The turbulence of the Chinese economy and stock market over the last 12 months continues to make headlines, but what has this meant for brands? Millward Brown's 10 years of the BrandZ Top 100 Most Valuable Global Brands has demonstrated that a strong brand protects the business in hard times, and enables it to recover faster.
Millward Brown and WPP have released the 6th annual BrandZ Top 100 Most Valuable Chinese Brands ranking and report. Learn how Chinese brands weathered the recent economic challenges and what impact this has had on consumer confidence and the growth of local brands.
http://www.millwardbrown.com/brandz/top-chinese-brands/2016
How videos can elevate your Google rankings and improve your EEAT - Benjamin ...
BrandZ Top 100 Most Valuable Chinese Brands 2016
1. BRAND VALUE RISES 13%
DESPITE TURBULENT YEAR
CONSUMERS PURSUE THE CHINESE DREAM
AS BRANDS EXPAND MOBILE STRATEGIES
2.
3. 4 5
TOP 100 Most Valuable Chinese Brands 2016
WELCOME
In turbulent times,
brand strength
protects and
propels the winners
2010. Compare that result with the
performance of a stock portfolio
comprised of brands from the BrandZ™
China Top 100 with the highest scores
in Brand Contribution, a BrandZ™
measurement of brand strength. Over
the same period, the portfolio of Brand
Contribution leaders rose 103.5 percent.
Let’s pull back the lens even further
so we can begin to see the outlines
of future brand growth in China.
Today, the BrandZ™ China Top 10
still accounts for almost two-thirds
of total ranking value, a legacy of the
production-driven economy and the
central role of state-owned brands.
However, the BrandZ™ China Top 10
only grew 3 percent in value, while the
growth rate of brands 11-to-100 was
over 30 percent.
These faster-growing brands
predominately are market-driven, as
are nine of the 10 brands that entered
the BrandZ™ China Top 100 for the
first time. In other words, as China
rebalances to a consumption-driven
economy, the faster growing brands are
those that depend less on government
and more on effectively meeting
consumer needs in ways that are
Different and Meaningful.
THE UNPARALLELED CHINA
RESOURCES OF WPP
Which raises the question, how does
a brand best compete in this rapidly
changing Chinese market? That’s where
we can help. This sixth annual edition
of the BrandZ™ Top 100 Most Valuable
Chinese Brands represents a fraction of
the knowledge, insight, and expertise
available from brand experts at WPP
companies in China.
WPP is the world’s communications
services leader. Our companies have
been engaged in China for over 30
years. Today, 15,000 people, including
associates, work across China in Beijing,
Shanghai, Guangzhou and many other
cities. We provide advertising; insight;
branding and identity, direct, digital,
promotion and relationship marketing;
media investment management, retail
and shopper marketing; and public
relations and public affairs. It’s all part of
our global presence in 112 countries.
By linking all this talent, creativity, and
wisdom, we amplify global trends and
insights that help our clients in useful
and unique ways. We call this powerful
perspective “horizontality.” It includes
our unrivaled Brand™ resource library,
which we invite you to access. Along
with the BrandZ™ Top 100 Most
Valuable Chinese Brands, the library
includes these titles: the BrandZ™
Top 100 Most Valuable Global Brands;
the BrandZ™ Top 50 Most Valuable
Indian Brands; the BrandZ™ Top 50
Most Valuable Latin American Brands;
the BrandZ™ Top 50 Most Valuable
Indonesian Brands; and Spotlight on
Myanmar - the ‘Leapfrog’ Nation.
You’ll also find insights about the
Chinese market in these BrandZ™
reports: Unmasking the Individual
Chinese Investor; The Power and
Potential of the Chinese Dream; The
Chinese New Year in Next Growth
Cities; and The Chinese Golden Weeks
in Fast Growth Cities. To download
these and other BrandZ™ reports,
please visit www.brandz.com. For the
interactive BrandZ™ mobile apps go to
www.brandz.com/mobile.
The backbone of all this intelligence
remains the WPP proprietary BrandZ™,
the world’s largest, customer-focused
source of brand equity knowledge
and insight. It is big data at its biggest,
with 4.5 billion individual data points.
Using the BrandZ™ brand valuation
methodology of Millward Brown, a
WPP company, we analyze relevant
corporate financial data and strip away
everything that doesn’t pertain to
the branded business. Then we take
a critical step that makes BrandZ™
unique and definitive among brand
valuation methodologies.
We conduct ongoing, in-depth
quantitative consumer research with
more than 200,000 consumers
annually, across over 50 markets, to
assess consumer attitudes about, and
relationships with, over 100,000 brands.
Our database includes information
from over three million consumer
interviews. It reveals the power of the
brand in the mind of the consumer
that creates predisposition to buy
and, most importantly, validates a
positive correlation with better sales
performance.
At WPP, we’re passionate about using
our creativity to create and build strong,
differentiated brands that deliver lasting
shareholder value. To learn more about
how to apply our experience and
expertise to benefit your brand, please
contact any of the WPP companies
that contributed expertise to this report.
Turn to the resource section at the end
of this report for summaries of each
company and the contact details of key
executives. Or feel free to contact me
directly.
Sincerely,
David Roth
CEO
The Store WPP, EMEA & Asia
David.Roth@wpp.com
Twitter: davidrothlondon
Blog: www.davidroth.com
Consider these circumstances. An economy slows to 6.9 percent GDP growth from annual
growth of 10 percent or more during much of the past decade. The stock market reaches a
record high in June, loses about a third of its value by the end of summer, but ends the year up,
actually outperforming the S&P 500. These events are the very definition of market volatility.
And they describe the context for the 2016 BrandZ™ Top 100 Most Valuable Chinese Brands.
The events of China’s past year
provided the perfect crucible for testing
the fundamental principle behind all
of our BrandZ™ work, which is that
brand strength provides the fortitude
to endure the most extreme market
fluctuations and emerge successfully.
In these circumstances, would you
expect brand value to decline? Or do
you think brand value might creep up
slightly? Despite the difficult economic
challenges, the value of the 2016
BrandZ™ China Top 100 rose a healthy
13 percent.
Let’s adjust the lens so that we are not
focused on last year alone, but on a
larger timeframe that encompasses the
more than three decades since China
embarked on economic reform, when
the swells of industrial expansion lifted
a lot of brands. Even as the current
turbulence tossed some brands, the
ballast of brand strength stabilized
many others.
Here’s one demonstration of brand
strength: The MSCI China, a weighted
index of Chinese stocks ended 2015
10.7 percent lower than its level in
David Roth
CEO
The Store WPP, EMEA & Asia
David.Roth@wpp.com
Twitter: davidrothlondon
Blog: www.davidroth.com
5. 14 60 90 108 200 228
230
232
234
236
242
244
246
247
248
249
210
224
115
144
158
192
188
92
96
98
102
64
68
72
76
80
82
20
24
36
40
42
50
54
9
TOP 100 Most Valuable Chinese Brands 2016
OVERVIEW
BRANDZ™ CHINA
TOP 100 STOCK
PORTFOLIO
TOP LINE RESULTS
Top 100 rises 13%
in difficult year
Market-driven brands now
over half of ranking value
Consumer mood is
optimistic; priorities changing
Chinese brands close Brand
Power gap with MNCs
THE CHINESE DREAM
ECONOMY,
DEMOGRAPHICS, AND
CONNECTIVITY
CROSS CATEGORY
TRENDS
TAKE AWAYS
OUR INSIGHTS
1. CONSUMER INSIGHT:
Price matters, but consumers
now seek quality and premium
2. DIFFERENCE:
Chinese brands must
communicate Difference
3. CORPORATE
REPUTATION:
Decline in Corporate Reputation
impacts both multinational
and Chinese brands
4. INNOVATION:
Drives brand value and greater
market penetration
5. DIGITAL
COMMUNICATION:
Consumers are on mobile, but
engaging them is challenging
6. CREATIVE QUALITY:
Big ideas turn media into magic
OUR INSIGHTS
THE CHINA TOP 100
RANKING
THE CHINA TOP 100
BRANDS IN BRIEF
THE TOP PERFORMERS
Top 20 in Brand Contribution
Newcomers
Top 20 in Global Revenue
Top 20 Risers in Brand Value
CATEGORY UPDATE
Category Overview
Categories in Brief
Q&A WITH SENIOR
EXECUTIVES OF TOP
100 BRANDS
Edward Cheng,
Corporate Vice President,
Tencent
Wang Zhenghua,
Chairman, Spring Airlines
OUR INSIGHTS
INTRODUCTION
SIX CRITICAL
OBSERVATIONS
FOR BUILDING
BRAND VALUE
THE CHINA
TOP 100
BRAND BUILDING
PERSPECTIVES RESOURCES
THOUGHT
LEADERSHIP
DIGITAL
By Jason Yu, General Manager,
Kantar Worldpanel China
E-COMMERCE
By Oceanne Zhang,
Director of Retail Insights and
E-Commerce, Kantar Retail
PHYSICAL WORLD
OPPORTUNITY
By Leon Zhang, Director,
Millward Brown Vermeer
BRAND AS CAPITAL ASSET
By Doreen Wang, Global Head
of BrandZ™, Millward Brown
THE NEW NORMAL
By Charles Laporte Aust, Vice President
and Jacco ter Schegget,
President, OgilvyOne China
MARKET SEGMENTATION
Sports Marketing
By John Kristick, Global CEO and Jin
Wei Toh, Regional Head, APAC
ESP Properties
Youth Marketing
By Lucy Yu, Business Development
Director, Millward Brown
Senior Marketing
By Theresa Loo, Chief Knowledge
Officer and Lily Xiong, Associate
Research Director, Ogilvy & Mather
China with Zod Fang, Director, GroupM
Knowledge China and Liu Yu,
Vice President, GeTui
CHANGING MEDIA
LANDSCAPE
Managing Change and
Complexity
Maneesh Choudhary, Head of Client
Service and Solutions and Jenny Ma,
Group Account Director, Millward
Brown Beijing
E-commerce and M-commerce
By Nils Roehrig, Chief Digital Officer,
GroupM China
Social Media
By Sam Flemming, Founder & CEO,
Monica Zhao, Head of Research
Innovation, Kantar Media CIC and
Theresa Loo, Chief Knowledge Officer,
Ogilvy & Mather
Agency Response
By Patrick Xu, CEO, GroupM China
OUR INSIGHTS
BrandZ™ Valuation Methodology
BrandZ™ Eligibility
and Definitions
BrandZ™ Reports,
Apps and iPad Magazines
WPP Companies
WPP Company
Contributors
WPP Company
Brand Building Experts
BrandZ™ China Top 100 Team
and Acknowledgments
About WPP
Brands Valuation Contact Details
WPP in China
BrandZ™ Online and Mobile
8
6. P E O P L E S E E T H E C H I N E S E D R E A M
O F A B E T T E R L I F E O N T H E N E A R H O R I Z O N .
