The Unfair Competition
Globalisation has become an opened arena for both gigantic global brand and the local one. However, when we look precisely in the local scope, unequal competition has aroused, putting local brands in a precarious position.
Since the late century, globalisation has become an inevitable process. Globalisation brings the interdependence across countries and the integration of world economy (Hamelink, 1999). Accroding to Albrow (1990), globalisation depicts the unification of the whole world and brings single society as a global village. This process provokes trade and economy between countries become more integrated.
The notion of this concept, at the beginning, aimed to share wealth from richer countries to the poorer countries by removing trade barriers. By splitting the value chain of designing, production, and marketing of a new product, the gain from the product can be shared globally (Hamelink, 1999). Other than that, globalisation provides a wider opportunity for brands to reach a broader market, and vice versa. Accordingly, globalisation also increases market competition between brands.
The emergence of globalisaton also reaches Indonesia as a developing country in South East Asia. Since 2012, Indonesia has made eight free trade agreements (FTA). Globalisation and technology also raise the number of micro, small, and medium enterprises (MSME). Today, Indonesian industry is dominated by MSMEs (more than 90%). On one hand, this number can be a potential for local brand in Indonesia to survive in globalisation.
On the other hand, globalisation looks terrible in perceive of local society. The survey from LSI — an Indonesian survey institution, shows that Indonesian society perceives ACFTA (Asean-China Free Trade Area) as a disadvantage to them. They think that globalisation, in this case is ACFTA, can bring advantage to China and any foreign country, but giving a disadvantage to the national economy (Sudaryanto, et al., 2014).
If globalisation is undertaken to raise local prosperity, why those local people feel anxious about the loss of barriers?
The idea of globalisation contributes significant impact on local brands which are mostly msme. While international barriers are taken off, those local brands are indirectly involved in the ocean of global brand. Local brands can get more access to broader opportunity in global market, but at the same time, they also face higher competition with global brands and the risk of market loss (Knight, 2000) especially when we look at local scope. This new environment may impacts their performance since they may have inappropriate resource and capital to keep pace with broader market and more competitors, even at their own home (Knight, 2000).
Based on the condition in the developing country and the potential impact of globalisation to local MSME, my premise is that global world becomes a new broader competitive arena fulfilled with gigantic global and local firms. This international integration, however, provides unfair competition for local brands because of the domination of number, power, and consumption by global brand.
“How do we know if we’re in control? That we’re not just making the best of what comes at us, and that’s it? Trying to constantly pick between two options? Like your two paintings in the waiting room. Or… Coke and Pepsi? McDonald’s or Burger King? Hyundai or Honda? Hmm. It’s all part of the same blur, right? Just out of focus enough. It’s the illusion of choice. Half of us can’t even pick our own… our cable, gas, electric. The water we drink, our health insurance. Even if we did, would it matter? In fact, aren’t they… aren’t they the same? No, man… our choices are prepaid for us, long time ago.”
- Eliot Andersen in Mr Robot the series
The part of Mr. Robot quote above clearly depicts the illusion of our control as consumers. While the number of shampoo brands looks broad, the choice is actually very narrow. The supremacy of global brands definitely shapes and limits our choice of shampoo product. No matter what kind the shampoo we buy, it mostly ends up between P&G and Unilever. In Indonesia, even for basic commodities like sugar, rice, and salt has been prevailed by foreign brand; it then drives local brands into the corner. This condition remains less space for local brands to reach the market. In the end, the purchase likelihood of global brands will become far bigger than the local one.
The competition between global and local brands becomes more inequitable when we take a look at the resource they used. There is a significant gap in the level of labour productivity and RnD expenditure between higher and lower income in Asean country, making Indonesia in a lower position. Although Indonesia leads the number of MSMEs, its capability to upgrade its performance and reach the market is still low. The low level of technology used in Indonesia makes a lot of MSMEs struggle with price competition. This inequality of resource and capital makes a broader gap between global and local brand.
Indeed, globalisation is not only about removing international barriers, but also limit of consumerism. Market have more access to consume specific lifestyle. The finding from Batra, et al. (2000) said that in developing countries, consumers attitude toward global brands is stronger than local counterpart. Batra (2000) stated that domination of western ideas through film and TV shapes consumerism in developing countries. People in developing countries are inspired to taste the cosmopolitan lifestyle offered by western ideas. In consequence, global brands become more appealing to them. Thus, since market as the spectators also takes side with global giants, it becomes more tough for local brand to survive.
Instead of enriching the nation, the liberalism of trade becomes an arena at which uneven competition between the giants and the local is held. The giants have more power and resource, and the spectators are lured by the glamorous cosmopolitan lifestyle offered by the giants. While countries have become more interdependent, there is no way return and protectionism cannot be a solution. Thus, local brands should find their power to take back the market. Otherwise, the arena will just truly make the giant bigger.
The ideal phase of globalisation has become such a utopian, arousing question, how local brands could possibly enrich their local market? Is globalisation a chance for prosperity or a modern form of colonialism?
References
Batra, R., Ramaswamy, V., Alden, D., Steenkamp, J. and Ramachander, S. (2000). Effects of Brand Local and Nonlocal Origin on Consumer Attitudes in Developing Countries. Journal of Consumer Psychology, 9(2), pp.83–95.
Hamelink, C. (1999). The Elusive Concept of Globalisation. Global Dialogue, 1.
Knight, G. (2000). Entrepreneurship and Marketing Strategy: The SME Under Globalization. Journal of International Marketing, 8(2), pp.12–32.
Wijayanti, R. (2014). Strategi Pemberdayaan UMKM Menghadapi Pasar Bebas Asean. [online] Available at: https://www.kemenkeu.go.id/Kajian/strategi-pemberdayaan-umkm-menghadapi-pasar-bebas-asean [Accessed 12 Oct. 2017].
