BrandZ Top 50 Most Valuable Chinese Brands 2013

BrandZ Top 50 Most Valuable Chinese Brands 2013
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BrandZ Top 50 Most Valuable Chinese Brands 2013
BrandZ Top 50 Most Valuable Chinese Brands 2013
TOP 50 Most Valuable Chinese Brands 2013




                         Welcome
                         It is again my pleasure to welcome      and complicated. Like winning           quality and safety. Building strong      AKQA, Burson-Marsteller, Kantar,          market knowledge produced by
                         you to the annual WPP BrandZ™ Top       at the ancient game of Chinese          and meaningfully differentiated          Kantar Retail, Hill+Knowlton              our combined WPP capabilities
                         50 Most Valuable Chinese Brands.        chess, brand strength requires          brands, always a wise investment,        Strategies, Maxus, Mediacom,              in China. Located in Beijing,
                                                                 understanding and evaluating all        is crucial in this kind of changing      Mindshare, Ogilvy One, Oracle             Shanghai, Guangzhou and
                         The 2013 edition marks the third        the possible moves, developing          market environment.                      Added Value, Y&R and Landor.              many other cities and provinces,
                         year that we’ve published this          thoughtful strategies, and                                                       I also want to acknowledge the            WPP companies—with all our
                         definitive study of brand valuations,   maneuvering with purpose and            The study examines many of the           accounting firm Grant Thornton for        significant resources, including
David Roth               analysis and insights. The results      determination.                          key issues shaping China’s most          its viewpoint about the connection        over 14,000 employees in Greater
                         again illustrate that brands are                                                valuable brands and the Chinese          between high brand value and a            China—are here to help you gain
CEO, The Store WPP       becoming stronger and more              Brand strength is key to sustained      market. We begin the study with          strong balance sheet.                     competitive advantage. We offer
Europe, Middle East,     important in China, and strong          commercial success, as this year’s      highlights of the extensive data and                                               insights, advertising, digital, PR,
Africa (EMEA) and Asia   brands create financial strength.       survey demonstrates. For the first      analysis that’s presented in four        “The Top 50 Most Valuable                 promotion, marketing, media,
                         Some examples:                          time since we first published this      sections: Part 1. Trends and Insights;   Chinese Brands” is part of our            retail and shopper marketing—the
                                                                 study in 2011, The China Top 50         Part 2. The Top 50 Results and           rapidly growing library of WPP            knowledge and implementation
                         • The China Top 50 grew in              declined in brand value.                Analysis, including the ranking of       BrandZ™ reports about brand               necessary to understand China and
                           stock market value by 5.8             The decrease, a relatively minimal      the 2013 China Top 50 according to       valuations and the insights and           build and sustain brand value.
                           percent between July 2010 and         1.6 percent, is attributed mostly       their valuation results, and profiles    strategies required for building and
                           September 2012, while the stocks      to the slower growth rate of            of each of the Top 50 brands; Part 3.    sustaining valuable brands. These         To learn more about how to apply
                           in MSCI index of Chinese stocks       China’s economy.                        Best Practices for Building Brands       reports also include: the annual          this expertise to benefit your
                           fell by 5.6 percent. (Please see                                              and Part 4. Resources.                   “BrandZ™ Top 100 Most Valuable            brand, please contact any of the
                           chart on page 27)                     In contrast, the Brand Contribution                                              Global Brands,” “BrandZ™ Top              WPP companies that contributed
                                                                 level of the China Top 50 increased.    WPP’s Millward Brown Optimor             50 Most Valuable Latin American           to this report. Turn to page 172
                         • Chinese brand builders are            Brand Contribution is the portion of    conducted the brand valuations           Brands,” “The Chinese New Year            for summaries of each company
                           increasingly active overseas across   brand value that depends solely on      based on BrandZ™ Brand valuation         in Next Growth Cities,” and “The          and the contact details of key
                           many categories and including         brand, stripping away other factors,    methodology. BrandZ™ is the              Chinese Golden Weeks in Fast              executives. Or feel free to contact
                           both State Own Enterprises (SOEs)     like financial performance. The         world’s largest and most reliable        Growth Cities.”                           me directly.
                           and market-driven organizations,      rise in Brand Contribution helped       and comprehensive brand analytics
                           like Lenovo, which has become         mitigate the decline in brand value     and equity database. It’s available      You’ll find all our smart phone apps      Sincerely,
                           the world’s largest PC brand.         caused by economic forces.              exclusively to WPP companies.            at www.brandz.com/mobile. For all
                           (Please see chart on page 31)                                                 Many other WPP companies                 of our iPad interative magazines,
                                                                 Even as China’s economic growth         contributed specialized expertise.       including the “BrandZ Top 100“,
                         • These market-driven brands now        rate slows, it will continue to                                                  the “Latin America Top 50“,
                           comprise 27 percent of the China      outpace the rates of other countries.   WPP companies that provided              “Chinese New Year“ and “Golden
                           Top 50, up from 22 percent in 2011.   But a somewhat slower economy           commentaries on relevant topics          Weeks“ simply go to the Apple app
                           (Please see chart on page 27)         will accelerate an ongoing shift        include: CIC, CTR, Grey, Millward        store and search for WPP BrandZ.          David Roth
                                                                 in consumer attitude. As people         Brown, MEC, Ogilvy & Mather,                                                       WPP
                         As the study also documents,            become more discriminating about        and Wunderman. These other               Like all these excellent reports,         david.roth@wpp.com
                         achieving and sustaining brand          their purchases, they’ll increasingly   WPP companies also generously            “BrandZ™ The 50 Most Valuable
                         strength in China is challenging        look to brands for assurances of        contributed analysis and insights        Chinese Brands 2013“ offers just
                                                                                                         that appear throughout the report:       a glimpse of insightful and useful




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BrandZ Top 50 Most Valuable Chinese Brands 2013
馬炮車卒相士帥象將兵車相帥卒
士帥象車相帥卒將兵馬炮車卒相
相帥兵將相卒士帥象馬炮車卒車
將兵車相帥馬炮車卒相士帥象卒
象車相帥卒士帥將兵馬炮車卒相
兵馬炮車卒相帥將相卒士象車帥
馬炮車象將兵車卒帥帥相卒相士
相帥卒將兵馬士帥車炮車卒相象
卒士帥象車相帥兵馬車卒將相炮
馬炮車卒相士帥象將兵車相帥卒
士帥帥卒將兵象車相馬炮車卒相
相帥兵馬炮車卒將相卒士帥象車
將兵車相帥馬炮車卒相士帥象卒
象車相帥卒士帥將兵馬炮車卒相
兵馬炮車卒相帥將相卒士象車帥
馬炮車象將兵車卒帥帥相卒相士
相帥卒將兵馬士帥車炮車卒相象
卒士帥象車相帥兵馬車卒將相炮
         PART 1. KEY TRENDS AND INSIGHTS   PART 3. BEST PRACTICES FOR
         Key Results 8                     BRAND BUILDING
         Trends 9                          Trust 148

         Take Aways 11                     Differentiation 150

         Brand Valuation 12                Media 152

         Brand Building 14                 Social Media 154

         Going Global 16
         Lower Tier Cities 22              PART 4. RESOURCES
                                           Methodology 160

         PART 2. THE BRANDZ™               Index of the China Top 50 Brands 162
         CHINA TOP 50                      BrandZ™ Apps 164
         The Top 50 Overview 26            WPP Resources 166
         Top Risers 32                     Credits 168
         Brand Contribution 34             WPP Company Contributors 172
         Newcomers 35                      WPP in China 173
         Category Update 36


                                           Contents
         The Top 50 Ranking Chart 44
         The Top 50 Brand Profiles 46
BrandZ Top 50 Most Valuable Chinese Brands 2013
TOP 50 Most Valuable Chinese Brands 2013




1
PART
       Key
       Trends &
       Insights
         6        7
BrandZ Top 50 Most Valuable Chinese Brands 2013
PART 1. KEY TRENDS & INSIGHTS                                                                                                                                                              TOP 50 Most Valuable Chinese Brands 2013




