"We're not losing in terms of quality" can be fatal – The Southeast Asian automobile war and the law of "irreversible change" I learned from the phototypesetting era.
"We're not losing in terms of quality" can be fatal – The Southeast Asian automobile war and the law of "irreversible change" I learned from the phototypesetting era.
In Thailand's new car market, Japanese cars, which once boasted a market share of over 90%, are projected to fall below 70% by 2025. Some studies suggest that in the EV (electric vehicle) market alone, Chinese manufacturers already hold nearly 80% of the market. BYD alone holds approximately 40% of Thailand's BEV market share, and the Chinese market share, which was 221 TP3T in 2022, has jumped to 711 TP3T in just two years. Looking at the numbers alone, it might seem like a simple story of "Japanese cars, superior in technology, losing due to lower prices." However, having worked in branding for over 25 years and constantly facing change in this industry, this scenario feels strangely familiar. Why do the supposedly superior companies stop being chosen by local consumers? I believe it's not a matter of "quality," but rather a matter of "how they perceive change."
The danger of the phrase "We are not inferior in quality"
When speaking with representatives of Japanese manufacturers in Southeast Asia, there's a phrase that comes up almost without fail: "We haven't lost yet in terms of quality and after-sales service." And that's probably true. Failure rates, durability, dealer networks—the trust they've built up won't crumble so easily.
However, I believe that these aren't necessarily the main factors that local consumers consider when choosing a car. While Japanese cars tend to be more expensive than those sold in Japan, Chinese manufacturers have leveraged the ASEAN-China Free Trade Agreement to ensure local production and pricing, gaining popularity among younger generations with cars priced under 1 million baht (approximately 4.5 million yen). For the digital native generation, large infotainment screens and social media-friendly designs are more compelling reasons to buy than fuel efficiency.
The problems we face daily in branding are structured in exactly the same way. There is a surprisingly frequent discrepancy between what companies believe to be their strengths and what customers actually value. Through repeated interviews, we find that many of the strengths that companies proudly tout actually have little influence on customer decision-making. Conversely, elements that companies consider "too obvious to mention" are often the deciding factors for customers. Whether or not a brand can recognize this asymmetry is the dividing line between survival and failure.
Even in the interviews we always conduct when making proposals, simply asking "What are your company's strengths?" doesn't reveal this asymmetry. What's important is to delve into what other options customers who actually choose those strengths compared them to, and what ultimately made the decision. When a customer answers "because it's cheap," there may be an underlying concern not so much about the price itself, but rather "anxiety about the burden of initial costs." Only by going beyond superficial words and getting to the real reasons behind them can we see the discrepancy between the strengths that headquarters believes in and the evaluation criteria used locally.
The Law of Irreversible Change I Learned Over a Quarter Century
When I entered the advertising and design industry, the job of typesetting was already on the verge of disappearing. Digital production using Illustrator and Photoshop had become commonplace, and data was burned onto MOs or CD-Rs and mailed to printing companies. After a while, this shifted to online submission. The need to send physical storage media disappeared altogether, and the workflow based on mailing schedules was fundamentally disrupted. Furthermore, cloud computing advanced, and the culture of sending files via email itself disappeared. And now, AI is doing the same thing at an even faster pace.
Before you know it, you've progressed so far that there's no turning back, and your previous skill set has become meaningless overnight. I often describe this as "the feeling of climbing a downward escalator." Even if you think you're moving forward, if the pace of change is faster, relatively speaking, you're constantly falling behind.
In my mind, "irreversible change" is defined as follows."A change where reverting to the old way of doing things becomes more costly than continuing with the new way."That's the point. We can no longer go back from phototypesetting to digital production, nor can we go back from online submission to postal mail, nor from the cloud to local management. I believe that what separates a boom from irreversible change is not the scale of the change, but whether or not the "cost of going back" has reversed.
The tricky part is that in the early stages of change, the judgment that "it's okay to wait and see" usually seems correct. Both the typesetting technicians and the online submission staff believed their jobs wouldn't disappear until just before the changes truly took hold. Those caught in the midst of change tend to underestimate its speed. This isn't a matter of ability, but rather a cognitive bias. That's why managers need to avoid over-relying on their intuition and consciously cultivate the habit of questioning whether "this change might be irreversible."
I believe the shift to EVs in Southeast Asia should be viewed through the same lens. The current perception that "gasoline cars are still dominant" or "they are chosen for their quality" may only be a temporary reassurance before the change becomes irreversible. One estimate suggests that if the EV ratio rises to 30% by 2026, the market share of Japanese manufacturers in Thailand will fall to around 60%. The moment we dismiss the seeds of change as a "temporary fad," there will be no time left to react.
Three questions that small and medium-sized enterprises should ask themselves right now
I believe the Southeast Asian automotive war raises common questions for all companies, regardless of size, that are facing overseas or new markets. Personally, I try to ask myself the following three questions every time I make a management decision.
Do the things we believe to be our "strengths" truly align with the criteria that our customers value?
Are we dismissing the changes happening now as just a "temporary fad" and postponing taking action?
To what extent are overseas branches and field offices given the autonomy to act without waiting for decisions from headquarters?
No one can stop change itself. All we can do is recognize that change quickly and correctly, empower those on the ground, and keep moving forward. I feel that the landscape of cars on the streets of Southeast Asia is not something happening in a distant foreign land, but a mirror reflecting whether our own company is repeating the same mistakes. If you are interested in how to interpret these structural changes and how to find the gap between brands and customers, I would like to have a long, in-depth discussion with you sometime.
WRITTEN BY
Ichikawa Atsushi
Representative Director and Chairman
After starting his own business at the age of 26, he has over 20 years of management experience in the design and branding fields. In 2016, he moved with his family to the Philippines and established a local IT outsourcing company, leading its global expansion. Currently, as a "GLOBAL BRANDING AGENCY," he supports the growth of companies while also actively working on organizational reforms within his own company. Based on the real-world struggles and firsthand information he has faced in organizational development and overseas management, he shares practical branding and organizational theories that are thoroughly aligned with the perspective of business leaders.
