Europe is suffering in Millward Brown’s annual ranking of the world’s most valuable brands, as the Chinese market continues to mature and gain power. Over the 10 years of the BrandZ list Chinese brands in the top 100 have grown their value by a staggering 1,004% to $432.4bn. By contrast, European brands have grown just 23% to $373.8bn and UK businesses have appreciated by 64% to $112.3bn.
The number of European and UK brands featured in the top 100 is on the decline. Europe is home to 19 brands, down four from last year, and there are now just five UK brands in the ranking, one fewer than 12 months ago. The proportion of total global brand value that these two regions make up has also dropped – the UK by one percentage point and Europe by three points – all of which has been mopped up by Asia, meaning it now accounts for 17% of the top 100’s overall value.
North America still dominates, accounting for 66% of the global total – though that share remains static – while the top 10 brands all originate from the US. With a 137% increase in brand values over the past 10 years, the rate of growth in North America is far slower than in China, but it is rising from a much higher base. The value of North American brands in the top 100 now totals $2.2trn, up from $912.7bn in 2006.
There are seven new entries to this year’s top 100, three of which are from China – ecommerce retailer Alibaba, telecoms provider China Telecom and telecoms technology manufacturer Huawei. The latter is one of the most globalised Chinese brands with 65% of sales revenue coming from outside the country.
While these three benefit from being within burgeoning digital and mobile sectors, Europe’s brand powerhouses come from waning traditional categories such as automotive, financial services and luxury.
“France has got a lot of luxury brands [such as Louis Vuitton in 32nd and Hermes in 55th] but the category is facing formidable challenges from corruption, people moving away from conspicuous consumption and the financial slowdown,” says Walshe. “The car market is also financially challenging at the moment so that’s a hit for Germany and to a certain extent the UK.”
Little has changed in the car sector over the past decade because the barrier to entry is so high, says Walshe. Western car brands have suffered in brand value terms by largely failing to appeal to new consumers in expanding markets such as Asia.
Walshe says Europe’s sluggish growth relative to China is really a problem with its legacy industries, which are flatlining in comparison with Asian tech-based companies: “You’ve got stability on one hand with lesser innovation causing lower growth, and on the other hand you’ve got massive disruption and high growth. Europe is in the first side,” he says.
Within these more traditional categories it is the businesses that innovate and focus on strengthening their brands that continue to grow. European brands can prosper in China if the proposition is right – roughly a third of Audi’s sales are now generated in the region, for example.