7. 01
INTRODUCTION
OVERVIEW
BRANDZ™ CHINA TOP 100 STOCK PORTFOLIO
TOP LINE RESULTS
THE CHINESE DREAM
ECONOMY AND DEMOGRAPHICS
CROSS CATEGORY TRENDS
TAKE AWAYS
OUR INSIGHTS
12 13
8. OVERVIEW
Value rises 13%
despite slower
economy and
stock market slide
in Brand Power, the BrandZ™
measurement of brand equity. Brand
Power parity means that Chinese and
multinationals are in many ways equally
competitive. And the trend favors
Chinese brands. In 2010, multinationals
scored 115 in Brand Power and
Chinese brands scored 89. Today both
score 100, which is average.
TECHNOLOGY AND
MOBILE DRIVE VALUE
The rising value contribution of
market-driven brands is also reflected
in the relative proportion of value
contributed by the 23 categories
examined in the 2016 BrandZ™
China Top 100 ranking.
A stock portfolio comprised of the
BrandZ™ Top 100 Most Valuable
Chinese Brands demonstrated the
impact of brand strength. It significantly
outperformed the MSCI China, a
weighted index of Chinese stocks,
increasing over time and protecting
gains even during the stock market
tumult, when the MSCI lost value.
(Please see related story.)
In a historic inflection, the majority
of value in the BrandZ™ China Top
100 shifted to market-driven from
state-owned brands. The technology
category, especially mobile Internet
brands, rose in prominence, as
the stimulus of China’s economic
growth continued to rebalance from
production to consumption.
Technology, a category comprised
of market-driven brands, accounted
for 27 percent of BrandZ™ China Top
100 value. Two years ago, technology
produced just 16 percent of value.
At that time banks accounted for the
largest segment of brand value, 30
percent. Banks now contribute less
than a fifth.
Two technology brands, online
video provider Letv, and NetEase, the
developer of Internet technology and
games, registered the largest year-
on-year brand value increases, 81
percent and 73 percent, respectively.
Four technology brands were among
brands that derived a major portion
of revenue from overseas business:
telecommunications giant Huawei;
Lenovo, a world-leading computer
and mobile technology company;
smartphone maker ZTE; and Tencent,
the Internet portal.
Three of the five market-driven brands
in the Top 10 are in the technology
category, including Huawei, which
joined the BrandZ™ China Top
100 for the first time. The other
technology brands in the Top 10 are
Tencent, China’s most valuable brand,
which rose 24 percent in brand value
after almost doubling in value a year
ago, and the search engine Baidu. In
addition, online marketplace JD.com,
a strong challenger to Alibaba,
entered the ranking at number 15.
The BrandZ™ Top 100 Most
Valuable Chinese Brands
2016 increased 13 percent
in value, a lower increase
than the previous year, but
a strong performance at a
time when China’s economy
slowed and the stock market
fluctuated with extreme highs
and lows. In this choppier
period, brand strength
became an even more critical
success determinant.
OPTIMISTIC CONSUMERS MOBILIZE
TO PURSUE CHINESE DREAM
For the first time, market-driven brands
produced over half the total value of the
BrandZ™ China Top 100, 51 percent,
and five of the Top 10 brands were
market-driven. Just two years ago only
two of the Top 10 were market-driven.
Signaling enormous potential, brands
ranked 11-to-100 grew over 30 percent
in value, while the Top 10 grew only 3
percent. Currently, the Top 10 produce
almost two-thirds of total value.
Similarly, nine of the 10 brands that
joined the BrandZ™ China Top 100 for
the first time were market-driven.
In addition, Chinese brands achieved
parity with multinational brands
01 > Introduction TOP 100 Most Valuable Chinese Brands 2016
14 15
9. Meanwhile, Alibaba, number three in
the BrandZ™ China Top 100, continued
to expand its ecosystem with the
acquisition of the video entertainment
brand Youku Tudou, which joined the
BrandZ™ China Top 100 for the first
time, at number 52. BrandZ™ lists
e-commerce brands, like JD.com
and Alibaba, in the retail category, but
these brands illustrate the impact of
technology, and specifically mobile
engagement with consumers.
Of China’s 668 million Internet users,
89 percent, 594 million users, accessed
the Internet with a mobile device, as
of June 2015, according to the China
Internet Information Center (CNNIC).
Brands increasingly rely on mobile to
engage with Chinese consumers and
assist their efforts to realize the Chinese
Dream of a better life for themselves
and their families. Consumers spend
over two hours a day on their mobile
devices, according to Millward Brown’s
AdReaction study.
CONSUMERS OPTIMISTIC
DESPITE TURBULENT
MARKET
Despite the slower economy and
the erratic stock market, Chinese
consumers remained optimistic that
they would achieve the Chinese
Dream over the next decade, and they
continued to spend both on necessities
and even on big-ticket items. Some
postponed buying a car or home, but
few canceled those purchase plans.
Reflecting greater consumer buying
power and sophistication, shopping
patterns changed. The growth rate of
FMCG sales declined as consumers
shopped less frequently. They sought
to save money on items viewed as
commodities, while for other items,
01 > Introduction TOP 100 Most Valuable Chinese Brands 2016
16 17
particularly in personal care and
healthcare, consumers willingly paid a
premium when justified.
Research by WPP revealed these
consumer trends, which impacted the
brands and categories examined in
the BrandZ™ China Top 100 ranking.
A BrandZ™ report investigated
the attitudes and behaviors of the
consumers who were also small
investors in the China stock market.
Kantar Worldpanel examined changing
shopping patterns. (Please see consumer
mood story.)
Consumers were also more skeptical
and impatient with products of low
quality or unacceptable safety standards.
Corporate Reputation in China declined
from a score of 101, around average, to a
below average score of 97, as measured
by RepZ, a BrandZ™ metric. The decline
in Corporate Reputation touched both
local Chinese brands and multinational
brands operating in China. (Please see
Corporate Reputation story.)
However, consumers sustained their
optimism even as GDP growth slowed
to 6.9 percent, the Shanghai Composite
Index lost about a third of its value during
the summer of 2015, and external forces
also battered the economy, including
the drop in crude oil prices, which ended
2015 at $37 a barrel.
The government reinforced consumer
optimism. Following government
intervention, the Shanghai Composite
Index rebounded, and ended the year
up over 12 percent, beating the S&P 500.
Consumers also have faith in realization
of the Chinese Dream of a more
prosperous, equitable, and internationally
respected nation, as first articulated by Xi
Jinping three years ago.
OVERVIEW
10. 01 > Introduction TOP 100 Most Valuable Chinese Brands 2016
18 19
GOVERNMENT INITIATIVES
ADVANCE THE CHINESE
DREAM
President Xi and the Chinese
government introduced several
domestic and international measures
to advance the Chinese Dream. The
Belt and Road initiative is intended to
connect China with nearby and more
distant trading partners. It references the
Silk Road, the network of trading routes
that laced China and the surrounding
territories starting with the Han Dynasty
around 2,000 years ago.
The government also accelerated
development of a virtual network with
Internet+, the plan to prepare China for
economic growth in a post-industrial,
connected world of mobile devices, big
data, cloud computing and the Internet
of Things. China’s three state-owned
telecom providers accelerated the
rollout of 4G and the move to 5G. The
2015 World Internet Conference, held
in China, drew attention to China as an
Internet technology leader.
In his speech at the World Internet
Conference, and in his personal
diplomacy, Xi has demonstrated
determination to raise the international
profile of China and facilitate trade.
Since taking office in 2013, Xi has visited
over 30 countries, in part to strengthen
strategic commercial relationships with
countries and regions, including India,
Russia, the UK, the US, and Middle East.
To stimulate domestic consumption, the
government introduced cross border
e-commerce zones with lower tariffs
on imported merchandise. Chinese
consumers enjoyed lower online prices
and faster delivery for imported goods.
The first cross border e-commerce
zone was established in March 2015, in
Hangzhou. The government plans to set
up zones in Shanghai, Guangzhou and
10 other cities.
In another step to stimulate economic
growth, the government rescinded
China’s one child policy. Larger families
are expected to impact just about every
category of products and services,
including food and dairy, education, real
estate, and baby care. The introduction
of the baby care category in the
BrandZ™ China Top 100 this year is a
preview of the anticipated growth.
Government limitations on extravagant
official entertainment or gift giving,
aimed at curtailing corruption, continued
to impact certain categories, like alcohol.
But many of the most successful brands
have effectively repositioned and now
reach a wider audience, through broader
distribution channels with more modest
pricing.
With all these changes, China remains a
singular opportunity for brand growth –
but a more complicated and competitive
opportunity. Growth is slower and the
greatest potential is deeper in the country
and harder to reach. Using the Internet,
particularly mobile, brands are engaging
with consumers in smaller cities, towns and
villages, and strengthening relationships
with customers in the coastal cities. These
dynamics affect all brands regardless of
ownership.
For multinational brands, being foreign is no
longer an adequate differentiator because
local Chinese brands have caught up in
Brand Power, the BrandZ™ measurement
of brand equity. And Chinese brands, both
state-owed and market-driven, have invested
heavily to build Salience and be easily
recalled when a consumer is in a purchasing
mind frame. But Salience alone is insufficient
without being Different in a Meaningful way.
Chinese brands need to build Difference.
At the same time, communicating and
engaging with consumers has become more
challenging because of changing media
habits. Over half of all media investment will
be spent on digital in 2016, GroupM predicts.
And reaching consumers can be tricky.
They prefer to watch video ads on TV. But
they spend more than half of their screen-
watching time on mobile devices, primarily
smartphones.
Finally, the geography of Chinese brand
competition is changing. An encounter with
a Chinese brand can happen anywhere in
the world. Ten years ago, only one Chinese
brand, China Mobile, ranked in the BrandZ™
Top 100 Most Valuable Global Brands. Today,
14 Chinese brands are included in the Global
ranking, and that number is expected to rise
as Chinese brands build global presence.
For example, Haier, the home appliances
brand, is expected to firmly establish in the
US with the acquisition of General Electric’s
appliance division.
Brand success in China requires high
awareness, meaningful differentiation,
compelling creative work and an integrated
media plan, with traditional and mobile
components, to reach Chinese consumers at
the right time with the appropriate message
in the most effective medium. More than
ever, brand builders need the combination
of strategic thinking and effective execution
of a chess champion or, even better, a
master of XiangQi, the Chinese board game
invented during the Han Dynasty.
Implications
for Brands
OVERVIEW
Chinese President Xi Jinping and Queen Elizabeth II during a state visit to the United Kingdom in October 2015.
Photo by David Roth
11. JUL 2010
180%
160%
120%
140%
100%
80%
60%
40%
20%
0%
JAN 2011 JUL 2011 JAN 2012 JUL 2012 JAN 2013 JUL 2013 JAN 2014 JUL 2014 JAN 2015 JUL 2015 JAN 2016
-20%
STOCK PERFORMANCE
Stock portfolios of
the most valuable
Chinese brands
outperform market
During the early part of the year, the
stock market rose sharply as investors
pursued opportunities to make rapid
profits. This activity continued to
drive up stock prices until the bubble
burst, on June 12. Following an initial
recovery and government intervention,
the market fell sharply again, on
August 24.
Between June and September, the
Shanghai Composite Index lost about
a third of its value, before recovering
some value by the end of the year.
The MSCI China, a weighted index
of Chinese stocks ended 2015 10.7
percent lower than its level in 2010.
