View the full Brand Finance Nation Brands 2019 report here
Developing economies have seen 30 times faster nation brand value growth over the past year than developed ones, according to the latest report by Brand Finance, the world’s leading independent brand valuation consultancy.
The average year-on-year nation brand value growth among the developing economies stands at 13.9%, compared to as little as 0.4% for the developed economies included in the annual study into the world’s 100 most valuable nation brands. This means that – on average – the nation brands of developing economies have been growing at a pace 31.3 times faster than the developed ones.
Nation brand values of most developed economies have contracted or stagnated year on year. Japan is a notable exception with 26% growth, but even so – it is only the 15th fastest-growing nation brand this year, behind many developing African, Middle Eastern, Asian, and Latin American nation brands. Consistently with previous years’ trends, 11 out of the 20 fastest-growing nation brands of 2019 come from the Middle East and Africa, with Ghana (up 67%), Uganda (up 56%), and Egypt (up 50%) in the top 5.
David Haigh, CEO of Brand Finance, commented:
“With the Western world seeing a real crisis of leadership on both sides of the Atlantic, the developing world is catching up. Bolder, more agile, increasingly innovative African, Middle Eastern, Asian, and Latin American nation brands are racing ahead at breakneck speed, poised for further growth in the years to come.”
Although catching up, at US$37.8 trillion – the combined nation brand value of the 65 developing economies in the study remains far behind that of the 35 developed economies – which sits at US$60.3 trillion. Topping the ranking again this year, the nation brand value of the United States alone stands at US$27.8 trillion.
China shows no sign of slowing
Claiming second position, China continues to grow at a very healthy rate, recording an impressive 40% increase in brand value to US$19.5 trillion. Building on its solid performance in previous years, China is closing the gap behind long-standing leader the US, which has recorded a brand value growth of just 7% over the past year. The difference in value between the two nation brands has dropped from US$12 trillion last year to just over US$8 trillion in 2019.
The two largest economies in the world have been at loggerheads since July last year in a bitter trade war, with tariffs imposed by both sides on billions of dollars’ worth of imports and exports. Despite this, China’s brand value has defied the expectations of a slowdown, benefitting from the glowing success of some of its most dominant and valuable brands, including ICBC, Huawei, and Alibaba. The latter two in particular have embraced strong marketing strategies that mirror their international counterparts, which have helped successfully propel them onto the global stage as legitimate competitors to Western brands.
David Haigh, CEO of Brand Finance, commented:
“China is undergoing a meteoric rise on the global stage, rivalling the traditional nation brand powerhouses in the West. Despite economic and political challenges, China’s nation brand value has grown by 40%, consistently outpacing the US and other major economies.”
Japan overtakes UK
Behind the US, China, and third-placed Germany, Japan’s brand value has increased 26% to US$4.5 trillion. In spite of predictions that its economy would suffer in the face of a global slowdown, Japan has been able to reap the benefits from its solid consumer spend and high levels of business investment. As the tech powerhouse economy of Asia, Japan is progressively forward-thinking and outward-looking, protecting itself amid global uncertainty. Championed by Abe and Trump, the Free and Open Indo-Pacific Strategy supports and promotes connectivity and free trade in its own right. However, the nation is contending with its ‘super-aging’ society putting pressure on social and health services.
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of nation brands, determined by performance on dozens of data points across three key pillars: Goods & Services, Investment, and Society. According to these criteria, Japan has also recorded solid growth in brand strength, jumping to a AAA brand strength rating, with a corresponding BSI score of 85.8 out of 100.
David Haigh, CEO of Brand Finance, commented:
“Japan is increasingly becoming a tourism hotspot, with millions visiting every year hoping to soak up the culture and explore all the country has to offer. With the nation currently hosting the 2019 Rugby World Cup and next summer’s Tokyo 2020 Olympics just around the corner, there is no doubt we will see an even greater uplift in Japan’s brand strength in the future.”
Taking fourth rank, Japan has pushed the UK, which saw little uplift from last year (up 3% to US$3.9 trillion), into fifth position. With the final Brexit decision yet to come and therefore not currently accounted for in the nation’s brand value, the next few months will be crucial in determining the UK’s future outlook.
Ireland makes the most of Brexit
The uncertainty around Brexit has prevented both the UK and the rest of the EU from faster growth. Ireland, however, seems to be making the most of the situation. Ireland’s nation brand value has more than doubled since 2015 – the year before the disruption of status quo through the Brexit referendum – increasing 110%. By contrast, in the same period, the UK’s nation brand value and the combined brand value of the other EU member states have only grown 19% and 32% respectively. Confirming strong performance, Ireland is the fastest-growing nation brand in Western Europe in 2019, up 12% to US$604 billion, while all other players in the region have recorded a minimal uptick or a decline. A potential no-deal scenario is however likely to cause challenges for Ireland going forward.
No new entrants in top 10
Although there were no new entrants to the club, India (up 19% to US$2.6 trillion) has made the largest jump within the top 10 – from 9th to 7th position. The economy was quick to recover after the global financial crisis, with growth now reduced by a recent slowdown in both the manufacturing and construction sectors. The Indian government has launched several initiatives to try and boost the nation’s exposure on the world stage, including ‘Make in India’ and the Swachh Bharat mission.
Other movers in the top 10 include: Canada, dropping from 7th to 8th (down 2% to US$2.2 trillion); Italy falling from 8th to 10th (down 5% to US$2.1 trillion); and South Korea, which has inched up one place from 10th to 9th (up 7% to US$2.1 trillion). South Korea is one of Asia’s largest economies and benefits from its strong export base and improved structural policies that have bred inclusion and enhanced productivity.
Top turnaround: Turkey
Turkey has recorded a remarkable turnaround from its performance in 2018, going from a loss of almost a third of its nation brand value, to this year leaping up 47% to US$560 billion. The nation is back on track following a recession and the sharp fall in value of the lira, which tainted the economy in the second half of 2018. Turkey has the opportunity to thrive with the advantage of the youngest and fastest-growing population in Europe, as well as looser monetary policies currently in place. Continued geopolitical tensions, however, could potentially blight this improvement.
Singapore is world’s strongest
Singapore has retained its title of the world’s strongest nation brand, earning the elite AAA+ rating and a Brand Strength Index (BSI) score of 90.5 out of 100. Although this is a slight drop from 2018, Singapore is the only nation in the ranking to record a BSI over 90.
The highly prosperous city-state serves as the business hub of Southeast Asia and is renowned for its world-class education, healthcare, transport, and low crime levels. These factors, paired with the nation’s unwavering political stability and commitment to its ‘Future Economy’ strategy, makes the island a very strong and stable nation on the global stage.
David Haigh, CEO of Brand Finance, commented:
“Singapore’s pioneering efforts in human capital development make it an exemplary nation for its high-class healthcare facilities and first-rate education. These are the types of investments which drive the nation’s sustained growth and build brand strength.”
Note to Editors
Every year, Brand Finance values 5,000 of the world’s biggest brands. The 100 most valuable and strongest nation brands are included in the Brand Finance Nation Brands 2019 ranking.
The classification of developed and developing economies in the study relies on the definitions included in the United Nations’ World Economic Situation and Prospects.
Additional insights, charts, and more information about the methodology are available in the Brand Finance Nation Brands 2019 report.
Data compiled for the Brand Finance rankings 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.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined 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. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
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 Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings 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, while 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 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.