China 2016: In turbulent times, brand strength protects and propels the winners
In turbulent times, brand strength protects and propels the winners
Consider these circumstances. An economy slows to 6.9 percent GDP growth from annual growth of 10 percent or more during much of the past decade. The stock market reaches a record high in June, loses about a third of its value by the end of summer, but ends the year up, actually outperforming the S&P 500. These events are the very definition of market volatility.
The events of China’s past year provided the perfect crucible for testing the fundamental principle behind all of our BrandZ™ work, which is that brand strength provides the fortitude to endure the most extreme market fluctuations and emerge successfully. In these circumstances, would you expect brand value to decline? Or do you think brand value might creep up slightly? Despite the difficult economic challenges, the value of the 2016 BrandZ™ China Top 100 rose a healthy 13 percent.
And they describe the context for the 2016 BrandZ™ Top 100 Most Valuable Chinese Brands.
Let’s adjust the lens so that we are not focused on last year alone, but on a larger timeframe that encompasses the more than three decades since China embarked on economic reform, when the swells of industrial expansion lifted a lot of brands. Even as the current turbulence tossed some brands, the ballast of brand strength stabilized many others.
Here’s one demonstration of brand strength: The MSCI China, a weighted index of Chinese stocks ended 2015 10.7 percent lower than its level in 2010. ompare that result with the performance of a stock portfolio comprised of brands from the BrandZ™ China Top 100 with the highest scores in Brand Contribution, a BrandZ™ measurement of brand strength. Over the same period, the portfolio of Brand Contribution leaders rose 103.5 percent.
Let’s pull back the lens even further so we can begin to see the outlines of future brand growth in China. Today, the BrandZ™ China Top 10 still accounts for almost two-thirds of total ranking value, a legacy of the production-driven economy and the central role of state-owned brands. However, the BrandZ™ China Top 10 only grew 3 percent in value, while the growth rate of brands 11-to-100 was over 30 percent.
These faster-growing brands predominately are market-driven, as are nine of the 10 brands that entered the BrandZ™ China Top 100 for the first time. In other words, as China rebalances to a consumption-driven economy, the faster growing brands are those that depend less on government and more on efectively meeting consumer needs in ways that are Diferent and Meaningful.
THE UNPARALLELED CHINA RESOURCES OF WPP
Which raises the question, how does a brand best compete in this rapidly changing Chinese market? That’s where we can help. This sixth annual edition of the BrandZ™ Top 100 Most Valuable Chinese Brands represents a fraction of the knowledge, insight, and expertise available from brand experts at WPP companies in China.
WPP is the world’s communications services leader. Our companies have been engaged in China for over 30 years. Today, 15,000 people, including associates, work across China in Beijing, Shanghai, Guangzhou and many other cities. We provide advertising; insight; branding and identity, direct, digital, promotion and relationship marketing; media investment management, retail and shopper marketing; and public relations and public afairs. It’s all part of our global presence in 112 countries.
By linking all this talent, creativity, and wisdom, we amplify global trends and insights that help our clients in useful and unique ways. We call this powerful perspective “horizontality.” It includes our unrivaled Brand™ resource library, which we invite you to access. Along with the BrandZ™ Top 100 Most Valuable Chinese Brands, the library includes these titles: the BrandZ™ Top 100 Most Valuable Global Brands; the BrandZ™ Top 50 Most Valuable Indian Brands; the BrandZ™ Top 50 Most Valuable Latin American Brands; the BrandZ™ Top 50 Most Valuable Indonesian Brands; and Spotlight on Myanmar - the ‘Leapfrog’ Nation.
You’ll also find insights about the Chinese market in these BrandZ™ reports: Unmasking the Individual Chinese Investor; The Power and Potential of the Chinese Dream; The Chinese New Year in Next Growth Cities; and The Chinese Golden Weeks in Fast Growth Cities. To download these and other BrandZ™ reports, please visit www.brandz.com. For the interactive BrandZ™ mobile apps go to www.brandz.com/mobile.
The backbone of all this intelligence remains the WPP proprietary BrandZ™, the world’s largest, customer-focused source of brand equity knowledge and insight. It is big data at its biggest, with 4.5 billion individual data points.
Using the BrandZ™ brand valuation methodology of Millward Brown, a WPP company, we analyze relevant corporate financial data and strip away everything that doesn’t pertain to the branded business. Then we take a critical step that makes BrandZ™ unique and definitive among brand valuation methodologies.
We conduct ongoing, in-depth quantitative consumer research with more than 200,000 consumers annually, across over 50 markets, to assess consumer attitudes about, and relationships with, over 100,000 brands. Our database includes information from over three million consumer interviews. It reveals the power of the brand in the mind of the consumer that creates predisposition to buy and, most importantly, validates a positive correlation with better sales performance.
At WPP, we’re passionate about using our creativity to create and build strong, diferentiated brands that deliver lasting shareholder value. To learn more about how to apply our experience and expertise to benefit your brand, please contact any of the WPP companies that contributed expertise to this report. Turn to the resource section at the end of this report for summaries of each company and the contact details of key executives. Or feel free to contact me directly.
The Store WPP,
EMEA & Asia