As the second largest consumer market in the world, brand relevance is of increasing importance in China. Brands, both local and foreign, face increasing competition and evolving consumer needs that have intensified brand building.
Late last year, we surveyed more than 10,000 Chinese consumers to find out which brands are most meaningful in their lives – the ones they simply can’t live without. The result was Prophet’s first China Brand Relevance Index™ (BRI).
The BRI revealed interesting insights about the evolution of brand relevance in China. For example, just a few years ago Xiaomi (No. 59) was touted as the Apple of China, now its seen as less relevant (and seeing declining sales due to a lack of innovation). Alipay and WeChat (No. 1 and 2) continue to play dominant roles in many Chinese consumers’ lives by being both innovative and inspiring. Visa (No. 3), the highest ranked global brand, is seen as ruthlessly pragmatic – largely due to major growth in outbound travel.
Why did we create the Brand Relevance Index™?
Over the last several years, our clients have asked for our perspective on other brand rankings and how they could use them to better their brands. We felt there was a void in the marketplace. None of the brand rankings out there truly reflected the consumer’s perspective or could provide brand leaders with actionable insights that could be used to grow their businesses. We created the BRI to help business and brand leaders measure the relevance of their brands, and provide ways to improve it.
Differentiation and preference no longer are enough to win in the market today. Strong brands win by being relentlessly relevant. Relentlessly relevant brands engage, surprise and connect. They delight, disrupt and deliver. They are restless. They push themselves to earn and re-earn consumers’ loyalty — and they define and redefine what’s possible in their categories and in our world.
The Brand Relevance Index™ uses four pillars to measure relevance. The top, most relevant brands, excel at these four things:
They’re customer obsessed.
Everything they invest in, create and bring to market is designed to meet important needs in people’s lives.
They’re pervasively innovative.
They don’t rest on their laurels, even as industry leaders – they push the status quo, engage with customers in new and creative ways and find new ways to address unmet needs.
They’re ruthlessly pragmatic.
They make sure their products are available where and when customers need them, deliver consistent experiences and make life that much easier for people.
They’re distinctively inspired.
They’ve made emotional connections, earned trust and often exist to fulfill a larger purpose.
This year, for the first time, the Brand Relevance Index™ examined four geographic areas: United States, United Kingdom, Germany, and China.
What We Learned About the Top Brands in China
The BRI indicates that China remains a tricky market for international brands, especially those that don’t take the time to understand the needs of Chinese consumers and adapt their products, customer experience and marketing to meet those needs. Five recurring themes were seen; the top brands:
Challenge category norms and exceed expectations by continuously imagining new ways to engage consumers. AliPay, WeChat and Apple are brands that have put innovation at the core of everything they do to continually win over Chinese consumers. However, innovation must also evolve to stay relevant.
Embrace and immerse in local culture and traditions, and tailor offerings to meet unique consumer needs. Marriott, Suntory and Shangri-La are a few successful brands that take time to localize offers and create services and products specifically for the Chinese market.
Help consumers aspire for more, and empower them with the confidence to pursue their dreams and ambitions. Brands such as Adidas, Lancome and Tmall win the hearts and minds by inspiring and building emotional connections for that feel-good factor.
Stay laser-focused. From Audi, Huawei to Heborist, these brands build upon and exploit their core strengths and heritage to stay relevant in China.
Remove the complexities from daily life by making experiences easier, better and faster. As China becomes more affluent, consumers begin to yearn for simplicity and convenience to help them cope with the faster and more varied pace of lifestyle.
How Can Global Brands Be More Relevant in China?
To become more relevant in the minds of Chinese consumers, global brands need to focus on two primary things.
- Focus on elements related to the ‘Customer Obsessed’ pillar. Develop a deep understanding of consumer needs and better align brands to meet those needs.
- Think about the ‘Ruthlessly Pragmatic’ pillar. Make consumers lives easier and be a brand that can be depended on.
Global brands have always been more innovative and inspiring, but to win in China, going deeper to understand local needs is extremely important.
When looking at differences in the Index by city tier, we see that global brands tend to perform stronger in Tier 1 cities than Tier 2 cities. The Top 50 relevant brands for Tier 2 cities are much more balanced between global and local brands while in Tier 1 cities, 80 percent are global brands.
How Can Chinese Brands Win in This Market?
Although only 18 Chinese brands made it into the Top 50, it’s noteworthy that several local Chinese brands such as Alipay, WeChat, Tmall, Haier and Vivo performed remarkably well across all four brand relevance pillars. For Chinese brands to become more relevant in the minds of Chinese consumers, they need to focus on two primary areas:
- Perform better on elements related to the ‘Distinctively Inspiring’ pillar. Inspire consumer by being modern and in-touch.
- Get creative to make an impact on the ‘Pervasively Innovative’ pillar. Finding new and interesting ways to meet consumer needs.
Successful Chinese Brands have traditionally been focused on being well-priced, pragmatic and convenient. However, with more affluent and savvy consumers, focusing on innovation and being inspiring to lift hearts and minds are ways to build stronger brands.
What Brands Surprised Us in the China BRI
Visa not only emerged as the Top Global brand, but trumped the dominant local favorite UnionPay.
UnionPay (No. 13) is still an incredibly relevant brand with some considerable strengths (e.g., being an indispensable part of my life, being trusted and making my life easier). That being said, UnionPay does have some shortcomings compared to similar brands like Visa.
UnionPay needs to focus on two things: 1) being more innovative in how it delivers against consumer needs with its products and experiences, and 2) finding a way to make a stronger emotional and inspiring connection to consumers.
Huawei (No. 23) performed well, but wasn’t the strongest in its category (Vivo won the smartphone battle at No. 17).
Huawei has strengths that made a Top 25 relevant brand in China. These strengths include having a purpose consumers believe in and being trusted. However, Huawei underperforms in creating an emotional and inspiring connection with consumers. Consumers also say that Huawei isn’t an indispensable part of their lives.
Didi (No. 79) won the business battle against Uber, but the BRI shows that they didn’t win the battle for the hearts and minds of Chinese consumers.
Uber (No. 5) performed as well or better than Didi on every element of relevance. The most significant challenges for Didi are around critical areas of innovation (finding new and creative ways to meet consumer needs), customer experience (delivering a consistent experience) and brand engagement (inspiring and emotional connection, and having a purpose that consumers believe in).
As we start the year of the Fire Rooster, we’ve already seen several foreign companies scale back their operations in China. Although this is largely related to tougher regulations and conditions of manufacturing, competition from stronger, more relevant local Chinese brands also has had impact (such as L’Oreal closing down their Garnier brand in China while local brand Herborist grows; or Panasonic stopping its TV production in China while local TCL brand expands).
Some global brands find it challenging to understand and adapt to a more digital-first mindset as e-commerce continues to play a central role in the more developed tier cities, while lower tier cities demand a different merchandising mix and distribution strategy.
If you’re a global brand trying to break through in China, or a local brand seeking to build relevance and gain greater marketshare – set up a meeting with one of our experts to take a closer look at the BRI data and develop a strategy for how your brand can grow better.