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July 6, 2020

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Brands are us: China companies profit from high-profile names

Seventeen Chinese brands ranked in the top 100 in a global survey, with digital companies and retailers the biggest winners. That compares with 15 Chinese brands on the list last year.

Internet giants Alibaba and Tencent ranked sixth and seventh, respectively, in the BrandZ Global Top 100 list. BrandZ is commissioned by WPP and conducted by market research firm Kantar.

BrandZ claims to be the only valuer that ranks brands on what they contribute to the corporate value of their owners. It says its research covers more than 3.7 million consumer interviews about 165,000 brands in 50 markets.

The combined brand value of this year’s top 100 hit US$5 trillion, adding US$277 billion from a year ago.

The top five brands on the global list are: Amazon, Apple, Microsoft, Google and Visa.

This year’s combined value of Chinese brands on the list rose 16 percent from last year, almost triple that of all global brands.

The BrandZ report says top brands have shown more resilience during the novel coronavirus pandemic than they did during the global financial crisis in 2008. The company has been conducting annual surveys since 2006.

The latest ranking is based on stock-price performance and corporate market valuation as of April 2020, reflecting the effects of the pandemic.

The survey measures consumer brand preferences and how that translates into buying habits and price premiums.

“Innovation has proven to be a key driver for growth in this year’s top players, and a way to prevent decline,” said Doreen Wang, global head of BrandZ at Kantar.

Size does not necessarily guarantee high brand value. Some 52 brands have been replaced by newcomers on the list in the last 10 years.

Wang said brands need to better adapt their pricing to reflect value for consumers.

“More efforts are needed in terms of how brands offer value instead of just driving sales through discounts,” she noted. “Those who paid less attention to brand-building efforts will be under challenge from newcomers.”

Chinese liquor maker Moutai is the fastest-rising brand, with a 58 percent jump in brand value, and Douyin, known as TikTok overseas, is the highest-ranking newcomer on the list.

“Quality and brand have always been our priority, above all other pursuits,” said Li Jingren, chief executive officer of the Moutai Group.

The retail sector’s combined brand value rose 21 percent, the fastest in any segment tracked by the study. That was largely driven by brands in the e-commerce realm.

“We’re fully aware that seeking growth over a short period of time will only hurt the brand in the long run,” said Major Zhu, head of corporate branding at online retailer JD Group. “We’ve been making efforts to extend our supply chain to lower-tier cities to expand the e-commerce experience.”

Over half of brands in the media and entertainment category in the global study ranked in the top 20 gainers, including Netflix, Instagram, LinkedIn and Xbox. That reflects increased demand for digital entertainment during pandemic lockdowns.

Not many Chinese brands on the list, however, are perceived as truly international players. Their rankings largely reflect the giant size of the domestic market.

Wang said it’s a challenge for local brands to increase their presence when globalization has been put on hold by the virus.

She suggested brands seek to provide more value to consumers instead of just pursuing low-price strategies.

In addition to Alibaba and Tencent, the Chinese brands on BrandZ’s top 100 list are: Moutai, ICBC, Pingan, China Mobile, Huawei, JD, Meituan, China Construction Bank, Didi, Haier, China Agricultural Bank, TikTok, Xiaomi, Baidu and Bank of China.

Brand success is propelling the fortunes of company founders and executives.

In a report last month by Hurun Research, just over a quarter of the world’s top 100 billionaires were Chinese, and six ranked amid the fastest-rising fortunes.

In the Hurun Top 100 list, the two biggest names gaining wealth from the coronavirus outbreak were Jeff Bezos of Amazon and Huang Zheng, founder and chief executive of e-commerce company Pinduoduo. Bezos’ wealth increased by US$20 billion; Huang’s by US$18 billion.

Yuan Zheng, founder of the popular video-conferencing app Zoom, tripled his fortune from US$4.5 billion in January to US$13 billion in May.




 

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