These Are China’s Most Valuable Brands

These Are China’s Most Valuable Brands
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What you need to know

Brands catering to the rising middle class continue to expand while the old economy's decline has slowed the growth of some of China's biggest brands.

By Scott Cendrowski

The growth in value of China’s biggest brands slowed way down last year amid the old economy’s industrial decline, but brands catering to the rising middle class kept up their rapid expansion.

That’s according to advertising agency WPP’s latest BrandZ Top 100 Most Valuable Chinese Brands report, which was released on March 20 and tracks the value of old and emerging Chinese brands. While banks, insurers, and oil and gas companies declined in value by 6 percent on the ranking, consumer services travel and education each rose 46 percent last year. The two fastest rising brands in the top 100 ranking were TAL Education’s Xueersi and New Oriental, which offer after-school tutoring for English and other subjects. Overall, the value of the top 100 brands grew 6 percent.

WPP’s BrandZ says it singles out a brand’s value according to corporate earnings statements, then layers in what it calls proprietary consumer sentiment from 3.2 million consumers across 50 global markets. Other brand rankings describe a similar process; BrandZ says the wide range of consumer feedback gives its list special oomph.

Regardless of whether it is definitive, the list offers a measuring scale for the richest Chinese brands. Government support is a consistent theme. While five of the top 10 are state-owned companies, including China Mobile, ICBC bank, and China Construction bank, recent Chinese government meetings this weekend in Beijing attest to the support even private companies enjoy.

Technology is one of the key areas that receive direct or indirect government support. China’s walled-off Internet benefits local players, and just this week popular sharing site Pinterest was blocked. BrandZ's first place ranking this year goes to Tencent (TCEHY, +3.48 percent), which runs China’s most popular social network WeChat. E-commerce player Alibaba (BABA, +1.55 percent) ranks second, and search engine Baidu (BIDU, -0.28 percent) third.

China's new push to replace foreign high-tech equipment is expected to raise local players’ value. On Sunday, one of China’s senior technology officials defended China’s indigenous innovation program, called Made in China 2025, which is offering US$300 billion of government support for the local development of computer chips, electric cars, airplanes, and other products to move Chinese manufacturing up the value scale. Foreign companies fear the plan will force them to turn over technology to stay in China's market.

In the past decade, the government has supported the telecom industry’s overseas expansion. Now Huawei ranks sixth on the BrandZ list, with a value of US$20.4 billion. Similar support to expand China’s influence overseas, such as One Belt, One Road, were one reason the BrandZ list in 2017 reported that the top 100 brands’ proportion of overseas revenue rose to 40 percent of their total, from just 24 percent in 2011.

Chinese consumers still prize foreign goods, from cars and child products, for safety and reliability, but BrandZ noted that last year Chinese brands passed multinationals in a ranking of brand equity for the first time.

Chinese brands should only grow in influence thanks to a rising middle class and government directives.

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TNL Editor: Olivia Yang