The BrandZ Top 100 Most Valuable Chinese Brands for 2014 expanded this year from 50 to 100 businesses. The study works off a continually updated database and draws on consumer opinions to build a picture of emotional attachment and product performance as well as brand relevance and familiarity. The ranking aims to quantify which companies are most likely to command a significant portion of consumer mindshare and wallet.
In his introduction to the annual ranking, David Roth, CEO, Europe, Middle East, Africa and Asia, for The Store, WPP's global retail practice, emphasised that a growing number of the most valuable firms are market-driven companies rather than old-school, state-owned behemoths. Chinese businesses are becoming more entrepreneurial and nimble, thus presenting greater potential to give earnest competition to multinationals beyond China’s borders.
“The challenges Chinese brands face when venturing into foreign markets will be manifold,” said Jason Spencer, managing director, Millward Brown Shanghai. ”The first challenge to overcome will be of course the existing perceptions around Brand China.”
Many of China’s brands still lag their overseas competitors in terms of distinction. Chinese consumers expressed favour for local prices and ‘fame’ but many shoppers found foreign products offered meaningful differentiators, which is key to building loyalty and driving value growth.
To gain against global peers, the report’s commentary suggested that marketing for Chinese brands should put more focus on strengthening consumer ties and perceptions. For example beer brands Tsingtao Beer, Snow Beer and Harbin Beer all deployed unique consumer interactions and achieved double-digit advances in the BrandZ ranking. Travel service provider Ctrip also fared better after developing a new mobile hotel-booking app, showing again that marketing’s future, locally and globally, has a big digital footprint and that ecommerce could be a future path to building greater equity for China’s brands.
“Tencent was a company previously known mainly for its QQ service and online casual gaming," Spencer said. "It has stayed true to its core offerings but has adapted. SIna and Alibaba have formed a partnership recognizing that social media and e-commerce are a natural fit, and Baidu has also signed a deal to purchase a major app store. These moves all underline that to be successful in this sector, one cannot rest on their laurels.”
The report also shows that while state-owned enterprises (SEOs) still command some of the highest levels of name recognition within China, claiming most of the top-10 spots, their value growth has slowed compared with market-driven ones. Plus, up and coming firms, with a market focus, outnumber SOEs two-to-one in the ranking’s last 50 slots. That implies there is still considerable growth potential among these companies. And just as Tencent and Baidu have created standout reputations as well as huge revenue streams, there is considerable potential still pent up in the wider business landscape. That holds implications both in China as well as across Asia and the globe.
Commenting on how Chinese brands fare outside the country, Spencer said, “Chinese brands also need to realise that foreign consumers will be more open to Chinese brands in some categories rather than others. For example, our research has shown that consumer acceptance of Chinese brands is more pronounced in developing markets such as Brazil, South Africa and others than in markets like the US and UK. So choosing the first markets to tackle will be an important choice for Chinese brands.”
The overall impression from the report is that developed-market firms should be careful about dismissing China’s homegrown brands. Preparing to face new rivalries and greater competitiveness from these companies would be a good strategic move. The country’s brands have a large and complex market in which to learn best practices. Satisfying local consumers is a huge task, but at some point the home-appliance makers, apparel manufacturers and hotel chains that round out the study’s lower tiers are likely to get big enough to look past the domestic panorama.
“The biggest obstacle to Chinese brand success overseas is perhaps not quality concerns but is just a fundamental lack of awareness of Chinese brands," Spencer added. "Chinese brands must now cultivate and communicate a meaningful difference.”
And just as Toyota rose to become the world’s largest automaker or Samsung swelled to overtake all other electronics brands, the yet lesser-known labels from China still have potential to turn into giants.