Category: brand definition

Recovery branding for Tourism in Malaysia. A Q&A with Marcus Osborne

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I was invited to participate in a conversation on Recovery Branding for Tourism. You can watch the video here.

I think the video is worth watching, but if you don’t have time, I’ve added my responses to the questions below

Introductions

On the personal front I’m Marcus Osborne. I’ve lived in Malaysia since 1994, I’m married to a Sarawakian and have 3 kids all born in Kuching and they all are very proud of their heritage.

On the professional front, I co-founded Fusionbrand in 2003 after a career in marketing & sales in Europe the Middle East and SE Asia.

We founded Fusionbrand because we saw how the branding landscape was changing and that although branding was becoming more complex and necessary, most firms thought it was related to positioning, taglines, logos etc.

Then and even now, most firms see branding or rebranding as a cosmetic tactical exercise like changing a logo, developing a tagline or creating a new advertising campaign. We also noticed that a lot of businesses were stuck more in a trading mentality and didn’t invest enough in the brand experience or technology to assist them with brand building.

We determined that with an economy growing at up to 9% a year, this didn’t matter but we realized that as growth slowed and the world was getting smaller, more dynamic, more competitive, that cost was no longer a good enough differentiator and that building brands around delivering value would not only block local and international competition but also lower operating costs and increase profits.

So we established Fusionbrand and built the business around two primary pillars

  1. THE BRAND
  2. BRANDING

The Brand

A brand is the visual, historical, topography, environmental and cultural assets of the business or destination. It’s important you base these not on what you want the destination to be but on the reality of what it has to offer. For destination brands today, authenticity is key so it’s about leveraging the natural assets into something that’s of interest to key segments.

This becomes the destination’s DNA and it must have at its heart the goal of consistently delivering memorable experiences to consumers at every stage of their journey from the initial research to becoming part of the consideration set and then to become the chosen destination, through the visit and afterwards as well.

It’s really important therefore to have the buy in of all stakeholders, especially the front liners who often benefit the most. If stakeholders aren’t on board, it doesn’t work. This is often the hardest part, especially when, if they won’t adjust, then they have to be excluded.

Branding

Branding is about how we bring the brand to life, throughout the customer journey. Both through the narrative we create around the destination and its assets and how we encourage others to participate in the development of that narrative.

The narrative can take many forms and be communicated through multi channels but the DNA has to be consistent in terms of how the brand is represented. This consistency is more important than how creatively it is presented.

Most campaign driven marketing projects are a straight line whereas smart branding uses technology to connect with the consumer from the outset using a variety of tools and build a relationship that includes staying connected with them long after their first visit.

To be successful, you need to have a solid brand in place before you attempt branding. There’s no guarantee of success but technology allows us to measure the effectiveness of everything we do.

And you need a fair amount of luck as well.

The benefits of branding are significant – lower acquisition costs, better reputation, improved visitor numbers, higher repeat visits or purchases, increased investment and more.

Fail to do it and at best you get left behind which is why most Malaysian states aren’t attracting visitors, even those with outstanding natural assets.

At worst you spend millions every year trying to develop a creative campaign that will stand out in a crowded market place dominated by destinations with far deeper pockets.

And of course if something like a pandemic or other disaster happens, everything you’ve spent on traditional media is essentially wasted.

  1. From your perspective, could you give us the overview of the current situation in our Tourism Industry?

The industry has been hit hard, really hard. Look at hospitality, even before the MCO, in the first 3 months of the year 170,000 hotel bookings were cancelled.

The hotel industry alone is reported to have lost RM3.5 billion in the first 6 months of the year. That’s unsustainable. All related industries have been impacted and it’s not over yet.

But you only need to look at the social media pages of the minister to see she is working tirelessly to stimulate domestic tourism & its working because there has been a fair amount of revenge tourism since the MCO was partially lifted although that has been a double edged sword because a lot of destinations and hotels weren’t ready for the surge in visitors.

Moving forward, what I’d like to see is a more strategic approach to stimulating domestic tourism. There needs to be a plan outlining initiatives as well as new incentives from the government to stimulate demand and regular briefings from the communications team at MOTAC on what is being done and its impact.

From Sarawak’s perspective, I can see that STB is trying hard to stimulate domestic demand & I like how quickly the Sia Sitok programme was developed although if I’m not mistaken, its only available for those living in Sarawak. If this is still the case, I suggest it is extended to West Malaysians.

