BrandZ(TM) Top 50 Most Valuable Chinese Brands 2013 Outperform MSCI China Index

• Brands are becoming more important to Chinese consumers and businesses
• Technology brands see biggest rise
• Chinese brands strengthen overseas presence

BEIJING, Dec. 4, 2012 /PRNewswire/ -- The third annual BrandZ™ Top 50 Most Valuable Chinese Brands study, commissioned by WPP and undertaken by Millward Brown, was released today. This year's ranking shows that brands are becoming more important to the Chinese consumer. Despite a challenging economic environment, strong brands outperformed their competitors and the broader stock market.

(Photo: http://www.prnasia.com/sa/2012/12/04/20121204095907542041.html )

China is not immune to the global economic environment, and this year the total value of the BrandZ Top 50 Most Valuable Chinese Brands fell to $320,224 million, down 1.6 percent in 2012. Despite this, brands continued to grow in importance. The BrandZ Top 50 Brands Portfolio outperformed the MSCI China Index by 11.4 percent as of September 2012.

This year, China Mobile retains the number one spot in the rankings with a brand value of US$50,589 million. Leading financial institutions also continue to head up the rankings - with ICBC and China Construction Bank in positions two and three respectively.

China's technology brands have seen tremendous growth, as Chinese consumers spend even more time - and money - on Internet and mobile platforms. Baidu has moved up two positions to number four and Tencent has moved from position 10 to number five.

China's private sector and entrepreneurs are seeing growing success in building Chinese brands, with the share of non-State Owned Enterprises (SOEs) in the Top 50 rising to 27 percent from 22 percent in 2011.

David Roth, CEO of The Store, WPP said, "As the growth rate of the Chinese economy slows, brands become a more important discriminator of consumer choice. As this study shows, strong brands help Chinese companies grow faster. This is set to accelerate as the Chinese economy rebalances. This, combined with the requirement for more Chinese companies to be successful overseas, will drive the necessity for creating strong Chinese brands as a critical factor for success."

Adrian Gonzalez, Head of Greater China, Millward Brown said, "Building strong brands domestically is a vital template for the increasing number of Chinese brand owners exploring international markets. This year's BrandZ Top 50 gives an insight into how an expanding group of privately-owned Chinese brands are growing value by meaningfully differentiating their brands."

Strong Brands Outperform the Stock Market

An analysis of the BrandZ Top 50 Most Valuable Chinese Brands as a "stock portfolio"' over the past two years shows that it consistently outperforms the MSCI China stock market Index. While the total return on investment (ROI) for all companies in the MSCI China Index was minus 5.6 percent in September 2012, the BrandZ Top 50 Brands Portfolio provided a 5.8 percent ROI. This proves that companies with strong brands are able to deliver better value to their shareholders.

Photo: http://www2.prnasia.com/sa/2012/12/04/20121204123842477537.html )

Newcomers

Four new brands have joined the rankings this year. Bank of Communications leapt into the rankings for the first time in position 15, its success due to both financial and brand factors. Key also to its inclusion is that 20 percent of its earnings came from retail banking, a key eligibility criteria for this ranking. The beer brand Harbin joined the ranking in position 39; it linked its advertising to key sports events and carved a distinctive space in a competitive category. The apparel brands Youngor and Semir were the other new entrants this year in positions 45 and 49, respectively. Youngor benefited from a shift in taste to smarter attire and Semir continued its focus on youth whilst investing in retail outlets and the supply chain.

Overcoming Category Challenges - Top Risers and Category Leaders

Coupled with a flagging international economy, certain categories are facing increasingly tough competition domestically. Still, there are several standout brands that have grown in value despite a challenging year, these include:

Septwolves

• Men's apparel brand Septwolves has increased its brand value by 44 percent and is second only to Tencent in this year's list of fastest risers. By focusing on its strategy to become the top-tier apparel brand in the lower-tier cities, and by carefully controlling its expansion, Septwolves has sidestepped competition from foreign brands and the issues of excess inventory that have affected some of the other brands in the apparel category this year.

