Consumers spark brand creativity and innovation
MARKET-DRIVEN BRANDS DOMINATE VALUE GROWTH
Only five years ago, the BrandZ™ Top 5 Most Valuable Chinese Brands were SOEs (State Owned Enterprises). Today, three of the Top 5 are market-driven. Tencent and Alibaba rank first and second, respectively, and Baidu ranks fifth. The trend reaches well beyond the Top 5. Over the past five years the value of market-driven brands in the BrandZ™ Top 50 Most Valuable Brands grew 278 percent. The value of SOEs grew only 6 percent. The results indicate the growing importance of brands in China, which will become even greater as the market continues to liberalize.
TECHNOLOGY AND RETAIL LEAD INNOVATION
Chinese brand innovation is especially apparent in the intersection of technology and retail, in ecommerce and in mobile payments, for example. Among the factors driving innovation and creativity are: increasing demand from more sophisticated and better informed Chinese consumers; and increasing market competition, driven in part by liberalized economic policies.
CHINESE BRANDS NARROW THE GAP WITH MULTINATIONALS
Consumers increasingly see little difference between the local Chinese brands and multinational brands in China. More prosperous and sophisticated, Chinese consumers today choose brands based on the value offered rather than provenance. More Chinese brands are accepted not only because they may be well known, but also because consumers see them as meaningful and different in important ways.
BRANDS EXTEND TO NEW PRODUCTS AND CATEGORIES
Growth opportunities and competitive pressures in the evolving Chinese market are driving brands to enter new categories or new product lines within their current category. Some initiatives are similar to western brand extensions, while others are more specifically Chinese. Chinese are inclined to extend brands through overseas acquisition, for example, to move rapidly into the premium range.
MEDIA SPENDING GROWS AND MIX CHANGES
More varied media portfolios reflect growing brand competition and increasingly elaborate communication strategies. Total media spending doubled since 2009, and allocation of media investment shifted dramatically with the growth of Internet marketing. TV comprised less than half of media spending for the first time in 2014. Internet accounted for almost one-third of media spending.