Chinese fintech firms Tencent and Alibaba may have joined Google, Apple and McDonald’s as two of the world’s 10 most valuable brands, but China has a steady supply of other rising stars that could bump even more US giants down the list.
Up until now the most valuable brands have largely been an all-American affair. That was until Tencent replaced Verizon in 2017 in the top 10 list and Alibaba leapfrogged IBM in 2018, according to an annual report by BrandZ, a database owned by Kantar Millward Brown. In fact, this is the first year that non-US brands (read China) have grown at a faster clip than those founded in America.
“Chinese companies execute very well and their growth potential is huge,’’ said Spiros Margaris, a venture capitalist based in Switzerland. “The sheer number of existing and potential clients is just mind boggling. The size of assets and the number of customers they attract is just a different ball game.’’
Biggest Chinese Companies – Getting Bigger
The rise of Chinese companies onto the global stage has been underscored by the growing importance of technology and the need for businesses to innovate, an area where Chinese Fintech firms have particularly made a name. But other industries in China including in retail, alcohol and insurance are starting to make inroads too.
In the last 12 months, the value of the 14 Chinese brands included on BrandZ’s broader top 100 list has surged 49%. That compares to just one company (China Mobile) that was included in the report 12 years ago. Among this year’s top 20 risers – that is brands that have appreciated most in value – seven are Chinese versus two in 2017.
“Made in China is becoming cool,’’ Doreen Wang, global head of BrandZ wrote in a separate report. “Chinese brands are particularly well regarded as (being) innovative. The signature proposition of China’s brands is to combine innovation with value for money.’’
So who are the other Chinese success stories that could yet usurp more US companies? Here’s five of our top picks:
JD.com – Major Alibaba Competitor
This company is China’s answer to Amazon. In 20 years JD.com has grown from being a self-described brick-and-mortar store in Beijing to one of the world’s largest online retailers. The value of its brand has almost doubled in the last 12 months to be worth more than $20.9 billion in 2018, according to BrandZ.
That may be worth significantly less than Amazon’s $207.6 billion brand, but it’s the fastest riser of all the companies included on the list. It’s also outpacing the U.S. retailing giant by revenue growth too. A report from eMarketer last year showed Amazon’s retail sales climbed 27% in 2016 on the prior year compared to 41% jump for JD.com.
So what is its secret? Founder, Liu Qiangdong, made the rather prescient decision to only sell high-quality authentic brands, rejecting a trend in China to sell cheap counterfeit goods, and allowing the company to benefit from the disposable income of the country’s rising middle class.
It built its own shipping service to offer same-day delivery for customers in China and with the help of companies like Tencent, more than 80% of customer orders are made using a mobile. It employs 12,000 engineers between China and Silicon Valley and plans to use hundreds of drones to help deliver its goods. Like many of its rivals, JD.com is investing in everything from data science and artificial intelligence (AI) to automation and robotics.
Baidu – $13.03 Billion Revenue in 2017
Often referred to as the Google of China, Baidu’s numbers are compelling when you consider that it’s the most popular search engine in a country that also happens to boast the world’s largest internet user population.
Much like Google, Baidu in addition to its core internet search business also does maps, news, image and video searches too. They’ve developed AI enhancements for internet searching and thanks to some timely investments and strategic partnerships with smartphone makers like Huawei (see below), they’ve capitalized on the rapid growth of mobile adoption. So much so that mobile revenue now makes up some 78% of their total net sales.
They’ve branched out into other areas including e-payments and takeaway food delivery and they are investing in self-driving cars too. They started testing their Apollo software technology on public roads in late 2017 and received the green light from authorities to run tests in Beijing this year.
Baidu’s brand fell two places in 2018 to rank 41 on BrandZ top 100 list, but its value increased a respectable 14% to $26.9 billion. Still, if it’s aspiration is to topple Google as the world’s most valuable brand, it’s got a long way to go. Google, owned by Alphabet Inc., saw its brand increase 23% in value in 2018 to $302 billion. It also has a market share of 90% versus Baidu’s 2.2%.
Moutai – World’s Most Valuable Distiller
Not all of China’s most valuable brands are technology related – at least one company has managed to make it in booze too. Kweichow Moutai is now the highest valued liquor company in the world, beating the UK.’s Diageo, owner of Johnny Walker and Guinness. It sells baiju, a traditional Chinese white alcohol.
The value of Moutai’s brand has soared 89% in 2018 to $32.1 billion, jumping 30 places to be ranked 34 in the top 100. After taking a substantial hit from the Chinese government’s anti-corruption campaign which restricted officials from entertaining and gifting, the company responded by lowering prices and broadening its customer base to younger generations. The strategy has worked and in the first three quarters of 2017, revenue was up 60% and its share price hit a record. It’s also been ranked as the sixth most innovative company in Asia by Forbes.
Even so, with an alcohol content of around 53%, Moutai’s main product is not for the faint hearted and it still generates the vast majority of its revenue in China.
Huawei – Telecom, Services and Smartphones
This company has expanded from being a telecommunications network provider to becoming a global player in smartphones. It’s now owns the world’s third-largest brand in the smartphone sector with a 10.7% market share worldwide, not bad when you consider it only developed its first branded phone about five years ago, according to BrandZ. Only Apple (ranked second on the top 100 list) and Samsung (ranked 33) sell more phones.
This Shenzhen-based company operates in more than 170 countries and in the first half of 2017, saw sales revenue jump by some 36% and smartphone shipments climb 21%. While it may still be trailing its US and South Korean rivals, Huawei is catching up. In the first quarter of 2018, shipments were up 13.8% from a year earlier, according to IDC. Only Xiaomi, a fellow Chinese competitor, saw higher growth.
Ranked 48 on BrandZ top 100 list, Huawei still made the top 10 list of business-to-business brands and saw its overall value climb 22% to $24.9 billion in 2018.
Ping An – Leading China’s Fintech
This Chinese insurer has seen its brand value soar 51% to $26.1 billion, jumping 18 places in 12 months. The insurance sector in China has benefited from the country’s rising middle class who are buying more products for protection rather than as an investment. With the country’s still low penetration of insurance and expansion into online products, the brand value of the sector is up 34% on last year and Ping An holds the number one spot.
Based in Shenzhen, the Silicon Valley of China, Ping An like many of its global competitors, is heavily investing in technology. Its chairman Peter Ma Mingzhe wants half of the company’s revenue to come from technology within a decade, according to the Financial Times. It currently contributes less than 1%.