Chinese companies no longer occupy 'low cost', 'cheap' position in consumers' minds

Millward Brown's global brands survey for 2012 has recently been published and again Chinese companies have performed well with 13 occupying positions in the top 100 most valuable global brands, up from 11 last year.

What makes this year's results all the more remarkable is the growing dominance of Chinese brands across the Asian region with only three non-Chinese brands making the top 10 Asian brand rankings. Toyota, once the world's largest car producer by sales volume, is fifth. NTT is eighth and South Korea's Samsung 10th. All of these have been displaced by Chinese technology or banking brands.

Indeed, it is "technology" which appears to underpin the achievement of most of the top global brands with Apple and Microsoft occupying the top positions.

Clearly, Chinese companies still have much to learn in branding but this year's BrandZ results demonstrate unequivocally that real progress is being made. Many of China's rising stars are relatively new companies and all have far less brand-building experience than their US and European competitors. Baidu, ranked 25th (up four places on last year) and Tencent, ranked 37th (up a whopping 15 places on last year) are representative of the emergence of "high-tech" Chinese industry on to the world stage.

This year's survey results also highlight the breadth of Chinese brands now emerging internationally. For example, Moutai, the alcoholic drinks brand, is the third-highest newcomer at No 69 in the rankings and no other alcoholic drinks brands can be found in the top 100. In addition Sinopec, this year's highest new entrant at 56, is now the world's most valuable energy producer brand and MetersBonWe has now risen to the ninth-most valuable global clothing brand.

For some time there has been pressure on China and the Chinese government to establish some sort of industry specialization and non-price-based source of competitive advantage. Pressure which would appear to have arisen from the path pursued by some advanced nations such as Germany, Japan, France and Italy with industry specializations of science and engineering and fashion and style.

However, this year's survey adds more weight to the argument that, in the case of China, an industry specialization is unnecessary and even limiting. However, the Chinese government has been extremely active in promoting China's uniquely rich cultural heritage. This is a brilliant initiative upon which more and more Chinese brands can build sustainable competitive advantage.

Of course these individual Chinese company success stories are to be much applauded but the real reason, the sine qua non, for the continued emergence of Chinese companies, right across the industry spectrum, is the stewardship of the Chinese economy by the central government.

The eurozone lurches from one crisis to another and remains beset by internal wrangling, indecision and major political differences. The US economy appears no stronger with very sluggish growth prospects and chronic unemployment. In sharp contrast, China's economic and business environment continues to combine stability with an increasingly vibrant, entrepreneurial quality.

As a result, it is no surprise to see more and more Chinese companies occupying top places in the list of the most valuable global brands. It will also be no surprise to see the emergence of more Chinese technology brands in the near future, following in the footsteps of the likes of China Mobile, Baidu and Tencent.

The Chinese government has not only provided the perfect environmental platform for the growth of Chinese industry, it is also working closer and closer with Chinese companies, injecting not just business and financial expertise but crucially a large does of self-belief, ambition and determination and entrepreneurial flair.

Nowhere has the current global economic malaise manifested itself more than the banking sector and no other industry has such responsibility in establishing the stable environment needed for economic growth. Yet, China's banks continue to occupy very healthy positions in the global rankings with Industrial and Commercial Bank of China leading the way in 13th (the world's most valuable banking brand) as well as China Construction Bank (24th), Agricultural Bank of China (38th) and Bank of China (61st) all sending an unequivocal signal of strength and stability around the world. The Chinese banking sector remains untarnished, unlike most US and European banks, due to the government's careful and steady economic management.

The Chinese insurance sector appears to be in good shape too. China Life remains the most valuable global insurance brand, despite dropping 20 places to No 53. However, Ping An improved its position at 78th, up five places on last year, and sits directly behind China Life as the second-most valuable global insurance brand.

Sustainable economic development will require stable and buoyant strategic industries such as banking and insurance, but, especially in the case of China, a vibrant and efficient energy sector. Once again the central government has enabled further progress here.

In particular the oil and gas sector, so crucial for China's continued economic expansion, is another plus area for Chinese brands (Sinopec ranked 56th and PetroChina 68th). Sinopec's entrance to the top 100 is most remarkable: not only is it the highest newcomer this year, it represents the highest newcomer during the history of the BrandZ survey.

Perhaps most encouraging for Chinese brands is the fact that this global recognition has been achieved with still relatively little international expansion. Over the next few years, it is inevitable that Chinese brands, and not just those found in the BrandZ Top 100, will build on their domestic strength and venture overseas. Cross-border takeovers are the most likely form of expansion, following in the footsteps of Guang Ming (Bright Food Group) which recently bought the Weetabix brand, Geely (which bought the Volvo brand in 2010) and Lenovo (which bought IBM's PC brand in 2005).

However, key to further, international expansion among Chinese brands is not just brand awareness and improvements in product quality. The most valuable global brand, Apple, has built on its reputation for innovation and advanced technology with an emotional brand image of "fun", "excitement", "fresh" and, above all, "trust". It is these emotional brand values which create lasting, sustainable competitive/differential advantage. The next step for Chinese brands is, therefore, this addition of suitable emotional brand values to their offering.

Key to any emotional brand building is establishment of "trust" in the mind of the consumer and over recent years, BrandZ and other research studies have shown that Chinese companies no longer occupy the "low cost", "cheap" positions in consumers' minds. Chinese consumers more and more are turning to Chinese brands in recognition of successful re-branding. This trend is set to continue as Chinese brands achieve acceptance on the international stage. Chinese brands will also develop emotional brand positioning more and more with use of association with Chinese culture as their emotional selling point.

No longer the China of "cheap and nasty". Arise, Brand China with an image of "high technology", "innovation" and "excitement".

The author is a researcher at Nottingham University's School of Contemporary Chinese Studies. The views do not necessarily reflect those of China Daily.