At the same time STB seems to be moving away from mass advertising to developing branded content. This long term focus will help the state rebound quicker once the pandemic is over as potential visitors will be increasingly familiar with the state.

Because the way destinations are researched these days means experience related content is critical as it drives visitors to a website or blog which allows a tourism board to start the relationship building process through the use of email marketing and other tools. It also allows tourism boards to develop revenue streams by using affiliate marketing.

There’s a real possibility that as governments look for ways to reduce costs, pay for COVID economic stimulus packages or decide agencies now have to generate their own revenue streams, technology will help tourism boards achieve this.

Used correctly, technology allows tourism boards to have more control over their messaging. When visitors to a website or blog don’t sign up for newsletters or leave contact information they can still be reached with retargeting, allowing the destination to stay relevant for longer.

I also think the private sector needs to understand that it’s not just the job of the government to drive visitors to Malaysia, the private sector needs to contribute as well. This is going to require a mindset change.

            2. What are the prevalent branding practices during this pandemic (tourism or other industries) and what do you think of them?

On a Sarawak level, there seems to be a pivot away from international markets to domestic ones. This is necessary but I think content creation related to experiences needs to be ramped up. And improvements can be made to how social media is used.

On a national level there doesn’t seem to be much marketing with the exception of Desaru that is advertising a lot online but the website is buggy and doesn’t provide enough information or seamless opportunities to purchase products. Desaru could learn from the One and Only marketing experience.

From what I can see, just about every other state seems to have gone into its shell. This is sad because destinations can use the pandemic to forge long term bonds with domestic tourists now that could last for years, even generations.

Digital is underused & under appreciated

Digital can be used to build interest in destinations, forge relationships with travellers and close deals. But it’s important to appreciate that digital is not a broadcast platform. It’s a platform for connecting with people. This requires structural change and a move away from how things have been done for the past 40 years.

Today, destination brands must be constantly connecting with audiences to get the most out of social media. There is the potential to build DTC relationships that will benefit destinations in the long run. But this means digital infrastructure has to be changed as the old rules, even before Covid no longer apply.

Industry wide structural issues

However there are other structural issues that have to be addressed as well. There are not enough ‘best in class’ products in Malaysia. My theory is too many products are created from the wrong perspective. The goal is not to create a product. The goal is to create an authentic experience that delivers economic, experiential and emotional value.

For example a homestay is not about creating a building in a kampung and calling it a homestay. A homestay is about creating an authentic experience. Everything about it should mirror the reality of the kampung. If it doesn’t it fails.

            3. What are the new norms for tourism branding?

COVID has given us an opportunity to evaluate the national and state tourism industry as well as the agencies that are responsible for the development of the industry and the marketing of Malaysia and states.

And this is timely because there’s a problem with the industry. Tourism arrivals have been flat for ten years. Unsavoury practices within the industry are destroying Malaysia’s brand equity and need to be addressed because they won’t go away. Now is the time to take a long hard look at who manages the industry, how it is managed and where it is going because things must change.

A road map for investment needs to be developed around pillars that will drive the industry forward for the next 20 years. I think one pillar that should be explored thoroughly is tourism investment zones.

Until there’s a vaccine, it’s going to take a long time for international travel to pick up. Corridors will be the first step and marketing teams will have to adapt. We’re already hearing about a corridor between Perth and Langkawi. That’s a great development but it’s a small step.

With the right approach, we could see charter flights into Sarawak from certain locations but we need the products to attract visitors from those sources. This requires a pivot away from what we’ve done for the past 20 years.

Transparency is a critical success factor

Transparency is going to be really important. Who knows what the psychological impact of covid is going to be but we can sure that with all the uncertainty around the pandemic and the poor handling of the fallout by many important sources of visitors to Malaysia like the UK, transparancy will play a big part in generating traveller confidence in a destination.

Other new normal branding initiatives will be the use of visitor tracing apps in the supply of information. Leverage on the excellent work done by the Ministry of Health by providing information on health and safety in marketing collaterals and define protocols while providing easy access to real time information.

Those travellers who are exploring medium and long haul trips will look for ease of access to COVID related information around a destination. And they’ll cross reference it against what they can find online. Those that are transparent and open.

So destinations that use a multi channel approach to their branding and provide real time COVID updates, provide hot lines for visitors, seamless advice on what to do if there is a surge in numbers etc on a regular basis will build trust and give potential travellers the information they need to make travel plans. And once travel begins, make sure it’s a touchless travel experience to further build confidence.

