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October 08, 2006

Will Hutton on Brands

I'm just about willing to believe that Will Hutton does in fact write his column each week but I do wonder whether he actually reads it.

British companies would like to join their ranks, but are less connected to culture and markets and less geared up to deliver high-quality products. It's so much easier to sell out in a takeover or make fortunes in the City rather than devote a career to the lengthy and expensive business of building a global brand.

The weakness has a big impact on our culture. British capitalism is more ephemeral and transient; too few of our companies are there for the long haul. As a result the corporate approach to branding tends to be short-termist and faddish. A Tesco or a Rolls-Royce is the exception rather than the rule.

As a society we have learnt to sense the lack of long-term intent of most British brands.

OK, fair do's, British capitalism is ephemeral, doesn't invest in brands, far too short term an outlook. The evidence?

British companies are not great at much of this. I looked up the industry's gold standard ... the Interbrand/Businessweek 2006 list of the top 100 global brands, based on how much brands contribute to a company's worldwide image and revenue. While the Americans have more than 50 brands in the list, the Germans nine, and the French eight, Britain ranks alongside Switzerland with only five - and all but one rank below 50.

We don't have many global brands. Again, fair do's.

But, but....the Americans have the lion's share of the top global brands. Is Hutton seriously suggesting that US capitalism is less ephemeral, less focused on the short term than the UK variety?

If anything it is vastly more focused on the short term, all those quarterly earnings announcements and so on. So, if we are to take the evidence of successful branding as our yardstick, we would have to say that the creation of such requires more short term thinking and focus.

So, again, does Will Hutton actually read his own column?

October 8, 2006 in Economics | Permalink


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"Is Hutton seriously suggesting that US capitalism is less ephemeral, less focused on the short term than the UK variety?"

Of course he does - have you read 'The State We're In'?

Tim adds: I haven't no. I can imagine him saying that about Rhineland variants, but not US.

Posted by: Matthew | Oct 8, 2006 9:53:06 AM

OK, British companies are mostly better at "commodities" and banking than brands but why is it that there are usually more British companies in lists of the biggest 500 or 1000 global companies by market capitalisation than companies from any other country except America and Japan?

The latest accessible global 1000 (from Business Week) I can find on the web today is for 2003:

Unfortunately, the FT's annual global 500 by market capitalisation is hidden behind a subscription barrier.

Btw in Business Week's global 1000 for 2003 there are less than half the number of German companies than British companies and Germany has the third largest economy in the world by GDP after America and Japan.

"The UK was Europe's biggest recipient of inward investment, especially in the research and development field, where it accounted for more than a quarter of all projects launched in the region last year, followed by France with 19 per cent."

"The worldwide volume of foreign exchange trading is enormous, and it has ballooned in recent years. In April 1989 the average total value of foreign exchange trading was close to $600 billion per day, of which $184 billion were traded in London, $115 billion in New York, and $111 billion in Tokyo. Fifteen years later, in April 2004, the daily global value of foreign exchange trading had jumped to around $1.9 trillion, of which $753 billion were traded daily in London, $461 billion in New York, and $199 billion in Tokyo."
Krugman and Obstfeld: International Economics (2006) p.311

"In the booming world of hedge funds, London is a growing rival to New York"
This week's The Economist:

According to the 2001 Census in Britain, 24.81% of London residents were born abroad.

But then:

"A UNITED Nations report has labelled Scotland the most violent country in the developed world, with people three times more likely to be assaulted than in America. England and Wales recorded the second highest number of violent assaults while Northern Ireland recorded the fewest."

What was all that spin about crime from Tony Blair in the mid 1990s really about: "Tough on crime, tough on the causes of crime" ?

Posted by: Bob B | Oct 8, 2006 12:36:39 PM

Did Hutton really work as an investment analyst?

"British companies would like to join their ranks, but are less connected to culture and markets and less geared up to deliver high-quality products."

Rubbish. What about GlaxoSmithKline? AstraZeneca? ICI? Vodafone? BAE Systems? Unilever? Are they not making high-quality products?

There's also lots of companies who aren't in the list because their value is less in their brand and more in other things. Sometimes, celebrity endorsement can send a fashion product sales through the roof, in effect raising the value of the brand as something desirable. That's not going to happen with accounting software.

Posted by: Tim Almond | Oct 8, 2006 3:01:34 PM

Apart from an abiding aversion to his shrill writing style, I came to the conclusion several years back that Will Hutton was really effing clueless and that he wrote for the mass ranks of New Labour traditionalists who wanted reassuring that their value systems and beliefs about capitalism are nevertheless fundamentally true.

Posted by: Bob B | Oct 8, 2006 10:40:45 PM

So do we suppose that the kind of capitalism that Will Hutton likes, is Coke, Macdonalds and Disney? Thats the kind of company where brand value is very high.

Huge numbers of companies are very successful in niche markets, despite most people not being aware of their existence. Are these companies unimportant?

Typical clueless lefty.

Posted by: EU Serf | Oct 9, 2006 9:14:14 AM