                                Highlights

                                Key Results                                                                       Trends
                                The BrandZ™ Top 50 Most Valuable         Two of the brands that appreciated       Consumer Preferences                   Health and Safety                      International Expansion
                                Chinese Brands 2013 experienced          most in brand value were in the
                                a 1.6 percent decline in brand value     technology category. Social media        Consumers expected more                Product health and safety remained     Chinese brands continued to
                                to US$320.2 billion, the first decline   leader Tencent led the Top Riser         choice and began to express a          important concerns. Dairy brands,      expand overseas. With some
                                in the three years that the study has    ranking with 60 percent growth           preference for more specialized        especially hurt by tainted food        notable exceptions—like Lenovo,
                                been conducted.                          in brand value. Baidu, the search        products. They expressed interest      scandals, took steps to make food      which derives 58 percent of
                                                                         engine, was fourth in brand value        in less casual, smarter clothing.      safer, such as forming alliances       revenue from overseas business—
                                The decline resulted primarily           rise with 40 percent appreciation.       Beer consumption continued to          with international brands to rapidly   they remain better at the logistics
                                from pressure on revenue and                                                      increase, but with a growing taste     achieve production, supply chain       of international growth and less
                                profits, the financial components        Apparel brand Septwolves was the         for more premium brands.               and marketing best practices.          effective at the brand building.
                                of the brand value equation. They        Number 2 Top Riser, with 44 percent                                             Unlike most past alliances, these
                                decreased mostly because of the          growth in brand value, followed by                                              seemed intended to build the           The State Owned Enterprises (SOEs)
                                slowdown in the rate of growth of        Moutai, the traditional Chinese baijiu   Differentiation                        reputation of the Chinese brand        led the global push. Banks added
                                China’s economy.                         alcohol, at 42 percent.                                                         rather than the foreign entrant.       overseas branches, airlines acquired
                                                                                                                  As the market becomes more                                                    new routes, oil and gas brands
                                Brand Contribution actually              Privately held companies                 competitive, and price alone is                                               formed overseas ventures to explore
                                increased. Brand Contribution is         comprised around 27 percent of           no longer sufficient motivation to     Innovation                             reserves. Brand should become
                                the component of brand value             the China BrandZ™ Top 50 total           purchase, meaningful differentiation                                          more important for SOEs as they
                                driven by brand alone stripped           brand value in 2013, up from 22          becomes more important.                                                       expand to new overseas markets
                                                                                                                                                         Innovation continued to be critical
                                of any other factors, such as            percent in 2011. In contrast, the        Meaningful differentiation not only                                           where they’re relatively unknown.
                                                                                                                                                         and was especially evident in
                                financial performance. (Please see       portion of total value attributed to     attracts customers, it measurably      technology, the category that
                                Methodology on page 160).                State Owned Enterprises (SOEs)           adds to brand value. In a recent                                              Overseas consumers are open
                                                                                                                                                         appreciated most in brand value.
                                                                         decreased somewhat to 74 percent         Millward Brown BrandZ™ study           The speed of innovation was so         to Chinese brands, according to
                                Of the Top 50 Most Valuable              from 78 percent.                         meaningful differentiation raised                                             Millward Brown research, but
                                                                                                                                                         rapid, however, sometimes rivals
                                Chinese Brands, 14 increased in                                                   brand value 37 percent.                                                       they express reservations about
                                                                                                                                                         offering new ideas and incremental
                                value, 30 declined and two                                                                                                                                      the quality and durability of
                                                                                                                                                         improvements surpassed the
                                remained unchanged. In addition,                                                  Meaningful differentiation is in                                              Chinese products.
                                                                                                                                                         innovators of just a few years ago.
                                four newcomers joined the                                                         part about being relevant, but         Loyalty is low because the next
                                Top 50 ranking.                                                                   it’s more. The most meaningfully       best idea is just a click away.
                                                                                                                  differentiated brands start with
                                Three categories appreciated                                                      consumer insights to find ways
                                in brand value. Technology rose                                                   for the brand to be distinctive in
                                35 percent, followed by the                                                       all aspects, from functionality to
                                traditional Chinese liquor baijiu,                                                communication to how it makes the
                                up 19 percent, and beer, with a 17                                                consumer feel.
                                percent increase.




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BrandZ Top 50 Most Valuable Chinese Brands 2013
PART 1. KEY TRENDS & INSIGHTS                                                                                                                               TOP 50 Most Valuable Chinese Brands 2013




Highlights

Trends                                                                       Take Aways
Lower Tier Cities                      Trust
                                                                            1   The growth rate of China’s
                                                                                economy slowed but only in             6   International brands also can
                                                                                                                           enjoy success, but in a market      9    Many Chinese brands are
                                                                                                                                                                    good at providing functional
Both Chinese and international         Concern with food and dairy              relative terms. The market                 with greater choice and more             benefits, but few do an excellent
brands competed beyond Beijing,        safety generalized to a measurable       opportunity remains enormous.              sophisticated consumers they             job bonding emotionally
Shanghai and Guangzhou in              erosion of trust that crosses many                                                  may need to work harder.                 with consumers. Bonding is
tier two and three cities where        categories. The Trustworthy Score                                                                                            important for several reasons.
purchasing power is increasing.        for the Top 50 Most Valuable
                                                                            2   Consumer sophistication is                                                          It’s a way to gain consumer
In some instances, the absence
of major international or Chinese
                                       Chinese brands declined 2 percent,
                                       according to Millward Brown
                                                                                increasing rapidly. It’s critical to
                                                                                keep up with shifting tastes and       7   Sustaining success is another
                                                                                                                           story. In several product
                                                                                                                                                                    insight. And bonding correlates
                                                                                                                                                                    positively with sales.
brands opened a market niche.          analysis of BrandZ™ data.                to respect the quest for value.            categories the leading brands
Some brands aimed to become                                                                                                of just a few years ago declined
the upper tier brand in the lower
tier cities. Despite converging
                                       The decline in trust in part
                                       mirrored the rise of social media
                                                                            3   The convergence of these two
                                                                                                                           in value either because they
                                                                                                                           misunderstood the customers’        10   As China’s media environment
                                                                                                                                                                    becomes more complicated
household income levels, the           as a popular communication               factors—the slowdown in the                needs or they responded more             and fragmented, many small
tiers remain culturally distinctive.   channel where the information and        rate of economic growth and                slowly than the competition.             ideas can be more effective
Consumers in the lower tier cities     opinions recorded by bloggers            the acceleration of consumer                                                        than one big idea for reaching
are generally more practical and       reaches and influences a wide            sophistication—may signal an                                                        multiple audiences with diverse
tend to choose value over bling.       audience. Understanding the
                                       immense brand building power of
                                                                                emerging era of more cautious
                                                                                and discerning customers.              8   As consumer attitudes change,
                                                                                                                           they will not be uniform across
                                                                                                                                                                    media consumption habits,
                                                                                                                                                                    with many people still tuning
                                       digital and mobile communication,                                                   all of China’s geographic                into TV but social media users
                                       brands tried to understand how to                                                   markets. It’s possible—and               rising dramatically.
                                       most effectively insert themselves
                                       into the ongoing conversations.      4   To reach customers as they
                                                                                adopt these new attitudes,
                                                                                                                           important—to isolate the factors
                                                                                                                           that that most contribute to
                                                                                brand owners will need to be               consumer bonding with brands
                                                                                more precise in their targeting            in the various tier cities. These
                                                                                and messaging. Brands will need            bonding drivers help to both
                                                                                to be more relevant.                       design market entry strategies
                                                                                                                           and improve the performance of
                                                                                                                           brands currently competing in

                                                                            5   Both entrepreneurial companies
                                                                                and State Owned Enterprises
                                                                                                                           the market. The BrandZ™ data
                                                                                                                           that produces the Top 50 report
                                                                                (SOEs) can enjoy success with              contains this intelligence.
                                                                                these changing consumers.
                                                                                The integrity of the brand is
                                                                                more important to consumers
                                                                                than its pedigree.




