Top 100 value rise keeps pace with rate of Top 100 Global brands
The BrandZ™ Top 100 Most Valuable Chinese Brands 2016 increased 13 percent in value to $525.6 billion. Although the increase is lower than the 22 percent rise a year ago, brand value rose despite the countervailing forces of China’s slower economic expansion and extreme stock market fluctuations.
China’s GDP growth slowed to 6.9 percent in 2015, down from 7.3 percent the prior year, according to China’s National Bureau of Statistics. The Shanghai Composite lost about a third of its value between June and September before recovering by the end of the year. Brands were not immune to this volatility, of course, but inoculated with high Brand Power the most valuable brands survived and even thrived. Brand Power is the BrandZ™ measurement of brand equity.
A comparison of the stock market performance of MSCI China, a weighted index of Chinese stocks, and the BrandZ™ Portfolio of the Top 100 Most Valuable Chinese Brands, shows that in January 2016, the MSCI was down 10.7 percent from its 2010 level, while the BrandZ™ China Top 100 Portfolio was up 43.1 percent. A related China BrandZ™ Top 100 stock portfolio comprised of brands with exceptional brand strength more than doubled in value over the same period.
These results demonstrate that brand strength provides stability, even in the most volatile market conditions; investments brands make to build value are measurably rewarded in the stock market; and valuable brands deliver superior shareholder returns.
While market volatility and global economic forces, including the low prices for crude oil, pressured certain brands and categories, they also opened opportunities for smaller, entrepreneurial brands, able to perform with more agility than some of the State Owned Enterprises (SOEs).
The China BrandZ™ Top 10 grew only 3 percent in value, as it transitions to market-driven brands, while lower ranks, filled with market-driven brands, grew sharply in value; brands ranked 11-to-50 increased 36 percent and 51-to-100 increased 34 percent.
Considered in a worldwide context, the 2016 China BrandZ™ Top 100 13 percent increase is comparable to the 14 percent brand value rise of the BrandZ™ Global Top 100. It was faster than the growth rate of the BrandZ™ Latam Top 50, but slower than the BrandZ™ India Top 50, which experienced exceptional growth, driven by a robust economy, consumer empowerment, and financial sector strength.
Implications for Brands
Economic and stock market fluctuations are inevitable in a market-driven economy. However, brands do not inevitably need to rise and fall extremely with the economic cycles. A strong brand, or brand equity, strengthens the brand immune system and helps moderate the impact of economic swings.
Even when external forces impact competitors, resilient, strong brands can grow in value, gain market share, achieve strong financial results, and deliver superior returns to investors.