Chinese brands need to stress identity and difference: report

As Chinese brands expand their operations globally and face rising consumer demand domestically, they must begin to differentiate themselves from stiff competition at home and abroad, according to an analysis from brand-management experts.

"Chinese brands now match or exceed foreign brands in China in all the elements that comprise brand equity, except one - difference," said analysts with brand and communications research firm Millward Brown.

In a new report, BrandZ Top 100 Most Valuable Chinese Brands, analysts said that brands in China can match foreign brands in "brand equity strength" - which measures performance, relevance, presence - but are still lacking when it comes to creating "bonding" value, which measures a customer's emotional engagement with a brand that ultimately translates into brand loyalty and advocacy.

Home brands in the country are seen as being "well known" and "well priced," but not sufficiently different enough from each other, which foreign brands in China have an advantage in.

In addition, Chinese brands trying to build an international presence are faced with the challenge of low brand awareness overseas and changing the perception of "Brand China" abroad. According to Millward Brown, only 20 percent of customers worldwide can name a Chinese brand and people associate brands in China with being government-backed and poorly made.

The report, released annually, ranks the 100 most valuable brands in China according to a formula based on financial value and brand contribution (price, convenience, availability, and distribution). State-owned enterprises and financial institutions dominated the top 10 spots on the 2013 list.

Listed in order of brand value in billions of dollars, the top 10 are: China Mobile (telecom, $61.4), ICBC (financial, $39.7), Tencent (technology, $33.9), China Construction Bank (financial, $25.5), Baidu (technology, $20), Agricultural Bank of China (financial, $19.3), Bank of China (financial, $13.6), PetroChina (oil and gas, $13.4), Sinopec (oil and gas, $13.1) and China Life (insurance, $12.7).

Millward Brown said that market-driven brands grew at a faster rate in 2013 than State-owned enterprises (SOEs) did, but SOEs still dominate the highest-valued brands in the country. In the list of 100 brands, 71 percent of the ranking's total value was occupied by SOEs while 29 percent was comprised of market brands.

"China's rebalancing, the shift to a consumer-driven economy and less government investment in infrastructure and other projects, suggests that the Strategic SOEs will need to adopt brand-building strategies," Millward Brown said.

It is because the country is rebalancing - dealing with a changing economy and the side-effects of rapid growth in the last three decades - that brands are especially essential for competitive success, said David Roth, CEO of The Store WPP (Europe, Middle East, Africa, and Asia) and leader of the BrandZ project, in an introductory note of the report.

"[The report's] findings mean that Chinese entrepreneurs have been developing market-driven companies and valuable brands across many products and service categories for some time. And these brands now will grow more rapidly in value as rebalancing unleashes competition," he said.

As China shifts its attention away from an export-driven economy to a domestic consumption one, "being a well-known or famous brand is still important. But it's no longer enough," Millward Brown said. Brands need to focus on fostering trust with consumers and be "meaningfully differentiated" from their competitors.

"To succeed in a more competitive, rebalancing China, brands also need to understand the changing desires of Chinese consumers as consumers themselves rebalance," Roth said.

amyhe@chinadailyusa.com