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BrandZ Top 50 Most Valuable Chinese Brands 2013
PART 1. KEY TRENDS & INSIGHTS                                                                                                                                                         TOP 50 Most Valuable Chinese Brands 2013




                                Thought Leadership

                                Brand Valuation
                                High Value Brands Have
                                Healthy Balance Sheets
Jonathan Geldart
                                Business leaders in much of the         Brand Increasingly                     practices and the highest standards   wages rise, labor costs increase      We advise our clients to focus on
                                world have sought for a long time       Influences Purchasing                  of management and governance.         and China relinquishes its status     activities that generate both short-
Global Marketing Director       to build local, regional and global                                            Perceptions are changing and it is    as a low cost provider. In this       term and long-term commercial
Grant Thornton                  brands that add significant value to    This brand awareness has been          a brave business that ignores the     evolving economy, companies that      success. The acquisition of
                                their organizations. Today, in China,   the case in major cities for some      change in demands.                    prospered as Original Equipment       established Western brands by
                                we see the same phenomenon              time, but we are now seeing it                                               Manufacturers (OEMs) supplying        successful Chinese companies
                                emerging as Chinese brands move         in second, third and even fourth       Chinese Companies Evolve              Western brands may themselves         appears to be a long-term plan for
                                from being local to regional to         tier cities. The effect is a flight    from Suppliers to Brands              move up the value chain to become     both balance sheet growth and
                                national and now to global entities.    to quality and a more consumer-                                              brands serving global markets.        strategic brand management, both
                                                                        driven attitude that you get what      The Chinese interest in brands                                              of which impact on brand valuation.
                                China’s people drive the change.        you pay for. With the growing          began with affection for Western      When Chinese suppliers existed
                                Historically, the people of China       appreciation of quality comes the      brands. The explosion of foreign      as OEMs, we determined                Building strong brands alone is
                                generally have been savers rather       demand for brands that offer the       brands in China over the last 10      their value based on tangible         not enough, but the evidence is
                                than spenders. However, as the          reassurance of quality and value.      years has been in direct proportion   assets, their real estate, plants     that those companies that are
                                economy strengthens the Chinese                                                to the growth of China’s economy.     and machinery. But as these           aware of the power of brands
                                are changing and causing the            And with consumers paying more         Indeed, many foreign brands           suppliers evolve to become both       end up building the biggest and
                                businesses they buy from to             attention to brands as they make       have seen a massive explosion         manufacturers of products and         most successful enterprises.
Xu Hua                          change too. Government policies         purchasing decisions, it’s important   in growth that far outstrips the      marketers of brands we need to        The commercial success of the
                                and initiatives encourage the           to understand how brand is             Chinese economy.                      consider the intangible value of      BrandZ™ Top 50 Most Valuable
CEO of Zhi Tong,                formerly conservative Chinese                                                                                        those brands when we evaluate         Chinese Brands is evidence that
                                                                        valued. The Chinese government
the Chinese member              consumers to release some of their                                                                                   the overall value of the company.     the strongest brands are also often
                                                                        and the Chinese Institute of           The major American car
firms of Grant Thornton         hard earned money and spend                                                                                                                                the most successful businesses.
                                                                        Certified Public Accountants,          manufacturers sell more units
                                it on goods and services, driving       and brands themselves are              here than they do domestically.       Valuable Brands, Healthy
Grant Thornton offers           GDP growth.                                                                                                                                                Once the appetite has been
assurance, tax and advisory                                             demanding improvements in the          The premium European fashion          Balance Sheets
                                                                        measurements of brand because          houses are opening up more                                                  created for brands, and it most
services to a range of public   This slow but steady, and now                                                                                                                              certainly has in China, we will never
companies, State Owned                                                  these numbers are essential            stores across China than in other     Chinese companies now create
                                very noticeable, transformation         for winning the confidence of          countries. And global sports          products as good as anything          see a time when brands don’t
Enterprises (SOEs), private     is affecting every business across                                                                                                                         matter. In China, we now live and
companies and foreign                                                   investors, inside and outside China.   franchises are doing commercial       made in Europe, Latin America,
                                China. Consumers are learning to                                               deals based on the Chinese            the US and the rest of the world,     work in a consumer economy.
investment enterprises across   buy more products and services for                                                                                                                         Consumers will choose the
mainland China and Hong                                                 The credibility of brand value is      consumer’s appetite for brands.       but our wealthy and influential
                                reasons other than price. They’re       essential for facilitating brand                                             Chinese consumers may be              products and services that best
Kong.                           paying attention to brand.                                                                                                                                 meet their rational and emotional
                                                                        growth. In China’s rapidly evolving    But a growing consumer society        tempted by foreign alternatives.
                                                                        brand landscape, having a highly       changes many dynamics. As wages       The challenge for Chinese brand       needs—and they may be willing
Kelly Jiang                                                                                                                                                                                to pay a premium. In this world,
Grant Thornton China                                                    regarded brand means a lot more        increase, the middle class expands.   owners in the future is to continue
                                                                        than simple name recognition.          And with more disposable income       to win the emotional hearts of        organizations that own the most
kelly.jiang@cn.gt.com                                                                                                                                                                      valuable brands will enjoy the
                                                                        Brands are expected to adhere to       to spend, the new middle class        Chinese consumers as well as their
                                                                        their industry’s international best    drives economic growth. But as        patriotic heads.                      healthiest balance sheets.
Jonathan Geldart
Grant Thornton International
jonathan.geldart@uk.gt.com

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BrandZ Top 50 Most Valuable Chinese Brands 2013
PART 1. KEY TRENDS & INSIGHTS                                                                                                                                                                      TOP 50 Most Valuable Chinese Brands 2013




Brand Building In The Weibo Age
Being Part of the
Conversation
Protects and                                                                      Scott Pollack
                                                                                                                         Thought Leadership
Builds Brands                                                                     Senior Strategy Director, China
                                                                                  Wunderman | AGENDA


With the amazingly quick rise of          The Weibo Effect                        As many brands in China have           consistent brand identity that is a     brand images in the minds of their     So What’s Next?
both Sina and Tencent Weibos,                                                     learned, negative word of mouth        necessary foundation for consumer       consumers—the kind of brand
the media landscape in China              In the last couple of years as          can spread like wildfire across        trust. Thus, when a crisis occurs,      images that are the foundations for    As Weibo and Weibo marketing
fundamentally changed. Since their        Weibo penetration accelerated           Weibo calling into question even       consumers can be quick to link          enduring brand trust.                  continue to evolve, expect that
launch in August 2009 and April           and the reach of this always-on,        the most respected brands. These       the crisis with the brand’s identity.                                          there will be plenty of new brand
2010 respectively, Sina and Tencent       fast-moving C2C media platform          negative 'tweets' can come from        It is important that these brands       Wrigley’s Extra chewing gum, the       communication opportunities. And
have each amassed over 300 million        grew exponentially, the number of       anyone including unsatisfied           are part of the conversation            leading confection brand in China,     with mobile now the top channel
Weibo users, that’s significantly         high profile brand crises in China      customers, disgruntled employees,      long before such a crisis occurs,       is an example of a brand that has      for accessing the Internet in China,
more than the total number of             also increased. From tainted milk,      ruthless competitors and even          building trust through open             done a particularly good job.          new social, local and mobile
Internet users in the United States       sports drinks and pork to recycled      third party companies paid to          and genuine dialogue with their         Over the last few years Extra has      (SoLoMo) C2C media platforms
registered for each of these Twitter-     cooking oil in restaurant chains        manufacture Weibo posts. Yes, this     consumers. While this may not be        produced a series of very popular      will further change the game. For
like services (hereinafter collectively   to refrigerator door problems to        is happening. In this environment,     enough for brands to build clear        emotionally charged mini “movies”      example, Tencent’s Weixin (known
referred to as Weibo).                    questionable import furniture           brands cannot afford to sit back       and meaningful identities with their    to tell its brand story, but that is   as WeChat outside China) has
                                          origins to faulty car tires, it seems   and only listen to the conversation.   consumers, it is certainly a start.     just the beginning. The reach and      rocketed to over 200 million users
In China, a country in which              as if there is always one brand                                                                                        impact of these feature videos has     in just 20 months, and brands such
traditional media is tightly              or another that is under fire           From Brand Protection ...              ... To Brand Building                   been significantly enhanced by a       as Starbucks are already using it
controlled by the state, Weibo has        from consumers. Therefore, it                                                                                          continuous flow of consistently-       to engage their customers in new
become a powerful consumer-to-            also seems no coincidence that          At a minimum, brands must              Beyond brand protection, top            themed social objects across           conversations and further bolster
consumer (C2C) media platform             overall trust of Chinese brands,        proactively defend themselves.         companies in China are seizing the      Weibo: TV commercial pre-roll          their brands. Fellow marketeers,
that has increased the broader            as measured by Millward Brown’s         This starts with actively listening    opportunity to build and strengthen     videos and mini-movie trailers;        hold on to your hats because this
Chinese public’s consciousness            BrandZ™ research, has declined.         in real time to what’s being said      their brands on Weibo. They             “in-the-making” and “behind-the-       wild ride is just beginning.
in ways that most could not have                                                  about the brand—getting a finger       are going beyond listening and          scenes” video content; contests
even imagined only five years ago.        There is no reason to believe that      on the pulse of Weibo word of          participating in the conversation       asking consumers to submit
And with the rise of these C2C            the number of product or service        mouth. The next step is to become      to initiating conversations with        their own similar stories; live
media platforms, the challenges           issues underlying brand crises has      part of the conversation; however,     their consumers. For this they are      events featuring the stars of the
and opportunities facing brands in        increased in recent years; however,     success in this realm is highly        creating and posting engaging           videos attended by thousands
China have also changed radically.        the new C2C media outlet                dependent on perceived openness        social objects—immersive videos,        of fans; movie posters, desktop
                                                                                                                                                                                                        Advertising Age ranks
                                          provided by Weibo has significantly     and genuineness from the brand,        amusing cartoons, celebrity             wallpaper, photos, postcards, etc.
                                                                                                                                                                                                        Wunderman as the Number 1
                                          extended and amplified the voice        particularly when it comes to          photos, topical stories, etc.—that      All of these have become the
                                                                                                                                                                                                        digital and Number 1 Customer
                                          of disgruntled consumers, thereby       responding to negative feedback.       are central to conversations with       seeds of consumer conversations
                                                                                                                                                                                                        Relations Management (CRM)
                                          escalating these brand crises in the                                           and among their consumers (and          on Weibo, enabling Extra to
                                                                                                                                                                                                        agency in the world.
                                          minds of consumers.                     To make matters more challenging,      potential consumers) on Weibo.          garner literally billions of branded
                                                                                  many well-known brands in              Further, these social objects are       video impressions.                     www.wunderman.com
                                                                                  China lack the kind of strong and      building clear and consistent