In sharp contrast, the BrandZ™ China
Top 100 Portfolio ended the year 43.1
percent above its 2010 level. This stock
portfolio consists of all the brands in
the BrandZ™ Top 100 Most Valuable
Chinese Brands.
The extreme fluctuations of
China’s stock market in 2015
provided a “stress test” for the
resilience of brands and the
correlation between brand
strength and shareholder
return on investment.
Valuable brands deliver superior shareholder returns
A separate stock portfolio of the
brands in the BrandZ™ China Top 100
with the strongest Brand Contribution
was up 103.5 percent since 2010.
Brand Contribution is a BrandZ™
measurement of brand strength, the
influence of brand alone on earnings,
with other factors stripped away.
In other words, $100 invested in the
MSCI China in 2010 would be worth
only about $90 today. That $100
invested in the BrandZ™ China Top
100 would be worth $143, and it would
more than double to $204 in the Brand
Contribution Portfolio because of
the brand strength of the component
stocks.
These results demonstrate several
important realities: (1) brand strength
provides stability, even in the most
volatile market conditions; (2)
investments brands made to build
value are measurably rewarded in the
stock market; and (3) valuable brands
deliver superior shareholder returns.
BrandZ™ China Portfolios vs. MSCI China July 2010 to January 2016
01 > Introduction - Overview TOP 100 Most Valuable Chinese Brands 2016
20 21
Source: BrandZ™ / Millward Brown, Bloomberg
For extensive analysis of attitudes and behavior influencing the
Chinese stock market and the impact on brands, please see
Unmasking the Individual Chinese Investor,
a new BrandZ™ research report, available at brandz.com.
■ BrandZ™ China Brand Contribution Portfolio (Brands in the China Top 100 ranked highest in Brand Contribution. Brand Contribution is a BrandZ™ measurement of brand strength)
■ BrandZ™ China Top 100 Portfolio (All China Top 100 brands)
■ MSCI China (a weighted index of Chinese stocks)
103.5%
43.1%
-10.7%
12. A M B I T I O N S A N D E N E R G Y S O A R W I T H P O S S I B I L I T I E S
I N T H E M O R E M A R K E T- D R I V E N E C O N O M Y.
13. TOP 100 GROWTH
Top 100 value
rise keeps pace
with rate of Top
100 Global brands
China’s GDP growth slowed to 6.9 percent
in 2015, down from 7.3 percent the prior
year, according to China’s National Bureau
of Statistics. The Shanghai Composite lost
about a third of its value between June and
September before recovering by the end
of the year. Brands were not immune to
this volatility, of course, but inoculated with
high Brand Power the most valuable brands
survived and even thrived. Brand Power is
the BrandZ™ measurement of brand equity.
The BrandZ™ Top 100 Most Valuable Chinese Brands 2016 increased 13
percent in value to $525.6 billion. Although the increase is lower than the 22
percent rise a year ago, brand value rose despite the countervailing forces of
China’s slower economic expansion and extreme stock market fluctuations.
A comparison of the stock market
performance of MSCI China, a weighted
index of Chinese stocks, and the BrandZ™
Portfolio of the Top 100 Most Valuable
Chinese Brands, shows that in January 2016,
the MSCI was down 10.7 percent from its
2010 level, while the BrandZ™ China Top
100 Portfolio was up 43.1 percent. A related
China BrandZ™ Top 100 stock portfolio
comprised of brands with exceptional brand
strength more than doubled in value over
the same period.
01 > Introduction - Top Line Results TOP 100 Most Valuable Chinese Brands 2016
24 25
13%BrandZ™ Top 100 Most
Valuable Chinese Brands
2016 Total Brand Value
$525.6 BILLION
These results demonstrate that brand strength
provides stability, even in the most volatile market
conditions; investments brands make to build value
are measurably rewarded in the stock market; and
valuable brands deliver superior shareholder returns.
While market volatility and global economic forces,
including the low prices for crude oil, pressured
certain brands and categories, they also opened
opportunities for smaller, entrepreneurial brands, able
to perform with more agility than some of the State
Owned Enterprises (SOEs).
The China BrandZ™ Top 10 grew only 3 percent in
value, as it transitions to market-driven brands, while
lower ranks, filled with market-driven brands, grew
sharply in value; brands ranked 11-to-50 increased 36
percent and 51-to-100 increased 34 percent.
Considered in a worldwide context, the 2016 China
BrandZ™ Top 100 13 percent increase is comparable
to the 14 percent brand value rise of the BrandZ™
Global Top 100. It was faster than the growth rate
of the BrandZ™ Latam Top 50, but slower than the
BrandZ™ India Top 50, which experienced exceptional
growth, driven by a robust economy, consumer
empowerment, and financial sector strength.
The BrandZ™ China Top 100 grows
13 percent…
… And the China Top 100 keeps pace with
Global Top 100
The BrandZ™ Top 100 Most Valuable Chinese Brands 2016 increased 13
percent in value to $525.6 billion, after growing 22 percent a year earlier.
The 13 percent growth rate of the BrandZ™ China Top 100 was comparable
to the 14 percent brand value change of the BrandZ™ Global Top 100.
Source: BrandZ™ / Millward Brown
2014 to 2016 BrandZ™ China Top 100 Value Change BrandZ™ ranking growth rates
India Top 50
Global Top 100
China Top 100
LatAm Top 50
Economic and stock market fluctuations
are inevitable in a market-driven economy.
However, brands do not inevitably need to rise
and fall extremely with the economic cycles. A
strong brand, or brand equity, strengthens the
brand immune system and helps moderate the
impact of economic swings.
Even when external forces impact competitors,
resilient, strong brands can grow in value, gain
market share, achieve strong financial results,
and deliver superior returns to investors.
Implications
for Brands
$379.8
Billion
2014
$464.2
Billion
2015
$525.6
Billion
2016
+22% +13%
33%
14%
13%
2%
14. MARKET-DRIVEN BRANDS
Market-driven
brands now exceed
half of ranking
value for first time
These developments demonstrate
how China’s economy is changing in
fundamental ways as the government
invites more market competition to
enable private enterprises, encourage
consumption, create wealth, and
distribute it more equitably. The
BrandZ™ results also signify the
growing importance of brands.
Since 1978, when Deng Xiaoping
first introduced market reforms,
Chinese consumers have experienced
a government-driven economic
transformation that created or
improved products and services in
most sectors of the economy. Today,
Chinese consumers want more. The
brand choices they make will help
shape the country’s prosperity over the
next period of economic change.
It is only around three years since
Xi Jinping articulated the idea of
Market-driven brands
comprise over half the brand
value of the BrandZ™ Top
100 Most Valuable Chinese
Brands for the first time since
the ranking was introduced
in 2011. In addition, the China
Top 10 is now evenly split
between market-driven and
state-owned brands.
rebalancing the economy. This
process is not completed overnight,
even in China, however the results of
the BrandZ™ China Top 100 indicate
how extensively change is happening.
Market-driven brands now comprise 51
percent of the BrandZ™ China Top 100
brand value, compared with only 29
percent, in 2014.
Over those three years, the amount
of BrandZ™ China Top 100 value
driven by State Owned Enterprises
(SOEs) declined to 49 percent from 71
percent. Similarly, five of the Top 10
brands are market-driven in the 2016
BrandZ™ China Top 100, compared
with only two brands in 2014. And five
of the Top 10 are SOEs, compared
with eight three years ago. Perhaps
more important than changes over
the past three years, is the potential for
even greater change throughout the
BrandZ™ China Top 100 ranking.
01 > Introduction - Top Line Results TOP 100 Most Valuable Chinese Brands 2016
26 27
Market-driven brands are 51 percent
of Top 100 Value…
… And half of the Top 10 are
market-driven
Market-driven brands comprise over half of the value of the BrandZ™
Top 100 Most Valuable Chinese Brands for the first time.
The BrandZ™ China Top 10 is now evenly split between
market-driven and state-owned brands.
Source: BrandZ™ / Millward Brown
Share of China Top 100 value by ownership Number of brands in China Top 10
28
37
55
2014
2015
2016
29%71%
47%53%
51%49%
2014
2015
2016
■ State-Owned
■ Market-Driven
■ State-Owned
■ Market-Driven
15. 01 > Introduction - Top Line Results TOP 100 Most Valuable Chinese Brands 2016
28 29
These results suggest that the
Chinese market is more open
to competition, but they do
not say that success is assured.
Challenging well-known, well-
established SOEs still requires
having a product or service
that benefits the consumer
in a Different and Meaningful
way, along with investment to
communicate those benefits
and build Salience.
And SOEs, now under greater
pressure, need to project
more than Salience to remain
competitive. SOEs also need
to rebuild Difference, which
eroded over time because
SOEs won with dominance,
not Difference. It is critical for
SOEs to differentiate now, in
a rebalancing economy, with
more competition from market-
driven challengers.
These challengers have an
important opportunity. Often
fast-growing, energetic
brands lower in the ranking,
they receive less media and
investor attention than the
better-known, higher value
brands. With communications
and promotion investment
these brands, with important
stories to tell, could draw more
attention from media, investors,
and customers.
Implications for Brands
Value is still concentrated at the top
of the ranking. The Top 10 produce
64 percent of the value. However,
the value growth rate of the Top 10
is declining, while value growth rate
is increasing dramatically throughout
the rest of the ranking. The value of
the BrandZ™ China Top 10 increased
by only 3 percent; but the brands
ranked 11-to-50 rose 36 percent in
brand value, and brands ranked 51-
to-100 rose 34 percent.
Market-driven brands, which grew
22 percent in brand value, drove this
distribution of value throughout the
ranking, primarily. But Competitive
SOEs grew 20 percent in brand
value. Competitive SOEs are state-
owned brands in consumer-facing
categories, like food and dairy, where
brand equity is an important success
determinant. In contrast, Strategic
SOEs grew only 3 percent in brand
value. These brands, in categories
like oil and gas, are closely aligned
with the government and involved
with policy implementation.
This contrast, between higher value/
slower growth brands toward the top
of the ranking and lower value/faster
growth brands toward the bottom,
means that over time the BrandZ™
China Top 100 should begin to
resemble the BrandZ™ Global Top
100 where the Top 10 account for
only 35 percent of value, which is
much more evenly distributed.
Brands below Top 10 grow faster in brand value…
The rate of Top 10 value growth is declining, while throughout the rest of the BrandZ™ China Top 100
ranking the rate of value growth is increasing dramatically.
BrandZ™ China Top 100 Brand Value year-on-year change by ranking range
… And value is distributed more evenly in the Global 100 vs.
the China 100
Brand value is concentrated at the top of the BrandZ™ China Top 100, compared with the BrandZ™
Global Top 100, where value is more evenly distributed throughout the ranking. However, fast-growing
market-driven brands are driving rapid value rise lower in the BrandZ™ China 100 ranking, while value is
growing at a fairly even pace throughout the Global ranking.
Source: BrandZ™ / Millward Brown
% Brand value year-on-year change
SOEs decline in Different
Between 2014 and 2016, SOEs declined 14 points in Different, from a score of
119 to 105. SOEs are still better than average, a score of 100, in Different. But if
the steady decline continues, SOEs will become more vulnerable to market-
driven competitors.