These are new norms and confidence is key. Building confidence takes time. Now is the time to start.

On a tactical level, I think we’ve seen the end of the hotel buffet which is probably a good thing!

            4. What essential element(s) should industry players be aware of when strategising their recovery branding?

Well the pandemic should go away but it won’t be an on/off lightbulb moment. It’s more likely to fade away, so there’s time to get ready. If they haven’t done so already, industry players should be doing or do the following:

  1. Review your operations, especially marketing departments and how they operate
  2. Review existing products & determine whether they are fit for purpose for a post Covid environment
  3. Build a strategy around what you have, not what you or stakeholders want to have
  4. Use down time to reskill your teams around delivering memorable experiences at every stage of the customer journey both online and off
  5. Look to renovate, invest in new materials, equipment etc. The industry will come out of this and when it does, the competition will be intense
  6. Create a brand plan. If you don’t have a plan everything you do is guesswork. Fusionbrand, a destination brand consultancy has noticed that firms with a brand strategy that incorporates a crisis plan are dealing with the COVID environment better than those who don’t have a plan
  7. Government & the private sector must move away from mass media marketing to creating content that builds organic narratives and collect data
  8. Data will be key. The post COVID travel environment will be different, so invest in data collection tools and use data to build direct relationships with target markets. Especially important for those destinations or products that don’t have the massive marketing budgets of competitors
  9. Reduce the number of stakeholders in the industry
  10. Industry players should be objective in their decision making. Collaboration between stakeholders is important to get out of this. This is not the time for stubbornness!
  11. Explore tourism investment zones, ideal for places like Sematan in Sarawak for instance
  12. Stay fluid. Community managers will play a big role as they keep followers involved and informed on developments in the relevant destination
  13. The fastest way to restore traveller confidence is by being accessible and transparent. Put protocols in place now to deal with a surge in social enquiries

         5. New norm vs conventional ways. Do you think industry players would return to the conventional ways of doing things once this situation died down?

I hope not! We’ve been doing it wrong for some time. Which is why visitor numbers to Malaysia have remained around 25 million for the last 10 years.

The majority of people who visit, love Malaysia but products are not good enough to encourage return trips. There are exceptions but overall the quality and variety is simply not there. And many of the products are not marketed properly.

Moreover, regional competitors are constantly creating new offerings while Malaysia’s tend to stay the same. Plus the management of many of Malaysia’s tourism products leaves a lot to be desired.

Moving forward, there are not enough new products coming onto the market. This needs to change. Let’s hope it isn’t ignored once things get back to normal.

And there needs to be more synergy between TM & state tourism boards. Local destinations don’t market themselves aggressively enough.

And moving forward, I want to see the private sector investing more in the industry. If this requires policy change then so be it.

            6. How can branding for a destination like Sarawak be done effectively now during the pandemic and after it has blown over?

It’s important to appreciate that branding is a strategic initiative. So although COVID has taken a toll on every destination, there should still be a road map in place to drive the industry forward and build the destination’s reputation. Much of that will remain although if the marketing focus was on mass media, that needs to change.

Tactically, getting West Malaysians to visit is the right approach for both the long term and the short term but it’s going to take time and they need to be nudged repeatedly before it’ll start happening.

But Sarawak can’t ignore international markets. I understand a new tourism master plan is being developed and this is good news for the industry. It’ll have to be ruthless as currently there are too many stakeholders in Sarawak so this master plan should streamline this and it needs to move away from the campaign approach of small tactical initiatives to a long term strategy.

And that strategy must be built around a clear brand proposition that is authentic and they must use this to unlock growth around 3 pillars, products, content & relationships. Those products should be built around 5 – 10 niche sectors, invest in them to ensure they are best in class.

Substantial investments need to be made in the tourism infrastructure. New products created for the right target markets.

Sarawak has a lot of potential but not as a shopping/mainland Chinese mass tourism destination. There will be business from China but not volume business. It’ll never be a mass market destination for anyone & shouldn’t try to be.

Sarawak will never have the accessibility that other destinations have but that shouldn’t stop Sarawak from becoming a globally respected destination. Something it could be in 5 – 10 years.

More importantly, the tourism master plan must propose a task force is created to implement the master plan because too many plans have been created only to gather dust on a shelf.

Consumers have changed, has your marketing strategy?

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Doe this sound familiar?

You need to spend time creating a position that is driven by the corporation.

Once created, the position must be communicate across traditional media (with a nod toward social media, but a nod only) to as many people as possible and hope that some of it sticks.