Hainan Airlines

• Chinese airlines faced a difficult environment due to increasing competition from domestic high speed rail and rising fuel prices, resulting in a 22 percent decline for the entire category. However, Hainan Airlines bucked the trend with a 23 percent increase in brand value, moving up five places in the ranking. Hainan Airlines has built a strong brand and reputation for excellent customer service under its Customer First strategy; in 2011 it became the first Chinese airline to be awarded five stars by Startrax. By concentrating on the customer, and by remaining heavily focused on the Chinese domestic market, Hainan Airlines, which first entered the rankings last year at number 46, has become one of this year's top risers to number 41.

Gree

• The closure of a white goods subsidy programme at the end of 2011 badly affected the home appliances category, resulting in a 14 percent drop for the sector. However, Gree has been able to maintain its brand value. Sticking to its core markets of air conditioning, creating a clear message and offering its customers a wide choice of models, Gree has grown to control over 50 percent of the market in China and become the number one air conditioner brand in the world.

Chinese Brands Overseas

Chinese brand builders are increasingly active overseas across many categories and include both State-Owned Enterprises (SOEs) and market-driven organizations.

Lenovo

• Lenovo (no. 24) this year became the world's largest PC maker by volume, according to Gartner, with overseas revenues representing 58 percent of total revenues.

Tencent

• Tencent launched its WeChat service (a version of Weixin for non-Chinese markets) which is enjoying growing popularity.

Haier

• Haier engaged in activities to strengthen awareness of the brand overseas including a sponsorship of the Science Museum in London and renewal of its basketball sponsorship in the US. It also invested heavily in e-commerce.

Chinese Consumers' Shifting Tastes

For Chinese consumers, brands are becoming more important than ever, playing an increasingly significant role in their consumption choices - a trend that is well-established in first-tier cities and becoming more deeply entrenched in China's lower-tier urban populations. While brand competition is intensifying in both top and lower-tier cities, companies face the choice of becoming a smaller brand in top-tier cities or a bigger brand in lower-tier cities. SeptWolves (No. 38) and Youngor (No. 45) are brands taking advantage of this strategy.

Chinese consumers are increasingly brand selective when making purchase decisions. This provides exciting opportunities for the companies who invest in their brands now.

Materials

Available from http://www.millwardbrown.com/ChinaTop50

• Full report about the ranking with analysis and commentary
• Videos about the Top 50 brands: www.millwardbrown.com/BrandZ/BrandZ_Top50_Chinese_Brands/Video.aspx
• Photographs of the Top 50 brands
• Full report about the ranking with analysis and commentary
• Mobile and iPad magazine

Background and Methodology

Commissioned by WPP and undertaken by Millward Brown, the BrandZ Top 50 Most Valuable Chinese Brands ranking is the only study to combine measures of brand equity based on interviews with over 35,000 consumers in China. It conducts a rigorous analysis of the financial and business performance of each company (using data from Bloomberg and Kantar Worldpanel) to identify the value that brand plays in driving business revenue and market capitalization.

Criteria for the Chinese brands included in the Top 50 ranking were:

• Brand must be owned by a publicly-traded enterprise
• The publicly-traded enterprise must report positive earnings
• Brand must originally have been created by a mainland Chinese enterprise
• When valuing financial institutions, we only included banks that obtain at least 20 percent of their earnings from retail banking.

About Millward Brown

Millward Brown is one of the world's leading research agencies and is expert in effective advertising, marketing communications, media and brand equity research. Through the use of an integrated suite of validated research solutions ———— both qualitative and quantitative ———— Millward Brown helps clients build strong brands and services. Millward Brown has more than 82 offices in 52 countries. Additional practices include Millward Brown's Global Media Practice (media effectiveness unit), The Neuroscience Practice (using neuroscience to enhance traditional research techniques), Millward Brown Optimor (focused on helping clients maximize the returns on their brand and marketing investments), Dynamic Logic (the world leader in digital marketing effectiveness) and Firefly Millward Brown (a global qualitative research business). Millward Brown is part of Kantar, WPP's insight, information and consultancy group.

About WPP

WPP is the world's largest communications services group with billings of $71.7 billion and revenues of $16.1 billion. Through its operating companies, the group provides a comprehensive range of advertising and marketing services including advertising; media investment management; consumer insight; public relations and public affairs; branding and identity; healthcare communications; direct, digital, promotion and relationship marketing; and specialist communications. The company employs over 162,000 people (including associates) in 3,000 offices across 110 countries. For more information, visit www.wpp.com.