What's in a name? The answer is not a lot when you are ICBC
Apple is the world's top brand, according to the latest research, but 12 mainland companies have significantly increased their name recognition globally, with China Mobile becoming the first mainland company to crack the top 10 at No 9.
SCMP, May 11
I checked out these rankings by advertising consultants Millward Brown Optimor (do they themselves even make it to the top million?) and I have to say that I was more than a little surprised.
Does Industrial and Commercial Bank of China at No 11 really have better global name recognition than Walmart at No 15, Visa at No 20, Toyota at No 27 and Disney at No 38?
Think about it. If you walk along a road almost anywhere in the world you will soon see two intersecting ovals and the name Toyota on the back of a car. Yet we are told that a bank in China with little business elsewhere in the world has greater global name recognition.
Ask your kids if they can confirm the lower Disney rating - 'No, daddy, we don't wanna watch Little Mermaid. We wanna watch the video record of the ICBC annual general meeting.' Really?
But it's not quite so surprising when you find the crucial statement on methodology at the bottom of page 102 of the study report:
'In the final step, the growth potential of these branded earnings is taken into account. Both financial projections and consumer data is used. This provides an earnings multiple aligned with the methods used by the analyst community. It also takes into account brand-specific growth opportunities and barriers.'
You will note the indication given in the grammar of how far the authors got beyond grade school - 'financial projections and consumer data is used.' On their website they also talk of 'corporate' brands. But this is nothing truly unusual, I suppose, as the whole report is written in Consultababble.
From what I can determine, the statement on methodology means that a bunch of advertising people took it on themselves to make precise earnings forecasts across the world for a large number of big companies with very intricate operations.
They then adopted their own valuation methods to establish what these companies are worth and ranked them on this basis rather than on a scale of how well consumers across the world recognised the brand names. It's a novel approach.
I gather from the phrase 'aligned with the methods used by the analyst community' that they did not entirely ignore the valuations set on these companies by professionals. This would explain why the rankings very roughly correspond to market capitalisation. ICBC comes before Agricultural Bank of China on the list. ICBC has a bigger market cap. Simple.
It also explains the sudden ascent of the 'Brand China' names in these worldwide rankings, particularly the financials. Their shares are listed on stock markets generally buoyant relative to the rest of the world.
But because I am a bit of a Jeremiah about these things, let me point out that this same methodology 20 years ago would likely have given top 10 rankings to Yasuda Trust and Savings, Dai-ichi Kangyo and several other Japanese names you have either forgotten or never heard of.
The most interesting ranking of all here, however, is the first one on the list, Apple. It undoubtedly deserves to be there. The whole world lines up every time Apple announces the launch of a new igadget.
And where are these igadgets made?
In China, of course, right across the border from us in Guangdong.
Yet no one rates Apple as a 'Brand China' name. If igadgets are not rated as fully American they are seen as Taiwanese - because the Guangdong assembler, Foxconn Technology, is Taiwan-based - or Korean or German due to the origin of some of the fancier parts.
This unfortunate reflection on 'Brand China' is not an anomaly. The fact is that while China has become the world's biggest supplier of consumer goods, there is no Chinese consumer brand with the name recognition of a Japanese Toyota and Sony, an America Disney and Walmart or even a Korean Samsung.
Messrs Millward Brown are simply wrong about this. China Mobile, ICBC and Baidu are not names widely known outside China. Only by adopting an ill-defined variant of market capitalisation as a substitute for name recognition can they be made to seem so, and this is a very poor substitute.
It also does China's industrialists no favours to encourage them to believe that they have achieved what they are still some way from achieving. Too many are still no more than low-cost, low-margin assemblers of foreign-branded consumer goods. They need to break out of this cocoon, not be cosseted into thinking that the world is contained in the cocoon.