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China 2016: PERFORMANCE ANALYSIS | OVERSEAS REVENUETOP RISERS

Faster growth, lower value brands indicate China market’s potential

It is getting much tougher to qualify for the Top 20 Risers, the ranking of brands that increased most in brand value year-onyear. Each Top Riser in the BrandZ™ Top 100 Most Valuable Chinese Brands 2016 increased by at least 41 percent in brand value. The minimum brand value threshold for the Top 20 Risers in 2015 was 21 percent, and in 2014 it was only 10 percent.


At the same time, the total value of the Top 20 Risers decreased to $69.4 billion in 2016, from $123.6 billion in 2015, and $158.6 billion in 2014. Both the increase in Top 20 Riser value growth rate and the decrease in total value are driven by the shift to lower value/faster growth marketdriven brands from higher value/slower growth State Owned Enterprises (SOEs).

The number of market-driven brands declined somewhat from a year ago, but the longer-term trend is clear. Eleven market-driven brands made the Top 20 Risers in the China BrandZ™ 2016 ranking, compared with eight brands two years ago. Seven of the Top 20 Risers fall in the second half of the ranking, brands 51 to 100. And 15 of Top Riser brands rank below 30. The number of categories represented among the Top Risers remained fairly consistent: 10 in 2016, 12 in 2015, and 10 in 2014, demonstrating that brand value growth potential continues to cross the economy. 

With four entries apiece in the 2016 Top 20 Risers, home appliances and insurance were the most represented categories, followed by technology, with three brands. The presence of these categories reflects consumption trends. The airlines and retail categories were represented with two brands apiece. One brand from each of these categories appeared in the Top 20 Risers: alcohol, apparel, healthcare, hotels, and real estate. 

INSURANCE AND APPLIANCE  BRANDS DOMINATE
With a 70 percent increase in brand value, insurance brand China Taiping, a strategic SOE, ranked third in the Top 20 Risers. Along with China Taiping, which ranks 80 in the BrandZ™ China 100, the other Top Riser insurance brands are China Life, New China Life and Ping An.
The appearance of four insurance brands reflects the growth of a category positioned to meet the financial concerns of China’s expanding middle class. China Life and Ping An marketed aggressively online. With brand value growth of 53 percent and 41 percent, respectively, they also entered the TBrandZ™ China 100.
The home appliances brand Midea, which ranked in the Top 20 Risers in 2014 and 2015, continued to aggressively market at home and overseas. Supor, maker of small appliances, ranked 82 in the BrandZ™ China Top 100, and grew 59 percent in brand value by leveraging its high brand awareness to extend the brand into new product areas.
TCL, ranked 95 in the BrandZ™ China Top 100, enjoyed consumer acceptance as a leading TV brand, while Robam, 63 in the Top 100, introduced a new line of kitchen ranges as part of its efort to position the brand as a leader in the connected home. 


TECHNOLOGY BRANDS LEAD TOP 20
Two market-driven technology brands, Letv and NetEase, ranked one and two, respectively, in the Top 20 Risers, increasing in brand value 81 percent and 73 percent. Along with ZTE, the third technology leader, these brands ranked below 30 in the China 100 ranking, indicating the potential for fast-growing, market-driven brands to reshape the Chinese market. 
etv stretched the brand, known originally as a content provider, to sell smartphones and prepare for the launch of an energy-saving car in 2016. The web portal NetEase expanded the mobile presence of its renowned web games, and benefited as a popular purchase platform for overseas merchandise, at a time when tarif reforms made international brands more afordable.
Ranked 47 in the China Top 100, ZTE, maker of telecommunications equipment, increased activity outside of China, particularly in the US. Rapid expansion of mobile helped drive its optical and 4G LTE solutions businesses. The brand produced solutions for the Internet of Things. Long a maker of handsets for China’s three telecom providers, ZTE shifted strategies, to build and market smartphones under its own brand.


AIRLINES AND RETAIL BRANDS SURGE
The vitality of the travel industry propelled the two airline brands, China Eastern Airlines and China Southern Airlines. The airline category grew 39 percent in brand value. With Shanghai as a hub city, China Eastern Airlines experienced strong international travel and expected to receive a boost in 2016, with the opening of Disneyland Shanghai. China Southern Airlines benefited from the increased interest in domestic travel and the expansion of flights between the Chinese mainland and Taiwan.
Although the retail category declined slightly in value, two retail brands ranked in the Top 20 Risers. In just a few years, Suning transformed from an electronics retailer with too many physical stores and too little e-commerce presence, to more of a general merchant whose strategic partnership with Alibaba helped transform its bricks and mortar locations into distribution points and pick-up locations.
Although the retail category declined slightly in value, two retail brands ranked in the Top 20 Risers. In just a few years, Suning transformed from an electronics retailer with too many physical stores and too little e-commerce presence, to more of a general merchant whose strategic partnership with Alibaba helped transform its bricks and mortar locations into distribution points and pick-up locations.

POSITIONING DRIVES GROWTH
The other Top Riser brands increased brand value because of a variety of category-related and brand-specific reasons. Moutai, the premium brand of Baijiu, the traditional white alcohol, repositioned the brand to reach a wider audience with more popular pricing after government policies discouraging lavish spending impacted sales at the high end. 
In the competitive sportswear sector, Anta, known for its strong basketball presence, launched a soccer initiative. The brand’s plans to make and market soccer uniforms align with the Chinese government’s intention to increase the contribution of sports to GDP and also to raise the country’s global competitiveness in soccer. 
Tong Ren Tang, the traditional Chinese medicine (TCM) brand founded in 1669, increased its overseas revenue by about a third, based on the growing international acceptance of TCM and the brand’s international presence, with 115 stores in 25 countries and regions. 
Jinjang Inn benefited from the surge in Chinese travelers to both domestic and overseas destinations. The brand operates around 880 locations in China and is part of Jinjiang International, which owns or operates hotels worldwide. As the real estate market stabilized, in response to favorable government policies and increased consumer demand, Evergrande Real Estate results improved and the brand launched new projects in 17 cities.