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BrandZ Top 50 Most Valuable Chinese Brands 2013
PART 1. KEY TRENDS & INSIGHTS                                                                                                                                                                   TOP 50 Most Valuable Chinese Brands 2013




                                      Going Global
                                      Chinese Brands Take
                                      Early Steps On a Long                                                           Thought Leadership
                                      and Winding Road
                                      It is worth noting, however, that as   country sales managers, are at best      Leading B2B brands from China,          With the recent troubles
Lyndon Q. Cao                         Chinese brands export to overseas      sporadic and fragmented (Lenovo          a group that traditionally shuns        experienced by some long-time
                                      markets, their top priority isn’t      is an exception). At this stage,         branding initiatives, are prompted      global titan brands, emerging
Director, China Practice              brand building. Rather, they’re        just keeping the communication           to answer the question “who             global brands from China,                Key Initiatives for Going Global
Ogilvy & Mather Worldwide             creating the foundations for           smooth and effective between             am I” when stepping out of              hardened by fierce competition
                                                                                                                                                                                                       1. Give People a Reason to Buy
                                      sustained growth, sometimes with       the international outposts and           their comfort zone in China to          in the Chinese market, are
Ogilvy & Mather is one of the         an organic approach (establishing      headquarters in China is a               face scrutiny in unfamiliar global      emboldened to reenact the feat             Don’t use the “Made in China”
largest marketing communications                                                                                                                                                                         label as an excuse to avoid
                                      sales channels) or, more frequently,   daunting task. It will only become       markets. Suddenly, the ability to       accomplished first by Japanese
                                                                                                                                                                                                         overseas expansion or to explain
companies in the world,               through acquisitions (finding          more complicated as brands               tell the brand story effectively        and recently by South Korean               overseas failure. Over 65 percent
www.ogilvy.com                        leading, mature but financially        attempt to develop and execute           to international stakeholders           companies. The Chinese brands will         of overseas consumers are willing
                                      struggling top global brands).         worldwide campaigns launched             becomes a high priority. For            enter new international markets at         to consider Chinese brands,
                                                                             and coordinated from China.              these B2B brands it’s time to           the low end of the value continuum         according to Millward Brown
                                      Whether or not these Chinese                                                    replace the exquisitely printed yet     but attempt to evolve quickly to           research. They may ask where
While splashy TV commercials of       companies decide to pour               Early On The Learning                    soulless corporate brochure and         provide premium products and               a product is made, but what
Chinese brands are nowhere to be      resources into brand building                                                   the company websites narrated in        services with better margins. The          they really want know is, “What
                                                                             Curve                                                                                                                       benefits does the product offer?
seen outside China, the drumbeat      will be determined later, by the                                                “Chinglish.” They need a succinct       upsurge of disruptive force of social
of Chinese companies going global                                                                                                                                                                        How will it enrich my life?”
                                      sales numbers and market share         Meanwhile, another crop of Chinese       and persuasive elevator pitch to        media in branding might offer
has been heard around the world       gained in this early stage of                                                   impress internat ional clients at the   Chinese brands the late-mover
                                                                             companies has become the pet of                                                                                           2. Leverage Online Experience
for a long time.                      internationalization.                                                           first meeting.                          advantage as well.
                                                                             international and Chinese media                                                                                             Because of the size and
                                                                             of late. These cash-rich, State                                                                                             prominence of e-commerce and
The emerging global brands from       Market Entry With Entry                                                         Riding Robust Momentum                  To enter global markets and
                                                                             Owned Enterprises (SOEs) and                                                                                                social media in China, Chinese
China, many of which used to be       Price Points                                                                                                            develop strong and profitable              brands often have a lot of
                                                                             leading private companies have
Original Equipment Manufacturers                                                                                      We see progress. The emerging           brands will require the Chinese            experience communicating with
                                                                             been making headlines with cross-
(OEMs) for leading Western                                                                                            Chinese brands are riding a             brands to follow these three               consumers online. Overseas
                                      Not surprisingly, low price remains    border mergers and acquisitions.
brands, are no longer content to                                                                                      healthy and robust momentum.            fundamentals:                              audiences will bring new
                                      the core competitive edge for          A noteworthy trend in this game is
nest on the lower end of the value                                                                                    Although the world economy is                                                      challenges, but the knowledge
                                      many Chinese companies that,           that many Chinese players, having                                                                                           about online brand building
chain. Instead, they are stepping                                                                                     still recovering from recession,        • Gain thorough and useful market-
                                      at the same time, try to avoid         learned from earlier high-profile                                                                                           should help Chinese brands
up efforts to sell flat-screen TVs,                                                                                   the rise of the middle class in           specific consumer insights.
                                      being labeled cheap. Driven            debacles, now put branding and PR                                                                                           establish their presence in new
smart phones and cars and buses                                                                                       emerging economies continues.
                                      by pragmatism, most Chinese            on the to-do list.                                                                                                          country markets.
bearing their own logos.                                                                                              This development should generate        • Execute in a robust and well-
                                      companies harbor no ambition
                                      to challenge the top brands in         Last year’s acquisition of Manassen      immense purchasing power to               choreographed way.                     3. Invest Long Term
In the developing markets, Chinese                                                                                    sustain the growth of Chinese
                                      their industry, but rather hope        Foods of Australia by Shanghai                                                                                              Going global requires
brands such as Lenovo, ZTE,                                                                                           brands. In addition, the current        • Sustain the investment in brand          commitment and investment.
                                      to become a second tier leader.        Bright Food (an SOE) serves
Huawei, Haier, Yutong Bus and                                                                                         economic slowdown in developing           building over time.                      Once you make the decision
                                      In so doing, these bands aim to        as a case in point. To diffuse
Great Wall Motors are gaining                                                                                         markets forced consumers to                                                        to expand overseas, don’t
                                      differentiate themselves from close    any concerns, Bright Food
traction and posing a direct                                                                                          balance excessive optimism with a       Early evidence suggests that the           be tentative. International
                                      competitors, usually from China as     communicated early and regularly
threat to Western incumbents.                                                                                         strong dose of reality. It reminded     Chinese brands, in the infancy of          expansion is a strategic decision
                                      well, to avoid cutthroat price wars.   with key Australian stakeholders.                                                                                           not a tactical step for topping
In the developed markets, a                                                                                           consumers to seek value, the            global brand building, have great
                                                                             It is fair to say that the transaction                                                                                      up revenue and profits.
steady stream of Chinese brands                                                                                       relationship between price and          potential and understand the need
                                      For the first movers among             was concluded successfully and
flows onto the shelves of Costco,                                                                                     performance, which happens to be        for these fundamentals, but the
                                      Chinese brands going global,           smoothly at least in part because of
Walmart and other mass merchants.                                                                                     the primary competitive edge the        brands have much to learn and a
                                      branding efforts, often led by         the friendly environment established
                                                                             by Bright Food’s charm offense.          Chinese brands enjoy.                   long and winding road to navigate
                                                                                                                                                              as they seek long-term success.



