World sees Lenovo and Huawei as top China brands

Lenovo has the strongest cachet of any Chinese brand in overseas markets, followed by Huawei and Alibaba, according to Kantar Millward Brown's ‘BrandZ Top 50 Chinese Global Brand Builders 2018’.

The study, now in its second year, used the Google Surveys market research tool to assess consumer awareness of 84 relatively well-known Chinese brands across 12 categories in seven different markets (Australia, US, UK, Spain, Germany, France and Japan) to produce a ‘Brand Power’ score.

Lenovo topped the list of 50 for the second year running, with a 1% rise in brand power on 2017. Doreen Wang, Head of BrandZ at Kantar Millward Brown, attributes this achievement to over a decade of experience building a global reputation following the brand’s acquisition of IBM in 2005. There have been some slowdowns in Lenovo’s momentum because of declining PC sales, notes Wang, but the brand has also been successful at seeking business opportunities beyond this sector.

Huawei, meanwhile, stays in the number two spot, with its Brand Power score leaping 22% since 2017. “They are very dedicated in building their brand in multiple country markets, so not just in Europe and a lot of Asia but in the LATAM countries too,” says Wang, who adds that Huawei ads are now a regular feature at LATAM airports, a sign that the company is attempting to exert leverage there before pushing north into the US.

Overall, the majority of brands in the top 50 are growing in international influence levels compared to last year, evidence that Xi Jinping’s ‘Belt and Road’ initiative, announced in 2013, has lit a fire under brands’ efforts to move abroad, Wang believes. “Many, many brands are not just following the propaganda but also supporting it and wanting to take the initiative to go further in terms of their globalisation,” she says. This applies not only to brands in established categories like banks, cars and airlines but increasingly to internet service brands, smart-device brands and others, she says. A key theme of the initiative is not only to portray goods as ‘made in China’ but ‘innovated in China’.

Consumer electronics is the fastest growing sector by some distance in terms of influence abroad, the report finds, with a 9% rise in overall brand power compared with last year. Brands in this category, such as Lenovo, Huawei, Xiaomi and Anker, are working with ‘Internet of Things’ developments, such as remote-controlled cookers and robot vacuum cleaners, meaning they should also be well positioned to lead an emerging category of ‘smart-home appliances’.

Also contributing to their success is the quality of the products these brands are making, which is improving significantly. Companies are making more attempts to demonstrate some of their world-class achievements on a global stage, too, for example at events like CES, held recently in Las Vegas.

The mobile gaming category is a loser in this year’s report, down 11% on Brand Power points compared with 2017. Half of the brands found to have lost influence globally were gaming brands, including Elex, Go Launcher and Youzu.com. This doesn’t necessarily spell doom, points out Wong: gaming brands commonly experience more fluctuation than most brands because the amount people recognise them depends on their ability to produce “the next big hit” in gaming. They may be down for now, but their turnaround power should be pretty fast too, says Wong.

Rises and falls aside, all Chinese brands have significant work to do in terms of raising global consumer awareness with the rest of the world, which remains low. “[Consumers] probably use Anker, but they don’t know Anker is from China,” explains Wong. “They use Huawei but they probably don’t know the country of origin. So that's why we think that even through 21% of the consumers we interviewed think Chinese brands are innovative, we still believe that perception is being under-activated because they must be using the brands but they don’t know they are from there.”

Awareness and feelings towards Chinese brands also vary significantly by country, finds the report. China brands’ power is up 9% year-on-year in Australia, following increased investment. A rising population of Australians with Chinese origins may play into this as well. China brands are also doing well in the US and UK, with power levels up 7% and 6%, respectively, suggesting these countries will be key targets for growth in the near future.

Japanese consumers were the least receptive to Chinese brands of the seven countries assessed, with the brands' impact levels increasing just 2% on 2017; 66% of Japanese consumers said that knowing a brand comes from China would weaken their intention to purchase it. “In all these countries there is room to grow, but Japan is no doubt the hardest one,” says Wong. This comes down to Japanese consumers’ loyalty to their own countries’ products and lack of openness towards brands from any other country, not only China.

Geography also plays a part, thinks Wong: “The closer geographically that you are, probably the better knowledge they have towards the Chinese there. [Japanese people's] perception that Chinese brands are low quality and cheap is still very strong, very much inherited from the last generation.”

Kantar’s report outlines several lessons on what it will take for China brands to succeed in their chosen global markets. The most important element, according to Wong, is battle readiness: deciding which markets to go for according to which have the best potential to adopt your brand, then making sure the product is “not the standard Chinese-y product, but is meeting the local consumers’ needs.”

Getting partnership strategies right is also key. When Chinese brand Geely acquired Volvo, for example, it made it clear that it would play a behind-the-scenes role, to avoid deteriorating Volvo’s brand power in the European market.

Finally, China brands need to work not so much on innovative technology—to survive in the Chinese market, this in an inherent feature of any company—but on building the perception of themselves as innovative, high quality brands in consumers’ minds.

“The perception of innovation is equal to premium, is equal to value,” says Wong. “If you only have innovative technology but you do not know how to leverage the communication to build the consumer's perception towards your brand, that is going to be quite challenging.” Huawei is a “next-level” example of a brand that understands this, Wong continues, demonstrated by the ‘Wow Way’ strategy they launched at CES, which played on the difficulties non-Chinese consumers have in pronouncing the company name.

Wong’s tip on the hottest outbound China brands to watch? Huawei, and DJI, the drone brand that accounts for around 70% of the world market at present.