Chinese entrepreneurial brands are rapidly emerging. Although most are too small to appear in the BrandZÔ Top 100 Most Valuable Chinese Brands, they are large enough to make an impression on consumers, even overseas. BrandZÔ examined overseas consumer attitudes toward both emerging and established Chinese brands at this pivotal moment, when China faces outward and transitions from being the world’s product maker to potentially becoming one of its most powerful marketers.
The research considered nine product categories in seven developed markets, including three continental European countries, the UK, the US, Australia, and Japan. It compared how consumers view Chinese brands with how they view non-Chinese brands – both global and local country brands. The research concluded:
- Entrepreneurial, Internet-driven Chinese brands are finding acceptance overseas, and consumer electronics brands dominate the ranks of Chinese exporters; however,
- Consumers worldwide are still less likely to choose a Chinese brand in most categories; and
- As Chinese companies continue to expand beyond nearby Asian countries, export success will require extensive market insight and brand building.
These findings are contained in the BrandZ™ Top 30 Chinese Global Brand Builders, a report produced by BrandZ™ and Kantar Millward Brown in collaboration with Google. The report identifies and ranks Chinese brands based on the strength of their BrandZÔ Brand Power outside of China. Brand Power is a BrandZÔ metric of brand equity, the consumers’ inclination to select a brand. (For full details and methodology, please visit www.brandz.com)
The results reflect the transition of China’s economy from a production-driven past to a consumer-driven future. Brands in the established categories dominate the top of the ranking. In general, these brands drove economic growth and built Brand Power over time. The Internet-driven brands are more present toward the bottom of the ranking. These emerging brands indicate the potential for economic growth and rising Brand Power.
Challenges and insights
Six of the Top 10 Chinese Global Brand Builders also rank in the BrandZÔ China Top 100. These include technology brands Lenovo, Huawei, and Hisense; e-commerce giant Alibaba; Air China; and appliance maker Haier. But four of the brands are not in the BrandZÔ Top 100 because their valuations are not large enough. These brands include: game maker Elex; Anker, a maker of consumer electronics accessories; and smartphone makers Xiaomi and Cheetah Mobile.
These brands are at the thin edge of the wedge of Chinese brands expanding abroad and facing a set of challenges that requires new marketing insights, including these, developed from the BrandZÔ research:
- Chinese brands need to build awareness and consideration. In the countries and categories studied, consumers are much less aware of Chinese brands – or likely to purchase them – compared with local market or international brands.
- Awareness and consideration varies by country and category. Consumers in Spain and Australia are relatively more receptive to Chinese brands, especially compared with consumers in the US, the UK, and Japan. In established categories, Chinese brands enjoy awareness, but also face a lot of competition. Internet-driven brands are growing quickly in awareness and consideration.
- Brands in established categories need to differentiate. Consumers say that brands in established categories have understood and met their needs in relevant ways, but the brands have not sufficiently differentiated. In contrast, the newer Internet-driven brands have had less time to meet consumer needs, but consumers are likely to view these brands as distinctive because of their technology and innovation.
Changing market dynamics
Chinese brands are increasing their export efforts at a time when several market dynamics are aligned in their favor. First, Chinese brands have changed. For several reasons, including pressure from increasingly sophisticated Chinese consumers, and production experience gained as Original Equipment Manufacturers (OEMs), Chinese brands have improved in quality during the past decade. They now are more capable of meeting international expectations. Second, consumers have changed. Equipped with greater product choice and knowledge, consumers worldwide are more capable of assessing brand quality and willing to select less well-known brands, when justified.
Chinese brands demonstrate their quality with their digital sophistication and ability to create ecosystems that integrate e-commerce with mobile payment apps and a wide variety of other services. Chinese innovation and quality is also evident in other technology sectors. DJI, ranked 13 in the BrandZ™ Chinese Top 30 Global Brand Builders, is a pioneer in drone development. While well known in the US, where the brand launched, awareness is lower in other overseas markets. Consumers in the seven markets studied were less aware of Chinese brands than non-Chinese brands, across all categories.
Similarly, brands like Huawei or Xiaomi produce smart devices that rival Apple and Samsung in function and design. Yet when BrandZÔ research compared the Number 1 Chinese mobile phone brand with the Number 1 global or local mobile phone brand in each of five markets (the UK, Germany, Australia, Japan, and Spain), consumers viewed the Chinese brand as less trustworthy, desirable, and creative. This disconnection between reality and perception particularly challenges brands that intend to reach a space where few Chinese brand have gone before – premium.
It seems as if the quality of Chinese brands is improving faster than the image of Chinese brands. The gap exists at a time when western consumers have greater access to products from China, in part because of the e-commerce brands that market Chinese products abroad. Those ranked in the BrandZ™ Chinese Top 30 Global Brand Builders include not only Alibaba, which reaches overseas consumers with its AliExpress site, but also GearBox and Light in the Box.
Ranking reveals potential
Chinese brands have a good story to tell, but they need to tell it better and more often, BrandZÔ research suggests. Perception is changing, in part because of a generational influence. Younger consumers have experienced Chinese products differently than their parents or grandparents. For young people, China makes cool stuff. BrandZÔ research discovered that in one category, mobile gaming, consumers prefer Chinese brands over the local or global brands. They like the graphic style of Chinese games and the strategic thinking required to play.
The mobile gaming category illustrates the enormous potential spread throughout the BrandZ™ China Export Top 30 ranking. With one exception, Elex, the mobile gaming brands fall in the second half of the ranking, and four of them – Tap4Fun, IGG, Youzu, and Ourpalm, are clustered together in ranks 19 to 22. Compared with the Top 10, which represents 57 percent of Brand Power, the Bottom 10 produces only 16 percent.
Two consumer electronic brands, smart phone producers Oppo and Vivo, appear at ranks 26 and 27, respectively. Like the mobile gaming brands, they illustrate how China’s export economy is tilting to technology and innovation, and how, with greater access to venture capital, Internet-driven brands have rapidly entered overseas markets to compete with more established Chinese and global brands. Many younger brands are in growth categories and are expanding organically now, having survived a competitive shake out in China.
These entrepreneurial brands can be nimbler than some of the larger BrandZ™ China Export Top 30 brands in more mature categories, which have built their international presence through acquisition. These include Lenovo, with its purchases of the IBM personal computer and server divisions, and Motorola Mobility; Haier, which expanded US market share with the recent purchase of GE’s home appliance division; and TCL the home appliance brand that achieved initial prominence with acquisitions, including the telecommunications brand, Alcatel.
Regardless of their category or export strategy China’s export leaders are raising awareness of Chinese brands overseas and improving the perception of Brand China. As these companies build their brands abroad, they also enjoy a bonus return on investment at home. According to BrandZ™ research about the Chinese Dream, around two-thirds of Chinese believe that building strong brands worldwide is essential to achieving a better life. Exporting success confers status on a brand and potentially raises trust. Chinese consumers view acceptance by an international audience as an endorsement, a guarantee of quality.