                                                       16                                                                                                                      17
PART 1. KEY TRENDS & INSIGHTS                                                                                                                                                        TOP 50 Most Valuable Chinese Brands 2013




                                Thought Leadership

                                Going Global                                                                manufacture good quality,
                                                                                                            affordable products. If, however,
                                                                                                            overseas consumers cannot
                                                                                                                                                   way of doing so is by associating
                                                                                                                                                   the brands with celebrities or sport
                                                                                                                                                   sponsorships. Sponsoring mega-
                                                                                                                                                                                          One of the weaknesses of
                                                                                                                                                                                          “Competitive Networks” is
                                                                                                                                                                                          inherent in their core strength.


                                Brands Expand Out of                                                        name Chinese brands and do
                                                                                                            not recognize their benefits, then
                                                                                                            Chinese corporations attempting
                                                                                                                                                   events, such as the Olympics or
                                                                                                                                                   World Cup, give the brands an
                                                                                                                                                   image boost almost overnight.
                                                                                                                                                                                          Being a collective of individual
                                                                                                                                                                                          companies makes it difficult to
                                                                                                                                                                                          agree about the investments


                                China, Travel Up the
                                                                                                            to penetrate international markets     In addition to gaining publicity       necessary for brand building. And
                                                                                                            face a difficult barrier.              by winning air-conditioning            because these networks do not
                                                                                                                                                   contracts for the 2008 Beijing         conform to the conventional notion
                                                                                                            Overseas Brand Success                 Olympics and the 2010 World Cup        of an organization, it is not easy


                                Value Chain                                                                 Requires Customized
                                                                                                            Strategies
                                                                                                                                                   in South Africa, Gree uses film
                                                                                                                                                   star Jackie Chan to endorse its
                                                                                                                                                   “Created in China” proposition.
                                                                                                                                                   Furthermore, since these are scale
                                                                                                                                                                                          to brand them. Place branding, as
                                                                                                                                                                                          in coffee from Colombia or wine
                                                                                                                                                                                          from Burgundy, can be an option.
                                                                                                                                                                                          Cigarette lighters can be branded
                                                                                                            Chinese corporations going abroad
Jane Liu                                                                                                    fall into four categories, according
                                                                                                                                                   businesses, “National Champions”       as “Made in Wenzhou”, or neckties
                                Ever since the 1978 Open Door         Since then, many Chinese                                                     can examine global consumer            as “Made in Shengzhou.” A good
Researcher                                                                                                  to business school professors Ming     segments to determine the most         story about the heritage, culture
                                Policy, China has become the          corporations have made forays         Zeng and Peter J. Williamson:
Analytics & Insight             most capable and competitive          into international markets.                                                  promising international markets.       and expertise of place of origin can
MEC China                                                                                                   “National Champions,” “Dedicated                                              be a strong point of differentiation.
                                Original Equipment Manufacturer       Some, such as Lenovo, which           Exporters,” “Competitive
                                (OEM) in the world. This drives       purchased majority share of                                                  “Dedicated Exporters,” brands
                                                                                                            Networks” and “Technology              that expand overseas for the           While “Technology Upstarts” have
                                enormous economic growth in           IBM’s PC division in 2005, and        Upstarts” (Please see page 21). Due
                                the country. Yet in order for China   Haier, which became the global                                               economies of scale, tend to align      to invest in their brand building
                                                                                                            to the differences in their business   with respectable retailers or strike   efforts like all other marketers,
                                to sustain long-term economic         leader in compact refrigerators       models, corporations in these four
                                prosperity, it cannot stay a low-     and wine coolers, have achieved                                              alliances with distributors rather     they have the Chinese diaspora
                                                                                                            categories face a varying mix of       than go it alone in international      as a springboard for penetrating
                                cost manufacturing base forever. It   phenomenal results. However,          challenges and opportunities in
                                has to move up the value chain to     despite global achievements by                                               markets. They use the retailer         overseas markets. In addition
                                                                                                            branding. Advertising agencies         brands to signal their quality and     to enlisting the technological
                                sell higher value-added products.     individual corporations, most         and communication professionals
                                                                      Chinese brands are not well known                                            help establish their credibility and   knowhow and management
                                                                                                            can play a role in bringing Chinese    reputation. Once retailers bring       expertise of Chinese people
                                Building multinational corporations   in overseas markets. As Nobel         brands to the international
                                is seen as a way to improve a         Prize winning economist, John                                                in customer traffic, dedicated         residing all over the world,
                                                                                                            marketplace by devising precise        exporters need to present a            “Technology Upstarts” also can
                                corporation’s capabilities in         Nash, Jr., has written, “We know      and focused branding strategies.
                                international business and fast       Chinese products, but not Chinese                                            persuasive brand story. They           solicit these individuals as early
                                track the learning curve. In          brands.” Millward Brown’s 2011                                               need to truly understand shopper       adopters or key opinion leaders to
                                                                                                            With their enormous success            behavior, provide memorable user       tell their brands’ stories. For this
                                addition, China’s domestic market     Going Global Study validated this     as domestic leaders, “National
                                is also becoming more competitive     point, revealing that 83 percent of                                          experience and creatively brand        segment, digital and social media
                                                                                                            Champions” can afford to invest        themselves at a retail level.          can be heavily deployed. Since
                                as companies battle fiercely for      consumers outside of China could      in building up their own global
                                their slice of the most populous      not name a Chinese brand.                                                                                           many in the Chinese diaspora can
                                                                                                            brands from day one. The fastest                                              read Chinese, they can even be
                                consumer market in the world.
Theresa Loo                                                           The real impact to global                                                                                           exposed to brand communications
                                Driven by these economic              competition will come from an                                                                                       via Chinese websites.
National Director of
                                pressures and fired by the urge to    abundance of these relatively
Strategic Planning,
                                partake in the global economy, the    unknown Chinese brands with
Analytics and Insight
                                Chinese government declared the       expertise in low cost mass
MEC China
                                “going abroad” policy in 2001 to      production and the ability to
                                encourage Chinese corporations to
                                move into the international arena.



                                                18                                                                                                                  19
PART 1. KEY TRENDS & INSIGHTS                                                                                                                            TOP 50 Most Valuable Chinese Brands 2013




Going Global
Brands Expand Out of                                                                                                 Global Chinese Brands Divide into Categories
                                                                                                                     National Champions are home grown corporations that have beaten



China, Travel Up the
                                                                                                                     international competitors to become domestic leaders. They often
                                                                                                                     tackle niche segments that leading brands in overseas markets are not
                                                                                                                     participating in. They then use their production prowess in China to
                                                                                                                     develop specialty benefits, drive down production costs and grow volume



Value Chain
                                                                                                                     businesses. A successful example is Haier making compact refrigerators and
                                                                                                                     wine coolers.