Source: BrandZ™ / Millward Brown
Change in Brand Power component scores 2014 to 2016
MARKET-DRIVEN BRANDS
3%28%
10%
18%
22% 13%
36%
34%
Ranking 1 - 10
Total Value
Ranking 11 - 50
Ranking 51 - 100
■ 2014 vs. 2015
■ 2015 vs. 2016
35%
64%
43%
5%
22%
31%
State-Owned Market-Driven
MEANINGFUL -2 +1
DIFFERENT -14 -0
SALIENT +12 +10
■ Ranking 1 - 10
■ Ranking 11 - 50
■ Ranking 51 - 100
3%
14%
8%
19%
36%
34%
BrandZ™ Global
Top 100
2014 vs. 2015
BrandZ™ China
Top 100
2015 vs. 2016
16. declining volume of exports. Not
surprisingly, high housing prices was
a greater source of pessimism among
younger people, ages 18-to-30.
Because of the general optimistic
frame of mind, over 80 percent of
investors surveyed in the BrandZ™
report said that the stock market
volatility would have little or no effect
on their spending. They expected
to limit cutbacks for necessities and
moderate spending for luxuries and
entertainment, if necessary.
They also planned to continue spending
for telecommunications services and
education. Big-ticket spending was well
protected, too. Few people planned to
cancel the purchase of a car, home or
vacation because of the stock market
setbacks. Most may postpone purchase
of a home, but few will cancel these
plans. Vacations are most sacrosanct.
CONSUMER MOOD
Optimistic
consumers spend,
but priorities
begin to change
The rate of spending on fast moving
consumer goods (FMCG) is declining
because consumers are becoming
more pragmatic and sophisticated
as shoppers. Consumers sought
discounts in the FMCG categories
they viewed as commodities. In other
FMCG categories, especially related
to personal health, consumers were
willing to pay a premium. With growing
disposable income, Chinese consumers
also are spending more on travel and
entertainment.
These findings are contained in
two recent WPP reports. BrandZ™
research examined the attitudes and
behaviors of China’s individual investors
toward the end of 2015, after the
stock market declined precipitously.
Chinese consumers had many reasons to feel pessimistic last year. But they
did not. Despite the slowdown in economic growth and extreme stock market
fluctuations, Chinese felt optimistic about the economy and the stock market.
These factors only had a modest effect on spending, even for big-ticket purchases.
01 > Introduction - Top Line Results TOP 100 Most Valuable Chinese Brands 2016
30 31
Chinese investors feel
optimistic about the stock
market…
… Faith in government to fix
problems drives optimism
in stock market…
… And faith in government
drives optimism about the
economy
Almost three-quarters of investors say they are
fairly or extremely optimistic about China’s stock
market, despite the sharp drops in overall value.
Investors who feel optimistic about China’s stock
market offer believe the government is trying to
improve the economy.
Of the three quarters of investors who are
optimistic about the economy, two-thirds believe
that China’s economy is in transition and will
become healthier.
Source: BrandZ™
Source: BrandZ™
How do you feel about China’s stock market performance?
Why do you feel optimistic about China’s stock market?
Why do you feel optimistic about China’s economy?
Kantar Worldpanel analyzed the
FMCG shopping patterns of Chinese
households.
Almost three-quarters of China’s small
investors feel optimistic about the
stock market based on faith that the
government will continue to drive
economic growth and correct any
stock market difficulties along the way.
These attitudes are fairly consistent
across age, gender, income, city of
residence and investment experience.
Around three-quarters of Chinese
individual investors also feel optimistic
about the economy. Two-thirds of
the optimists believe that China’s
economy is in transition and will
become healthier. A somewhat smaller
group, 60 percent, is confident that the
government is trying to improve the
economy. And for 55 percent, China’s
increased international stature reassures
them about the nation’s economy.
Their optimism is reflected in the vitality
of the retail industry, which grew at a
monthly rate of 10 percent or more
during 2015, according to China’s
National Bureau of Statistics. Retail
spending also is indicative of China’s
economic growth driver shifting from
production to consumption. Although
the 6.9 percent annual GDP growth in
2015 was less than half of GDP growth
at its peak, in 2007, consumption
now contributes a greater proportion
to GDP, which is also comprised of
investment and net exports.
The pessimists, a minority, worry that
economy is declining, inflation is rising,
and housing prices are high. Some
expressed concern about China’s
■ Extremely Optimistic
■ Fairly Optimistic
■ Don’t know/No idea
■ Only somewhat
Pessimistic
■ Extremely Pessimistic
2%
22%
2%
11%
62%
■ The government is trying to improve overall economy
■ The government is issuing new trading policy
■ The system of the stock market is turning transparent
and mature
■ The government will rescue the stock market
performance
■ Others
59
58
52
22
1
67
60
55
46
41
■ China is in economic transition, and the economic
environment will become healthier and better
■ The government is trying to improve the economy
■ The international status of China is improving
■ Economic solutions and policies to strengthen
China’s economy are being implemented
■ National leaders’ visits to other countries will bring
more business opportunities
17. 01 > Introduction - Top Line Results TOP 100 Most Valuable Chinese Brands 2016
32 33
Source: BrandZ™
How did the two stock market drops affect your plans to purchase these items?
This optimism and determination to
maintain spending habits happened
in the context of the increasing
affluence and sophistication of Chinese
consumers and the refinement of
consumption behavior. Chinese are
shopping less but spending more on
each trip because they increasingly are
concerned not with price alone, but
value and quality.
The change in shopping behavior is
clear in FMCG spending, where the
rate of growth has declined from 11.8
percent in 2012 to 3.5 percent in 2015,
according the research by Kantar
Worldpanel. The research divides
the 26 FMCG categories studied into
The stock market swings had
little effect on spending…
Premium brands gain
market share
… Even big-ticket spending plans continue
Over half of Chinese investors said the stock
market correction will have little effect on
spending, and 28 percent expect no effect.
Of FMCG brands that increased market penetration,
added new buyers, 64 percent sell products at
premium or even super premium prices.
Few investors plan to cancel the purchase of a car, home or vacation because of the stock market
setbacks. Most may postpone purchase of a home, but few will cancel these plans.
Source: BrandZ™
Source: Kantar Worldpanel
How did the two stock market drops affect your regular
shopping behavior?
Winning brands increased penetration (gained new buyers),
losing brands decreased penetration.
Price Index = Brand Average Price/Category Average Price X 100
two groups: those with prices rises
exceeding inflation and those lagging
inflation.
The results identify 16 categories with
prices rises exceeding inflation, in which
consumers are willing to pay a premium,
and 10 categories that lag inflation,
in which consumers expect to pay a
promotional price for a commodity
product. For example, consumers will
pay a premium for bottled water, but
expect to buy carbonated soft drinks
on promotion. Of FMCG brands that
increased market penetration, meaning
they added new buyers, 64 percent
sold products at premium or even super
premium prices.
Consumers are optimistic and continue to spend,
but they spend differently. How consumers spend
on essentials varies by FMCG category. And it
is important for brands to understand whether
their customers are willing to pay a premium for
perceived value or instead are willing to purchase
only on promotion.
Outside of FMCG, brands in categories like travel
and leisure have an opportunity to accelerate
growth as consumers shift their spending
from filling needs to satisfying wants. Chinese
consumers, especially in the larger cities, continue
to pursue their aspirations regardless of changes in
the economy and stock market.
Opportunities are available to both Chinese
and multinational brands. But Chinese brands
are gaining advantage. They have achieved
parity with multinationals in Brand Power, the
BrandZ™ metric of brand equity that correlates
with market share. Chinese brands gained market
share an average of 10 percent in 18 of the 26
FMCG categories studied in the report by Kantar
Worldpanel. Multinationals grew share in only
eight categories, averaging gains of 3 percent.
Implications for Brands
CONSUMER MOOD
■ Yes, it has
strong impact
■ Yes, but it is
small impact
■ No impact
■ Super Premium (Price Index >150)
■ Premium (Price Index 120-150)
■ Medium (Price Index 80-120)
■ Low (Price Index <80)
28%
53%
15% 20% 13%
32%
7%
28%
24%
48% 44% 38%
19%
37% 36% 49%
5%
9%
55%
40%
Car
House/
Apartment
Vacation/
Recreation
■ Make planned purchases
■ Postpone planned purchases
■ Cancel planned purchases
Losing
Brands
Winning
Brands
18. CHINESE VS. MNC BRANDS
Chinese brands
now equal
multinationals
in Brand Power
Brand Power correlates with market share. Chinese brands
gained market share an average of 10 percent in 18 of 26
FMCG categories studied in a Chinese shopper report by
Kantar Worldpanel. Multinationals grew share in only eight
categories, averaging gains of 3 percent.
Brand Power parity means that Chinese and
multinationals are in many ways equally competitive. And
the trend favors Chinese brands. In 2010, multinationals
scored 115 in Brand Power and Chinese brands scored 89.
Today both score 100, which is the average score.
The Brand Power score is derived from three
components: Meaningful, consumers feel an affinity
for the brand or think it meets their needs; Different,
consumers view a brand as unique in some way, even
trendsetting; and Salient, consumers think of the brand
quickly when a purchase opportunity arises.
Chinese brands have achieved parity with multinational brands in Brand Power, the
BrandZ™ measurement of brand equity. Over the past six years, Chinese brands
strengthened in Brand Power, while the multinationals weakened.
01 > Introduction - Top Line Results TOP 100 Most Valuable Chinese Brands 2016
34 35
Examining these components reveals
that Chinese and multinationals score
the same in Brand Power for different
reasons. Chinese brands now exceed
multinational brands in Salience, but lag
multinationals in Difference. Chinese
and multinational brands are about
equal in Meaningful. (Please see Part
2: Six Critical Observations for Building
Brand Value.)
Chinese brands made this competitive
progress in part because of the
increased knowledge and sophistication
Chinese brands reach Brand Power parity
with multinationals …
Over the past six years, Chinese brands have strengthened in Brand Power, while
the multinationals weakened.
Source: BrandZ™ / Millward Brown
Brand Power is the BrandZ™ measurement of brand equity;
Brand Power average score = 100
… But consumers view Chinese brands as less Different
Chinese consumers describe multinational brands with characteristics like sexy and different,
and view Chinese brands as friendly and kind.
Consumer view of Chinese and multinational brand characteristics across 16 categories.
Adventurous
Assertive
Brave
Caring
Creative
Desirable
Different
Friendly
Fun
Generous
Idealistic
In Control
Innocent
Kind
Playful
Rebellious
Sexy
Straightforward
Trustworthy
Wise
… And the Chinese brand archetypes are
less assertive than the multinational
When those 20 brand personality characteristics are combined
into brand archetypes, consumers view Chinese brands as the
Friend, for example, while multinationals become the Rebel.
Source: BrandZ™ / Millward Brown
Consumer view of Chinese and multinationals across nine categories
Chinese brands have momentum
in building Brand Power. They have
grown in Salience and now surpass
multinational brands, which are
weakening in Salience. Chinese brands
need to build on their Salience and
communicate how they are Different.
