Q: Could you tell us a bit about your background?
A: My first inroad into the design business was as a founding member of Unimark International, opening the New York office in 1965. The other founders included Ralph Eckerstrom, Jay Doblin, Wally Gutches, Jim Fogelman, Bob Noorda, Larry Klein, Massimo Vignelli, Tom Watson, Robert Craig, Arthur Leydin and Herbert Bayer. I also set up the offices in Detroit, Milan, and started our first activities in Johannesburg, South Africa. I currently run The Network with a Silver Lining which I co-founded with Christian Mure in Paris. I have a BA design degree from the Institute of Graphic Arts in Stockholm in Sweden and began my professional career as a typographer and bookbinder in Toronto, Canada. I have worked as an external consultant to some of the leading consultancies in the field, such as AID, Wolff-Olins, Landor Associates, Design Bridge, Siegel and Gale and WPP/Enterprise. I have now initiated design consultancy operations in every major European capital, some in the Middle East, the USA, and covered almost every industrial sector, working on complex brand and corporate identity projects, throughout Europe and the USA.
Q: Can you tell us a little about the day in the life of Jan Van Holstein?
A: My day is extremely varied, as I divide my time between London, where I live, our European offices, and China. A typical day in China would be like this Friday: the morning starts with a barrage of e-mail and requests for information from varies members in the network. This usually takes about an hour. Then, at 9:00, I will have a meeting with the head of P&G Research on professional products and fragrances to get a briefing on a new project. This is followed by lunch with the head of an Italian fashion conglomerate, who wants advice on positioning some of their brands in China, and who has a specific project they want to discuss. At 3:30 in the afternoon I give a two-hour lecture on brand creation to the MBA students at Fudan University. A meeting follows this with the Fudan University Press, for whom I am writing a book on design management and design leadership. In the evening I am going to a gallery opening, looking for new artist stars emerging in China for a client in Scandinavia who is a big art collector. There are astounding painters and sculptors here, who will soon occupy the world stage.
This morning started with a breakfast meeting at 8:00 with the Swedish Chamber of Commerce on whether international companies should adapt their brands to the Chinese markets. The rest of the morning was spent working out a brand strategy in China for one of the top international hotel groups, and what brand architecture could be envisioned for the future.
Q: Tell us a little about the Network with a Silver Lining and why you started it.
A: You might draw the conclusion that I have had enough of spearheading the Unimark, Landor, and EnterpriseIG operations. But really there were two basic reasons: first, most global companies need help to create global brand strategies, and to implement these around the world. Second, this inevitably requires brand translation and brand adaptation to local customs and consumer expectations.
Q: You mention brand translation and brand adaptation to local customs and consumer expectations. Could you expand on this?
A: There are two basic elements of brand translation: verbal and visual, and one impacts on the other. Starting with verbal, I strongly believe that you can never really understand another culture without understanding the language. Culture is imbedded in language. The majority of people around the world only understand their own language. Although English is slowly becoming the common language of the world in business and communications, it does not replace the local language. In China this is a particularly important difference. China has sixteen different spoken languages, but only one written language, going back nearly two thousand years. The written language is not phonetic; it originated as simple pictograms, which were simplified to iconic forms. In commercial terms this means that the brand name for products has a strong graphic component, often dominating space on packaging. Secondly, the meaning of a word is always specific, and this can be the reason for choosing a particular image or illustration. Images used in packaging and printed media are often more powerful and imaginative today than in the West, as designers are exploring the new frontiers of computer-based graphics and the use of strong colors. This is sometimes further combined with traditional Chinese images from the past.
Serious work in this area was the domain of individual "master" designers in the early '50s and '60s, and then evolved into multifaceted consultancies, incorporating all the disciplines we consider necessary today, to create unique and effective solutions. This gave brand designers boardroom access and responsibilities in helping shape and reshape companies at the highest level. This access has for the most part been denied advertising agencies, whose key role still remains to help sell products and services through traditional advertising. Consequently, the three big advertising networks, Interpublic, Omnicom and WPP, started to buy their way into this high-level access. In addition, their dwindling advertising revenue required new ways of binding their client relationships by becoming "complete service" operations, offering all communications services on one plate. They already did part of this with PR twenty years ago.
Q: The three big networks bought their way to the top through offerings of complete services. What are the services that "all communications services" encompasses?
A: By complete services I mean access to the boardroom, which the top design consultancies always had when working on big corporate identity changes. The big networks have already pursued this road by absorbing PR companies, research companies and specialist below-the-line operations. Ogilvy & Mather define this as their 360-degree service offer. During the last 15 years, the three major advertising groups have bought every design consultancy they could lay their hands on. Many of them were creatively driven and some had very incisive strategic capabilities added - the role some "planners" play for advertising campaign strategies. In almost all of these bought-up operations, the owners/creators leave as soon as their earn-out period has been reached. Their role is taken over by advertising executives picked from inside the parent company, and the soul and delivery character of the bought-up company evaporates. So do their capabilities to deliver new insights, new thinking and real design solutions. In addition, managers are involved in a musical-chairs exchange among these companies. Managing Director of Enterprise moves to Future Brand, Future Brand MD moves to Landor, Landor MD moves to Interbrand, MD of Interbrand moves to Enterprise, and so on. All of their presentations are beginning to look the same. So my thought behind creating another network was to fill the creative void that is the result of these developments.