                                                                                                                     Dedicated Exporters mainly go into international markets to gain global
                                                                                                                     economies of scale. When they first enter a market, they tend to work with
                                                                                                                     retailers or distributors. Once they develop market expertise and scale
Making Up for Lost Time                                                                                              the business, they migrate to high value products. They are aggressive
                                                                                                                     in striking partnerships or acquiring smaller companies in order to move
Possible but Challenging                                                                                             up the value chain. BYD started out supplying rechargeable batteries to
                                                                                                                     Apple, Nokia, Motorola and Samsung. It evolved into an electric vehicles
Brands are intangible assets          that mergers and acquisitions           world, any product quality incident,   manufacturer. The company sold a 10 percent stake to Warren Buffet’s
that are slow and costly to build.    face is cultural integration. When      safety crisis, or mining accident      Berkshire Hathaway in 2009, and formed a partnership with Daimler in 2010.
China, as a latecomer to the global   a Chinese company acquires a            within China will affect how           The company expects to export its plug-in hybrid to North America.
marketplace, is at a disadvantage.    Western company, combining              overseas consumers see Chinese
A quick way to catch up is by         companies means integrating             brands. In fact, close to 70 percent   Competitive Networks are groups of small, specialized companies that
mergers and acquisitions, an          Eastern and Western cultures.           of international consumers have        exist separately in close geographic proximity but operate as a single,
option that Chinese companies         This requires sensitivity in internal   concerns over the safety of made-      interdependent yet unofficial entity. To minimize internal rivalry, they organize
now are pursuing. Recent examples     communication with employees.           in-China products, according           production into specialties, with the smaller manufacturers making components
                                                                                                                     and the larger ones doing the assembly. Examples are entrepreneurs in
include Lenovo, which acquired                                                to Millward Brown’s 2011 Going
                                                                                                                     Wenzhou manufacturing cigarette lighters or in Shengzhou making neckties.
a majority stake in Medion AG,        Last, but not the least, crisis         Global Study. Industries in which      In this way, China has already taken huge shares in the global market for
a German home electronics             management skills also are              consumer concern with safety is        watches, socks, shoes, precision electronics and Christmas decorations.
company, in 2011, and Haier,          important. A product’s country of       high, such as food and beverage,
which acquired the small and          origin affects purchase decisions       airline, pharmaceutical, banking,      Technology Upstarts use technological innovations to enter commercial
large appliance businesses from       because consumers tend to               are especially impacted by this        markets. For example, a group of scientists from China’s Institute of
Japan’s Sanyo in the same year. In    infer the quality of a country’s        phenomenon. The finding doesn’t        Computing Technology started Legend, Lenovo’s holding company.
cases such as these, the strategy     products from its country image,        exclude Chinese-made products          “Technology Upstarts” challenge the conventional wisdom that hi-tech is
for rebranding the newly merged       as Theresa Loo and Gary Davis           from consideration by overseas         restricted to high-end products. They often acquire foreign brand names
or acquired companies is crucial.     wrote in “Branding China: The           customers, but it does require         and the technology and market access that come with them. “Technology
One of the greatest problems          Ultimate Challenge in Reputation        ensuring consumer confidence with      Upstarts” also enjoy the benefit of being closely related to computer and
                                      Management.” In today’s digitized       evidence of product safety.            electronics, home appliances and computer games—three of the top five
                                                                                                                     “Made in China” product categories that overseas consumers are most
                                                                                                                     likely to consider purchasing, according to research by Millward Brown. In
                                                                              MEC delivers value by creating,        addition, many of China’s e-commerce companies, such as Alibaba.com
                                                                              implementing and measuring             and Ctrip.com, like to enlist cooperation and support from individuals in
                                                                              communication solutions that           Chinese diaspora. These individuals often have technological knowledge
                                                                              actively engage people with brands.    and international business experience, providing these companies with a
                                                                                                                     resource for world-class capabilities.
                                                                              www.mecglobal.com




                                                        20                                                                           21
PART 1. KEY TRENDS & INSIGHTS                                                                                                                                                              TOP 50 Most Valuable Chinese Brands 2013




                                Thought Leadership
                                Lower Tier Cities
                                Vast Opportunity                                                               1   Purchase intentions are
                                                                                                                   more family centric.
                                                                                                                                                           more for brand. For example,
                                                                                                                                                           lower tier consumers ranked
                                                                                                                                                           “image quality” and “technical
                                                                                                                                                                                                     programs to acquire knowledge,
                                                                                                                                                                                                     perhaps for career advancement.
                                                                                                                                                                                                     CCTV (Chinese Central TV) is


                                Requires Understanding
                                                                                                                   The majority of lower tier
                                                                                                                   consumers focus their shopping          performance” most important               especially dominant and popular
                                                                                                                   on the purchase of family               when purchasing a digital                 in lower tier cities.
                                                                                                                   items first, according to the           camera. Higher tier consumers,


                                the Consumer                                                                       CNRS-TGI tracking study. With           in contrast, ranked “image
                                                                                                                   relatively larger families and
                                                                                                                   lower disposable income, these
                                                                                                                                                           quality” and “brand” as the most
                                                                                                                                                           important purchase criteria.          6   Higher tier or global
                                                                                                                                                                                                     brand fame doesn’t
                                                                                                                   consumers seek products and                                                       guarantee lower tier
Shen Ying                                                                                                          packaging that are designed to                                                    success.
General Manager
                                Over the last four years, the
                                economy of China has grown by
                                                                      these cities, as a result of favorable
                                                                      government policies, consumption
                                                                                                                   satisfy family consumption and
                                                                                                                   fit family budgets.
                                                                                                                                                       4   Brand, ads and word-of-
                                                                                                                                                           mouth exert a greater
                                                                                                                                                                                                     What consumers in lower tiers
                                                                                                                                                                                                     look for in a brand is quality
CTR Media &                     over 30 percent in real terms. It     patterns will be the main driver of                                                  influence on purchasing.                  assurance or prestige. However
Consumption Behavior            has become the world’s second         China’s domestic economy. In fact,                                                   Lower tier consumers show a               the qualities that connote
                                largest economy and is fueling the
                                country’s global growth. However,
                                                                      across all product categories, lower
                                                                      tier cities are already beginning to
                                                                                                               2   Kids have less say for
                                                                                                                   routine items, more say
                                                                                                                                                           higher tendency to treat ads as a
                                                                                                                                                           fair source of product knowledge.
                                                                                                                                                                                                     prestige in a lower tier city may
                                                                                                                                                                                                     be specific to the locality and
                                its domestic consumption rate         account for a significantly larger           for specialty products.                 They even click online ads more           different from the qualities that
                                remains notoriously low while         proportion of consumption.                   In order to keep their limited          frequently. With fewer channels           confer stature in higher tier cities.
                                saving is astoundingly high as                                                     budgets under control, parents          for obtaining product information,        To succeed, a brand requires
                                a share of GDP. As the global         In China, higher and lower tiers             in the lower tier cities give           and greater apprehension about            a communication strategy that
                                financial crisis subsides, China’s    are generally accepted terms for             their kids less say in purchasing       purchasing mistakes that will             assimilates local culture. Blind
                                leaders realize they must             organizing such a large and diverse          decisions for routine items,            stretch limited budgets, lower            replication of strategy from other
                                recast China’s economic focus         country into a comprehensible                such as clothing and food.              tiers consumers are more eager            markets can sometimes create
                                from export-led to domestic           hierarchy of population centers.             When purchasing new or trendy           to seek reassurance from word-            only the adverse perception of
                                consumption-driven in order to        Tier one includes the great coastal          products like electronic gadgets        of-mouth or from brand. In more           expensiveness without the value
                                maintain sustainable growth. In       cities—Beijing, Shanghai and                 however, lower tier parents are         expensive or safety-related               for money.
                                2011, China began its twelfth five-   Guangzhou. Historical provincial             more likely rely on their kids as       product categories, such as
                                year plan, designed to encourage      capitals comprise some of tier               information sources.                    automobiles or baby formula, the

