I recall the frequent remark that the Portugal brand was not beneficial for our exports. Now we have the strongest Portugal brand ever. What are we going to do with it and how can we use it?
Portugal is rich in its cultural and artistic heritage and possesses high-value artisanal skills in various sectors and specialties. Today, major international brands have their production hubs in our country in sectors as diverse as footwear and textiles, tanneries and jewelry, and more recently in sectors such as engineering and software development. Portugal, and the Portuguese, know how to do it.
But when we look at our economic statistics, where we invariably do poorly is in the level of productivity, which always appears insufficient when compared to other European countries. Economists complain about the working models, and I, as a manager, complain about the business model: we sell to third parties without a brand, and therefore, less value is added.
For example, we are the only country in Western Europe that does not have a major international luxury brand. And luxury, whatever one may say, is the only ecosystem that creates value throughout its entire chain. But this article is not about luxury, but about brands, and the value they help create and develop.
Why don’t we have big brands in Portugal?
There are several explanations in history as to why we have not been able to reproduce the tradition of producing strong brands. The fact that the model was born after the Industrial Conditioning Law of 1937 led to the creation of a non-competitive environment focused on the development of the internal market. Large economic groups were indeed “artificially” created, but, barely without any competition between them, so there could hardly be a great appetite for developing brands, since those that existed would be hegemonic. Afterwards, these groups were created to focus on an enlarged and protected internal market, and never on competitive international markets. After 1974, with the opening of sectors to the private sector, there was an atomization of small businesses that are still the basis of our business ecosystem today, with known difficulties in investment capacity, and consequently with short medium and long-term vision, which is absolutely essential for the development of business models based on brands.
The “new” Portuguese model
The Portuguese entrepreneur, based mainly on the know-how he acquired, decides to open his business using a low-cost human resources structure. As all businesses when created need immediate liquidity, he prefers to sell his “expertise” immediately to those who place it on the market and to those who can value it. It is the oxygen balloon that allows them to maintain jobs and pay bills, for customers it is the “gift” they need: low production costs with high quality. This model ends up covering industries and sectors and being almost transversal to an entire post-revolution industrial sector. And since things are going well, why the need for a change? In the 80s and part of the 90s of the last century, many Portuguese companies grew by manufacturing for third parties. What stood out most, was the car park that the model managed to create in some areas of Northern Portugal.
But then came China and the panorama changed radically.
The current model and where it can take us
Portugal, despite its size, still manages to have a set of sectors where it has international relevance and where it is recognized for its quality and delivery capacity.
In the textile and clothing industry, the quality and precision of our production is recognized. Numerous international brands rediscovered Portugal during the pandemic, as a haven for their European productions. And several international brands produce their new collections here, from fast fashion to high-end. The same applies to the footwear sector, where only Italy rivals us in terms of quality, and Spain in terms of production volume. Also, we have furniture, tanneries and leather, wines and agri-food, and even jewelry, with several luxury brands producing some of their most impressive pieces in Portugal.
And, for the first time in our history, we have a globally recognized and admired sector – tourism. Our ability at this time to be acknowledged as a destination of the highest quality and sought after, which has never before been achieved in our history, opens an opportunity unlike anything we have ever experienced. I recall the recurring complaint that the Portugal brand did not help our exports. Now we have the strongest Portugal brand ever. What are we going to do with it and how can we use it?
And for the first time in our history, we have a globally recognized and admired sector – tourism. The ability that we have at this moment to be recognized as a destination of great quality and desired by many opens doors for us that have never been possible before in our history. I recall the frequent remark that the Portugal brand was not beneficial for our exports. Now we have the strongest Portugal brand ever. What are we going to do with it and how can we use it?
And suddenly, we have the consumer in front of us
Tourism has a fundamental dual role in the Portuguese economy. Firstly, it is an export sector and of great importance in terms of revenue and employment. Then, it is also a sector that allows us to make what we know to the millions who visit us. And I’m not sure we’re doing everything we can to achieve that.
The truth is that every visitor is a potential customer for the future. It is a highly valuable contact who, first of all, wants to come and get to know us. In other words, the fundraising barrier has been overcome. Now we have to work on the best model to make Portugal and its brands known to these people. And here, I believe, we still have a lot to develop, taking advantage of tourism as an advertising platform.
Greater collaboration between companies is everything. We know that traditionally Portuguese businesspeople are not enthusiasts of this and also not exactly the most associative businesspeople. But this mentality needs to change. Cooperation between companies helps to achieve scale economies, allows the sharing of costs and risks, shares resources and knowledge and increases our competitiveness. Through partnerships, we can strengthen our international presence, expand production capabilities, and jointly seize opportunities. Big global brands form partnerships. Have you seen any Portuguese brands with this intention?
The path of change and affirmation
Everything has to start with long-term thinking and logic. A brand takes time to create, it requires coherence and consistency for years to be able to assert itself. Then we need to clearly define the target markets. It is a mistake for Portuguese companies to seek the global market as if they could reach everywhere. The dispersion and product adaptation that this causes lead to enormous corporate wear and tear, which is often the cause of projects being abandoned.
Afterward, companies need to look for synergies amongst each other. If there is a need to approach the American market by three companies, why don’t they come together to create a value proposition that makes sense? Why can’t a cheese company, a wine company, and a sausage company work together in a common market, and prefer going on their own, alone? Why don’t they look for synergies and boost their cross-selling? Why are they not present together on Amazon or any other marketplace, thus increasing their chances of success and minimizing their entry costs?
I’m not a fan of waiting for the State to solve problems that each person can solve. But I believe in a State that helps and facilitates processes that are critical to certain aspects of our common life. Much has been done in terms of programs to encourage exports and companies to do so. It seems to me that in these processes, the issue of the brand has been forgotten, leading to the continuation of the model that leaves us behind.
The brand must be present in public policies to encourage exports as a guarantee of its greater added value. Supporting low-value models is throwing money away, as their real value will be lost in the very short term. To this end, encouraging the creation of brands, and their national and international registration, could be assisted by a public entity. This is the first obstacle to entrepreneurs, and if we can break through it more quickly, we’ll have a better chance of success.
In addition, when defining their support policies, public authorities should pay particular attention to the development of a policy of tax incentives for international sales made with a brand and new business models based on direct selling platforms and support for intercompany and intersectoral international partnership models.
More than a matter of pride, the creation of international brands in Portugal is decisive for the affirmation of our country as a producer of great added value with all the inherent advantages and results that this will give us. Let’s stop doing things for those who ask us, and start producing for those who want us. The difference is not subtle.
Opinion article originally published in ECO.