If it doesn’t, create a new position and repeat ad nauseum. Hopefully you will get it right. If you don’t, well you can always discount. This model was developed by Jack Trout in the 1970s. I wrote a blog post about it here

Sadly, despite US$1.5 trillion spent annually on marketing, 70% of today’s manufactured goods will be obsolete in six years (Industry Week magazine). There are estimated to be more than 30,000 new product introductions in the US alone every year, and that’s just in the packaged goods market. According to AC Nielsen, up to 90% of products fail to become brands. This means that as many as 27,000 of those new products will fail.

Today’s consumer has changed the way he lives his life and moreover, markets are so fluid, spending time developing a position and watching your competitors is the fastest route to business oblivion.

The key to success is the sales force and their ability to build your business through collaborations and by matching products/services to individual customer requirements for value and then maintaining those relationships and your brand communities team who develop brand evangelists and influence influencers.

And with social media and modern technology, that is not difficult. A lot less difficult than creating a position and pinning all your hopes on, well hope.

What is the difference between an advertising agency and a brand consultancy?

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As the consumer landscape changes and consumer habits and the purchase decision making process evolves, it is imperative that brand owners understand where, when and how to spend their valuable and increasingly limited resources.

Historically advertising agencies defined and controlled a brand’s message and through which channels it was broadcast. They would then blitz consumers with intrusive advertising and messages. The goal was to reach as large and as broad a target audience as possible on those platforms with the most extensive penetration.

But in the social economy, consumers have little faith in such corporate driven messages broadcast across mass media channels to which they are paying less and less attention.

Today consumers spend their time in a variety of social networks or in niche online communities with likeminded people. And it is to these people they look to when seeking information on products and services.

So does this mean the end of advertising agencies and advertising? Definitely not, there is still a need for good advertising agencies that create good work but the process has changed and the advertising agency can no longer be given responsibility for building brands.

In the past, branding and advertising used to be elements of marketing. Today, marketing and advertising are now part of branding and it is the brand consultant you should look to if you want to build a brand.

So here is an outline of the difference between an advertising agency and a brand consultancy. Hopefully this will give you enough knowledge to make an informed decision on who should build your brand.

1) Branding is strategic and advertising is tactical. The most strategic actions you will get from an advertising agency will be a brief. The brief will define the proposition that the advertising must communicate and to which segments. But then what? And what about internally? How will you get personnel on brand? Does the delivery driver or sales assistant know what their role is in the delivery of the promise/s made?

A brand consultant will develop a brand plan or brand blueprint that will drive the brand strategy, both internally and externally. This holistic approach will address all key elements of the brand from the copy used in recruitment advertising to customer facing departments and their ability to represent the brand to point of sale and retention strategies and more.

The brand consultant will then work with you to determine the best resources to use to get the whole organisation on brand.

It is not possible to define a brand through an advertising brief but it is possible to define a brand through a brand plan or blueprint.

2) Advertising agencies do advertising. That’s what they are good at. In fact some of them are very good at it. Advertising uses creativity and a slick message (normally defined by the organisation) to get your attention.

And this is done via campaigns pushed out across TV, radio, billboards, websites and so on. The idea is that enough people will see the campaign and the message will hopefully resonate with as many people as possible. And of course the agency gets a commission for placing these ads with the channels.

If it doesn’t work you either get the agency to come up with another creative idea and go through the whole process again, get rid of the agency, hire another one and hope they can come up with a creative campaign that does resonate or you can go out of business.

And as consumers have lost faith in traditional marketing and now distrust the messages contained in such campaigns or simply miss them because of the clutter, it is increasingly difficult to build a brand using such a model.

So unless you have very, very deep pockets and can advertise consistently for long periods of time, this approach is simply going to waste valuable resources.

A brand consultant will carry out an audit of your business, industry, processes, systems, stakeholders and more and then determine the best way forward for you.

Solutions may require advertising but will also look to improve R&D, sales, production, supply chains, operations, customer relationships and retention strategies.

3) If you are looking to go with an advertising agency, your strategy is likely to be in the hands of a creative director and his team. If the agency is going through a difficult period and doesn’t have many staff when they win your business, the agency will attempt to employ talent with experience in your industry.

Unfortunately, if the talent isn’t available, perhaps because they are working for competitor agencies, you will end up with sub standard people working on your brand and your chances of success are reduced further.