Q: In what ways does Silver Lining fill the creative void?
A: As the advertising agencies incorporate the design agencies, many of whom were design driven with strong strategic thinking content, their character changes within a few years. Most of the founders leave after their earn-out period and nearly all are replaced by advertising executives, who have different training, a different background, and certainly not the same discipline, aesthetic values and feeling for quality. The idea behind The Network with a Silver Lining to provide a source of design which is still based on some of the ideals and innovative flair of designers, not led by the sales-driven motives of advertising, and is much closer to what consumers feel and think about. Each company in the Network is independent and not driven from the top as a pyramid. Secondly, the idea is to provide a portal in and out of China with a true understanding of cultural differences and the capability of transforming this into local market requirements. The Network of Silver Lining is currently the only independent design group capable of delivering services in so many key markets around the world. The driving force is the quality of design and original thinking about brand creation.
Q: Do you have a specific example of the quality of design and original thinking of Silver Lining?
A: It became clear to me five years ago that China would become a force to be reckoned with. This meant creating a real portal both into China and out of China. Most global players are already in China and thousands more are scrambling to get in. At the same time, major Chinese companies are about to enter world markets with their own brands. We have already been reading about this in BusinessWeek and other publications in the last twelve months, and the reality is companies like Haier and Lenovo are entering the US markets with a big bang. Most of the others still have no valid brand positioning or marketable brand for any market outside of China.
Q: Is there a large difference between adapting a company from a developed market to China's market and vice versa?
A: The difference is primarily verbal. Western brand names are meaningless in China and only high fashion and cosmetic companies, who appeal to a small portion of high-spending, well-educated consumers, can "import" their brands and international image as a desirable alternative to local brands. Even Coca-Cola changed the name of their brand in China, in spite of being the world's leading brand name and the best-known brand in China. That speaks for itself. The visual imagery is not always understood either, and McDonalds and KFC now face locally created counterparts which are almost caricatures of the American brands. Real consumer research in Chinese is only beginning, and this coupled with very fast moving demographic and financial changes make the Chinese market particularly challenging. Distribution is also in the early stages, currently leaving a very fragmented market and no real national approach.
Not much has happened yet in the other direction. Only a few companies like Haier, Lenovo, and Tsingtao beer have made their mark outside China. China Airways and the Bank of China are easily understood, as the name explains their activity. Many more are waiting in the wings to start exporting their own brands, and most face the need to change their brand identities from scratch. They will be unknown entities and will require substantial investments to break into new markets. Some will take quantum leaps by acquiring famous brands, and piggyback into existing markets to get instant access. Lenovo did it with IBM. Haier tried it with Maytag and CNOOC with Unocal. Others will no doubt follow suit. To respond to these needs we have our international network and two strong local companies in Shanghai with years of experience in China. There are other finer elements of this strategy, but this is the basic bigger idea and vision behind it.
Q: What are the differences between branding for a western market and China? How different are the relationships between brand and customers in both markets?
A: This is closely related to what I said earlier about how the West has long plied the techniques of quantitative and qualitative research. This, amplified by very careful studies of consumer behavior in the retail environment, has led us into the experiential shopping phase. We are well ahead in the West and also have a more predictable consumer evolution, with slower moving, structured, predictable economies. This is not the case in China, and the challenges there are enormous in this regard.
Q: How are you planning to translate your knowledge about branding from the West to the East, considering the fact that the cultural differences are so big? Do you have any specific methods?
A: The translation is happening on several levels, starting with first-hand operations in the market, performing brand translation for both Chinese and foreign companies. Secondly, by workshops with companies, organizing our own seminars, speaking at others and appearing regularly at international chambers of commerce in China. Finally and equally important, speaking engagements at the top universities' business and design schools, introducing them to brand strategies, design management, and design solutions for global players. Last year I made over twenty such appearances and it is continuing at the same pace this year. At the same time I am also giving talks around Europe about the challenges facing foreign companies in China, and what they need to do in the future to improve their position and be more competitive in the Chinese market. My roundtable at the ID conference this year has the same purpose.
Q: What is the process you follow to introduce your clients to the Chinese market? How long does this process take?
A: We do not have a predetermined process, as the circumstances change from case to case depending on size of the company's brand position and its objectives in entering the Chinese market. Some cases start with a basic research phase to identify market potential and the competitive situation for the sector they operate in. The next phase could be a more detailed development of positioning strategy and market entry tactics. This could begin with events and press activities and go through all the way to sourcing and local manufacturing for products and services. Finally, it may involve product/packaging adjustments and local brand name development. The timing therefore could vary from initial four-week studies to six-month engagements.
Q: How do you approach consumer research for emerging markets?
A:Our in house facilities are geared to quantitative research, and any cross-country operation involves collaboration with one or two local specialists who conduct regular quantitative research.
