Make the new Chinese Dream come true

The ‘Chinese Dream’ is evolving. Once focused largely on increased wealth, consumers now also aspire to improving their quality of life, health and wellbeing—and this is having an impact on the choices they make. As their priorities and spending behaviour change, market-driven brands (those without government backing) are recognising and using the power of a strong brand—and have overtaken state-owned enterprises (SOEs) in pace of growth as a result.

The 2014 BrandZ Top 100 Most Valuable Chinese Brands ranking gives us a glimpse into the future of the country's economy. The importance of brand is being recognised by companies and endorsed by government, and consumers are responding. The market-driven brands in the ranking are now growing faster in value than the SOEs. Those in the top 50 enjoyed value growth of 27 per cent over the last year—three times that of SOEs, at 9 per cent. They also make up two thirds of the brands in the second tier (51-100).

Although SOEs, including colossuses such as China Mobile, ICBC and PetroChina, still hold a greater proportion of overall brand value (71 per cent), this cannot last forever. Being big and well-established is no longer enough. By concentrating on engaging with consumers, market-driven brands are winning the kind of loyalty and love that fuels long-term growth of sales and profits.

Strong brands are built on relevance, salience and meaningful difference—and the brands that will win in China are those that can deliver these attributes through becoming more market oriented, being ready to meet emerging needs and developing an emotional bond with consumers. Qunar, Jinding and Blue Moon are three ‘rising star’ market-driven brands that are proving highly adept at doing this—and could well be threatening the dominance of the SOEs in terms of brand value in coming years.

Holiday travel site Qunar.com is owned by Baidu, and its steady market-focus has propelled it past category leader C-Trip in terms of value growth. As the appetite for and availability of travel increases, Qunar sets out a dream in a very compelling way: its name means ‘where do you want to go?’. In China, 15 per cent of holiday bookings are now made online, presenting a massive opportunity for brands that execute it well—and Qunar’s well-designed site offers a good user experience that enables customers to arrange their trips out safely and without fuss.

Jinding is a brand of cooking oil with a parent company, Sinograin, that is very committed to investing in the brand. Having identified a relatively untapped market—consumers in rural areas—it is carving out a niche for itself there. Recognising the diversified tastes consumers have for oil across its target regions, Jinding has developed a series of flavours, and the production capability to deliver them. Tapping into the current trend for boosting health, it has identified segments and developed products to target them, including corn oil for older people, fish oil for children and camellia seed oil for pregnant women. Sinograin is now looking to expand globally, using its Jinding brand as the spearhead.

Laundry detergent brand Blue Moon’s successful brand-building enables it to charge a premium price. In contrast with its competitors, it is seen by consumers as ‘different’ and ‘desirable’—attributes it has developed through offering a meaningful in-store brand experience that creates a really potent and sustained connection with the brand. This involved a promotional team engaging shoppers at the point of purchase, encouraging them to smell the product as if it was a fine perfume, which led shoppers to interact with the brand in a very direct and sensual way.

The strongest brands stand for something meaningful and different: They provide something consumers want or need, and offer something their competitors do not. Brands that build positive customer sentiment by being meaningfully different are able to capture five times more volume, command a 13 per cent price premium and are four times more likely to grow their value share than those that don’t, according to research from Millward Brown.

To establish reputation and stimulate loyalty, this differentiation must then be demonstrated through a consistent brand experience that meets consumers’ expectations, and reassures them they have made the right decision. It needs to connect with them in a meaningful, emotive way, and create associations and ‘good feelings’. The investment required to build a brand through constantly developing and communicating what it stands for is significant—but it is more cost-effective in the long term. The brand will attract more customers and command loyalty with less effort; it becomes an instinctive, almost automated choice.

In a more competitive, rebalancing China, consumers are exposed to more and more choices as to how to spend their increasing money. They want different things: to enjoy their leisure time, to enhance their wellbeing and buy products that make life easier and more pleasant. To win in the new consumer economy brands alike must meet consumers' needs, be seen as different and innovative, and form strong emotional bonds with consumers.

There is work to be done here for Chinese and international brands alike. BrandZ research shows that while consumers bond with Chinese brands on the basis of their price and ‘fame’, they find foreign brands stronger on meaningful difference. SEOs have the added challenge of transforming product-oriented strategies into market-facing strategies. Global brands, meanwhile, must gain a genuine understanding of the market.

The investment will be well worth making. As desires, priorities and behaviours in China continue to change, the ability to connect and make the Chinese Dream a reality will make a brand extremely valuable: they will sell more, and sell at a premium price.

Peter Walshe is Global BrandZ Director with Millward Brown