Because branding is a strategic institutional initiative, not a marketing initiative and therefore must have the buy in of executive management, a brand consultant will insist on having C level involvement in the development of the brand which places your brand strategy where it should be, in the hands of executive management.

4) Advertising agencies are often deemed successful if they have won lots of awards for creativity not whether a campaign increases sales or profitability.

There aren’t many awards for brand consultants which is a good thing because this allows them to focus on increasing profitability, often through developing and strengthening relationships with stakeholders and customers.

5) Most advertising focuses on a series of tactical initiatives to acquire customers. A brand consultant will develop a strategy to acquire and retain customers.

6) Traditional marketing activities are enormously wasteful as much of the advertising targets irrelevant demographics or customers that cannot afford or are not interested in the product. A recent report in the Harvard Business Review quoted a UK study that reported 72% of CEOs are tired of being asked for money from marketing departments without an explanation of how it will increase business.

Furthermore, in the same survey, 77% of CEOs have had enough of talk about ‘brand equity’ that can’t be linked to any real equity. A brand consultant will ensure budgets are spent on the right strategies for the right segments with metrics for measurement.

7) An advertising agency uses a one size fits all series of tactical advertising campaigns that use mass marketing across mass media with only a nod to digital and below the line activities.

A brand consultant will look to collect and leverage specific data to develop targetted communications across digital channels to engage prospects, whilst carrying on conversations with existing customers.

8) An advertising agency will often look at what the competition is doing and try to position an offering based on competitor actions. This approach is flawed because successful organisations are nimble and by the time you have developed your position the competition’s strategy will have evolved.

A brand consultant will be aware of competitor activities and will use that knowledge to strengthen the firm’s competitive advantage but will not allow competitors to define strategy going forward.

9) The impact of an advertising agency’s work is difficult to measure. A brand consultant will develop metrics to measure promotions, advertising and other activities.

Luxury branding in Malaysia & Asia

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Despite the global economic meltdown, the development of the retail sector in Malaysia continues at a phenomenal pace with over 1,000,000 square foot of additional mall space becoming ready this year. Passing almost unnoticed however is the proliferation of international luxury brands in many of those malls. Familiar international names such as Asprey, Giorgio Armani, Prada, TOD’s, Van Cleef and Arpels and so on, have all entered the local market in recent years, encouraged by the success of exclusive names such as Bulgari, Cartier, Hermes, Louis Vuitton, Rolex and other famous names already familiar to KL shoppers.

Unusually in Malaysia, The Pavilion has clustered its luxury boutiques into a high profile area facing Bukit Bintang. Globally, this clustering of stores is nothing new. For centuries stores have organized themselves into districts based on what they sell – think Saville Row in London (tailors), Faubourg Saint-Honore in Paris (designer boutiques), Deira in Dubai (jewelry), and so on. The cluster approach allows the rich and famous to be dropped off in front of the store, rush in and make a purchase that would make a small African country drool and then rush out into the safety of the limousine without having to rub shoulders with the rakyat.

With its double story street facing façade the luxury section or ‘couture precinct’ of the Pavilion is an exciting development in the evolution of the retail sector in Malaysia. But there is one thing missing from this development. That is a luxury Malaysian brand.

And as Malaysia moves from an Original equipment manufacturer (OEM) economy to an Original brand manufacturer (OBM) economy, and the government rams home the need to move up the value chain, the retail sector, where so many Malaysian OEM cut their teeth, should be at the forefront of this step up the value chain. Especially as according to the MasterCard Worldwide Insight report, the value of the market for luxury products and services in the Asia-Pacific region will jump from US$83.3 billion in 2007 to US$258.7 billion in 2016. Not a bad segment.

What’s more, there’s already a ready made market because the largest number of tourist arrivals to Malaysia is from ASEAN countries, followed by Japan and China with India and the Middle East not far behind. And the burgeoning middle classes from these countries are notoriously brand conscious.

This interest almost obsession with brands is likely to continue according to Radha Chadha, author of “The cult of the luxury brand”. She believes that the Asian interest in luxury products is because of the massive changes – social, cultural, economic and political that have been affected by the traditional attitudes to who you are and where you are in the societal food chain.

She believes that over the past 50 or so years, many of the traditional cultural indicators of social standing in Asia – profession, family, clan, caste have been eroded by the onset of globalization, migration and education. Free of rigid social hierarchies, mass migration and the development of urban areas, more people are making money and making it faster. The way to differentiate oneself is by purchasing a luxury product that shouted, “I’ve got money, respect me.”

