· NetEase doubles brand value in a year, making it China’s fastest growing brand
· WeChat is also growing strongly, its value is up 90% to CNY 41.5 billion
· Huawei and Alibaba are also growing strongly, by 77% and 65% respectively
· China Mobile is China’s most valuable brand, worth CNY 319 billion
· China’s bank and insurance brands are also growing in value rapidly
· CCB is the world’s most powerful banking brand
Every year, leading brand valuation and strategy consultancy Brand Finance puts thousands of the world’s top brands to the test. They are evaluated to determine which are the most powerful and the most valuable by country, by industry and against all other brands worldwide. China’s most valuable brands can be found in the Brand Finance China 250.
NetEase is China’s fastest growing brand. NetEase has enjoyed massive success by developing hugely popular games such as the Westward Journey series as well as countless ecommerce and other internet tools. Games revenue topped CNY 18.5 billion in 2015 contributing to a profit of nearly CNY 7 billion. Shares have gained 20% this year and look set to grow further based on this encouraging news about its brand and consensus equity analyst forecasts.
WeChat is also growing strongly and is in the top 5 in terms of year on year growth. The user growth has remained consistently strong, adding 40-50 million new users a quarter since 2012 with the total now standing at around 850 million. As a result, advertising revenue is soaring; revenue for Q3 2016 is up 51% on the previous year at CNY 7.5 billion. WeChat has become the default communication method for the majority of people in China and is rapidly gaining ground across the world. Consumers’ relationship with WeChat is more profound than other brands. They see it throughout the day and it is the way that they engage with many other brands, their friends and family and the wider world. As such it commands almost unrivalled awareness and loyalty.
China Mobile, the world’s largest mobile operator by subscribers, is China’s most valuable brand. Its latest valuation of CNY 319 billion represents an 8% increase from last year’s value. Although the smartphone market and 4G coverage are approaching saturation, China Mobile’s increasing market share contributes towards its continued brand value growth.
On the hardware side of the telecoms sector, Huawei is making astonishing progress internationally. In 2015 it overtook Microsoft to become the world’s third largest manufacturer of smartphones and now has a 9% market share. After the success of the P9, the April 2017 launch of the P10 will be eagerly awaited and should contribute to further brand value growth. From 2015 to 2016, Huawei was up 77% to CNY 126 billion, making it one of China’s top 10 most valuable brands.
Chinese bank brands have been performing well for a number of years, however this year has seen particularly strong growth. China now accounts for 28% of global bank brand value while China Construction Bank has become the world’s most powerful banking brand. Alex Corringham, Consultant at Brand Finance comments, “Chinese banks are moving beyond provision of basic banking services and are investing in their brands, they are performing well on customer brand equity measures such as familiarity, consideration, preference, satisfaction and recommendation, leading to some of the highest scores in Brand Finance’s Brand Strength Index.”
The slight slowdown in the economy has had affected brands differently. Demand for luxury goods has been reduced, negatively affecting Chow Tai Fook, its brand value dropped 12% to CNY 23.7 billion. On the other hand ecommerce giant Alibaba saw its brand value grow 65% to CNY 115 billion. Jack Ma, founder of Alibaba commented, “As the economy goes down, people look online to Alibaba to buy cheaper things.”
Brand Finance CEO David Haigh comments, “China is already a long way down the road towards achieving successful Nation, Corporate and Product brands. There seems little doubt that President Xi Jinping is strengthening both the China Nation Brand and individual commercial brands, enabling China to compete globally on a level playing field with US and EU brands”.
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 nearly 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.