Ada Luk
                                consumer goods imports, foster
                                urbanization and optimize the
                                                                      two. Factors including history,
                                                                      population and income determine
                                                                                                                                                           need for brands to play the quality
                                                                                                                                                           assurance role is even greater.       7   Online purchasing is more
                                                                                                                                                                                                     prevalent.
                                consumer market. It plans to          other tier designations. What’s
Group Account Director          nurture 10 million new consumers      most clear is that the golden age        3   Value-for-money and
                                                                                                                   functional attributes
                                                                                                                                                                                                     Many popular brands or retail
                                                                                                                                                                                                     chains have not yet expanded
Millward Brown Shanghai         each year to enter the market.        of growth of China’s consumer
                                                                      class appears to be taking place             influence more than                 5   TV is still the most
                                                                                                                                                           effective mass media
                                                                                                                                                                                                     into lower tier cities. Sometimes
                                                                                                                                                                                                     online ordering is the only access
CTR is a leading market         Until recently, most of China’s       outside the higher tier cities and in        brand.
information and insight                                                                                                                                    for product ads or                        channel for these consumers. Yet
                                wealth has been concentrated in       the lower tiers cities. Any business         Although price is the most
provider in China.              the higher tier cities. The average   serious about establishing a                 important influence on purchase
                                                                                                                                                           infomercials.                             they may desire trendy products
                                                                                                                                                           Unlike higher tier viewers                and brands as much as consumers
www.ctr.china.cn                disposable income of a higher         meaningful presence in China’s               decisions across all tiers, lower
                                                                                                                                                           who watch TV mostly for                   do in the higher tier cities.
                                tier family is about three times      consumer market must acquire                 tier consumers will spend more
                                                                                                                                                           entertainment, lower tier viewers         With relatively limited product
                                higher than that of a lower tier      a deep understanding of the                  for products with more or better
                                                                                                                                                           are more serious minded. They             selection available in local stores,
Millward Brown is one           family. However, the consumer         purchase behavior of consumers               functional attributes, while
                                                                                                                                                           usually watch news and utilitarian        consumers in lower tier cities are
of the world’s leading          market in the higher tier cities      in the lower tier cities. One way            higher tier consumers will pay                                                    more likely to shop online.
research agencies.              is fast approaching saturation.       to understand this behavior is to
                                Fortunately, China has more           compare it to consumer purchasing
www.millwardbrown.com           than 100 lower tier cities with       behavior in the more familiar
                                populations in excess of one          higher tier cities. Here are seven
                                million. As their incomes rise in     important insights:

                                                 22                                                                                                                       23
TOP 50 Most Valuable Chinese Brands 2013




2 50
PART
         The
        BrandZ™
       ChinaTop

               24   25
PART 2. THE BRANDZ™ CHINA TOP 50                                                                                                                                                                                                  TOP 50 Most Valuable Chinese Brands 2013




BrandZ™ China Top 50 Overview and Analysis                                                                              market performance. Measured
                                                                                                                        over 14 months, starting in July
                                                                                                                        2010, against MSCI China, an
                                                                                                                                                                BrandZ™ China Top 50 Portfolios Outperform MSCI China Index

Brand Importance Increases,                                                                                             equity index of Chinese stocks, the     The MSCI China, a weighted index of Chinese stocks, declined 5.6 percent in value during
                                                                                                                                                                the 14 months ended September 2012. The BrandZ™ China Portfolio, up 5.8 percent over
                                                                                                                        BrandZ™ China Top 50 Portfolio          the same period, and the BrandZ™ China BC Portfolio, up 29.2 percent, outperformed it.
                                                                                                                        consistently outperformed the           The BrandZ™ China Portfolio consists of the brands in the China BrandZ™ Top 50 Most



Touches all Categories
                                                                                                                        equity index of Chinese stocks and      Valuable Chinese Brands. The BrandZ™ China BC Portfolio is a subset of the Top 50 that
                                                                                                                        was up 5.8 percent in September         includes only the Top 10 Brand Contribution leaders. Brand Contribution is a metric that
                                                                                                                                                                isolates the influence of brand from other factors, such as financial results, in the calculation
                                                                                                                        2012 when the MSCI was down             of brand value (Please see Methodology on page 160) The performance of the BrandZ™
                                                                                                                        5.6 percent. The BrandZ™ China


Buoys Value in Slower Economy
                                                                                                                                                                China Top 50 Portfolios demonstrate a clear correlation between brand strength and
                                                                                                                        Top 50 Portfolio outperformed the       positive stock market performance.
                                                                                                                        market by 11.4 percent.                       50%


                                                                                                                        Even more compelling, the share               40%

                                                                                                                        price of the Top 10 brands in
                                                                                                                                                                      30%                                                                                                                               29.2%
                                                                                                                        Brand Contribution gained an
Brand importance in China continues    The first brand value decline             Stock Appreciation Mirrors
to increase.                           in the three years of doing this                                                 extraordinary 29.2 percent over               20%
                                                                                 Brand Contribution                     the same period. (Please see the
                                       study reflects the slowdown in the
As the Chinese become wealthier        growth rate of China’s economy,                                                  stock market chart) This contrast             10%
                                                                                 The key to understanding               in stock performance indicates
                                                                                                                                                                                                                                                                                                        5.8%
and more sophisticated consumers,      which expanded at an annual rate          this result is that the growing                                                      0%
they grow more aware of their          of around 7.5 percent, much faster                                               both how important brand is                                                                                                                                                     -5.6%
                                                                                 importance of brand in China           to stock appreciation and how                -10%
relationship with brands and the       than most of the developed world,         mitigated the depressive effect
impact brands have on their lives.     but well below the annual rates                                                  stock appreciation is a return on
                                                                                 that lower financial results can       investment in brand.                         -20%
                                       that characterized China's growth         have on brand value. The level of
                                                                                                                                                                           Jul 10    Sep 10 Now 10 Jan 11 Mar 11 May 11          Jul 11   Sep 11 Now 11      Jan 12   Mar 12 May 12   Jul 12   Sep 12

Increasingly, Chinese consumers        during the past few decades.              Brand Contribution for the Top 10
                                                                                                                                                                                            BrandZ™ China BC Portfolio: Top 10 in Brand Contribution

view brands not simply as badges                                                                                        Some of the strongest evidence                                      BrandZ™ China Portfolio: All companies in the Top 50
                                                                                 brands increased to 36.9 percent       revealing the increasing                                            MSCI China
denoting accomplishment and            The decline touched most sectors          from 33.2 percent. The level of
wealth, but rather as useful symbols   of the economy, with 30 of the                                                   importance of brand comes from          Source: BrandZ™ / Millward Brown Optimor, Bloomberg
                                                                                 Brand Contribution for the Top 50      the shifting balance between State
embedded with cues about product       Top 50 brands decreasing in value,        increased to 38.8 percent from 38.2
quality, design and safety and other   14 increasing, two remaining                                                     Owned Enterprises (SOEs) and
                                                                                 percent. Brand Contribution is a key   private brands driven by market
data necessary for making informed     unchanged and four newcomers              metric that indicates the portion
purchasing decisions.                  joining the Top 50 ranking. Three         of brand value that can be directly
                                                                                                                        forces alone. Market-driven brands      Shifting Balance of SOE and Market-Driven Brands
                                       categories appreciated in brand                                                  comprised 27 percent of the China
                                                                                 attributed to the sole influence of                                            The BrandZ™ Top 50 Most Valuable Chinese Brands fall into two broad categories of
The growing importance of brand in     value. Technology rose 35 percent,                                               BrandZ™ Top 50 total brand value        ownership: State Owned Enterprises (SOEs) and private firms. BrandZ™ analysis further
                                                                                 the brand after other factors, such    in 2013, up from 22 percent in
China emerges from a close analysis    followed by the traditional Chinese                                                                                      divides SOEs into two sub-categories: strategic (financial institutions, utilities, for example)
                                                                                 as financial performance, have         2011. (Please see the SOE chart)        and competitive (consumer products, for example). While the number of strategic SOEs
of this third annual BrandZ™ Top       liquor baijiu, up 19 percent, and beer,   been stripped away. (Please see        And the importance of brand             in the China BrandZ™ Top 50 remained fairly consistent during the past three years, their
50 Most Valuable Chinese Brands        with a 17 percent increase.               Methodology on page 160)                                                       share of total Top 50 brand value decreased. Competitive SOEs and market-driven firms
study, which finds that the total                                                                                       varies even among SOEs.                 increased their share of Top 50 value. The shifting balance of value reflects the growing
value of the BrandZ™ Top 50 2013       Given this background, the more                                                                                          importance of brand.
                                                                                 The power of Brand Contribution        SOE brands deemed to have
declined 1.6 percent to a total of     revealing result is not that brand        also is evident in stock market
US$320.2 billion.                      value declined, but that the decline                                             strategic national importance, such                                                                        22%                 23%
                                                                                 performance. All of the Top 50         as banks or energy companies,                        29              29               28                                                      27%
                                       was minimal both in absolute terms        brands are publicly traded, mostly                                                                                                                 4%                 5%
                                       and relative to the decrease in                                                  are more tightly controlled than                                                                                                              6%
                                                                                 on the Hong Kong or Shanghai           SOE brands in categories like
                                       brand value in some fast growing          Stock Exchanges, but on other                                                                                                                     74%                 72%            68%
                                       markets, such as Brazil, where the                                               baijiu, the traditional Chinese clear
                                                                                 exchanges as well. The BrandZ™         liquor. The brand value of these                                      6               6
                                       BrandZ™ Top 50 Most Valuable              China Top 50 Portfolio consists of
                                                                                                                                                                              8

