Julien's notebook: Ever heard of these Chinese companies?

Bonjour,

China is the second largest economy in the world and yet, apart from knowing that most of our goods can be produced there, their brands are little known in the West.

Millwardbrown has just released its 2014 Chinese brand value document and I suggest you take a look at it here.

Why the interest?

This is a study which looks at the top100 brands in China. Another market research company: Interbrand, publishes an annual brand ranking. See it here. Its methodology is different: sectors such as telecoms are excluded while companies need to generate revenues on 3 continents and 30% of those overseas. Most Chinese companies do not achieve this yet. You have probably heard of the few which do, such as Haier (appliances) or Lenovo (computers).

If you were to merge both data, we could find 4-5 Chinese brands in the global top 20, with two in the top 10.

This suggests that Chinese companies are no more copycats but can offer better products and services than their Western peers.

Categories

So far, financial services, telecoms and technology have dominated the rankings. For the first two sectors, this is a pattern we often see in emerging markets. The case of technology is more interesting: China has Internet companies matching the size and profits of US giants: Tencent, the social media company, generated more profits than Facebook while Baidu handles as many searches as Google does!

While the financial services and telecom brand values are seeing smaller gains relatively now (which is fair I think as they are already oligopolies and most Chinese seem to bank and use a mobile already), consumer sectors are seeing their brand values rising fast, such as in the consumer sectors (tourism, luxury goods, food).

Rising purchasing power is changing consumption habits: diets are becoming more Westernized (dairy companies are rising fast, Mengniu is now a serious rival for a Danone and the Chinese are enjoying holidays (see how airlines and travel agents have brand value here relative to the Western countries: C-trip or Air China).

Long-term thinking

Once scale is achieved in China, these brands will seek new markets to grow further. The first step will be in South-East Asia, where there is a large Chinese community. Global consumer companies such as Unilever have benefited from strong growth in emerging markets and may start to feel some competition from Chinese rivals.

Infographics on Chinese top brands