SPEECH BY MR THARMAN SHANMUGARATNAM, SENIOR MINISTER OF STATE FOR TRADE & INDUSTRY AND EDUCATION, AT THE SINGAPORE BRAND AWARD 2002 ON 21 OCTOBER 2002, 7.00PM, AT THE RIVER ROOM, ASIAN CIVILISATIONS MUSEUM, EMPRESS PLACE.

Distinguished Guests,

Ladies and Gentlemen,

It gives me great pleasure to be with you at the inaugural Singapore Brand Award 2002. First, let me extend my heartiest congratulations to the 14 outstanding Award winners.

BRANDING AS A KEY STRATEGIC COMPETENCE

The development of strong Singapore brands is part and parcel of our strategy to internationalise local enterprise and create global winners. It is essential for our next phase of economic development.

A brand is a key intangible asset. It is a competence that a firm can leverage on to differentiate itself from competition, fortify its customer base, and enhance its bottomline. A number of studies have confirmed that strong brands create shareholder value, in their own right. A study by Harvard University and the University of South Carolina in 2001 observed that ownership of valuable brands enabled companies to yield consistently higher than market average returns to their shareholders, and carry a lower than market average risk profile.

Recognising this, and the fact that consumers across the world are becoming more discerning, global companies are taking their brands more seriously. In 1978, intangible assets accounted for only 5% of US companies’ total assets. After 20 years, this figure rose to 72%. Many are even making a business out of managing their brands, or generating significant revenue through brand licensing and franchising.

Nike, a well-celebrated example, focuses almost exclusively on brand and design management to retain its leading position in sportswear. Most Nike products are made by 3rd party manufacturers in over 50 countries, and most of its supply chain is owned by other companies.

Another well-known example is Samsung. Once a manufacturer of commodity electronics sold under other companies’ names, it has since become a household brand. Samsung’s heavy investments in branding and cutting-edge design have paid off. In ‘The Best Global Brands 2002’ league table by Interbrand and Business Week, the Samsung brand had leapfrogged from 42nd position in 2001 to 34th position in 2002, with an increase of 30% in brand value, to US$ 8.3 billion.

Countries too have realised the potential that branding offers in developing economic capabilities. In China, while WTO entry is opening the Chinese market, there is conscious effort to create global Chinese brands. Recently, the China Federation of Industrial Economics, together with the ‘China Promotion Committee for Top-Brand Strategy’ organised a Chinese Top Brands Forum, to step up the development of China’s top brands and improve the international recognition of Chinese products. Homegrown Chinese brands such as Haier, TCL Corporation and Legend are fast achieving recognition outside the Chinese market, and leading the way for many others.

BRANDING IN SINGAPORE - WHERE ARE WE TODAY

So where does Singapore stand? Several Singapore brands have achieved recognition in the global arena. We need look no further than this room for examples of such accomplished brands. However there is much work to be done. In the 2001 World Economic Forum Global Competitiveness Report on Micro-competitiveness, Singapore companies were ranked 23rd in ‘Extent of branding’. We need more SIAs, Tiger Balms and Hourglasses, among companies big and small, in order to succeed in our next phase of growth.

SINGAPORE BRAND AWARD 2002

Tonight’s 14 recipients are shining examples of companies that have managed their brands astutely and strategically to generate value for their customers, employees and shareholders. By raising awareness of branding through these annual awards it is hoped that more Singapore-based companies will leverage on their brands to gain recognition internationally, and ultimately join the league of global brands.

The winning brands were valued through a study by Interbrand using the same methodology as the ‘Best Global Brands’ league table that it assembles each year with Businessweek. A number of observations stand out in the study. For the first time, we have an idea of how much our top Singapore brands are worth, and where they stand vis-à-vis their global counterparts. Together, the top 14 Singapore brands are estimated to be worth S$ 7.6 billion. SingTel, with the highest estimated brand value of S$3 billion, might make it to the top 100 global brands before long.