                                       Brazilian Brands declined 24 percent                                             competitive SOEs increased 12                                                                                                                                 Market-Driven Firms
                                                                                 the BrandZ™ Top 50 Most Valuable       percent, while the brand value for                   13              15               16
                                                                                                                                                                                                                                                                                      Competitive SOEs
                                       (www.brandz.com/latam).                   Brands and tracks their stock          the more state-involved brands                                                                                                                                Strategic SOEs


                                                                                                                        declined 7 percent. This contrast                  2011             2012            2013                   2011            2012               2013

                                                                                                                        indicates that the investment in                          Number of brand in Top 50                                Value share of Top 50

                                                                                                                        brand building by the competitive       Source: BrandZ™ / Millward Brown
                                                                                                                        SOEs yields higher brand value.




                                                         26                                                                                                                                   27
PART 2. THE BRANDZ™ CHINA TOP 50                                                                                                                                                                                TOP 50 Most Valuable Chinese Brands 2013




Most important, a BrandZ™                                                                                                           Similarly, Baidu, China’s largest         campaign. As competition               long brand heritage and leveraging
analysis of the performance of                                                                                                      search engine, formed in 2000,            increases in just about every          the popularity of baijiu, Moutai
more than 1,100 Chinese brands
                                        Higher Brand Contribution, Higher Sales                                                     invested heavily in the Cloud during      product category, brands look for      increased 42 percent in brand value.
over three years reveals a strong       There is a strong correlation between Brand Contribution and market share. Brands with      2012, and its brand value increased       ways to differentiate and increase
                                        higher Brand Contribution scores enjoy greater market share or, said another way: higher
correlation between Brand               brand contribution, higher sales. The data comes from over 1,100 Chinese brands clustered   by 40 percent. In contrast, the social    their appeal. Apparel brands face      The Next Opportunities
Contribution and market share.          according to Brand Contribution.                                                            media site Renren felt the impact of      a particularly difficult challenge
In other words, higher Brand                                                                                                        these innovative competitors and its      in a category that declined 18         Despite the growing importance
Contribution translates into higher                                                                                                 brand value declined by 77 percent.       percent in brand value because         of brand in China, many challenges
sales. (Please see the Brand                                                                                                        In part, consumer interest in the         of weakened demand, excess             remain. Product safety lapses
Contribution chart)                                                                                                                 Internet and social media, which          inventory, a competitive field of      continue to erode consumer trust.
                                                                                                                                    drove the rapid rise of Renren,           domestic and international players     Although the issue most directly
Consumers Influence Brand                                                                                                           left the company vulnerable as            and shifting consumer preferences      impacted the food and dairy
Development                                                                                                                         consumers discovered newer ideas          away from casual wear and toward       category the fallout has affected
                                                                                                                                    and wider choice.                         smarter everyday wardrobes.            consumer trust in general, which
                                                   Market Share




With the expansion of the middle                                                                                                                                                                                     has declined steadily during the
class, rise in disposable income                                                                                                    Some of China’s greatest                  Despite these pressures, certain       past several years, even among the
and shift from rural to urban living,                                                                                               innovators, brands that identified        apparel brands did relatively well     most trusted brands. (Please see
the influence of Chinese consumers                                                                                                  and developed entirely new                in part because of their clarity of    page 30)
on the development of brands has                                                                                                    businesses, now face intense              focus. Septwolves took greater
                                                                  Brand Contribution
increased in many ways, including:                                                                                                  competition as rivals enter the           control over its brand, shifting       Brands are acting strategically to
faster innovation; more choice
                                        Source: BrandZ™ / Millward Brown                                                            market offering an incremental            priorities from wholesale to retail    repair reputations damaged by
and competition; and increased                                                                                                      improvement or change calculated          with plans to open over 1,000          safety issues, and also to build
focus on brand identity and                                                                                                         to steal market share. The brand          company-owned stores during            long-term brand strength by
                                                                                                                                    Ctrip, for example, pioneered             the next couple of years. Building     forming alliances with international
communication. And this consumer        Although the tiers are converging              Innovation, Competition                      online travel services in China           on its heritage as a clothing
influence touches all categories        in income level, consumer                                                                                                                                                    businesses that can introduce
                                                                                       and Choice                                   in 1999. Today, the e-commerce            manufacturer, Youngor is marketing     world-class production, supply
and is felt across the country as       attitudes and behavior differences
both Chinese and international                                                                                                      sites of airlines, hotels, other travel   under its own brand. Semir             chain, quality control and
                                        remain. Consumers in lower tier                The impact of this market dynamic
brands establish presence in the                                                                                                    providers and online shopping             effectively targeted the youth         marketing best practices. Mengniu
                                        cities tend to be more driven by               is evident in the technology
large urban centers other than                                                                                                      malls, such as Taobao, battle for the     market. Both brands ascended to        entered an arrangement with the
                                        practical concerns like price and              category. Of all the categories
Shanghai, Beijing and Guangzhou.                                                                                                    revenue generated by the tourism          the Top 50 ranks for the first time.   Danish dairy group Arla Foods.
                                        performance rather than status.                measured in this report, technology          of China’s expanding middle class.                                               Determined to become the leader
                                                                                       gained the most in brand value—35            In this crowded field, Ctrip’s brand      Effective brand positioning was        in the premium dairy segment,
Opportunity awaits brands that          Serving China’s large and diverse              percent—with the increase led by
can get it right in these lower tier                                                                                                value declined 39 percent.                evident also in the performance of     Bright made a series of overseas
                                        market helps strengthen Chinese                Tencent, China’s largest Internet
cities. A strong presence in lower                                                                                                                                            the Moutai, the traditional Chinese    acquisitions. Its brand value rose
                                        brands and even prepares them for              portal that connects over 700
tier cities is one of the reasons       overseas ventures. Brands also are                                                          Increased Focus on Brand                  baijiu liquor, and Harbin beer.        34 percent.
                                                                                       million users. Formed in 1998,                                                         Both brands faced considerable
why the brand value of Hainan           tempered by an attitude shared by              Tencent shifted its business during
                                                                                                                                    Building
Airlines appreciated 23 percent                                                                                                                                               competition in categories where        Chinese companies have formed
                                        Chinese consumers regardless of                2012 to focus more intensively on
while most of its competitors                                                                                                       Having built a multi-channel              brand plays a central role. Harbin     overseas partnerships before. In
                                        where they reside. They expect more            its mobile messaging app, Weixin,
felt the effects of a slowdown in                                                                                                   approach to travel, with access           associated the brand with the          the car category, for example,
                                        today. Simply being a famous brand             which reached about 200 million
international air travel. Being a top                                                                                               online or through an extensive            sports, including the National         Western manufacturers traded
                                        is no longer enough. Sustained                 users by March 2012, just over one
tier brand in a lower tier setting                                                                                                  network of call centers, Ctrip is         Basketball Association, and            their technological knowledge
                                        success requires anticipating and              year after launch. The brand’s value
proved to be a successful strategy                                                                                                  meeting this heated competition by        appealed to the growing taste          for access to the world’s largest
                                        meeting consumer desires or, put               surged upward 60 percent.
for the apparel brand Septwolves.                                                                                                   investing in its brand with a $US500      for more premium beer. Harbin          consumer market. There’s a
                                        another way, constant, useful and
                                                                                                                                    million promotion and marketing           entered the Top 50 ranking for         key difference between the car
                                        relevant innovation.
                                                                                                                                                                              the first time. By emphasizing its     industry example and some of




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