Multinationals need to halt the slip in
the Brand Power. Like Chinese brands,
multinationals will need to communicate
with consumers more effectively. They
need to rebuild Salience with marketing
communication that catches the
attention of Chinese consumers.
For multinationals, however, it may be
time to stress not how they are Different,
but rather how they are the same as
Chinese brands in the sense that they
understand the Chinese consumer, and
will help consumers build better lives for
themselves and their families.
Implications
for Brands
of Chinese consumers who
increasingly select brands for their
value. Chinese brands overall have
improved products and services and
have effectively communicated in a
way that builds awareness.
They have been less effective
communicating their distinctiveness,
however. In BrandZ™ research,
Chinese consumers described Chinese
and multinational brands according
to 20 personality characteristics. They
described multinational brands as
sexy, desirable and different, and the
Chinese brands as friendly, caring
and kind.
And when those 20 characteristics
are combined into BrandZ™ brand
archetypes, Chinese brands become
the Friend or the innocent Maiden,
for example, while multinationals
become the Rebel or the Seductress.
The less aggressive character of
the Chinese brands makes being
perceived as Different more difficult.
2010 2011 2012 2013 2014 2015
■ Chinese Brands
■ Multinational Brands
■ Chinese Brands
■ Multinational Brands
115 115 101 104 101
89
100 100 96 99
100
Seductress
Sexy
Desirable
Dreamer
Idealistic
Different
Creative
Maiden
Innocent
Kind
Friend
Friendly
Straightforward
Rebel
Rebellious
Chinese
Brands
Multinational
Brands
21%
1%1%
9%
8%
19%
22%
17%
10%
7%
19. THE CHINESE DREAM
Individuals
sustain confidence
in realizing the
Chinese Dream
Over the past four years, the Chinese
Dream has become more deeply
embedded in national life, not simply
as a useful government slogan, but also
as an idea embraced by the Chinese
people as the expression of their hopes
and expectations. This conclusion
comes from BrandZ™ research into the
attitudes and behaviors of the Chinese
consumers who invest in the stock
market.
The research, conducted after the two
deep stock market declines in 2015,
found that these individuals remain
optimistic about the stock market, the
economy, and the possibility of realizing
the Chinese Dream. The research
follows an earlier BrandZ™ examination
of the Chinese Dream called, The Power
and Potential of the Chinese Dream. (For
more details, please visit brandz.com.)
In November 2012, Xi
Jinping described a vision
of a nation, strong at
home and internationally
respected, whose citizens
enjoy the benefits of greater
prosperity. He called this
vision the Chinese Dream.
01 > Introduction
36 37
Confidence in the Chinese
Dream is strong despite
stock market…
Even following the two steep stock market
declines in 2015, almost two-thirds of individuals
who invest in the stock market feel confident or
extremely confident that they will achieve the
Chinese Dream during the next decade.
How confident are you that in the next 10 years you will
achieve your expectation of the Chinese Dream?
Source: BrandZ™ / Millward Brown
■ Extremely confident
■ Fairly confident
■ Don’t know
■ Only somewhat confident
■ Not confident at all
5%
30%
2%
21%
42%
20. Consumers are likely to favor brands
that help advance the Chinese Dream
by offering quality products and services
that improve lives. These offerings not
only help realize the Chinese Dream,
they elevate the view of China as a
producer and marketer. This burnished
image of Brand China facilitates overseas
business growth.
The new research report, Unmasking the
Individual Chinese Investor, finds that the
top three aspirations of Chinese have
not changed much since the earlier
research, in 2014. They are: a good life
for my family; live in a powerful country;
and be healthy. The desire for a good
life increased in importance. Almost
two-thirds of Chinese investors called
it the single most important aspect of
the Chinese Dream, compared with 54
percent of respondents in 2014.
And the Dream resonates, especially
among young people, according to
the recent report. (For more details,
please visit Brandz.com.) Compared
with 2014, people are more likely to say
that the Chinese Dream, as articulated
by the government, represents their
own opinions. In 2014, two-thirds of
respondents said they believed that
the Chinese Dream strengthens social
cohesion. Now, three-quarters of
respondents agree with that statement.
Similarly, in 2014, 65 percent said that
the Chinese Dream is the dream of the
Chinese people. Now three-quarters
agreed with that statement. (Note:
The respondent groups differ.) Almost
two-thirds are confident that they will
achieve the Chinese Dream during the
next decade. Less than a third are only
somewhat confident about achieving
the Chinese Dream. And only 5 percent
completely lack confidence in realizing
the Chinese Dream.
01 > Introduction TOP 100 Most Valuable Chinese Brands 2016
38 39
… A good life for self and family remains most important…
… As the Chinese Dream evolves from political slogan to
personal conviction
The priorities of the Chinese Dream remain fairly consistent over time for Chinese individuals.
A good life for the family tops the list for almost two-thirds.
Chinese Dream has become a unifying theme now more
deeply embedded in national life, not simply a useful
government slogan, but also as a theme embraced by the
Chinese people.
Source: BrandZ™
2015: Select five components of the Chinese Dream that are most important to you.
2015: To what extent do you think these descriptions of the Chinese Dream represent your opinions?
Fundamentals of the Chinese
Dream have not changed over
the past four years. People want
to become wealthier and able to
afford more creature comforts.
But attitudes toward aspects of the
Dream seem to be impacted by
events and personal experience.
While the components of the
Chinese Dream remain consistent,
their relative importance is
somewhat fluid. The importance
of home ownership has declined
somewhat, for example, possibly
because more people now own
homes and those that do not may
be waiting for a better time to buy.
Consumers are likely to view more
favorably brands that align with the
Chinese Dream, at least implicitly.
These brands demonstrate that
their mission is not only about
making a profit. Rather, in making
a profit, these brands create the
products and services that enable
Chinese individuals and families
to improve their lives, and China
to develop as a stronger, more
prosperous and equitable nation.
Implications for Brands
THE CHINESE DREAM
■ A good life for my family
■ Live in a powerful country
■ Be healthy
■ Sustainable economic development
■ Financial security
■ Have the same opportunities as everyone else
■ Good opportunity
■ To be able to retire comfortably
■ Pursuit of happiness
■ Be successful at work
■ Individual freedom
■ A good job
■ Home ownership
■ Rags to Riches
■ Be richer
■ Achieve more than parents’ generation
■ Become famous
65%
54%
51%
50%
39%
39%
36%
31%
29%
25%
19%
76%
75%
73%
73%
72%
72%
70%
68%
68%
68%
64%
14%
13%
12%
11%
9%
3%
■ Chinese Dream strengthens the social
cohesion
■ Chinese Dream is the dream of Chinese
people
■ Chinese Dream makes me feel confident in
the development of this country
■ Chinese Dream makes the country more
energetic
■ Chinese Dream makes me feel confident in
my future
■ Chinese Dream and my personal dream are in
concordance
■ Chinese Dream has brought positive changes
to our social environment
■ Chinese Dream attracts people from other
counties to come and fulfill their own dreams
■ Chinese Dream’s values extend beyond
national boundaries
■ Chinese Dream is the dream of the
government
■ Chinese Dream is demonstrated by China’s
social system
Photo by David Roth
21. XINJIANG
MONGOLIA
KYRGYZSTAN
INDIA
NEPAL
BHUTAN
BANGLADESH
MYANMAR
NORTH
KOREA
SOUTH
KOREA
JAPAN
RUSSIA
RUSSIA
VIETNAM
LAOS
QINGHAI
SICHUAN
YUNNAN
XIZANG
GANSU
NEI MONGOL
SHAANXI
SHANXI
HENAN
SHANDONG
HEBEI
TIANJIN
LIAONING
JILIN
HEILONGJIANG
HUBEI
HUNAN
GUIZHOU
GUANGXI
JIANGXI
JIANGSU
FUJIAN
ZHEJIANG
ANHUI
GUANGDONG
CHONGQING
BEIJING
SHANGHAI
ECONOMY, DEMOGRAPHICS,
AND CONNECTIVITY
01 > Introduction
40 41
TOP 100 Most Valuable Chinese Brands 2016
9.6 MILLION SQ. KM.
(3.7 MILLION SQ. MI.)
LANDAREA2
(World’s fourth largest nation,
slightly smaller than the US)
1.37 BILLION
TOTAL
POPULATION
POPULATIONBYAGE2
US $10.355 TRILLION
GDP
GROSSNATIONALSAVING FOREIGNDIRECTINVESTMENT
(Over half the US GDP and over
two times larger than Japan’s)
(2014 % of GDP)2
Figures are from the World Bank for 2014 unless otherwise noted.
The 2015 population, GDP growth rate, and percent of urban population are from the National Bureau of Statistics of China.
1
China Internet Network Information Center (CNNIC) as of June 2015
2
CIA World Fact Book, 2015 estimates unless noted
US $7.590 BILLION
GDPPERCAPITA
(somewhat less than Bulgaria)
US $2.3 TRILLION
EXPORTS2
(2014, number one worldwide,
followed by the EU and the US)
2005
0
3%
15%
12%
9%
6%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
GDPRATEOFGROWTH
11.4%
2005
US $8,000
US $7,000
US $6,000
US $5,000
US $4,000
US $3,000
US $2,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
GDPPERCAPITAGROWTH
$1,740 $2,082
$2,673
$7,590
$3,441
$3,800
$4,515
$5,574
$6,265
$6,992
12.7%
14.2%
9.2%
7.8%
9.6%
10.6%
9.5%
7.7% 7.3% 6.9%
48.5%
China
$289.1
Billion
China
32.2%
India
$33.9
Billion
India
19.2%
EU
$22.9
Billion
Russia
39.1
Russia
15.6%
Brazil
$96.9
Billion
Brazil
18.8%
US
$131.8
Billion
US
1981 1991 2001 2011 2012 2013 2014 2015
10%
20%
30%
40%
50%
60%
0%
URBANPOPULATION
(Percent of total population)
27%
37%
20%
51% 52% 53% 54% 56.1%
65 years and over
55-64 years
25-54 years
15-24 years
0-14 years
10.01%
11.14%
47.95%
13.82%
17.08%
MEDIANAGE2
36.8
China
27.3
India
31.1
Brazil
37.8
US
40.4
UK
668 MILLION
186 MILLION
594 MILLION
480 MILLION
TOTAL
INTERNET
USERS
RURAL
INTERNET
USERS
TOTALMOBILE
INTERNET
USERS
TOTAL
SMARTPHONE
USERS
48.8%
Internet
Penetration
88.9%
Internet Users
on Mobile
22. CROSS CATEGORY TRENDS
Mobile transforms
Chinese market,
as brands face
challenges of growth
01 > Introduction TOP 100 Most Valuable Chinese Brands 2016
42 43
Mobile has become an
integral part of everyday life
for Chinese consumers. On
mobile, they talk, text, shop,
order food, hail taxis, book
travel, trade stocks, pay
for products and services,
deposit money into their
bank or transfer money
to friends. These activities
happen on mobile in other
countries and regions, but
not to the same extent.