Q: How would you characterize multinational corporations' (MNC) view of branding for emerging markets?
A: They vary with their own merry-go-round strategies, which oscillate between centralization and decentralization every five to ten years. Typical big-time players are Unilever, P&G and Nestle. These groups also interchange brands with some regularity, requiring rethinking and re-shifting of their market position. In the decentralizing phase, the tendency is to really concentrate on local market conditions, local consumer profiles, different local cultures and language. When the swing goes in the other direction, a more dictatorial phase usually follows with more monolithic brand tactics and less heed to local factors. If they are newcomers to a market, they usually start with the premise that their own brand is good enough and strong enough, and that is how they enter. Many take years to understand that this may not be the most efficient and effective way to win. Multinationals in some sectors, such as fashion and cosmetics, have a bigger brand identity thanks to global publications and television.
Q: What are some of the assumptions MNC¹s make about emerging markets?
A: The most common assumption for most brand producers is to assume that they are better known and respected than they really are. Those who fail to recognize that some basic research is essential get burned. The differences between western and eastern cultures and values are substantial. But this has also happened in the past, when US brands failed to understand the differences in the European markets.
Q: What is the value you think traditional western branding companies can bring to the Chinese market?
A: Western brands, which have succeeded and honed their identities over a long period, know what it takes to build them up and to adjust them to gain loyalty and long-term purchase. It also takes investment power and patience. These techniques are essentially the same wherever you operate, and it is this expertise that will make the difference between success and failure. When it comes to "western values," we touch a much bigger question. The thrust of all major western consumer brand companies is to sell more, and this of course does further consumerism. You could well ask if we need twenty toothpaste brands, two hundred soft drink brands, etc. Are these western values and concepts that we should perpetuate in other parts of the world?
Q: How do you see the evolution of the branding market in the coming years? Do you see a big expansion of western companies, or a more balanced struggle to control the market?
A: There is no doubt in my mind that the development of more brands will continue apace. In the West, brand extensions and brand refinement is an on-going process. And as we are now in the phase where the retailers control the brands and their position in the distribution chain, the competition for brand power is increasing. When we move to the Far East, and China specifically, they are only at the entry curve of creating international brands, let alone successful local ones in their gigantic home markets. The competition there will intensify between international brands and new, local ones which are being created every day.
Q: What are the key drivers of innovation in emerging markets?
A: Everyone is talking about "innovation" as the key to the future, and it is on top of the political agenda in China too. So you could say that one of the drivers there is the concept and idea of innovation. What it really means and what it takes is not clear at all. One driving factor is certainly price, and there are some good examples such as CD and DVD players, which you can now buy for a fraction of what they cost a few years ago. Manufacturers needed a cheaper version for the mass market in China, and they simply found a way of doing it through technological innovation. I believe the development of a local car for China will be driven by this principle, and the need to find alternatives to petrol. Another factor no one can ignore is the environmental issue, and how we can avoid destroying our planet.
Q: How do you develop relationships with local actors in emerging markets?
A: There is no secret formula. You have to be diligent and search for partners with whom you can develop mutual trust and find common interests. I believe you also need to make a contribution to training and development. This can take different forms, such as staff training programs, research projects with leading universities, and public speaking engagements where you can share your experiences. The obvious due diligence process is of course also par for course before you actually enter into a partnership. An essential ingredient today is a clear understanding of the legal issues surrounding intellectual property and the sharing of patented technologies.
Q: What are the primary considerations when developing products for emerging markets?
A: I believe the main theme is to focus on value for money, and to develop really useful products for a broad audience. Brand extensions of existing ones do not really contribute much except to expand market share.
Q: What are some of the unique aspects of distribution channels in emerging markets vs. developed markets?
A: In developed markets, we are already well into the shift of power from the manufacturer to the retailer, with all that entails in terms of finding new ways of keeping the consumer enthralled through experiential shopping experiences and more exotic environments in which to have it. In China this has only just begun. To begin with, there is no homogenous market from North to South and East to West. Secondly, there are no nationwide distribution operators. It is, however, beginning, and a number of multinational players like Carrefour, Metro, Wall Mart and IKEA are well into it already. Local Chinese companies are also emerging, albeit mostly on a citywide basis at this stage.
Jan Stael von Holstein is Co-chairman of the Network with a Silver Lining, with particular focus on helping companies creating brands in and out of China. He was a founding member of Unimark International, and played a leading role in establishing Landor Associates and WPP/Enterprise IG in Europe. Has covered almost every industrial sector, working on complex brand and corporate identity project's, throughout Europe and the USA, including such companies as Ford, Renault, Daimler Chrysler, VISA, Shell, Elf, Occidental Oil, Accor Hotels, Banco de Santander, SAS, Alcatel, Valeo, Frontline Shipping and the Richemont group. He is a regular speaker on brand issues and design development at conferences and educational institutions, and speaks eight languages.
Huyniee Jung, Enric Gili Fort and Kevin Denney are Masters degree candidates at the IIT Institute of Design. They spoke with Jan as part of an assignment for Strategic Design Research workshop.
