Innovation and Brands in China: Practical Lessons from Millward Brown’s 2013 Report on China’s Top 50 Brands

Overvalued food? Sometimes brand owners say things they don’t really mean about their products. This comes from the menu of a classy restaurant on famous West Lake in Hangzhou.

Brand management is essential in consumer products and many B2B products. Here in China, Asia Pulp and Paper has many brands in both areas such as the famous QingFeng brand of tissue paper. Especially in the retail market, brand value can explode or implode suddenly, depending on market conditions, actions of the brand owner, and the vagaries of public opinion and the media. Managing brands in China is a daunting task and there is a constant need for improved tools and better data. We learn repeatedly that great inventions aren’t enough. The cool product has to be supported with brilliant marketing, strong logistics, and healthy brand management to grow and become a successful innovation.

Those interested in innovation and business in China should be delighted with the newly released report, “2013 Brandz Top 50 Chinese Brands” from Millward Brown, a global company focused on brands. The full report is a large, 16 megabyte PDF file in either English or Chinese. (Be patient: downloads may be slow.) Its case studies and highlighted companies provide valuable content for reflection.

The lessons from this report are many. We learn that innovation is not just alive and well in China, it is essential for business growth. We learn that Chinese companies are increasingly expanding past the borders of China to seek global markets. Lenovo, for example, is now the world’s leading PC brand. Yet we learn that China’s leading brands are not immune to economic tailwinds and collectively have suffered slowing recently, with the rest of the global economy, though the pain has been less than in most other sectors. An especially important lesson is that Chinese consumers are becoming increasingly sophisticated in their shopping, partly due to the pervasive influence of broadly shared information on Weibo and other internet resources, and so as the economy further contracts, the higher expectations and demands of consumers will create complex new forces in the market that will require sustained innovation from companies. Strong, trusted brands will increasingly be important.

As an observer here in China, I wish to emphasize the importance of trust. Brand failures can become permanent disasters. Constant attention to quality and reliability is essential as brands grow and develop. Shortcuts can become disasters.

The Brandz report also examines growth relative to the previous year. Technology, exemplified by innovation leaders like Tencent, had the largest growth among the sectors explored in this report. TenCent has invested heavily in innovation for mobile apps. Another tech leader, Baidu, has emphasized cloud computing in its recent innovation efforts. Food and beverage has also been relatively strong in maintaining or growing brand value. Retail and e-commerce, on the other hand, experienced a decline in overall brand value of around 30% in the 2013 report relative to the previous year.

Here is an excerpt of the information on Tencent, illustrating the strategies it is employing for growth and innovation (p. 29):

Driven by the rise of mobile, Tencent is shifting priorities. Tencent Weibo, the brand’s Twitter-type service, and its mobile messaging app Weixin, are now among Tencent’s most significant products.

The open nature of Weixin and its variety of mobile features make it an important part of Tencent’s strategy to diversify and expand internationally. Meanwhile, QQ, Tencent’s well-known instant messaging service claims over 700 million active users, making its audience in China comparable in size to Facebook’s globally.

Tencent reorganized its business during 2012 to more effectively develop Internet opportunities. The company purchased 49 per cent of Singapore game maker Level Up for $27 million and a minority stake in Epic Games, a US 3D technology company. Tencent also entered an agreement with Disney in which Disney will help develop animation content for distribution on Tencent platforms.

In another deal, Tencent will provide software for a 26-inch flat-screen TV made by TCL that allows users to shop and access online games and videos. The deal marks Tencent’s first collaboration with a consumer electronics maker. The deal illustrates the dynamism of Tencent, a brand that achieved market leadership in about a decade.

Tencent derives most of its revenue from Internet value-added services but also relies on mobile and telecommunications, online advertising and e-commerce, with a brand called, which it launched in December 2011. In 2004, Tencent Holdings Ltd., was listed on the Hong Kong Stock Exchange. Tencent ranks 37 in the BrandZâ„¢ Top 100 Most Valuable Global Brands 2012.

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