In most places mobile
is an option; in China it
seems autonomic. It is an
expression of the Chinese
Dream and a pathway to
its fuller realization. About
half of all e-commerce in
China happens on mobile
compared to just over a fifth
in the US and around a third
in the UK.
The implication for brands
is clear: consumers are on
smartphones at least two
hours a day, according to
MOBILE
Millward Brown’s AdReaction
study, and mobile is the
place to engage them. But it
is also important for brands
to understand why mobile is
such a large phenomenon,
how to best use mobile, and
when mobile may not be the
best medium. Numbers tell
much of the story. Internet
users in China reached 668
million in June 2015 and 549
million of those users, almost
90 percent, accessed the
Internet on a mobile device.
In other words, the number
of Internet users in China
is more than twice the
population of the US and
almost the population of
Europe, and most of those
individuals are walking
around with a smartphone.
These numbers alone
would appeal to any brand
marketer, but there is more.
The total number of Internet
users represents less than
half of China’s population
of over 1.3 billion. And
penetration is relatively low
in rural China, where the
Internet users make up just
over a quarter of China’s
total Internet users. A big
brand opportunity is about
to become bigger.
MOBILE USE
SEEMS AS
NATURAL AND
NECESSARY
AS BREATHING
Like many national markets, China is
not homogenous. But it is distinct in
several ways. First, the population of
over 1.3 billion is dispersed in cities and
villages across a landmass almost the
size of the US. Initially, it was sufficient
to reach the rising middle class in the
coastal cities. But now buying power,
and interest in brands, is increasing
throughout the country.
Second, many countries have a
generation gap, a normal difference
in attitudes between the young and
their parents. In China, this difference
is exaggerated because parents
experienced a different China than the
one in which their children grew up.
Parents remember scarcity and limited
MEDIA
access to western goods. Anyone
over thirty has experienced relative
abundance and overwhelming online
shopping options.
Third, reaching these varied audiences
– rural, urban, younger and older – is
tricky. Smartphones are becoming
ubiquitous, but TV remains the
preferred medium for watching ad
videos, especially in rural China. The
only certainty is the primacy of digital,
which now accounts for about half
of all media spending, up from only
11 percent in 2010. The shift to digital
will accelerate even more as the
government drives its Internet+ agenda
aimed at transforming the character of
the economy from industrial China to
connected China.
NEVER A SIMPLE
MEDIA MARKET,
CHINA NOW
IS MORE
COMPLICATED
23. 01 > Introduction TOP 100 Most Valuable Chinese Brands 2016
44 45
For Traditional Chinese Medicine (TCM)
products, being Chinese is the key product
advantage, of course. But Chinese brands
expanding internationally increasingly emphasize
their global ambitions rather than their national
provenance. This is often the case in the
appliance and technology categories, which are
accelerating their shift to global brand builders
from their earlier role as Original Equipment
Manufacturers (OEMs), makers of products that
were marketed under western brand names.
Haier, the manufacturer of white goods and
other appliances is in the process of acquiring
the appliance division of General Electric.
Hisense appliances are widely available in
the US. Huawei sold 100 million branded
smartphones in 2015, many of them in Europe.
Smartphone maker ZTE sponsors five NBA
teams in the US. It is 10 years since Lenovo
purchased the IBM personal computer division,
and two years since its purchase of Motorola
Mobility from Google. Today, 68 percent of
Lenovo revenue comes from outside China.
The international presence of Chinese brands
includes other categories, such as cars, where
export proceeds region by region, first to
emerging markets in Southeast Asia, Africa or
Latin America. The car brand Changan, which
appears for the first time in the BrandZ™ China
Top 100 this year, is expanding exports. The
government of China is aggressively facilitating
trade with initiatives like the One Belt, One
Road to create a network of trading partners,
a modern version of the Silk Road. In the
meantime, Chinese Internet brands, like Alibaba
and JD.com, and Chinese social networks like
WeChat, are raising international awareness of,
and access to, Chinese products.
Tencent, the Chinese Internet portal and gaming
leader, is exporting its online games, trying
to build a large and revenue-driving global
audience. A Chinese conglomerate recently
bought Brookstone, the US retailer of consumer
electronics and gadgets. The brand will become
another sales channel for Chinese brands,
perhaps featuring niche products from Chinese
start-ups like those producing smart watches to
compete with Apple and Samsung.
GOING
GLOBAL
BRANDS
EMPHASIZE
GLOBAL STATURE
RATHER THAN
CHINESE
PROVENANCE
CROSS CATEGORY TRENDS
24. 01 > Introduction TOP 100 Most Valuable Chinese Brands 2016
46 47
STAGES OF
GROWTH
As a brand grows and pursues
new opportunities it becomes
important to periodically do
an identity check, to see how
much the brand has shifted
from its original core idea or
mission, and to what extent
the evolved brand matches the
needs and desires of existing
and prospective customers.
In general, the more faceted
a brand becomes, the
more difficult it becomes to
summarize and coherently
communicate the brand idea.
Companies like Alibaba and
Tencent, which have built large
platforms, or ecosystems, with
many components, face this
challenge of clearly articulating
a unifying idea. It is a symptom
of success.
As they manage brand
portfolios in the virtual world,
Alibaba and Tencent face
some of the challenges that
organizations like Unilever and
P&G confront in the physical
world. Global ambitions of the
Internet giants add urgency
because clarity is a prerequisite
for success when introducing
a brand to consumers outside
of the home market.
GLOBAL AMBITION
REQUIRES
CLARITY OF
BRAND IDENTITY
Chinese consumers are purchasing
international brands, but less for
the status or bling and more for
assurances of quality and safety at
affordable prices. Status motivated
purchasing when international
brands first proliferated a decade
ago. Consumers with newly obtained
disposable income became giddy
from the available choice. Status
is still a purchase factor but brand
provenance, history and storytelling
are becoming more of a factor in
brand choice, particularly in luxury.
INTERNATIONAL
BRANDS
In addition, a lot of shopping shifted from
the physical world to cyberspace, where,
in part because of the government’s
establishment of cross border
e-commerce zones, foreign goods
are available at lower prices with faster
delivery, along with greater assurance
that products are genuine, not fake.
This development is an opportunity for
international brands to enter or expand
throughout China by being present on
any of the leading Internet marketplace
sites. The increased availability of
international brands is another reason for
Chinese brands to continue to improve
product quality and communicate
Meaningful points of Difference.
CONSUMERS
DESIRE OVERSEAS
BRANDS, BUT FOR
NEW REASONS
CROSS CATEGORY TRENDS
25. 01 > Introduction TOP 100 Most Valuable Chinese Brands 2016
48 49
BEYOND O2O
The retail lexicon cannot keep up
with the speed of change. A few years
ago, omnichannel described the goal
of being present in a consistent way
everywhere and all the time. Then O2O
required coordinating the offline and
the online brand manifestations so that
all customer engagements happened
seamlessly. Bricks and mortar brands
drove much of this conversation as they
formed their online counter lives. More
recently, the dynamic is also working
in reverse, as Internet brands attempt
to build up their offline presence.
E-commerce giant Alibaba purchased
almost a 20 percent stake in Suning,
the consumer electronics retailer that
operates about 1,600 stores. The trend
goes beyond China, which is relatively
advanced in harmonizing brand activity
in the physical and virtual worlds.
Amazon opened its first bricks and
mortar bookstore in November 2015,
in Seattle. But in China, compared with
the US, the potential for new physical
retail space is much greater.
VIRTUAL BRANDS
SEEK PHYSICAL
PRESENCE
After giving birth to a strong brand,
the complementary challenge is
protecting it. Brands are vulnerable.
As they grew, they attract more
attention, particularly on social media.
Several of China’s most valuable and
influential brands experienced these
growing pains. Government regulator
charges of counterfeit merchandise
on Taobao hurt the reputation of
the Alibaba online market. Baidu,
China’s largest search engine, faced
GROWING
PAINS
allegations of fraudulent activity on its
site. Online travel leader Ctrip blamed
vendor partners for incidents involving
fraudulent tickets. Corporate reputation
has declined in the consumer mind,
as measured by RepZ, a BrandZ™
metric. There is no substitute for
integrity. But in an imperfect world,
with the intense radar of social media,
building, protecting, and repairing brand
reputation sometimes requires the
intervention of communications experts.
BIRTHING A
BRAND BEGINS
A LIFETIME OF
RESPONSIBILITY
CROSS CATEGORY TRENDS
26. TAKE AWAYS
12 Prescriptive
ideas for building
brand strength
in today’s China
01 > Introduction TOP 100 Most Valuable Chinese Brands 2016
50 51
Mobile is ubiquitous in China, a
way of life, not only a medium of
communication. Brands need to
be present on mobile not simply as
purveyors of products and services,
but as partners helping consumers
with daily living. The brand in all its
aspects needs to be represented on
mobile: advertising and marketing,
social communication, shopping,
shopper marketing, purchasing, and
payment. The brand question in the
West might be, what is our strategy
for mobile? In China, with some
overstatement, mobile is the strategy.
Brands that focus exclusively on their
products or services operate from too
narrow a vision. Consumers believe in
the pursuit of what the government has
called the Chinese Dream, the effort to
create a China that is more prosperous
and equitable at home and more
highly regarded abroad. Brands play
a role in the realization of this Dream.
Consumers are likely to feel more
favorably toward brands that contribute
to the national welfare with products
and services that are genuine, safe, and
exist in harmony with the environment.
(For more information, please see
the BrandZ™ report, The Power and
Potential of the Chinese Dream, at
www.wpp.com/wpp/marketing/brandz/
the-chinese-dream.)
Chinese brands have rapidly
increased market share across most
fast moving consumer goods (FMCG)
categories. They accomplished this
feat at the expense of multinationals.
Several factors drove this change,
not least of which was heavy media
spending to raise awareness. But
now that many Chinese brands have
become well known, sustaining sales
requires also being Different in a
Meaningful way. Chinese brands have
been less effective at explaining how
they are functionally or emotionally
unique. That is the critical next step.
Innovation does not necessarily
mean total reinvention. Innovation
means introducing something new,
a product or packaging, for example,
which did not exist before. Innovation
is not simply an update, and it is not a
one-off. Innovative brands introduce
new ideas with enough regularity to
create a sense of anticipation among
customers. Innovation helps build
brand value and it correlates with
market penetration.
Trust is an effective way to build
Difference in China. Rebuilding brand
Trust has been a global issue since
the financial crisis of 2008 and 2009.
In China, product performance and
safety issues over the past several
years eroded Trust. But Trust is an
important differentiator in China. For
consumers worldwide, brands that
are seen as creative and desirable
are mostly likely to be viewed as
Different. In China, Trust strengthens
Difference.
The BrandZ™ China Top 10 grew 3
percent year-on-year in value, while
brands ranked 11-to-100 increased
over 30 percent. Because of their
size and impact, Top 10 brands draw
a lot of the media’s attention. But
with additional investment in creative
messaging and effective activation,
energetic brands lower in the ranking
have an opportunity to greatly raise
their profile among consumers
and investors, which is increasingly
important.
