• Transform magazine
  • October 19, 2017

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China and the rise of a nation brand

China and US flags.jpg

Nation Brands 2017, run by brand valuation consultancy Brand Finance, demonstrates the world’s most valuable nation brands through careful study of reputation and financial value. With evaluation methods based on the royalty relief mechanism most often used to value global corporations, Brand Finance is able to measure the strength and value of 100 leading countries.

 Its annual event that took place last night in the City of London’s prestigious Brand Exchange was underpinned by a confirmation of what brand experts had long predicted – China’s nation brand value is strengthening by the year, month and day.

Led by a panel of nation brand experts, including Alex Haigh, director of Brand Finance plc, Courtney Fingar, editor in chief of fDi Magazine, Stefano Nigro, FDI department director at the Italian Trade Agency, and Sir Tom Troubridge, chairman of the China Business Group, the Nation Brands 2017 edition focused on how Asian brands are performing compared with more ‘traditional,’ recognisable western brands. And, where some expectations came to fruition, the night’s most notable theme was the unexpected speed at which China’s national and regional brands continue to gather traction in the global marketplace.

Attributable to numerous factors, the astronomical rise of Chinese brands is thanks in no small part to Chinese president Xi Jinping’s pro-business outlook and a determination for China to create global brands, rather than just products. Now 50 Chinese brands grace the Global 500 brands index, 20 more than five years ago in 2012 – all of which have huge brand equity. In 2012, only China Mobile and China Construction Bank were visible in the top 50 global brands; 20% of the top 50 is now comprised of Chinese brands. “The country also celebrates an annual Chinese Brands Day on May 10,” says Brand Finance, “and has a nationwide China Council for Brand Development, dedicated to research on brand building and brand evaluation.”

But what does this mean for western or traditionally high-performing nation brands? According to Alex Haigh and Fingar, political instability and the ‘Trump effect’ is creating a stagnation in the nation brand value of the US – while it remains the most valuable nation brand globally, its value is not set to rise. Conversely, Singapore remains the strongest nation brand and was the only state to this year have a BSI score over 90, with 92.9, and hold a current brand value of $464 billion. Singapore’s reputation for investing in the development of its citizens, as well as political and economic stability and investment in its external-facing industries sees Singapore likely to remain top for the foreseeable future.

However, says Fingar, China’s ascension into the top of the Brand Finance rankings is attributable to a dedicated investment in the Asian technology industry. “A new breed of globally-minded Chinese companies, led by tech players such as Huawei, have led the charge of international expansion and become prolific generators of greenfield foreign direct investment around the world,” says Fingar.

For China, expansion opportunities are everywhere. As far as the UK is concerned, says Sir Tom Troubridge, China is disinterested in Brexit or its potential. In fact, for many Chinese, the UK is regarded as the ultimate destination – China’s dynamism and innovation is leading to record numbers of flows out of the country for both business and tourism.

David Haigh, CEO of Brand Finance, says, “The beginning of the 21st century has witnessed the rise of China as an economic and political power. The country has become the world’s largest manufacturer and exporter, and the largest economy by purchasing power. China’s economic growth has in turn bolstered its political standing. With the leaders of the United States and Europe pursuing inward-looking agendas, China is seizing the moment to take on a global leadership role it has aspired to for a long time.”

Thus, the strength of greenfield investment, M&A, market openness, tourism and foreign direct investment, while hugely important, go only part way towards consolidating nation brands on a global scale. Current events, such as the Trump presidency, Brexit and the controversial Catalonian independence referendum are symptomatic of a world in which even a day can make a significant difference. Functioning in an increasingly multipolar, interconnected and globalised world will require effective communication between governments, trade bodies, businesses and the multitude of other stakeholders which work to create a nation brand.

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