Can Chinese Consumer Brands Become Globally Competitive?

November 21, 2014

 


Bernstein Research And Interbrand Publish A Collaborative Research Report That Asks: When Will Globally Competitive Consumer Brands Emerge From China?

Hong Kong and Shanghai (November 20, 2014) – Bernstein Research, the pre-eminent independent equity research firm and Interbrand, the world’s leading brand consultancy, have collaborated to explore the potential for Chinese consumer brands on the international stage. Today they publish the results of their findings.

Bernstein analysts based in Hong Kong, London and New York cover a number of Chinese consumer sectors and companies. In this report, they consider the competitive landscape in China and the financial firepower and global ambitions of Chinese companies. Working together with Interbrand’s China-based experts, they assess the relative brand strength of Chinese companies both domestically and abroad – and discuss the obstacles such brands will face as they try to compete internationally.

Max Warburton of Bernstein Research said:

It has been fascinating to work with Interbrand on this research. We believe we already have a good understanding of the competitive position and relative strengths of Chinese consumer companies – both inside and outside our coverage. But Interbrand’s direct experience of working with private companies and SOEs in China on brand building gives a new level of insight and makes it clear just how complicated it will be for Chinese companies to compete globally“.

Leslie Butterfield, Chief Strategy Officer of Interbrand, based in Shanghai said:

Interbrand has now been active in China for over a decade, and I moved to Shanghai from the UK myself a few years ago. Branding is a complex area and many Chinese companies still have work to do. But the good news is that Chinese brands are shifting away from imitation and focusing more intently on innovation, and that is visible and evident. Chinese brands have become more self-confident about what they can do. They no longer feel as though they have to follow others or borrow interest, at least in the top quartile of more sophisticated clients.”

Interbrand very recently released its 2014 Best China Brands report. Tencent claimed the #1 position with China Mobile dropping to #2. Eight brands entered the report this year, including Alibaba Group (#3), Huawei (#13) and PICC (#20). The strong performance of China’s Internet brands marks the end of an era for the financial services and telecommunication brands that had previously dominated the Best China Brands ranking. But the challenge for these brands is whether they can go global – only one Chinese brand (Huawei) earned a position on Interbrand’s 2014 Best Global Brands ranking.

Bernstein has identified a number of Chinese consumer brands that it believes have the potential to go global. Bernstein sees an increasing number of Chinese brands becoming impactful in Consumer Staples and Beverages in the domestic Chinese market, where technological barriers are least daunting and where brands already have a long heritage. A few may progress to compete internationally. Bernstein also believes some Chinese restaurant chains may have global potential, given their ambitious plans and the current paucity of options globally for quick, cheap, consistent Chinese fast food. But perhaps the greatest potential can be found in Consumer Electronics where Chinese companies are reaching technological competitiveness, are building credibility (Huawei is the only Chinese brand in any sector to appear on Interbrand’s 2014 Best Global Brands league table) and where in some cases they have developed a unique approach (e.g., Xiaomi, the cell-phone producer). Consumer Electronics is also the sector where Interbrand’s research suggests international consumers are most willing to believe that the Chinese will emerge as global contenders in the next five years. By contrast, in other consumer sectors, such as Automobiles and Luxury Goods, technological barriers and heritage issues mean international brands will be harder to compete with.

Click here to view the report.

About Interbrand
At Interbrand, we believe that growth is achieved when an organization has a clear strategy and delivers exceptional customer experiences. We do both, through a combination of strategy, creativity, and technology that helps drive growth for our clients’ brands and businesses. With a network of 24 offices in 17 countries, Interbrand is a global brand agency, and publisher of the highly influential annual Best Global Brands and Breakthrough Brands reports, and Webby Award-winning brandchannel. Interbrand is part of the Omnicom Group Inc. (NYSE:OMC) network of agencies. For more information, please contact us, or follow Interbrand on LinkedInTwitter and Facebook.

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