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Mistrust of multinationals could spell success for local business, by Euromonitor International In emerging markets, where large multinational companies are viewed with mistrust, domestic companies have an opportunity to establish a strong hold on their local markets, by paying close attention to product quality and good customer relations, according to analysts at Euromonitor International. Local brands should take advantage Currently, consumers in emerging markets, such as Brazil, China and Russia, still have a preference for local, traditional goods. Domestics companies must act now, according to Euromonitor International, to take advantage of the positive perception consumers have of their products to develop a strong brand image. This will help see off competition from multinationals who are looking to take the lion's share of their rapidly growing markets. For example, the cosmetics and toiletries industry in China alone is expected to grow by 64.3% between 2006 and 2010, according to Euromonitor International's latest forecasts. Euromonitor's Alexander Kirillov advises, “National brands would be well advised to take advantage of this potential growth by promoting themselves as local brands. The emphasis should be on ensuring a high level of product quality and good customer relationship management.” Poor customer service threatens multinationals' market share According to the latest research from Euromonitor International, large companies are failing to address consumer concerns in emerging markets relating to product safety and loss of national identity. This is resulting in a growing consumer dissatisfaction and suspicion of foreign brands. In particular, the mismanagement of a number of crises has led to a high level of mistrust of multinational companies within emerging markets. For example, the claims of unsafe ingredients in Procter & Gamble's SK-II in China, and in Johnson & Johnson's baby products in India, have damaged the local reputations of these companies. Furthermore, their lack of response to ease consumer concerns and rectify the situation quickly and effectively in light of the crises is damaging their image even further. Alexander Kirillov from Euromonitor International comments, “By failing to respond adequately to crises, foreign companies are under-estimating the power of public opinion and risk losing valuable market share”. Acquisitions & associations provide a safety-net for multinationals The popularity of domestic brands makes them an attractive acquisition target for multinationals, according to Euromonitor International. By investing in the acquisition of local brands, large foreign companies will be able to prove to consumers that they take the market seriously and are concerned with the specific needs of local customers. Secondly, Euromonitor International recommends that multinational players should work in close contact with consumer associations in emerging markets to decrease both the probability and the impact of potential problems. Alexander Kirilov explains, “By cooperating with consumer associations, multinational companies will be better equipped to predict customers' reactions and develop crises management procedures. This will benefit their image as a whole and ensure their leadership in the market.” For further detail about this article and other related findings, please visit Euromonitor International by clicking here.
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