The recent acquisition of Italy’s tire manufacturer Pirelli by the Chinese state-owned chemical company ChemChina is the latest in a string of Chinese and Indian investments in worldwide known European brands, not limited to the automotive industry. Do European countries and consumers have to worry about this phenomenon? Does this spell danger for our crown jewels and will the manufacturing jobs be moved to China or India, where labor is much cheaper? History proves us we should embrace the Asians as excellent caretakers of “our” brands, better than the Americans have been in the last few decades.
The Asians understand the value of a brand, because in their domestic markets there’s a huge difference in perception between local brands, which are considered low-value and can only compete on price, and foreign import brands, which are considered high-end and therefore are able to demand higher transaction prices, resulting in high profits.
The American way
As a result, when an Asian company takes over a Western brand, it will do anything to preserve the brand image, because that is what makes a brand valuable and leads to those higher profit margins. This view is contrasting with the way American companies used to handle their takeovers of European brands in the relatively near past. [Read more…]