Tencent tops Facebook for first time in BrandZ rankings

In contrast to a 36 per cent decline in Facebook’s brand value, Tencent rose 52 per cent. The brand's services have almost 800 million active users.

Consumer desire to be connected on the go is driving Tencent's growth, commented Chris Maier, director of media and digital for Greater China at Millward Brown.

With consumers in China increasingly accessing the internet via mobile devies rather than PCs, Tencent is innovating to migrate its business model to mobile, Maier said. Mobile surpassed all other devices last year as the gateway to the Internet. At this inflection point, Tencent’s mobile apps, with social-networking and location utilities, rocketed in just two years. The rapidity was also influenced by the inherent closeness of Chinese families, he added.

Doreen Wang, head of client solutions at Millward Brown China, told Campaign Asia-Pacific  Tencent is not only good at WeChat, but also social networking, web browsing, games, news and music.

"They do not only think about their own services to beat competition, but from media touchpoints in a consumer-centred social environment," she said. "In fact, the brand looks confident when it cross-links content not only to its own verticals but also to competitors like Sina and Renren."

Rather than have lots of disconnections in between different social environments and lose consumers in the transition, the whole umbrella of services under the truly 'solomoco' brand makes the brand's relationships with consumers more intimate. The key to success going forward is the ability to monetize mobile internet, Maier added.

A total of 12 Chinese brands made it into this year’s top 100, with a combined brand value reaching US$270 billion. The most valuable Chinese brand remains China Mobile at US$55.3 million.

However, most of the Chinese brands on the list (China Mobile, ICBC, China Construction Bank,
Agricultural Bank of China, China Life, Bank of China, PetroChina, Sinopec, Moutai, Pingan) are state-owned enterprises. These benefit from financial resources from the government, specifically the State-owned Assets Supervision and Administration Commission of the State Council (SASAC).

This seems like an unfair advantage because brand equity is measured partly based on the financial performance of each company (using data from Bloomberg and Kantar Worldpanel). The contribution that brand value plays in driving business revenue and market capitalisation is low.

"Chinese SOEs are successful relying on strong financial assets rather than relationships with consumers," Wang said. "They should become more concerned about branding and differentiation."

The conventional wisdom has been: The bigger and more monopolistic the enterprise is, the less it is interested in branding. Domestically, the interest in brand building appears to be pragmatic and inconsistent from a executional perspective. "If a Chinese bank has an anniversary this year, it feels like pumping massive investments in advertising, but may stop next year," she said.

This is most pronounced among government-controlled organisations in the consumer products industry like food and dairy, but less noticeable among strategic SOEs like the banks and oil & gas companies.

"But brand management is not just about advertising, but about delivering into products and services such as shortening the waiting lines at the banks," Wang said. "You may look big and powerful now, but your brand value is likely to drop".

Outside of China, these SOE brands accomplish a political mission by projecting the soft power of the country, she added. They lubricate the international relations required for establishing Chinese brands abroad.

As the SOEs move into developed Western capitalistic democracies, branding becomes important for media and government relations, to help overcome any resistance to commercial ventures controlled by the Chinese government. Thus it makes sense to develop brand-building activity both at home and abroad, Wang pointed out.

Separately, Apple, though still at the top of the global ranking worth US$185 billion, grew just one per cent in the last year compared to a 51 per cent growth from Samsung, nipping at its heels with a brand value of US$21 billion.

Apple’s ability to maintain its leading position is because of the accumulation of brand equity since 2000—equity that is still lingering and will not disappear overnight. Its brand equity is not as volatile as its stock price, but its growth is slowing, said Wang.

Developed for WPP’s operating companies by Millward Brown Optimor, the BrandZ Top 100 Most Valuable Global Brands ranking is now in its eighth year. The China leg surveyed only 3000 consumers in 14 cities. Though small statistically, Wang said it is still "quite representative of tier-one and two cities". Next year, the sample size will be expanded into tier-three and -four cities for "more objective observations", she said.