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Rise of China’s home-grown brands ‘wake up call’ for foreign players, but lack of differentiation ‘hindering overseas potential’

China's most valuable brand

China’s most valuable brand

China’s leading domestic brands have increased more in value in the last year than in any other since the introduction of a survey by Millward Brown five years ago, but will struggle to conquer overseas markets unless they get better at differentiating themselves, the global head of WPP’s retail practice has said.

The value of China’s most powerful 10 brands rose by $22 billion – to $464 billion – in the 2015 BrandZ Top 100 Most Valuable Chinese Brands index – the biggest jump since the first report in 2011.

Tencent is China’s most valuable Chinese brand for the first time, and newly-listed Alibaba entered the ranking in second place. Both brands jumped above long-time leader China Mobile, which had held the top spot since the ranking was first introduced.

Most valuable Chinese brands

David Roth, CEO EMEA and Asia for The Store, WPP’s global retail practice, told Mumbrella that the results should come as a “wake up call” for foreign brands in China. “Domestic brands are fast learning the science and art of brand building. The delta is decreasing in terms of awareness and value proposition between domestic and foreign brands,” he said.

However, he noted that foreign brands have the upper hand in terms of differentiation, still the Achilles heel for many Chinese brands – although that is changing.

“It used to be that all that Chinese brands thought about was building awareness, but some have become more sophisticated, recognising that just being well known is not necessarily a recipe for success,” he said.

As market conditions toughen as China’s economy enters a leaner period, consolidation is likely to happen – and those companies with more differentiated brands are more likely to be successful, Roth suggested.

This year, the major change in the top ten most valuable Chinese brands is the rise of the tech sector. Roth commented: “If you look at the top 10 brands five years ago, the top ten were state-owned firms that were not particularly innovative. Today, almost half the brand value of the top ten lies in privately held companies – and the majority are in the high-tech arena.”

The biggest faller in this year’s top ten was the Agricultural Bank of China, which lost 20 per cent of its value, followed by China Construction Bank, the Bank of China and ICBC. There were also significant falls for China Mobile and PetroChina.

Watch a six-minute video that counts down China’s 100 most valuable brands.

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