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Conference Examines Asia's Move From Low-Cost Supplier to a High-Quality Provider

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March 15, 2005

As Asia's culture and goods flow into all parts of the world, its business leaders grapple with how to offer improved goods and services and still remain competitive, said experts at the Kellogg School Asian Business Conference, held Feb. 26 at the Donald P. Jacobs Center. Keynote speakers and panel experts at the student-led annual event discussed how certain Asian companies have succeeded, and how others could succeed.

Japan's Sony and Toyota, and South Korea's Samsung, are good examples of companies that have switched to offering competitively priced high-quality products, said Ajit Nazre, a keynote speaker and partner with Kleiner Perkins Caufield & Byers, a Northern California-based venture capital firm that helps entrepreneurs build sustainable technology businesses.

Through the years, Nazre said, these companies have improved their reliability, consistency and trustworthiness, thereby boosting their sales and standing in the global marketplace

In general, Nazre explained, Asian companies “move up the value chain” when governments establish initiatives that allow investments to surge and entrepreneurs to succeed. Additionally, companies must improve the quality of their goods and services, diversify their customer bases and develop new products. If they're smart, Nazre said, companies hire people with an entrepreneurial spirit and risk-taking attitude.

So far, China and India are outperforming other Asian competitors, he said.

But Chinese enterprises may lose their foothold if they don't pay attention to what's happening at street level, warned Steve Ganster, managing director of the strategic consulting firm Technomic Asia, based in Shanghai, China.

“Local businesses that thrived on counterfeiting are now being counterfeited by other local businesses,” Ganster said. “And instead of competing with these local businesses who counterfeit, multinational companies are buying them up.” In the meantime, businesses that engage in piracy are facing litigation and shutdowns, said Guy Bouchet '94, vice president at A.T. Kearney. Panelists suggested that this seemingly contradictory dynamic might be explained by the fact that some individuals continue to demonstrate a willingness to take calculated risks, despite potential official censure.

Unlike the United States and other countries, Indian and Chinese consumers lack brand loyalty, said Sajal Kohli '95, a partner with McKinsey & Co. “Customers (in these countries) are fickle,” he said, in part because “companies, even big suppliers, don't do much marketing.”

Most conference experts concurred that companies who are trying to offer more value will need to substantially invest in innovations and make sure they own the intellectual property rights to these innovations.

Asian companies that have expanded to other continents already have done this, panel members said. One example is Japan 's Pokémon, which markets its products in five languages. Akira Chiba, president of Pokémon USA, said the company currently produces 350 characters, TV shows, video games, movies, trading cards and toys.

As Pokémon approaches its 10th anniversary in 2006, its goal is to “become a classic,” Chiba said, like Mickey Mouse and Barbie. If MTV World has its way, it too will become a mainstay in the American marketplace. Its three new channels, aimed at Indian-Americans, Chinese-Americans and Korean-Americans, will be the vehicle that “tells the stories of these hyphenated groups” said Nusrat Durrani, general manager and senior vice president of MTV World and self-described “pop culture junkie.”

“Asian-Americans are trying to find their own identity through artistic expression as we've reached a historic moment — being in the American mainstream,” Durrani said. He noted that Asian culture and design have permeated the fields of fashion, furnishings, jewelry, music, art and film.

Addressing how to best serve Asia's low-income consumers were Murugappa Vellayan Subbiah, visiting scholar in the Kellogg School's Center for Family Enterprises, and keynote speaker C.K. Prahalad, professor of business administration, corporate strategy and international business at the University of Michigan. Both speakers challenged the audience to shed traditional business models and instead focus on creative and imaginative ways to build profitable business paradigms that concentrate on low-income consumers.

Bill Liu '97, vice president of the NaviAsia Consulting Group based in Naperville, Ill., delivered the breakfast speech.

Conference moderators were James Conley, Kellogg School clinical professor of technology, and Abe Peck, Sills Professor of Journalism and chair of magazine programs at Northwestern University's Medill School of Journalism.

For the first time, the India and Asian business conferences were merged under one umbrella. This approach “allowed us to reach a broader audience,” said conference co-chair Jimmy Rojas '05.

Pankaj Sahni '05, the conference's second co-chair, said he hopes the Asian Business Conference further motivated the next generation of business leaders to reduce the divide between Asian businesses and their Western counterparts. “For years I have heard people say Asia's time is coming,” Sanhi said. “I think it is time to show the world that Asia has finally arrived.”

Topics: Campus Life