Despite high patent and intellectual property filings, no regional company or product has a leading global position
If necessity is truly the mother of invention, Southeast Asians may need to devise a better strategy for exploiting their talent base in the marketplace.
Patent applications from the region have risen more than 40% in the past three years, prompting predictions within the Asian scientific community that it would soon become a “hub of research and innovation activity.”
Yet no Southeast Asian company or product has a leading position in global consumer markets, and there are worrying signs that some local firms may increasingly lose out to overseas rivals as shoppers become more brand-conscious.
Singapore (29), Vietnam (31), Thailand (33), Malaysia (39) and the Philippines (47) were ranked in the top 50 countries worldwide for intellectual property filings in 2016, according to the latest report by the World Intellectual Property Organization. Indonesia (53) was just outside the top table.
China led in all four categories of patents, trademarks and designs, with the US second in the overall list. Japan (4) and South Korea (5) were the other leading Asian countries, followed by India (10) and Iran (12).
Singapore (25) and Malaysia (37) did best in patent filings, while Vietnam (22), Indonesia (24), Thailand (28) and Singapore (31) ranked highly for trademarks. In the designs category, perhaps the true test of innovation, the regional list was led by Thailand (21) Vietnam (29) and Indonesia (28).
Indonesia, which has Southeast Asia’s biggest economy, lagged in the overall standings because of its low patent listing – 112th in the world.
Despite their strong showing, regional companies and their products have managed to secure a limited presence in global markets. None figures in BrandZ’s annual list of the 100 most valuable brands, which is headed by technology titans Google, Apple, Microsoft, Amazon and Facebook.
China has 10 brands on the list, including Tencent (8) and Alibaba Group (14), with a total market value of US$406 billion. Australian brands worth US$43.8 billion are in the top 100, while India has brands valued at US$17.1 billion.
There are a handful of Southeast Asian companies that can almost match the top market values, though some have little global brand recognition.
Indonesian financial services group Bank Central Asia, which replaced DBS Bank of Singapore as the region’s biggest lender in 2016, is the leading contender. BCA’s brand value of US$9.3 billion isn’t that far the lowest-ranked BrandZ company, automaker Nissan, whose brand is valued at US$11.3 billion.
Further down the list is San Miguel, the Philippine brewer of one of the world’s top-selling beers, arguably the region’s most familiar brand.
AirAsia is spreading its wings into global air routes after transforming regional services. Singaporean hotel groups Shangri-La and Banyan Tree have expanded into global markets, as has seafood company Thai Union Group.
Research and innovation in Southeast Asia is dominated by agricultural, chemical and medical science fields, so a multinational is most likely to emerge in one of these markets.
Another possibility is halal-certified products, mostly manufactured in Indonesia and Malaysia, which are making big inroads in world markets. The Islamic food market alone is worth US$1.5 billion.
One reason Southeast Asian products haven’t made it globally is that manufacturers are still building a regional foothold in the Association of Southeast Asian Nations Economic Community (AEC), launched in 2015, which has given them the consumer bases to match multinational competitors.
Grab, Malaysia’s ride-hailing service, has been able to fend off global market leader Uber in regional markets like Indonesia, Thailand and Vietnam.
A study by performance management company Nielsen indicates that Southeast Asian consumers prefer to buy their foodstuffs locally because of perceptions that they will be fresher.
Regional producers mostly compete on price, banking on the well-worn theory that Asian buyers will always shop around for a bargain. However, BrandZ’s surveys have found that this market perception may be misplaced.
Almost 90% of consumers now regard the choice of brand as the most important factor in purchasing decisions, while 30% think both brand and price are important. Just 10% believe that price alone is paramount.
Even product innovation is not enough unless it is branded correctly, as Singapore’s Creative Technologies famously discovered. In 1999, the firm invented the MP3 player, but not many people noticed until it was copied by Apple as the user interface for the first iPod range several years later.
Creative successfully sued Apple, but never invested in the marketing needed to sell its product to global audiences. Indeed, MP3 technology is now effectively branded as iPod.