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Does brand nationality still matter?

The nationality of a brand attains growing political significance in today’s marketplace. Some argue that with globalization a brand’s nationality — its perceived national association — has become so tenuous that contemporary consumers do not care where a brand is from or even know the “country-of-origin” of the brands they purchase. Yet all such spatial associations are not created equal. And they still matter in a wide range of circumstances, whether as an organization’s strategic asset or its competitive liability.

For instance, negative perceptions and attitudes toward a certain country affect policies and preferences concerning the brands associated with said country. In this regard, expressions of nationality, public or private, are fraught with commercial as well as political consequences. For the consuming public, such expressions provide a vehicle for asserting their national identity and allegiance. For brands, they present a threat to corporate image and bottom line. These contentions also influence and impact trade and foreign policies. Not least, the clamoring information ecosystem adds another layer of complexity to this market condition.

Trade and economic relations are a crucial aspect of contemporary international affairs. Brands are visible symbols in these exchanges and relationships. With the rapid evolution of emerging economies, the global marketplace is ever more diverse. Global Fortune 500 companies are now represented by over 30 countries, whereas the list was not long ago dominated by only a few. According to a 2017 McKinsey report, global economic growth in the coming decade will mainly be driven by regional markets, including India, China, Africa, and Southeast Asia. As brands compete globally, they must navigate ever more deftly the “political ecology” of the marketplace.

Yet the notion of brand nationality is also fraught with ambiguities and uncertainties. These days the sources of a brand’s nationality can be varied and complex. There is no one agreed-upon criterion to determine a brand’s nationality — should it be defined by the location where decisions are made, the shareholder’s or owner’s nationality, employee nationality, or where company data is stored? The diversification and fragmentation of the global supply chain over the past decades have rendered the “made in” label practically meaningless. Moreover, given regional differences in consumer attitudes, values and behaviors, brands often take on multiple and shifting local, national and global identities. Most global brands today are geographically hybrid in their ownership and business process.

While national identity is not always the defining element in consumers’ relation with companies and brands, it does from time to time serve as a sub-text of that relationship. And it is often conflated with other concerns, such as price and quality, or larger social and political controversies.

The current rise of nationalist fervor of all stripes in different parts of the world intensifies the interaction between nationhood and business, making the marketplace more volatile and challenging for pol-icy-makers and businesses alike. And it’s likely to affect how consumers (and employees) feel and think about brands in a global marketplace. The mounting geopolitical complexities, growing cultural encounters, and regulatory minefields in the digital economy are giving rise to calls for companies to develop “private” foreign policy and to strengthen corporate diplomacy. Indeed, global success will require new organizational capabilities for brands to remain relevant and distinctive in this dynamic narrative context.

Jay Wang is Director of the Center on Public Diplomacy and an associate professor at USC Annenberg in the fields of strategy communication and public diplomacy.

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