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Economic change causes
brand value fluctuations
The value of the technology category increased 16 percent in the BrandZÔ Top 100 Most Valuable Chinese Brands 2017, down from a 32 percent rise a year ago. The change reflected the mixed results among the 10 technology brands in the ranking. Five brands increased value, four lost value and one brand entered the ranking for the first time.
The impact of the technology category, which produces almost 30 percent of the total value of the BrandZÔ China Top 100 from 10 percent of the brands, reflects the journey of China’s economy toward consumer-facing businesses and the rise of market-driven brands. The brand value fluctuations reveal the bumps along the road, and the maturation of the category, which now is experiencing a rise in mergers and acquisitions and collaborations.
Tencent, China’s leading Internet portal, remains China’s most valuable brand. Baidu, the search leader, and Huawei, maker of telecommunications equipment and smartphones, also rank in the BrandZÔ China Top 10. The other Technology brands in the BrandZÔ China Top 100 are: Lenovo, NetEase, Letv, ZTE, Youku Tudou, Sina, and the newcomer this year, iQiyi, an online video platform similar to YouTube.
Tencent increased 29 percent in value based on the strength of its social media apps, like WeChat (Weixin in Chinese), which reached almost 850 million monthly active users as of the end of September 2016, a 30 percent year-on-year increase. These platforms helped drive advertising revenue with options including WeChat Moments, which connects ad content with relevant users and occasions. The payment functions of these platforms increased in popularity.
Along with Tencent, two other technology brands were among the BrandZÔ Top 20 Risers in value. The web portal Sina increased 43 percent. As of September 2016, Weibo, Sina’s, social media platform had increased monthly active users 32 percent year-on-year to almost 300 million. The brand’s new initiatives in live video and self-broadcasting helped build its following among young people. NetEase, a maker of online and mobile games, and a major e-mail service supplier, increased 36 percent in value. The brand had 890 million users as of the end of September 2016.
Consumer interest in video, and the burgeoning phenomenon of live streaming, drove the growth of newcomer iQiyi. Founded in 2010, iQiyi is primarily owned by Baidu, which has announced plans for an Initial Public Offering (IPO). iQiyi’s competitor, Youku Tudou, also rose in value because of the popularity of live streaming and the impact of its acquisition by Alibaba, as China’s e-commerce leader expands its ecosystem to seamlessly link entertainment with e-commerce and social media.
Letv also aggressively developed its ecosystem. Originally an online video streaming site, the brand has created original content, expanded into hardware with smart TVs and smartphones, and conducted electric car R&D. Because of costs associated with these initiatives, Letv declined somewhat in value, as did smartphone maker ZTE, primarily because of market competition.
As China’s GDP growth slows and the economy rebalances, technology brands are leading the search for overseas opportunities. Three of the BrandZÔ Top 10 Chinese brands in overseas revenue are in technology. These include Lenovo, Huawei, and ZTE. Lenovo derives over 70 percent of its revenue from overseas business. Huawei gains almost 60 percent of its revenue from outside of China in over 170 countries. ZTE gains 47 percent.
Lenovo declined in value because of the global slowdown in the growth of PCs along with challenges integrating Motorola Mobility, the mobile phone business it acquired from Google in 2014.