Chinese brands obtain
an increasing proportion
of revenue from overseas
But the potential is much greater
The questions have changed. Chinese brands today are less likely to ask whether they should expand overseas and more likely to spend time considering what strategy is best and how quickly to implement it. In the past, the few Chinese brands that contemplated overseas expansion usually did so as mature brands. Now, even some Chinese start-ups are developing plans for international growth.
Factors driving this change in attitude include China’s rising international stature that results in part from government initiatives, including One Belt, One Road, which promotes international trade along the historic Silk Road routes. In addition, the Internet has greatly increased access to Chinese brands outside of China.
And consumers worldwide are more sophisticated. With greater access to information, they can make well-informed purchasing decisions and select less familiar brands when justified. Finally, generational factors influence the global acceptance of Chinese products, as more young people regard Chinese products positively for their technology and innovation.
Just 11 years ago, in 2006, only one Chinese brand – the State-Owned Enterprise (SOE) China Mobile – ranked in the BrandZ™ Top 100 Most Valuable Global brands. Today 15 Chinese brands from six categories – banks, insurance, oil and gas, retail, technology, and telecom providers – rank in the BrandZ™ Global Top 100. And three Chinese brands – Tencent, China Mobile, and Alibaba – are among the 20 most valuable global brands
Nine SOEs compared with six market-driven brands are in the BrandZ™ Global Top 100. But the number of SOEs remains static, while the number of market-driven brands is increasing. With one exception, the market-driven brands are in technology or e-commerce retail. They represent the rise of Chinese entrepreneurialism and the new economy rebalanced toward the consumer. And the exception, insurance brand Ping An, is a sophisticated user of technology to create and market its products and services.
As more Chinese brands expand overseas, they also gain an increasing proportion of their total revenue from international business. We identified the 10 Chinese brands with the greatest proportion of revenue derived from overseas business. That proportion averaged 24 percent, in 2011. In this current BrandZ™ China Top 100 ranking, the proportion rose to 40 percent. Lenovo gained the largest proportion of revenue from overseas – 72 percent.
The 15 Chinese brands in the BrandZ™ Top 100 Most Valuable Global Brands, make China the most represented country in the ranking after the US. Despite their high value, however, many of these Chinese brands remain relatively unknown outside of China. These brands derive an increasing proportion of their revenue overseas, but probably far below what they potentially could gain with increased consumer awareness. The opportunity is significant because two important market forces are aligned. First, with the slowdown of the rate of growth of the domestic economy, China’s government encourages Chinese brands to reach consumers both at home and overseas. Second, overseas consumers are now more receptive to Chinese brands. While these propitious circumstances facilitate success, they do not guarantee it. That requires obtaining the insights and communication expertise necessary for reaching consumers across multiple complicated country markets.
More Chinese brands rank in the BrandZ™ Global Top 100…
Fifteen Chinese brands rank in the BrandZ™ Top 100 Most Valuable Chinese Brands, up from only one Chinese brand in 2009. Nine are SOEs and six are market driven, but the number of market-driven brands is increasing, while the SOE count is static.
… Technology and e-commerce characterize the market-driven brands…
With one exception, the insurance brand Ping An, the market-driven brands are in technology or e-commerce retail. They represent the rise
… And Chinese brands gain more revenue from overseas business
In 2011, the 10 Chinese brands that gained the greatest proportion of revenue from overseas, obtained less than a quarter of their revenue from outside China, on average. In the current BrandZ™ China Top 100 ranking, the average proportion rose to 40 percent.