China Daily｜Gao Yuning：Building up brand awareness
文丨高宇宁
清华大学公共管理学院副教授、国情研究院副研究员
By Gao Yuning | CHINA DAILY | Monday, February 18, 2019
The author is associate professor of Tsinghua University and research fellow of Institute for Contemporary China Studies.
In China, brand awareness is beginning to grow and the brand registrations are booming. By the end of 2018, there were more than 100 million market entities registered in the country. But despite this, 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 ($155.51 billion) and Amazon ($100.76 billion). Huawei ($7.58 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 the online market place Taobao, their rankings are relatively low.
The reason partly lies in the Interbrand ranking criteria. To qualify for inclusion on 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 overseas markets, which sets a high bar for a company's competitiveness in global markets. At present, there are only a handful of Chinese enterprises that have reached that threshold.
Estimating and ranking the value of brands is a complex, and sometimes controversial, pursuit. Changes to some basic economic facts may change the results of brand evaluation.
For instance, 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, the presence of companies in the Chinese market should be taken into account. In which case, the ranking of many Chinese brands will rise accordingly.
In fact the UK's BrandZ also produces a list of Top 100 brands, but its rankings do not use the criteria of international sales and targeting consumers. 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.
Another British brand consultancy, Brand Finance, adopts 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 were in the top 100. And the brand value of Chinese enterprises totaled $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 the various rankings, China should aim to raise the rankings of its brands. Research conducted by Chinese data tech company Blue Focus shows that in recent years, Chinese brands have gained more recognition in overseas markets with regard to aspects such as innovation, brand image and environmental sustainability. Except for traditional industries such as apparel and toys, the consumer electronics industry had the highest consumer recognition. It reflects an important change in the overseas performance of Chinese brands.
Among all the soft power of an enterprise, brand awareness is the most quantifiable and the most accessible to consumers. It is also the business area that sees the most fierce competition. With the awareness of its brands increasing overseas, China needs to shift its focus from the quantity of brands to nurturing more brands with higher global presence and reputation.
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