Country reputation is fast-becoming an even more important issue over the past several years, as our research found. A fascinating article in the Financial Times turned me on to a spat between India’s Taj Hotels and British run Orient-Express Hotels. [Indian Hotels owns the Taj Hotels and is part of the Tata Group of Companies. They have increased their holdings in Orient-Express Hotels recently which might be igniting the sparks. Taj Hotels are interested in developing a closer relationship with Orient-Express in terms of marketing and purchasing, according to the International Herald Tribune.]
As the story goes, the CEO of Orient-Express Hotels penned a tart letter to Taj Hotels saying that any business development or overture from the Indian luxury firm would taint their reputation as a world-class brand. Consequently, CEO of Orient-Express Paul White replied in a letter distributed to the media and posted on his company’s Web site: “…any association of our luxury brand and properties with your brands and properties would result in a reduction of the value of our brands and our business.” Those are clearly fighting words. As you can imagine, this public quarrel next pulled the Indian government into the rumble. Commerce Minister Nath is quoted as calleding Orient-Express CEO’s comments “a mind-set of the past.” He also added: “Indian companies will continue to play a role in the ongoing global economic integration. Those with a fossilized frame of mind risk being marginalized.”
The entire inter-country reputational brawl brings up a trend that has no stopping. Many of the third world and/or emerging countries have built substantial businesses and are set to expand beyond their borders and buy premium brands. These countries are cash rich. We see that happening now with the infusion of Middle Eastern funds into American financial services firms right now. We also saw more evidence in 2006 when a UAE state-owned DP World tried to win contracts managing six major U.S. ports.
I expect that country reputation battles will only grow over the next five years and the ability to grow ugly. Country reputation is yet another dimension in reputation management that will need managing well.