Observation 1: Innovation
More Chinese brands become innovative, in many categories
Trend benefits brands, consumers, and country
Innovation was not a term associated with Chinese brands until recently. Then Chinese technology brands began to transform China into an online nation where people integrate broad aspects of their lives on their mobile devices, including how they communicate, access information, shop and pay for merchandise, rent a bike or hire a taxi. Now, Innovation extends beyond technology brands.
In the BrandZ™ China Top 100, 82 percent of brands are viewed as highly or moderately innovative, compared with 72 percent three years ago. And Innovation extends beyond internet brands and the tech category. Although three of the Top 10 in Innovation are technology brands, the highest-scorer is an education brand. And retail, alcohol, real estate, retail, insurance, and logistics brands also appear. (Retail includes Alibaba and JD.com.)
By becoming more innovative, Chinese brands can help improve the lives of more Chinese consumers, which is a goal of the 19th Party Congress. Critically, consumers see innovative brands as Different. Along with Meaningful (meeting consumer needs in a relevant way) and Salient (coming easily to mind), Different is one of the components of Brand Power, the BrandZ™ metric of brand equity. Difference helps brands command a premium price.
In the BrandZ™ China Top 100, the brands that scored low in the BrandZ™ Innovation Index, 95 or below, scored only 81 in Difference (100 is average). In contrast, the brands that scored high in Innovation, 110 or above, scored an average a 148 in Difference, which is an extremely high score that has risen modestly over the past five years.
The ability to innovate also makes Chinese brands more competitive globally, positioning them to help China attain greater leadership status outside of China, which is another Party Congress goal. The Chinese brands ranked in the BrandZ™ Global Top 100 already score a strong 110 on the Innovation Index, the same as brands from Continental Europe and second only to the US brands.
The days of “copycat” China are over. First, Chinese consumers now expect more from the brands they purchase. And Chinese brands are meeting those rising expectations, across categories. Second, being innovative increases the potential appeal of Chinese brands abroad, ultimately raising the perception of Brand China. And Innovation creates points of Difference, which become even more important as Chinese consumers encounter greater brand choice. Difference enables brands to command a price premium in a market where more consumers seek higher quality products and have the money to pay for them.