Building up hard power out of soft power
By Gao Yuning |
chinawatch.cn |
Updated: 2019-02-13 14:43
In China the brand awareness is beginning to grow and the number of brand registration booming. By the end of 2018, there have been more than 100 million market entities registered in the country. Data from the World Intellectual Property Organization shows that in 2017, some six million trademark applications were filed by Chinese residents, accounting for about two thirds of applications globally.
In spite of the ever-growing brand awareness and the huge number of applications, China owns only a small number of top brands. Among the 100 Best Global Brands 2018 Rankings released by Interbrand, the world's largest brand consultancy, the top three most valuable brands are Apple ($214.48 billion), Google ($155.506 billion) and Amazon ($100.764 billion). Huawei ($7.578 billion) is the only Chinese company listed.
Indeed, in terms of place of registration, US brands have long been outshining others, and occupy about half of the top 100 list. Although China has many well-run brands, such as Taobao and Tencent, their rankings are relatively low.
The reason partly lies in the Interbrand ranking criteria. To qualify for inclusion in the list, a brand must be directly oriented to consumers and the company it belongs to must have sufficient open financial information.
Moreover, the company must occupy an important position in the world's major markets, particularly in developed economies such as Europe, the United States, Japan or South Korea; and more than 30 percent of its income must come from the overseas markets, which set a high bar for a company’s competitiveness in global markets. At present, there are only a handful of Chinese enterprises reaching the threshold.
Estimating and ranking brand value are complex, and sometimes controversial. Changes to some basic economic facts may change the results of brand evaluation. In 2018, total retail sales in China were close to those in the United States, an indicator of China’s increasing importance as a consumer market. Given this, companies’ presence in Chinese market should be taken into account, and the ranking of many Chinese brands will rise accordingly.
In fact BrandZ, a British brand ranking, has canceled the criteria of international sales and targeting consumers in its ranking. As a result, 15 Chinese brands were listed in the BrandZ Top 100 in 2018, compared to only seven in 2010. In addition to tech companies such as Huawei, Tencent and Alibaba, Kweichow Moutai (liquor) and S.F. Express (logistics) also had a place on the list.
British brand consultancy Brand Finance adopted a different estimation method -- multiplying the brand strength index (BSI) of brand investment, equity and performance by the royalty rate, and then multiplying the forecast revenues.
In the 2019, Brand Finance Global 500, 69 Chinese enterprises were listed, among which 21 in the top 100. The brand value of Chinese enterprises totals $130.4 billion, accounting for about 19 percent of the world's total brand value, a proportion higher than the rate of China's GDP in the world’s total.
Although there is controversy over the scientific basis of rankings, China should aim to develop its own brand ranking. Research conducted by Chinese data tech company Blue Focus shows that in recent years, Chinese brands have gained more recognition from overseas markets with regard to aspects such as innovation, brand image and environmental sustainability. Except of traditional industries such as apparel and toys, the consumer electronics industry also gained the highest recognition. It reflects an important change in the overseas performance of Chinese brands.
Among all soft powers of an enterprise, brand is the most quantifiable and the most accessible to consumers. It is also the business area that sees the most fierce competition. With an increased brand awareness, China needs shifting its focus from the quantity of brands to nurturing more brands with higher global presence and reputation.
Gao Yuning is an associate professor with the School of Public Policy and Management at Tsinghua University. The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
In China the brand awareness is beginning to grow and the number of brand registration booming. By the end of 2018, there have been more than 100 million market entities registered in the country. Data from the World Intellectual Property Organization shows that in 2017, some six million trademark applications were filed by Chinese residents, accounting for about two thirds of applications globally.
In spite of the ever-growing brand awareness and the huge number of applications, China owns only a small number of top brands. Among the 100 Best Global Brands 2018 Rankings released by Interbrand, the world's largest brand consultancy, the top three most valuable brands are Apple ($214.48 billion), Google ($155.506 billion) and Amazon ($100.764 billion). Huawei ($7.578 billion) is the only Chinese company listed.
Indeed, in terms of place of registration, US brands have long been outshining others, and occupy about half of the top 100 list. Although China has many well-run brands, such as Taobao and Tencent, their rankings are relatively low.
The reason partly lies in the Interbrand ranking criteria. To qualify for inclusion in the list, a brand must be directly oriented to consumers and the company it belongs to must have sufficient open financial information.
Moreover, the company must occupy an important position in the world's major markets, particularly in developed economies such as Europe, the United States, Japan or South Korea; and more than 30 percent of its income must come from the overseas markets, which set a high bar for a company’s competitiveness in global markets. At present, there are only a handful of Chinese enterprises reaching the threshold.
Estimating and ranking brand value are complex, and sometimes controversial. Changes to some basic economic facts may change the results of brand evaluation. In 2018, total retail sales in China were close to those in the United States, an indicator of China’s increasing importance as a consumer market. Given this, companies’ presence in Chinese market should be taken into account, and the ranking of many Chinese brands will rise accordingly.
In fact BrandZ, a British brand ranking, has canceled the criteria of international sales and targeting consumers in its ranking. As a result, 15 Chinese brands were listed in the BrandZ Top 100 in 2018, compared to only seven in 2010. In addition to tech companies such as Huawei, Tencent and Alibaba, Kweichow Moutai (liquor) and S.F. Express (logistics) also had a place on the list.
British brand consultancy Brand Finance adopted a different estimation method -- multiplying the brand strength index (BSI) of brand investment, equity and performance by the royalty rate, and then multiplying the forecast revenues.
In the 2019, Brand Finance Global 500, 69 Chinese enterprises were listed, among which 21 in the top 100. The brand value of Chinese enterprises totals $130.4 billion, accounting for about 19 percent of the world's total brand value, a proportion higher than the rate of China's GDP in the world’s total.
Although there is controversy over the scientific basis of rankings, China should aim to develop its own brand ranking. Research conducted by Chinese data tech company Blue Focus shows that in recent years, Chinese brands have gained more recognition from overseas markets with regard to aspects such as innovation, brand image and environmental sustainability. Except of traditional industries such as apparel and toys, the consumer electronics industry also gained the highest recognition. It reflects an important change in the overseas performance of Chinese brands.
Among all soft powers of an enterprise, brand is the most quantifiable and the most accessible to consumers. It is also the business area that sees the most fierce competition. With an increased brand awareness, China needs shifting its focus from the quantity of brands to nurturing more brands with higher global presence and reputation.
Gao Yuning is an associate professor with the School of Public Policy and Management at Tsinghua University. The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