1 42 53 6
Mobilize Advance the Chinese DreamCommunicate Difference InnovateBuild Trust Raise the profile
27. 01 > Introduction TOP 100 Most Valuable Chinese Brands 2016
52 53
For a while, Chinese brands
prospered by creating products that
were good enough for the local
market or somewhat better for
export. Those days, for the most part,
have past. Chinese consumers want,
can afford, and are willing to pay for
more than good-enough products.
Global consumers are becoming
more familiar with Chinese brands,
and purchasing them.
More pragmatic now, Chinese
consumers expect promotional
pricing in certain FMCG categories
like household cleaners. In these
categories, when they find little
differentiation, consumers treat
products like commodities and select
the brand that’s on promotion. Brands
need to find and communicate a valid
point of differentiation.
Except for traditional Chinese medicine
(TCM), or Baijiu, the Chinese white
alcohol, Chinese provenance is not
of primary importance to overseas
consumers. In overseas markets,
Chinese brands need to raise awareness
and build positive impressions. They
need to offer products of global quality,
while adjusting for local desires and
preferences. Prominence abroad earns
a dividend at home when Chinese
consumers regard the brand as global
rather than local.
Chinese consumers spend the greatest
portion of their screen-watching time
on their mobile phones. Many FMCG
brands are shifting investment to
digital for more targeted and effective
reach. In other categories, where
mass appeal is still paramount, brands
maintain spending levels in TV and
other traditional media. TV continues
to be a central source for trusted
information in smaller cities, and
media there is more affordable than in
large markets like Shanghai or Beijing.
Despite the economic slowdown
and the stock market fluctuations,
consumers are willing to pay
a premium, when it is justified,
especially for FMCG categories like
personal care or heathcare. Outside
of FMCG, more Chinese brands are
adding premium-priced offerings,
often less expensive than equivalent
items from multinationals. This
opportunity for local Chinese
brands presents a challenge for
multinationals. It is another example
of the increasing parity of Chinese
and multinational brands in the
mind of the Chinese consumer.
Chinese brands have invested heavily
to increase Salience, or awareness.
And that investment has paid off. In
BrandZ™ research, Chinese brands
exceed multinationals in Salience.
In other words, when a Chinese
consumer is considering a purchase
in a particular category, a Chinese
brand is now more likely to come to
mind. At that moment, being selected
for purchase depends on having
a compelling point of Difference,
preferably sufficient to command a
price premium. Chinese brands still lag
multinationals in Difference. Building
Difference requires the right strategy,
expressed in a creative big idea, and
communicated with a well-conceived
media plan.
7 108 119 12
Be best in class Expect pragmatic shoppersBe global, sell local Mix media effectivelySeek premium when justified Marry great creative
with effective media
TAKE AWAYS
28. 5554
Running – the most popular sporting
activity in China in 2015. Surprised? Well,
there are a number of reasons for the
surge in its appeal.
Changing demographics are partly
responsible: compared to ten years ago,
the population of young and unmarried
people in China has increased
significantly. Given that the majority of
avid runners are youthful and single,
the rise in the number of joggers is a
natural consequence. And of course, the
benefits to health and appearance from
running are of significant appeal. What
body conscious young man or woman
doesn’t want to look like a lean, mean
running machine?
Then there’s the fashion aspect. Running
shoes, jackets and trousers have
become statement pieces of clothing
in China. They carry
aspirational logos
such as Nike, Adidas
and New Balance,
so people naturally
gravitate towards
purchasing them.
Having purchased
them, you might as well use them.
Running is a simple (although not
always ‘easy’) activity – and if you don’t
do it at the gym, it’s free. Most runners
in Shanghai tend to go running after
work at night. It’s increasingly sociable
too; with the advent of WeChat groups
and Nike Plus - runners can share their
experiences with others and use social
networks to post and boast of their
achievements. (That’s ‘PB’ in runners’
parlance).
HAIDONG GUAN
Strategy Director
Grey China
Haidong.Guan@grey.com
TRENDS
THE HOTTEST
SPORT IN CHINA
TOP 100 Most Valuable Chinese Brands 2016
OUR INSIGHTS
Years from now, 2015 will be
recognized as a major inflection in
the evolution of brands in China,
the year when a handful of loosely
connected events in the political
and economic arenas interacted to
change the relationships of Chinese
brands with both owners and
consumers.
This pivot began with the sudden,
sustained undermining of the
market for luxury products by the
anti-corruption campaign of the Xi
Jinping administration. Brands that
had dominated consumer desires
for a decade became less desirable.
Yet the size and purchasing power
of the middle class continues to
grow explosively, and consumers are
increasingly confident in their ability
to choose, based on individual
tastes and context. Combine this
with Chinese management styles
in non-SOE companies favoring
semi-autonomous and highly
adaptive business units,
and the belief that that
speed to market is more
important than product
perfection.
The result is a systemic
shift towards a rapidly
evolving kaleidoscope of
niche brands and brand
ecosystems, adapting
to consumer and market needs in
close to real time.
This will prove a boon for Chinese
consumers, and will change the
worldview of China from that of
fast follower to trend leader. For
agencies, this will mean finding
ways to align and embed with
clients even more intimately, to co-
create communications and keep
up with the pace of change.
PETER MACK
Executive Director
Peter.Mack@landor.com
FISHER YU
Brand Strategy Consultant
Fisher.Yu@landor.com
Landor Associates
SHIFT
THE COMING EXPLOSION
IN CHINESE BRANDS: LET A
THOUSAND FLOWERS BLOOM
While many are impressed by the gigantic
transaction numbers (which keep growing
every year), few make serious efforts to
understand the brand drivers behind the
figures. We are now entering the next
phase of e-commerce – digital shopping
has become a daily practice
for Chinese consumers, and
mobile connectivity makes
such shopping possible in any
place, at any time. With this,
the e-commerce marketing
paradigm has shifted to brands
and platforms that can offer a
total brand experience rather
than a narrow focus on sales
and aftersales services. There
are two key strategic initiatives being
taken by leading brands:
1. Integrated experience across
all touch-points and channels:
Innovative brands are overcoming the
online and offline barriers to create a
seamless and immersive experience.
For example, Sephora Beauty
Workshop has 12 individual stations
equipped with USB ports, iPads,
and WiFi, so customers can look at
Sephora’s existing Skin IQ, Fragrance
IQ, and Color IQ technologies and
watch beauty tutorials to enjoy an
indulgent, digitized and personalized
shopping experience. Similarly,
the InterContinental hotel group is
leveraging VR and 3D imaging to bring
the on-property, in-room experience
alive for hotel guests when they plan a
booking.
2. Continuous engagement along the
entire consumer journey: The old
concept of the top-down marketing
funnel is not working any more as
consumers are shopping everywhere,
all the time. The rapid development
of e-commerce shortens the
physical distance between brand
and consumer. However, the
emotional distance between brand
and consumer is also contracting as
people are now consuming the entire
brand experience over a much shorter
interval. Winning brands are focusing
on designing an experience along the
consumer journey versus creating a
brand experience impulse (awareness-
to-preference). For that reason, we
see brands (P&G, L’Oreal et al) heavily
investing in building a brand-owned,
digital eco-system (rather than
building on third-party platforms).
OgilvyOne believes that upgrading
creative and content excellence in line
with a “continuous, omni-channel”
commerce strategy will help brands to
win the future of digital commerce.
MIKE ZHU
Head of eCommerce
and Analytics
OgilvyOne Shanghai
Mike.Zhu@ogilvy.com
INTEGRATION
CREATING TOTAL
BRAND EXPERIENCE
BEYONDE-COMMERCE
TRANSACTIONS
As revealed in the latest Kantar
Worldpanel report, the FMCG retail
market in China grew only 5.4 percent
in 2014 compared with
11.8 percent three years
ago. Conversely, online
sales rose 34 percent in
the same year. Shoppers
who merely switched from
offline to online channels are
estimated to have generated
approximately 40 percent
of e-commerce growth in
2014. The disappointing performance
of physical retail, together with the
rapid growth of e-commerce, has led
to a general pessimism towards the
fate of the physical retail store.
However, a recent study from A.T.
Kearney reveals that 95 percent
of retail sales are still captured by
retailers with a bricks-and-mortar
presence. Clearly, the physical store
still plays a critical part in the shopping
experience for retailers, brands and
consumers. Even the giant of online
bookstores, Amazon.com, realized
the importance of physical retail and
opened its first ever Amazon Books (in
Seattle) in October this year, putting
all its online success formulae into
the physical environment, delivering a
complete O2O brand experience for its
consumers.
So, retail needs to take a new form.
Retailers must embrace the hyper-
connected consumers of today, and
create a personalized, multi-device,
empowering and hassle-free omni-
channel shopping journey, resulting
in a delightful brand and retail
experience before, during and after
store visits. The retail store can no
longer be just a physical sales floor; it
has to incorporate the best of online
shopping in store.
BARRY LEUNG
President
Always Marketing Services, China
Barry.Leung@alwaysmkt.com
EVOLUTION
RETAIL NEEDS TO
TAKE A NEW FORM
29. C H I N A’ S A P P A R E N T C H A O S A N D F R E N E T I C E N E R G Y
B E L I E A B A S I C H A R M O N Y T H A T G U I D E S P R O G R E S S .
30. 02 SIX CRITICAL
OBSERVATIONS
FOR BUILDING
BRAND VALUE
1. CONSUMER INSIGHT
2. DIFFERENCE
3. CORPORATE REPUTATION
4. INNOVATION
5. DIGITAL COMMUNICATION
6. CREATIVE QUALITY
OUR INSIGHTS
58 59
31. 1. CONSUMER INSIGHT
Price matters,
but consumers
now seek quality
and premium
If required to cut back, people would start
with luxury and entertainment. Necessities,
like food, would experience limited spending
reductions. Investors are also reluctant to cut
back on their telecommunication expenses,
perhaps a necessity, and the cost of education for
themselves and their children. Spending cutbacks
are more moderate among higher income people.
These spending considerations rest on other
significant and long-term shifts in consumer
purchasing patterns. Chinese consumers are
shopping less frequently, but spending more
on each trip. A study of 26 categories by Kantar
Worldpanel found a “new normal”, where the
growth rate of Fast Moving Consumer Goods
(FMCG) purchasing is flattening, but consumers
are willing to pay more for certain products.
Remarkably, given the slowdown of China’s
economy and the extreme ups and downs
of its stock market, Chinese consumers
continue to spend, almost as if these
market changes are part of normal life.
BrandZ™ research about the attitudes and
behaviors of individual Chinese investors,
conducted autumn 2015, found that people
remain optimistic and plan little change in
their spending across most categories.
02 > Six Critical Observations For Building Brand Value TOP 100 Most Valuable Chinese Brands 2016
60 61
Chinese consumers continue to spend despite the stock market…
Spending remains relatively unchanged, especially on basics, despite the stock market declines.
How did the two stock market declines affect your spending in these categories?
