Are US brands taking an asswhooping from American foreign policy?

This should have been the title for an article that appeared in the Financial Times over the Christmas period called Tarnished Image: is the world falling out of love with US brands (paid subscription required).

The article does not reach a conclusion that this is the case, despite a call to boycott by many in the Middle East and apparent declines in Old Europe by standard bearers such as McDonalds. The academic research carried out measuring the the effect on brands has been inconclusive and as the author points out, it would be hard to separate the effects of hostility to American foreign policy from anti-globalisation and the rise of challenger brands from other countries.

A box-out in the article points out the potential threat from Japan taking over as the leader of global cool. This has already happened:

  • Sainsburys and Tesco now sell bento box style lunch packs to office workers
  • Fashionable graphic designers such as Designers Republic owe more than a little of their ‘look’ to Japanese packaging design
  • In film Kurosawa is cited by many directors from Sergio Leone on as an important influence
  • The Kill Bill duology is a homage to Chinese and Japanese action movies
  • Evisu the Japanese jeans brand leads the likes of Diesel and Levis in design and is one of the most frequently copied and faked apparel fashion brands
  • SHISEIDO cosmetics are at the bleeding edge of beauty products for women
  • Manga is influencing everyday art from Britney Spears videos to Western comics
  • The sublime global dominance of Hello Kitty
  • The success of sites such as oki-ni.com and J-List.com

‘Cool would come from Tokyo rather than LA’

US brands face a new threat in Asia. But it has less to do with the policies of President George W.Bush than with the preferences of consumers such as Han Yue, a 21-year-old native of Shenyang, China, who has moved to Singapore to learn about the property business.

Shopping on Singapore’s bustling Orchard Road, Ms Han makes clear that she looks to other Asian countries for her cultural cues. She is not hostile to US brands: some even strike her as “sexy”. She just prefers fashions from Japan. “I think they are very cute,” she says. “They look very young.”

Ms Han’s cultural sensibility is important. Marketing services executives see little evidence that the war in Iraq is provoking an overt backlash among Asian consumers. But they do see signs that some consumers are increasingly indifferent to US brands and are paying great attention to Asian trends and products.

“Japan is really what people are looking at for quality and relevance,” says Andy Wilson, regional planning director in Asia-Pacific for the Ogilvy & Mather advertising agency. “Cool would definitely come from Tokyo rather than Los Angeles.”

The growing interest in Asian labels is a challenge for US brands, but not an insurmountable one. Across the street from Ms Han, a sign in the window of a Levi’s store on Orchard Road proclaims that “iconic American jeanswear” can be found inside. If the image of the US has been tarnished, there is no sign of it on the rear ends of Singaporeans. Levi’s commands 85 per cent of the country’s premium jeans market, says Charles Wigley, strategic planning director for the BBH advertising agency in Asia.

Mr Wigley says that kind of market dominance is difficult in the west, where young trendsetters often abandon products because they are popular. By contrast, consumers in Asia still see brands as guarantors of reliability. “There is still a good deal of comfort and attraction in brands in Asia,” says Linda Locke, regional creative director for the Leo Burnett advertising agency.

Also, US brands have done an artful job of blurring their ties to their home market. Last year, a survey by Leo Burnett in China, India, Korea, Indonesia and the Philippines found that 49 per cent of respondents saw Coca-Cola as a global brand. Only 31 per cent viewed it as American and 15 per cent considered it to be local.

Since the Iraq war, Ms Locke says, US brands have been trying to stress their ties to local producers and franchise owners. For example, McDonald’s has been running advertisements celebrating the lives of people in Indonesia, the world’s largest Muslim country.

Maurice Levy, chief executive of Publicis, the marketing services group, says he has yet to see “an important sign” that the Iraq war is seriously harming western brands in Asia. “It is more a subject of debate between intellectuals than something that is hampering the development of these brands with consumers,” he says.

The danger for US companies is that they will fail to appreciate the growing self-assurance of consumers in markets such as China or India. This increasing confidence could translate into a growing tendency to take offence at cultural slights.

This month, China banned a Nike advertisement that depicted US basketball star, LeBron James, defeating a kung fu master and other Chinese cultural icons in a video game-style battle.

China said the advertisement was offensive. Advertising executives suggested Nike erred by not letting the home side win. BBH got a better response with a Levi’s advertisement that showed an Asian man facing down a street full of mean-looking westerners. “We have to be very careful about advertising in these countries,” Mr Levy said. “We know cultural things are very touchy.”