Report: Value proposition gains increasing attention from Chinese enterprises

The emphasis on boosting domestic consumption, lowertier markets and sustainability is reshaping the mindsets of companies doing business in China.”

Doreen Wang, Kantar China president and global chair of BrandZ

Chinese companies are putting more emphasis on value propositions along with product and business model innovation, and brand-building is paying dividends in equity performance, a recent survey showed.

The Top 100 Most Valuable Chinese Brands have gained 57 percent in value, reaching $1.56 trillion this year, according to consultancy Kantar in its 11th BrandZ ranking report published on Monday.

Tencent, Alibaba and Moutai were the top three on the chart. Seven of the top 10 companies were technology and internet firms like short-video apps Douyin and Kuaishou.

Apart from China’s V-shaped swift economic recovery fueling the growth of companies, incorporating the latest Chinese agendas such as dual circulation and carbon neutrality goals into business strategies has become an important driver of boosting brand value, according to Doreen Wang, Kantar China president and global chair of BrandZ.

“The emphasis on boosting domestic consumption, lower-tier markets and sustainability is reshaping the mindsets of companies doing business in China,” Wang said.

Brand value in Kantar’s calculation is based on a combination of publicly available financial data and in-depth quantitative consumer research that gives extra appealing factors to brands.

The report also found that strong brands provide stock market resilience during periods of volatility, offering a reliable and positive return on the money they invest to build brand equity.

For instance, the value of the Kantar BrandZ China Top 100 portfolio increased 246 percent between July 2010 and June 2021, which is more than three times the rate of the MSCI China Index, which increased just 77 percent.

“Valuable brands show superior shareholder returns,” Wang said. “It provides a hint to business owners and shareholders not to overlook the long-term effect of brand equity.”

Success does not lie only in financial performance, but also in social responsibility. Tencent, which jumped 85 percent yearon-year in brand value to $280 billion, is perceived in a favorable light by many consumers thanks to its philanthropical endeavors such as building rural development funds and restructuring organizations to fulfill social obligations.

While the ongoing antitrust campaigns are regulating monopolistic behaviors commonly found among internet giants, Wang sees these policies to be effective channels that offer brands guidance into how and where they should position themselves.

“Customers are less affected by the ongoing regulations,” she said. “But it’s a kind reminder to brands to reflect on their social values along the way.”

A total of 17 newcomers made it onto the Chinese brand rankings this year, led by food and beverage brands Nongfu Spring and Haitian. Other entertainment-sector entries include Mango TV, Sina Weibo and 360.

“These newcomers show that brands adapting to the post-pandemic era are being very successful,” said Chirantan Ray, managing director of brand, creative and media practice at Kantar China.

Ray said Chinese brands are gaining momentum thanks to a boost in national pride, as well as the cultural and emotional engagement found especially among Generation Z.

“Beyond the huge emotional and cultural attachment, another reason is because the quality of these brands has significantly gone up in the past five to 10 years.”

To succeed in China, foreign brands should have China “as a center of your strategy”, Ray said.

“You need to design in China, do it at China speed and stay agile.”

The study also pointed to sustainability as a key priority for businesses in China. Several prominent brands, both multinational and local, have started to make this a priority in business planning.

Analysis of Kantar’s BrandZ database has shown that over the past 12 years, brands with a strong commitment to purpose grew their brand value at least twice as much as other brands.