Chinese brands struggle to build value amid an economic slow down

This year’s BrandZ Top 100 sees Chinese brands move down in the rankings, owing also to the banking and oil and gas industries facing pressure. Chinese brands’ average value dropped by 9% versus 2015.

Chinese online retailer JD.com enters the BrandZ Top 100 for the first time this year
Chinese online retailer JD.com enters the BrandZ Top 100 for the first time this year

The Industrial and Commercial Bank of China (IDBC) drops five places to 27th as its brand value has decreased by 13% (see table below). Web services company Baidu, meanwhile, falls eight places to 29th after a 27% drop in value, and oil and gas company Sinopec moves back seven places to 73rd as its value drops by 24%. China Mobile has held on to 15th place but its value has fallen by 7%.

It’s not all bad news, though, as the list features 16 brands from fast-growing economies, one more than in 2015, with 15 from China and one from India. Chinese technology company, Huawei is the 14th fastest riser this year, increasing its brand value by 22% and moving up the ranking 20 places to 50th, as well as ranking 11th in the B2B category. Chinese internet giant Tencent holds onto 11th place in the top 100 after increasing its brand value by 11%.

No Chinese brands have made it into the top 10 this year.

world top 10

The performance of certain Chinese brands, however, throws up an interesting dialogue, particularly in the ecommerce space. The brand value of China’s number one ecommerce player Alibaba drops by 26%, while the country’s second largest ecommerce business JD.com grows by 37%.

Alibaba is still in the top 20 despite dropping five places since 2015 to rank 18th, while competitor JD.com is a new entrant at 99 – the fifth biggest riser in the list.

READ MORE: Facebook, Starbucks and Amazon are the fastest risers in this year’s BrandZ ranking

Plans for growth

But as a challenger, JD.com’s mission to grab market share from Alibaba is taking hold judging by its first quarter results, which show a 47% increase year-on-year to $8.4bn. JD.com also confirmed it is building on a partnership with Tencent, which has a 20% stake in the business, with targeted ads on the company’s social media app WeChat, the social app of choice in the country.

Speaking at a WPP event on Chinese brands at The House of Commons last month, vice-president of JD.com, Laura Xiong, told attendees that many British brands are failing to capitalise on China’s increasing population of 1.4 billion people and “bourgeoning middle class”.

Xiong also pinned the brand’s success to its operating model and customer experience, with a same- or next-day delivery service offered through its own logistics system and the fact it owns merchandise in most cases.

Ensuring quality of experience

She admits that the company has had to “field criticism” about the asset-heavy model “from time to time” but says it has “always believed that running [the] business [in this way] presents the only way to ensure the quality of what we sell and the quality of the experience”.

At the end of May, Liverpool Football Club announced the launch of an online store using JD.com’s platform to sell merchandise across China. It’s certainly a strategy to watch closely to see how the club will leverage the partnership to gain ground in China and build brand value globally.

JD.com is planning a week-long event later this summer to show UK brands the potential of partnering and reaching China’s 700 million internet users, many of whom “will never develop the habit of shopping in bricks-and-mortar stores”, claims Xiong.

Combined value slows

The BrandZ Top 100 Most Valuable Chinese Brands 2016 study, released in March this year, shows the combined value of the country’s brands increased by 13% to $525.6bn.

The combined value of the global BrandZ Top 100 ranking grew 3% in 2016, compared to 14% in 2015, meaning overall value grows to $3.4tr.

Brand value rose in China despite slower economic expansion and extreme stock market fluctuations, however growth was slower considering value grew by 22% in 2015.

The study highlights that China is now “a more complicated and competitive opportunity” and that 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.

lucy brandz3

Latest from Marketing Week

PLEASE SIGN IN OR REGISTER. IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and inspiration that will help you develop as a marketer and leader.

Register and receive the best content from the only title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work, so we can make Marketing Week more relevant to you.

Register now

THE BEST CONTENT

Our award winning editorial team and columnists will ask the biggest questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we will be your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Dedicated to developing your skills and helping you achieve marketing excellence. Find guidance on leadership, professional development and the latest industry jobs.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here