Page 11 - BrandZ Top 100 Most Valuable Chinese Brands 2015

Part1 | Introduction-Overview OVERVIEW | Key Observations
Consumers spark brand creativity and innovation
MARKET-DRIVEN BRANDS DOMINATE VALUE GROWTH
Only five years ago, the BrandZTM Top 5 Most Valuable Chinese Brands were SOEs (State Owned Enterprises). Today, three of
the Top 5 are market-driven. Tencent and Alibaba rank first and second, respectively, and Baidu ranks fifth. The trend reaches well beyond the Top 5. Over the past five years the value of market-driven brands in the BrandZTM Top 50 Most Valuable Brands grew 278 percent. The value of SOEs grew only 6 percent. The results indicate the growing importance of brands in China, which will become even greater as the market continues to liberalize.
TECHNOLOGY AND RETAIL LEAD INNOVATION
Chinese brand innovation is especially apparent in the intersection of technology and retail, in ecommerce and in mobile payments, for example. Among the factors driving innovation and creativity
are: increasing demand from more sophisticated and better informed Chinese consumers; and increasing market competition, driven in part by liberalized economic policies.
CHINESE BRANDS NARROW THE GAP WITH MULTINATIONALS
Consumers increasingly see little difference between the local Chinese brands and multinational brands in China. More prosperous and sophisticated, Chinese consumers today choose brands based on the value offered rather than provenance. More Chinese brands are accepted not only because they may be well known, but also because consumers see them as meaningful and different in important ways.
BRANDS EXTEND TO NEW PRODUCTS AND CATEGORIES
Growth opportunities and competitive pressures in the evolving Chinese market are driving brands to enter new categories or new product lines within their current category. Some initiatives are similar to western brand extensions, while others are more specifically Chinese. Chinese are inclined to extend brands through overseas acquisition, for example, to move rapidly into the premium range.
MEDIA SPENDING GROWS AND MIX CHANGES
More varied media portfolios reflect growing brand competition and increasingly elaborate communication strategies. Total media spending doubled since 2009, and allocation of media investment shifted dramatically with the growth of Internet marketing. TV comprised less than half of media spending for the first time in 2014. Internet accounted for almost one-third of media spending.
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TOP 100 Most Valuable Chinese Brands 2015
Stock portfolios of the most valuable Chinese brands outperform market
Two portfolios of the BrandZTM Most Valuable Chinese Brands 2015 significantly outperformed the MSCI China, a weighted index of Chinese stocks.
These results affirm (1) that valuable brands deliver superior returns; and (2) the investments brands make to build value by being meaningfully different
are measurably rewarded in the stock market.
Over the 51 months between July 2010 and October 2014, the MSCI increased 4 percent. In contrast, the BrandZTM China Top 100 Portfolio (all of the
Top 100 Most Valuable Brands) appreciated 32 percent.
In addition, the BrandZTM
China Top Brands by Brand Contribution Portfolio grew almost 85 percent during the same period. This portfolio comprises brands with the highest brand contribution scores. Brand contribution is a measurement of brand strength, the influence of brand alone
on earnings, with financial and other factors stripped away.
In concrete terms, $100 invested in the MSCI in July 2010 would be worth $104 today. That $100
invested in the BrandZTM China Top 100 Portfolio would be worth $132. If invested in the BrandZTM China Top Brands by Brand Contribution Portfolio, $100 would be worth $185.
This important relationship between brand value and strong returns is becoming even more critical in China as the country transitions to a more market-driven economy, brands become global competitors and investors expect results.
Valuable brands deliver superior shareholder returns
Two portfolios of the BrandZTM Most Valuable Chinese Brands 2015 significantly outperformed the MSCI China, a weighted index of Chinese stocks.
Brand ZTM China Portfolios vs. MSCI China (July 2010 to October 2014)
100%
BrandZTM China Top Brands by Brand Contribution BrandZTM China Top 100 Portfolio
MSCI China
0%
84.9%
32.0% 4.0%
OCTOBER APRIL
2013 2014 2014
Source: BrandZTM / Millward Brown; Bloomberg
OCTOBER APRIL OCTOBER 2010 2011 2011
APRIL OCTOBER APRIL 2012 2012 2013
OCTOBER
23