The ongoing effects of the pandemic and fierce competition seem apparent in Campaign Asia-Pacific's list of the top 100 brands in China (part of our exclusive Asia's Top 1000 Brands research). In one year, the brand landscape has changed profoundly, with 26 brands exiting the list, and 26 replacing them, plus significant movements throughout the top 100.
Even within the top 100, a lot has changed. Just take a look at the logos of the top 10 brands in 2020 (left) and this year (right).
Nike and Nestle have both toppled out of the top 10, with Panasonic and Starbucks (12th and 11th) last year, moving into the top tier.
More significantly, WeChat moved from 10th to first, bumping Chanel, which had held the top spot for three years, into second place. WeChat's move to the apex reflects its status as the highest ranked Chinese brand in the overall Top 1000 list.
Nestlé drops 31 places to 34th. However, the company will be comforted by strong increases for its brands Nescafe, up 16 from 77th to 61st, and cereal brand Nestum, which makes a strong top-100 debut at 55th. Nestum is also among the biggest gainers in the overall Asia's Top 1000 Brands list.
Nike's stumble is only a slight one, from 8th to 11th. The company seems more resilient against increased consumer preference for domestic sportswear brands than its rival Adidas, which drops significantly to 53rd from 26th (-27).
Across the top 100, 11 Chinese brands move down, 30 jump up, and eight drop out. At the same time, 17 overseas brands decline in the ranking, 29 move up, and 18 drop out.
Alex Duncan, a cofounder of Kawo, a marketing SaaS platform for WeChat, Weibo and Douyin, believes that rising competition in the Chinese market is an “inevitable evolution” that he has observed over the past decade. “Ten years ago consumer demand far exceeded supply," he says. "The rising tide lifted all boats. In 2021 while consumer spending is still growing, competition between companies is intense. It's no longer enough to just show up. Now for a company's sales to grow, another company somewhere must lose, and this is where the brand becomes the differentiating factor. ”
Another critical factor is that “overseas brands are under competition not only from their peers or "frenemies" but more so from new Chinese homegrown brands", says Claire Zhao, vice president of strategy in China for GroupM agency Essence. With the evolution of social e-commerce in China, “local homegrown brands are able to thoughtfully design and produce products for a specific target audience, often sub-segments of Generation Z", she adds.
Many industries and brands, such as internet giants, performed well under the lockdown, while others suffered. Meituan Waimai and Eleme debut on the top 100 list at 12th and 13th. Among Chinese brands, Tmall, the B2C ecommerce platform run by Alibaba Group, makes the biggest leap from 445 last year to to 58th (+387). Chinese sports brand Li Ning also moves into the Top 100 for the first time, moving up 163 from 258th to 95th. Bilibili is another big mover, surpassed all the Chinese video websites to enter the Top 100 this year at 84th, up 53 from 137th last year.
Cecilia Huang, partner at brand consulting company Prophet, analysed the business evolution of Bilibili over the past few years and says that “it acquired the first flock of Gen Z consumers through its ‘bullet screen’ feature and ACG [animation, comics and games] content. Over the years, its features and contents have extended to take share of audience attention further, encompassing entertainment, knowledge, schooling, shopping and hot trend channels.”
According to Huang, ‘bullet screen’ comments still mark a special advantage for Bilibili, providing “high-quality content and humanising experience” through the interaction of popup comments in the video while people are watching.
Zhao from Essence cites the pandemic for some of the shifts on this year's list. “When in-person activities were restricted, many activities moved online,” she said, creating business opportunities for grocery shopping and offline leisure. “Working from home created new purchase and utility trends. For example, home printers became mandatory for many households with children.” Meanwhile, senior citizens are now more active online shoppers due to social distancing. “They have started to become incrementally technologically-savvy as they adapt to living in a digital-first world,” Zhao said.
A number of brands from overseas made impressive debuts.
Nintendo Switch is the biggest mover, rising from 732nd to 91st (+641), while Coach is the second biggest mover, coming up 404 spots from 504th to 100th and reflecting its status as the biggest gainer on the overall Asia's Top 1000 Brands list. Visa moves up 147 places from 235th to 88th. Both Google (up 86 to 42nd) and Twitter (up 65 to 54th) are creating brand awareness in the China market even though they don't offer services to Chinese consumers.
US brands including Walmart, Johnson & Johnson, and Hewlett-Packard have dropped out of the top 100, and some US brands that have been in the Chinese market for decades decline, including Microsoft (down 34 to 65th) and Coca-Cola (down 53 to 72nd).
Because of the pandemic, furniture and home brands from both China and abroad, including Macalline (+23) and Ikea (+23), gained ground, as they did in the overal top 1000 for cushioning the pandemic's impact.
The worst drops of Chinese brands happened among dairy producers: Mengniu fell 70 places to 92nd and Yili dropped out of the top 100, falling from 24th to 109th. Another category that saw significant drops was Airlines. China Eastern Airlines (-48 to 82nd) and China Southern Airlines (-39 to 107th) both fell, while AirChina bucked the trend, rising 51 spots to 49th.
Hot pot restaurant chain Haidilao rose 18 spots to 15th, even though it faced criticism from netizens in China and lost profits. It now ranks ahead of instant meal food companies Master Kong and Uni-president, which both move down seven places this year.