Second, most of our top brands are from the services sector. This is not surprising. It demonstrates the importance of intangibles in the services industries, and the reputation and credibility that Singapore and Singapore-based companies have built up over the years, in areas like financial services, telecommunications, education and healthcare. While many Singapore manufacturers sell their products internationally, a large proportion have done so under foreign brands. We should build more local brands in Singapore manufacturing, even as we continue to attract foreign MNCs and move up the manufacturing value chain. Branding will help us create and capture value. We need more firms like Creative in our manufacturing industry.

Fourth, older, more traditional, brands need not go down the path of obsolescence. By constant, calculated reinvention, heritage brands have been able to stay relevant to the aspirations of consumers today. Eu Yan Sang is a case in point. A 120-year-old company in the business of Traditional Chinese Medicine, Eu Yan Sang has succeeded in refreshing its brand to appeal to the younger market, and in making Traditional Chinese Medicine more accessible to new and old users alike. As a result, Eu Yan Sang has enjoyed a 30% increase in brand awareness and recognition in Singapore. The company has also achieved higher levels of customer loyalty from its core segment of regulars.

A HOLISTIC APPROACH TO BRAND PROMOTION

Overall, there is catching up to do. A recent study by IE Singapore of Singapore’s internationalisation capabilities revealed that most Singapore companies are lagging in international marketing and branding.

These gaps need to be addressed, in order to broaden the base of companies that can succeed internationally, and to produce global winners. The Singapore Brand Award serves to kick-start a set of initiatives driven by IE Singapore as part of a holistic approach to brand promotion.

I am pleased to announce this IE Singapore programme, called "Branding for Internationalisation", comprising five key initiatives. The new initiatives, which will be rolled out over the coming months, will be targeted at Singapore-based firms that have the drive to internationalise.

INITIATIVE 1 - BRAND RESEARCH

The first is the Brand Research Initiative. Underpinning the success of a brand strategy is often the quality of research and positioning. Brand research is typically under-developed in Asia. This initiative serves to stimulate applicable research - to enhance companies’ branding strategies, and assist them to develop relevant programmes.

IE will establish a virtual "Brand Research Centre". It will work with several partners, including local as well as overseas consultants and brand centres, to develop applied research beneficial to Singapore-based companies and industries.

INITIATIVE 2 - BRAND TRAINING

The second initiative is Brand Training. IE Singapore aims to train at least 500 executives over 3 years through brand training. IE Singapore will play a catalytic role in developing customised brand programmes, and in deepening core skills and knowledge. It will also develop brand diagnostic workshops, to enable companies to audit their brands, identify brand opportunities, and bridge the gaps between brand awareness and investment.

INITIATIVE 3 - BRAND NETWORK

The third initiative is Brand Network. It will provide a "centralised platform" for Singapore-based companies to gain access to key brand resources and experts. Companies will have access to information and resources on branding, as well as directories of local and overseas brand players. Companies will also have opportunities to network with brand experts and practitioners.

IE Singapore will also form a network of global and regional brand experts, to harness thought leadership and resources in branding.

INITIATIVES 4 & 5 - BRAND INCENTIVE & BRAND RECOGNITION

Besides the three new initiatives mentioned, IE Singapore will continue to support companies through Brand Incentives to co-fund brand consultancy projects. It will also recognise top Singapore brands and encourage others through the annual Brand Awards.

Details of these initiatives will be announced in the coming months. Taken together, these five initiatives will catalyse the use of branding, raise brand understanding, and develop a pool of brand-savvy executives. These are significant thrusts to raise Singapore’s micro-competitiveness and enable more companies to make it big internationally.

BURNING BRIGHT

Once again, I would like to extend my congratulations to the 14 companies who are receiving the inaugural Singapore Brand Awards. They have had the foresight to invest in branding, and have created value for their companies, industries and Singapore. They present excellent examples for other local firms.

I was struck as I went down the list by the fact that four of the top 14 Singapore brands tonight are associated with lions and tigers. But they are all burning bright, for themselves and Singapore. I wish them every success.

Thank you.