Solving the locally-made conundrum

THERE have been many local companies that have sought out greener pastures in markets overseas and have done well for themselves. Some go abroad as part of their expansion plans, and some go because the international market is more receptive to their products.

In the case of vehicle coating products manufacturer Ominent Sdn Bhd, managing director Keong Chun Chieh says its attempt into more advanced and competitive markets like the US was due to the lukewarm demand for its products in Malaysia.

“We had to go to the US because we had no choice. It wasn’t working out in Malaysia,” he says.

It’s largely a perception issue, he adds. Keong notes that local consumers tend to perceive imported products as being of better quality. As such, there is greater support for imported products in the local market.

But this notion that imported products are superior in quality is not unique to Malaysia. According to a report late last year by performance management company Nielsen, consumers around the world are displaying a growing preference for global brands rather than locally-manufactured products.

“In today’s world of hyper-connectivity and globalisation, consumers have a wider array of product choices than ever before,” observes Regan Leggett, Nielsen’s head of foresight and thought leadership, growth markets.

“Importantly, consumers also have greater access to global brands than they have in the past, thanks to factors such as expanding distribution, e-commerce offerings, and modern trade retail channels. As a result, we’re seeing a swing in preference towards the big multinationals,” Leggett adds.

Notably, some countries have better brand loyalty than others.

According to the report, nearly six in 10 global respondents (59%) say they buy local brands because they support local businesses, with sentiment highest in North America (65%).

Developing-market respondents, on the other hand, are more likely than their developed-market counterparts to say that while local brands are more attuned to their personal needs or tastes, global brands offer the latest product offerings and innovations and are of better quality.

The report also noted that the top reasons for choosing a brand are the same for both global and local brands: better price/value, positive experience with the brand, safer ingredients and processing, better product benefits, and sales/promotions.

Keong adds that there can also be unreasonable expectations by consumers for locally-made products to be priced a lot lower than imported products simply because they are made locally. However, there are development costs that have been invested into producing the products which are not necessarily low.

Another difference between the local market and more advanced markets like the US that helps a brand grow in the market, notes Keong, is the way distributor networks function.

“Over there (the US), we can grow the brand collectively through the network. Everyone is proud of the product and they work together to build the brand. And when the pie gets larger, everyone gets to share in the growth.

“But distributors for the same brands in Malaysia tend to see each other as competitors. So we need to change our mindsets here. If we grow the brand together, we can grow together,” he says.

Related story:

Easy solution turned big dream