Brands in the BrandZ™ Top 100 Most Valuable Chinese Brands meet the rigorous valuation standards of the unique and objective BrandZ™ methodology that combines extensive and on-going consumer research with financial analysis.

BrandZ™ is the only brand valuation methodology that obtains the consumer viewpoint by conducting worldwide, on-going, in-depth quantitative consumer research, building up a global picture of brands on a category-bycategory and country-by-country basis, with extensive work in China.

Our research covers two million consumers and more than 10,000 brands in over 30 countries. This intensive, in-market consumer research differentiates the BrandZ™ methodology from competitors that rely only on a panel of “experts” or purely financial and market desk research.

Before reviewing the details of this methodology, consider these three fundamental questions: why is brand important; why is brand valuation important; and what makes BrandZ™ the definitive brand valuation tool?

Importance of brand

Brands embody a core promise of values and benefits consistently delivered. Brands provide clarity and guidance for choices made by companies, consumers, investors and others stakeholders. Brands provide the signposts we need to navigate the consumer and B2B landscapes.

At the heart of a brand’s value is its ability to appeal to relevant customers and potential customers. BrandZ™ uniquely measures this appeal and validates it against actual sales performance. Brands that succeed in creating the greatest attraction power are those that are:

Meaningful In any category, these brands appeal more, generate greater “love” and meet the individual’s expectations and needs.

Different These brands are unique in a positive way and “set the trends,” staying ahead of the curve for the benefit of the consumer.

Salient They come spontaneously to mind as the brand of choice for key needs.

Importance of brand valuation

Brand valuation is a metric that quantifies the worth of these powerful but intangible corporate assets. It enables brand owners, the investment community and others to evaluate and compare brands and make faster and better-informed decisions.

Distinction of BrandZ™

BrandZ™ is the only brand valuation tool that peels away all of the financial and other components of brand value and gets to the core— how much brand alone contributes to corporate value. This core, what we call Brand Contribution, differentiates BrandZ™.

Valuation Process

STEP 1 | Calculating Financial Value

Part A

We start with the corporation. In some cases, a corporation owns only one brand. All Corporate Earnings come from that brand. In other cases, a corporation owns many brands. And we need to apportion the earnings of the corporation across a portfolio of brands.

To make sure we attribute the correct portion of Corporate Earnings to each brand, we analyze financial information from annual reports and other sources, such as Kantar Worldpanel. This analysis yields a metric we call the Attribution Rate.We multiply Corporate Earnings by the Attribution Rate to arrive at Branded Earnings, the amount of Corporate Earnings attributed to a particular brand. If the Attribution Rate of a brand is 50 percent, for example, then half the Corporate Earnings are identified as coming from that brand.

Part B

What happened in the past or even what’s happening today is less important than the prospects for future earnings. Predicting future earnings requires adding another component to our BrandZ™ formula. This component assesses future earnings prospects as a multiple of current earnings. We call this component the Brand Multiple. It’s similar to the calculation used by financial analysts to determine the market value of stocks (Example: 6X earnings or 12X earnings). Information supplied by Bloomberg data helps us calculate a Brand Multiple. We take the Branded Earnings and multiply that number by the Brand Multiple to arrive at what we call Financial Value.

STEP 2 | Calculating Brand Contribution

We now have the value of the branded business as a proportion of the total value of the corporation. But this branded business value is still not quite the core that we are after. To arrive at Brand Value, we need to peel away a few more layers, such as the rational factors that influence the value of the branded business, for example: price, convenience, availability and distribution.

Because a brand exists in the mind of the consumer, we have to assess the brand’s uniqueness and its ability to stand out from the crowd, generate desire and cultivate loyalty. We call this unique role played by brand, Brand Contribution.

Here’s what makes BrandZ™ so unique and important. BrandZ™ is the only brand valuation methodology that obtains this customer viewpoint by conducting worldwide on-going, in-depth quantitative consumer research, online and face-to-face, building up a global picture of brands on a category-by-category and countryby- country basis.

STEP 3 | Calculating Brand Value

Now we take the Financial Value and multiply it by Brand Contribution, which is expressed as a percentage of Financial Value. The result is Brand Value. Brand Value is the dollar amount a brand contributes to the overall value of a corporation. Isolating and measuring this intangible asset reveals an additional source of shareholder value that otherwise would not exist.

Eligibility Criteria

The brands ranked in the BrandZ™ Top 100 Most Valuable Chinese Brands 2014 report meet these eligibility criteria:

  • The brand was originally created by a Mainland China enterprise.
  • The brand is owned by a publicly traded enterprise.
  • The brand reported positive earnings for the period covered by the ranking.
  • Financial brands derived at least 20 percent of earnings from retail banking.

Why BrandZ™ is the definitive Brand valuation methodology

All brand valuation methodologies are similar—up to a point.

All methodologies use financial research and sophisticated mathematical formulas to calculate current and future earnings that can be attributed directly to a brand rather than to the corporation. This exercise produces an important but incomplete picture.

What’s missing? The picture of the brand at this point lacks input from the people whose opinions are most important—the consumer. This is where the BrandZ™ methodology and the methodologies of our competitors part company.

How does the competition determine the consumer view? Interbrand derives the consumer point of view from panels of experts who contribute their opinions. The Brand Finance methodology employs a complicated accounting method called Royalty Relief Valuation. Each methodology is fine as far as it goes. But neither goes far enough.

Why is the BrandZ™ methodology superior? BrandZ™ goes much further. Once we have the important, but incomplete, financial picture of the brand, we communicate with consumers—constantly. Our on-going, in-depth quantitative research includes two million consumers and more than 10,000 brands in over 30 countries.

What’s the BrandZ™ benefit?
The key BrandZ™ methodology benefit is the unrivalled accuracy of the valuations, which is especially critical for two broad audiences.

  • Members of the financial community—including analysts, shareholders, investors and CEOs—depend on BrandZ™ for the most reliable and accurate brand value information available.
  • Brand owners turn to BrandZ™ to more deeply understand the causal links between brand strength, sales and profits and to translate those insights into strategies for building brand equity.

BrandZ China Top 100 2014

BrandZ China 2014 Report Top 100 Report
English | Chinese

Top 100 Chart
English | Chinese

2014 BrandZ China Top 100 Infographic

BrandZ China 2014 Infographic

Methodology and valuation by Kantar Millward Brown

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