MarketLine Blog

Year of the Dragon: Chinese firms storm the BrandZ top 100

The Brandz Top 100 for 2015 has seen impressive debuts and inexorable rises for a plethora of Chinese companies.

Alibaba surged into the top 20 on its debut. The company become eligible following Alibaba’s debut on the New York stock exchange in 2014 with a record $25bn IPO and has beaten Amazon into second place of the retail market, ranked 14th overall and top of the retail category.  The next most successful debut was Huawei.

Demonstrating China’s growing economic prowess and influence in the world, other firms made the top 20 including Tencent (the most valuable Chinese brand in at 11th),, China Mobile and Industrial and Commercial Bank of China (ICBC).  A quarter of the biggest risers in their index were Chinese, particularly those serving the online Chinese world.  Alibaba provides e-commerce similar to eBay and Amazon, Tencent provides a social network and Baidu a search engine. Other strong performers in climbing the ranks included China Life and Ping An, insurance companies who are diversifying to offer a plethora of financial services to middle class consumers.

China is outpacing other BRIC countries, but has a long way to go before it can dislodge North American companies. Half the brands of in the Global Top 100 are based in North America and they constitute two-thirds of its value. Fourteen of the 15 BRIC market brands in in the BrandZ™ Top 100 Most Valuable Global Brands 2015 were Chinese, up from just one Chinese brand 10 years ago. China was aided by economic slowdowns hitting Brazil and sanctions also impacting on the Russian economy.

China’s influence in the global economy can also be measured in how influential it was in the decline of the luxury brand-  The slower Chinese economy and the impact of government restrictions on official gift giving impacted the luxury category, which declined 6 per cent in Brand Value compared to the 2014 index.

While the companies are gaining traction globally in terms of brand value, the companies themselves are preparing for a slowdown. China’s economy traditionally relied on export-led industrial growth, but after the financial crisis of 2007 and 2008, it has depended more on credit-fuelled spending and infrastructure investment by the state. The first quarter of 2015 saw growth of 7%, with expectations that it could be held for the annual growth rate. This would represent the lowest rate of growth for 25 years, and is a blow to the policymakers hoping to transition the country to consumption driven growth.

Alibaba is also facing challenges- its inexorable rise has led to a halt in recruitment in order to consolidate and organise effectively. Share prices have rallied to $92.68 on May 27 2015, similar to its initial price of $93.89 but a far cry from the high of $119 in November 2014. It is well placed to reap the benefits of China’s growing ecommerce benefits, but faces challenges from other Top 100 placers Tencent and to its dominant position.

For related products, check out the Case Studies:

Alibaba: China’s answer to eBay and Amazon

Huawei A world leader marred by controversy

Tencent Holdings Limited: Tencent’s rise to dominance in the Chinese Internet industry

Posted in Economy, Retail.

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