· South Korea’s top brand, Samsung impresses with 57% brand value growth and AAA+ brand strength rating
· SK Hynix is crowned South Korea’s fastest-growing brand and breaks into top 10 most valuable, following 84% year-on-year brand value increase
· LG leads the chaebols with 43% average growth across divisions
Samsung’s brand value has surged by 57% to a new national record of ₩88.8 trillion, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy. Samsung is now worth eight times more than the next brand in the ranking – Hyundai (up 17% to ₩11.3 trillion). The figure refers to Samsung’s operations in the electronics industry alone, while Samsung’s total brand value across all of the chaebol’s operations has surpassed ₩105 trillion. This secures its position as the fourth most valuable brand in the world, behind only the American tech giants of Amazon, Apple, and Google. Samsung’s growth across all industries ensured it remained just ahead of Facebook in the global ranking.
Samsung’s success in the past year is a reflection of its remarkable brand strength, enabling it to overcome even the most difficult of challenges. It allowed the company to rebound from the reputational problems connected to exploding Galaxy Note 7s in 2016 and the jailing of Jay Y. Lee last year. Despite these issues, Samsung still recorded high-volume sales of LCD screens to manufacturers across the world, mobile phones to consumers, and other electronic components.
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer perceptions, staff satisfaction, and corporate reputation. Along with the level of revenues, brand strength is a crucial driver of brand value.
According to these criteria, Samsung is South Korea’s strongest brand, earning the elite AAA+ rating. Samsung has managed to build and protect a very strong brand across many different industries with innovative product launches which have built on the brand’s reputation for high quality devices, while also taking advantage of new technologies. This innovative brand strategy ensures that the Samsung brand continues to be highly regarded.
David Haigh, CEO of Brand Finance, commented:
“Samsung’s rebound from challenging times has been possible due to the remarkable strength of the brand and because Samsung has become a global byword for high quality products. Domestically, it has no equal. Internationally, it is the only non-American brand amongst the five most valuable brands in the world, and it has an opportunity to leverage its brand strength in manufacturing to other segments of the global value chain.”
SK Hynix outpaces competition
Following 84% brand value growth to ₩5.9 trillion, SK Hynix has claimed the title of South Korea’s fastest-growing brand this year, vaulting from 16th to 6th place in the ranking. This surge in value was driven by a universal increase in demand for computer memory chips caused by the global growth in internet data centres. This has been particularly lucrative for SK Hynix as their competitors have faced financial challenges in increasing their supply. In addition, SK Hynix has also benefited from growing demand for their mobile memory chips.
In the short term, SK Hynix has a clear plan to continue leveraging their brand value by developing their computer memory business, especially with planned implementation of new technologies and manufacturing techniques.
LG leads the chaebols
The LG conglomeration achieved strong brand value growth across several divisions, with their consumer-facing brand LG up 45% to ₩8.0 trillion and moving from 5th to 3rd place in the Brand Finance South Korea 50 ranking. The other brands in the LG family achieved similarly remarkable growth, including LG Display (brand value up 69% to ₩3.5 trillion), LG U+ (brand value up 20% to ₩3.5 trillion) and LG Chem (brand value up 38% to ₩2.8 trillion). With an average growth of 43% across four brands in the ranking, LG has outperformed other two major chaebols, as Samsung’s seven brands achieved an average growth of 28%, while Hyundai’s five brands recorded an average decrease in brand value of 5%.
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 50 most valuable South Korean brands are included in the Brand Finance South Korea 50 2018 league table.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is assessed through a balanced scorecard of factors (such as marketing investment, stakeholder equity, and business performance) and used to determine what proportion of a business’s revenue is contributed by the brand.
Additional insights, more information about the methodology as well as definitions of key terms are available in the Brand Finance South Korea 50 2018 report.
Brand Finance helped craft the internationally recognised standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671.
Data compiled for the Brand Finance league tables and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.
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About Brand Finance
Brand Finance is the world’s leading independent brand valuation and strategy consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax, and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximise brand and business value.
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines a brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand Strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.
Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Brand revenues are discounted post-tax to a net present value which equals the brand value.