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Competing at Home

Chinese brands surpass
multinational brands
in Brand Power score
 
This shift signals long-term trend
 
For the first time, in 2016, Chinese brands exceeded multinationals in Brand Power. Chinese brands have been steadily improving in quality and competitiveness, but until now they have lagged multinationals competing in China in this important BrandZÔ metric of brand equity, the consumer inclination to select a particular brand.
 
Only seven years ago, a significant gap separated the Chinese and multinationals, competing in China, in Brand Power. Chinese brands scored only 89, while multinationals scored 115. An average score is 100. During the ensuing years, Chinese brands strengthened while multinationals weakened in Brand Power. They converged in Brand Power a year ago and Chinese brands pulled ahead this year, scoring 101 in Brand Power compared with 99 for multinationals.
 
Over the past few years, Chinese brands have narrowed the gap with multinationals on each of the three ingredients that comprise Brand Power: Meaningful (meeting emotion and functional needs in relevant ways), Different (being seen as distinctive or trend setting), and Salient (coming to mind quickly at the time of purchase).
 
The shift in Brand Power was not consistent across all categories, however. Safety concerns still impact consumer acceptance of Chinese products, especially those that consumers put on or in their bodies. Consequently, some Chinese brands in these categories declined in Brand Power: dairy, instant food, face care, beer, and soft drinks.
 
Most importantly, Chinese brands improved their Different scores. They had lagged multinationals in being able to differentiate. And multinationals weakened in Salience, which had been an important strength. The decline in multinational Salience reflects a shift in media spending. Multinationals traditionally outspent Chinese brands. However, in 2016 the multinationals in China made up only about 20 percent of the media spending by the Top 15 advertisers in China, and Chinese brands made up around 80 percent, according to CTR Research.
 
Brand Implications
As Chinese and multinational brands trade places as Brand Power leaders, they remain close in scores, but Chinese brands have the momentum. In many categories, Chinese consumers are willing to purchase Chinese brands because quality has improved and pricing is competitive. In addition, being local affords Chinese brands an advantage in understanding and responding to consumer needs in meaningful ways. Chinese brands need to continue to offer Meaningful products while they strengthen being Different and Salient. Greater use of media has made a measurable impact. Multinationals face a different, almost mirror image set of challenges. Chinese consumers had chosen multinational brands because they offered wider choice, assured quality, and status – perhaps at higher prices. With the improved quality of Chinese products, consumers enjoy greater choice. And status alone, without value, is less likely to satisfy today’s Chinese consumers. Multinational brands need to develop the strengths of local brands, the ability to connect with consumers and to understand and meet their needs in relevant ways. 

Chinese brands surpass multinationals in Brand Power…
 
For the first time, in 2016, Chinese brands exceeded multinationals in Brand Power. Only seven years ago, a significant gap separated the Chinese and multinationals in Brand Power

… And Chinese brands narrowed the gap for all three Brand Power ingredients…
 
Chinese brands improved more than multinationals in each of the three ingredients that comprise Brand Power: Meaningful, Different, and Salient.
 


… But some categories performed better than others
 
The shift in Brand Power was not consistent across all categories. Safety concerns still affect categories in which consumers put products on or in their bodies.


Multinationals weakened in Salience…
 
Multinationals weakened in Salience, which had been an important strength.


… And lower scores correspond to reduced media investment
The decline in multinational Salience reflects a decline in media spending by multinational brands and an increase in spending by Chinese brands, reversing a traditional pattern.