Source: BrandZ™ Unmasking the Individual Chinese Investor report
Luxury Items
Entertainment
Dining Out
Healthcare and Exercise
Personal Electronic Devices
Clothing and Fashion
Transportation
Personal Care
Telecommunications
Household Appliances
Groceries
Household Utilities
Education (Adults and Children)
6% 57%
13% 38%
20% 30%
12% 29%
17% 28%
17% 27%
14% 26%
12% 24%
9% 21%
13% 13%
14% 12%
18% 11%
20% 10%
■ Increase Spending
■ No Change
■ Decrease Spending
32. 1. CONSUMER INSIGHT
Partially in reaction to the food
scandals that shocked China several
years ago, consumers are willing to
pay a premium for safety assurance in
certain categories, particularly those
related to health and personal care. In
less sensitive categories, consumers
shop for sales. Consumers will pay
a premium for bottled water, for
example, but expect to buy carbonated
soft drinks on promotion.
Consumers are becoming smarter. In
categories where they do not perceive
02 > Six Critical Observations For Building Brand Value TOP 100 Most Valuable Chinese Brands 2016
62 63
a useful difference between brands,
they shop for price. The ability to
command a premium is not about
category alone, however. Category
influences – but does not exclusively
determine – a product’s destiny. Brand
plays an important role, too. Brands
that score highest in Different, the
BrandZ™ measurement of how a
brand is unique or trendsetting, can
command price premiums that are 58
percent greater than the brands that
score lowest in Different, according to
BrandZ™ research.
… And consumers are willing to pay more in certain categories… … But brand Difference strongly influences
willingness to pay a premiumChinese consumers are more willing to pay a price premium in categories that relate to the health and wellbeing of themselves and their families.
Chinese brands that score highest in Different, the BrandZ™ measurement of a brand’s
ability to be unique and set trends, can justify charging a premium that is 58 percent higher
than brands that score lowest in Different.
Source: Kantar Worldpanel Source: BrandZ™
Note: “Promotion” is perception of shoppers
Premium Index: A brand’s ability to charge more than brands in the same category. Average = 100
Different: BrandZ™ measurement of a brand’s ability to be unique and set trends. Average = 100.
Top third are Most Different, bottom third are Least Different.
Chinese consumers are changing in
their attitude and behavior. In attitude,
they remain optimistic, despite
economic and stock market challenges,
and they intend to keep spending. At
the same time, they are becoming more
sophisticated as consumers, which is
reflected in their purchasing behavior
and shifting spending priorities
The rate of spending on FMCG
products is slowing. Consumers seek to
buy commodity products on promotion
but are willing to pay a premium for
other items, usually related to personal
care and health. And they devote
a larger portion of income to non-
essentials like travel, entertainment, and
other experiences.
A brand, in just about any category, can
command premium prices with product
innovations that can satisfy this need
for a special experience. In addition,
Chinese consumers are diverse. The
more affluent consumers are willing to
pay a premium for some products that
many consumers might expect to buy
on promotion. And the premium prices
of Chinese brands are still less than the
luxury prices of many multinationals.
Implications
for Brands
0%-5%
0%
10%
20%
30%
40%
COMMODITIZATION
BRANDPROMOTIONPERCENT
PREMIUMIZATION
AVERAGE ANNUAL SELLING PRICE GROWTH PERCENT
5% 10% 15% 20%
Toilet Tissue
FacialTissue
Fabric Softener
Shampoo
Baby Diapers
Infant Formula
Hair Conditioner
Toothpaste
Toothbrush
Skin Care
Instant Noodles
Colour Cosmetics
RTD Tea
Biscuits
Juice
Milk
Yoghurt
Bottle Water
Beer
Candy
Personal Wash
Kitchen Cleaner
CSDChocolate
Chewing Gum
Premiumizing categories
Commoditizing categories
Fabric Detergent
84
Least Different
Brands
133
Most Different
Brands
+ 58%
33. 2. DIFFERENCE
Now Salient,
Chinese brands
must communicate
Difference
Since 2014, Chinese brands have done
a good job improving their Salient
scores with media investment that
significantly raised brand awareness
and drove sales, as documented in
research by Kantar Worldpanel, which
found that Chinese brands gained
market share over multinationals in 18
of 26 fast moving consumer goods
categories.
Chinese brands continue
to struggle with being
seen as Different, one of
the three components of
Brand Power, the BrandZ™
measurement of brand
equity. Different means
consumers view a brand as
unique in some way, even
trendsetting. The other
Brand Power components
are: Meaningful, consumers
feel an affinity for the brand
or think it meets their needs;
and Salient, consumers
think of the brand
quickly when purchasing
opportunities arise.
02 > Six Critical Observations For Building Brand Value TOP 100 Most Valuable Chinese Brands 2016
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In this changed competitive
environment it is important that both
Chinese and multinational brands
maintain Salience, but Salience alone
will not sustain competitive advantage.
It also is necessary to explain how a
brand is Different and Meaningful; why
it is unique and worthy of purchase.
Chinese brands grew more Salient, but declined in Different…
... And multinational brands lead Chinese brands in
being seen as Different
Of the three components that comprise Brand Power, the BrandZ™ measurement of brand equity,
Chinese brands rose in Salient, remained flat in Meaningful, and declined in Different.
Multinational and Chinese brands are comparable in the Meaningful, a component of
Brand Power, the BrandZ™ measurement of brand equity. Chinese brands also lead in
Salient, but trail multinationals in Different.
Changes in Brand Power component scores
Meaningful, Different, Salient average score = 100
Based on BrandZ™ Top100 most valuable Chinese brands
Meaningful, Different, Salient average score = 100
Based on 179 brands across 11 categories in 2015
Source: BrandZ™ / Millward Brown
Source: BrandZ™ / Millward Brown
Chinese brands remained flat in Meaningful
and declined in Different, during the past
three years. Multinationals also remained
relatively flat in Meaningful and continue to
score substantially higher than Chinese brands
in Different. Multinationals scored 106 in
Different, a good score, while Chinese brands
scored 90, well below the average of 100.
The wide disparity is significant. It means
that Chinese brands are at a disadvantage
when trying to distinguish themselves, either
functionally or emotionally, especially from
multinationals, which Chinese sometimes view
as Different simply because they are foreign.
As Chinese brands improve their Different
scores, however, multinationals will need more
than provenance alone to build Difference.
Once brands establish ways in which they
are Different in Meaningful ways from the
competition, they need to communicate not
only to maintain Salience, but also to explain
how they are Meaningful and Different, and
why those benefits help consumers.
■ 2014
■ 2015
■ 2016
■ Multinational Brands
■ Chinese Brands
Meaningful Different Salient
117 114 113
115 109 118
117 107 124
Meaningful Different Salient
98 106 94
96 90 99
34. 2. DIFFERENCE
02 > Six Critical Observations For Building Brand Value TOP 100 Most Valuable Chinese Brands 2016
66 67
Brands that are Meaningful, Different,
and Salient grow share faster
Brands grow market share faster when they are strong in all three components
of Brand Power: Meaningful, Different, and Salient.
Source: BrandZ™ / Millward Brown
Certain brand characteristics correlate with
being Different…
… Being Trustworthy especially
differentiates brands in China
In China, the four personality characteristics that consumers most associate
with being Different are: Creative, Desirable, Trustworthy, and Wise.
Trustworthy correlates more closely with Different in China, compared with
other regions of the world.
% correlation between BrandZ™ brand characteristics and Different
Correlation between Different index and
brand characteristics. It is a spectrum
showing the color coding from highly positive
correlation to highly negative correlation
Source: BrandZ™ / Millward Brown
It is not a question of being Different just for the sake
of being Different. There are benefits associated with
being Different. Brands seen as Different are more likely
to command a price premium, for example.
A first step is to develop the brand personality
characteristics most associated with being seen
as Different. BrandZ™ analyzes brands worldwide
according to 20 personality characteristics. In China,
the four personality characteristics that consumers
most associate with being Different are: Creative,
Desirable, Trustworthy, and Wise.
In most of the world, Creative and Desirable correlate
most closely with Different. But not in China; in China,
Trust correlates most closely with Different. It may
be that because the product safety scandals in China
fomented such distrust in brands, Trust is the strongest
lever for being seen as Different.
After establishing Difference, the next step is
communicating it. Chinese brands usually establish
awareness, first. It is more effective to establish the
meaningful difference before building awareness.
Brands that develop all three aspects of Brand Power,
or brand equity, increase market share more quickly.
Implications for Brands
Creative
Trustworthy
Wise
Desirable
Strong in Meaningful,
Different, Salient
Weak in Meaningful,
Different, Salient
5% 10% 15% 20%
48%
41%
65%
41%
Adventurous
Global Asia Europe
North
America
South
America China
Assertive
Brave
Caring
Creative
Desirable
Different
Friendly
Fun
Generous
Idealistic
In Control
Innocent
Kind
Playful
Rebellious
Sexy
Straightforward
Wise
Trustworthy
Highly positive Highly negative
% Growth in Survey-Based Market Share
35. 3. CORPORATE REPUTATION
Decline in Corporate
Reputation impacts
both multinational
and Chinese brands
The good news is that the erosion
of Trust following the food scandals
of a few years ago has stabilized.
The bad news is that Corporate
Reputation continues to decline.
Trust alone strengthens a brand,
but a trusted brand surrounded by
the fortifying power of Corporate
Reputation provides greater
protection from the unpredictable
vicissitudes of the marketplace.
Trust in a brand is firmer when its
corporate parent has a reputation
for integrity and social responsibility.
The rebalancing of China’s economy is not only about slower growth, it also pertains to the changing
expectations that consumers have about the brands they choose and the organizations that own
those brands. More affluent and sophisticated, Chinese consumers seek not only price, but also
value. And the calculus of value increasingly includes products that are safe and socially responsible.
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… SOEs felt the impact of public distrust… … And both Chinese and multinational
brands suffered reputation lossConsumer impressions of two SOEs, Sinopec and PetroChina, became more
negative, impacting Corporate Reputation and resulting in a decline in RepZ
score, although both brands still score relatively high, 125 and 126, respectively. Chinese consumers do not seem to differentiate between Chinese and
multinational brands on the topic of Corporate Reputation, which is declining at
about the same pace in both instances.
Changes in RepZ scores and brand imagery 2013 to 2015. Based on BrandZ™
analysis of brand personality characteristics, and RepZ, the BrandZ™
measurement of Corporate Reputation. Average RepZ score = 100
Decline in
RepZ sccore
RepZ, the BrandZ™ measurement of Corporate Reputation.
Average RepZ score = 100
Source: BrandZ™ / Millward Brown Source: BrandZ™ / Millward Brown
Corporate Reputation declined across categories in China…
Corporate Reputation declined
to below average over the past
several years, as consumer
reaction to corporate misdeeds
circulated widely and rapidly on
social media.
RepZ is a BrandZ™ measurement of Corporate Reputation based on a composite of four factors: Success, Fairness,
Responsibility, and Trustworthiness. Average RepZ score = 100
RepZ scores for 16 categories 2010 vs. 2015
Source: BrandZ™ / Millward Brown
2010
Average
2011 2012 2013 2014 2015
100 101101101
98
97
101 105
100 105
101 105
99 106
90 117
87 124
Arrogant
Arrogant
Dishonest
Dishonest
Uncaring
Uncaring
-20
-22
■ 2013
■ 2015
■ Multinational Brands
■ Chinese Brands
2010 2011 2012 2013 2014 2015
102 101 101 101 98
97
97
99 101 100 101 98