China’s Top 100 Brands: Private Companies Gaining Ground

Dec 3, 2013

China’s Top 100 Brands: Private Companies Gaining Ground

China Mobile ranked as the country’s No. 1 brand in 2013, according to research from Millward Brown and WPP. China’s homegrown private brands are gaining ground against their state-backed peers, reflecting progress, experts say, in the country’s push to rebalance the economy.Among the country’s top 50 brands as ranked by research agency Millward Brown and media company WPP, the value of market-driven brands jumped 27% to $99 billion this year, up from a year earlier, encroaching on the strength of traditionally dominant state-owned enterprises. State-owned brand values remain large, but grew just 9% to $263.4 billion on-year, the study said.

From April to October, Millward Brown and WPP analyzed financial information of listed companies’ brands, pairing it with data from a survey of more than 405,000 consumers to come up with the list of the top 100 most valuable Chinese brands.

Technology and consumer brands such as Internet giant Tencent Holdings Ltd.TCEHY -0.60% and beer companyTsingtao Brewery Co.600600.SH +3.56% are innovating and building recognition with consumers, boosting their value by 68% to $33.88 billion and 40% to $1.7 billion, respectively, this year, according to the survey. Personal-care company Yunnan Baiyao Group Co.000538.SZ +5.22%jumped 72% ($2.99 billion) in value, while traditional Chinese medicine company Beijing Tongrentang600085.SH +3.34% Company Ltd.’s value increased by 50% ($1.6 billion), the study said.

The rise of China’s market-driven consumer brands comes as the country’s leaders are attempting to rebalance the economy to create a consumer-led—rather than export-driven—marketplace. Leaders are also focusing on building up the private sector to balance state-backed giants’ stronghold. And they want to build brands that will one day be recognizable outside the country’s borders.

“This is the year of consumer power,” said Doreen Wang, head of client solutions at Millward Brown in Beijing, noting that consumers are gravitating toward brands that promise them high quality of life and trust. That’s paved the rise for brands like Internet travel company CTrip International, Ms. Wang said, noting its value increased 47% to $718 million on-year.

Dairy brands also have benefited by tapping into this theme of quality and trust, said Ms. Wang, pointing to China Mengniu Dairy Co.2319.HK -1.25% and Inner Mongolia Yili Industrial Co.600887.SH +2.49%, which saw their value jump 30% ($3.1 billion) and 86% ($5.07 billion), respectively, on-year. They are turning around a distrust that has clouded the country’s dairy industry since 2008, when several companies added the industrial chemical melamine to infant formula to mimic protein content, killing six infants and resulting in the illnesses of 300,000 others.

Support for private enterprise is also gaining momentum, Ms. Wang said. The majority of new entrants in the study—which was expanded to 100 brands from 50 in previous years—were from market-driven companies. They accounted for 34 new entrants to the list, compared with 16 new state-owned entrants, the study said.

To be sure, state-owned companies still dominate the country’s top brands, accounting for eight of the top 10.

Aside from propelling private enterprise, other government initiatives appear to be reflected in the brand rankings, Ms. Wang said. Alcohol brands’ value has fallen amid an austerity effort, curbing lavish bureaucratic banquets and the consumption of pricey spirits. White-spirit brand Moutai’s value dropped 19% on-year, while alcohol company Wu Liang Ye dropped 66%.

Meanwhile, the rise of such brands as Shuanghui International, China’s largest pork producer, and food conglomerate Bright Food Group Co. reflects the government’s push to build Chinese companies overseas. Shuanghui acquired U.S. pork producer Smithfield earlier this year, while Bright Food has purchased a number of companies abroad in recent years, including U.K. cereal brand Weetabix last year.

But recognition of Chinese companies, despite their expansion abroad, remains low. Only 14% of U.K citizens could recall the name of at least one Chinese brand, compared with 6% in the U.S., the study said.

“In rebalancing, China is moving away from “Made in China” to “Created and Consumed in China,’” said Ms. Wang.