Displaying one’s status through outward appearances of rank and wealth is nothing new but Asians seem to have taken to it like the proverbial duck to water. And those LV bags, Chanel suits, Jimmy Choo shoes aren’t simple female indulgences, they are part of a new world order that identifies the wearers position in society. Indeed, these luxury brands are a modern set of symbols that Asian consumers are using to redefine their identity and social position.

The Japanese have been devouring brands for years. 94% of Japanese women in their twenties own a Louis Vuitton bag. In fact, the Japanese as a whole are the most brand conscious and a staggering 92 per cent of Japanese women own a Gucci bag, 57 per cent own a Prada one, and 51 per cent own a Chanel bag.

In fact, Japanese passion for luxury brands is so huge that they account for over 40 per cent of worldwide sales for most major luxury brands. Meanwhile, Asia accounts for a third of Louis Vuitton sales worldwide whilst Cartier depends on the region for half of its worldwide sales.

And what of China? According to the China Brand Strategy Association, 175 million Chinese people can now afford to buy luxury products. By 2010 their number is projected to reach 250 million. Already, Chinese consumers are responsible for about US$10 billion of global luxury sales. Following the announcement of the US$586 billion stimulus that is expected to encourage increased spending, 70% of consumers confirmed that they will spend more in the next 6 months than they did in the previous 6 months.

Rolls Royce, the iconic British luxury brand owned by BMW, expects to double annual sales volume from 1,000 to 2,000 when the new, smaller ‘Ghost’ is launched in 2010, many of the early enquiries for the yet to be launched model are from Asia. Not bad considering each car will cost over US$200,000.

So, with all this new found wealth in Asia, the time is ripe for the development of Malaysian luxury brands. And the good news is, Malaysian firms know how to manufacture quality products. They’ve been doing it for years for iconic brands such as Apple, GAP, Guess, Ralph Lauren and other well known global brands.

But developing a luxury brand is also like raising a family – it requires a long-term commitment and investment, attributes that don’t sit well with corporate Malaysia. It also requires limited production, value over volume, even with a successful line. It also requires quality, not only in production but also in marketing and service, especially service. Training of staff is key. Walk into the Cartier store in Kuala Lumpur and the staff will assess you based on a number of pre-determined factors. Pass the test and they’ll offer you a bottle of champagne to anesthetize the pain of the purchase!

Ongoing research is also critical to the long-term success of the luxury brand. Back in 1837, when Hermes was building its brand, the founders lent new products to customers to get feedback on how the products could be improved. Zara applies the same tactics today. If a new line doesn’t sell, it is pulled off the shelves immediately and replaced with a new range based on customer feedback on styles.

One mistake many brands make is that they ignore existing customers, preferring to always acquire new customers. The successful luxury brands have an ongoing relationship with their best customers who become brand ambassadors and grow the family.

And for those cynics who don’t think Malaysians can build luxury brands or that there is any money in luxury brands, think of Jimmy Choo, the closest Malaysia has come to a luxury brand. Six years after Jimmy Choo sold his 51% stake in his own company for US$25 million, TowerBrook Capital Partners recently paid more than US370 million for ownership of the iconic brand named after the charming cobbler born in Penang in 1961. And with annual sales that have grown since 2001 at a compounded rate of over 45% to more than US130 million today, the purchase looks like good value.

Another British based private equity group, Permira, paid US$3.5 billion a couple of years ago for the Valentino Fashion Group. This was one of the most talked about acquisitions of the year because although Valentino is a well respected brand in Europe, it does not have the penetration in Asia of say Giorgio Armani. This is reflected in the global sales of US$340 million for Valentino compared with US$3.1 billion for Giorgio Armani.

There is also a strong argument to suggest that luxury brands are recession proof. At the end of last year, when the American economy was in free fall, Saks Fifth Avenue had a massive sale, offering huge 70% discounts on iconic brands such as Manolo Blahnik and even Prada. However, at the Louis Vuitton shop inside the luxury department store, nothing was reduced. Recently, Moët Hennessy Louis Vuitton announced that sales in its fashion and leather goods division, which includes Louis Vuitton, increased by 11% to $2.1 billion in the first quarter of 2009.

So, as the average tourist spends only 22% of his budget on shopping in Malaysia compared with 50% in Hong Kong and Singapore, the time is ripe for Malaysian firms to start building brands that can take pride of place alongside Canali, Ermenegildo Zegna, Jean-Paul Gaultier and Versace in places like the Pavilion, Star Hill and other prominent malls in KL.