While the total return on investment (ROI) for all companies in the MSCI China Index was –5.6 per cent, the top 50 brands in the BrandZ portfolio provided a positive 5.8 per cent ROI, as of September 2012.
This year, China Mobile retained the number one spot with a brand value of US$50,589 million. Leading financial institutions also continue to head up the rankings—with ICBC and China Construction Bank in positions two and three respectively.
Millward Brown applies an economic approach to brand valuation based on intrinsic ability to generate demand. The dollar value of each brand in the ranking is the sum of all future earnings that brand is forecast to generate, discounted to a present-day value.
Focusing on the top rising brands, Millward Brown found that several diverse trends are driving the growing value of these brands.
These trends include: increased disposable income; the explosion of technology and the internet; concern over personal health and product safety; respect for Chinese heritage; and China’s development as a product marketer and producer.
The presence in the Top 50 of alcoholic beverage brands Chang Yu (19), Wu Liang Ye (20), and Moutai (9) suggests more discretionary spending. It also indicates ongoing regard for Chinese heritage, which also was the reason for the popularity of two traditional Chinese medicine brands, Tong Ren Tang (35) and Yunnan Baiyao (26).
Bank of Communications leapt into position 15 for the first time, its success due to both financial and brand factors, including the fact that 20 per cent of its earnings came from retail banking, a key eligibility criteria for this ranking.
Beer brand Harbin joined the ranking in position 39 by linking its advertising to key sports events and carving a distinctive space in a competitive category.
Apparel brands Youngor and Semir were the other new entrants to the top 50 this year, in positions 45 and 49 respectively. While brand competition intensifies, companies face the choice of becoming a smaller brand in top-tier cities or a bigger brand in lower-tier cities. Youngor is a brand taking advantage of the latter strategy and benefiting from it. Semir continued its focus on youths, whilst investing in its retail supply chain.
Men’s apparel brand Septwolves has increased its brand value by 44 percent and is second only to Tencent in this year’s list of fastest risers. By carefully controlling its expansion, Septwolves has sidestepped competition and issues of excess inventory that have affected some of the other brands in the apparel category this year.
Meanwhile, as Chinese airlines face a difficult environment due to increasing competition from domestic high-speed rail and rising fuel prices, Hainan Airlines bucked the trend with a 23 per cent increase in brand value to position 41, by building a strong reputation for excellent customer service and remaining heavily focused on the domestic market.
Air conditioner brand Gree (27) has been able to maintain its brand value even though the closure of a white goods subsidy programme at the end of 2011 badly affected the home appliances category. Sticking to its core products of air conditioners, and offering its customers a wide choice of models, Gree has grown to control over half of the market in China.