Chinese brands have narrowed the gap. Consumers now see less difference between Chinese brands and multinationals, which are not always the default choice they were just a few years ago. Several factors drive this change:
- Chinese brands have improved in how they develop and execute marketing strategies. They increasingly use big data and analytics to understand consumers.
- Chinese brands integrate marketing and sales functions effectively. This collaborative approach leads to more rapid execution.
- Chinese consumers have changed. They increasingly see brand as a symbol of value and not simply a badge of status. This change results from greater sophistication, and also thriftiness as the economic growth rate slows.
Chinese and multinationals close in brand power...
Five years ago there was a 26-point spread between the brand power of Chinese and multinational brands as measured by the BrandZTM Power Index. Today their scores are almost identical.
Five years ago, 26-points separated the lower brand power of Chinese brands from the multinational brands, as measured by the BrandZTM Power Index. Today the scores are almost identical. The Power Index measures the potential volume share a brand could command based only on consumer perception of the brand.
In 2010, multinational brands achieved a Power Index score of 115 and Chinese brands scored 89. A score of 100 is average. In 2014, multinationals and Chinese brands were almost tied, scoring 101 and 99, respectively.
The BrandZTM Power Index score increased over time for Chinese brands because they improved in being meaningful (meeting functional needs and forming an emotional bond) and remained consistently salient (being vibrant and coming to mind quickly), two of the three components of the Power Index.
Chinese brands improved slightly in a third component, being seen as different, but still lag the MNCs, which declined slightly in all three components. These results suggest that Chinese brands are making progress but do not match multinationals in the ability to stand out from the competition as being different and trend setting.
Closing this gap is critical because being differentiated is a key determinant of lasting brand value. It’s necessary for competing successfully against foreign brands.
... But Chinese brands not seen as sufficiently different
Consumers view Chinese brands as meaningful
(being relevant and meeting their needs) and salient (vibrant or coming to mind quickly), but not sufficiently different from other brands in the same category.