Brand survey: Nokia, Dangdang still hot
Nokia and Dangdang both still have an important China asset in their strong brand recognition, but will probably lose that advantage if they fail to reverse their declines soon
Big names like Lenovo (0992.HK), Tencent (0700.HK) and Alibaba are coming out on top in a newly published survey on top brands in China, but the results also include surprisingly strong showings for fading former leaders Dangdang (NYSE: DANG) and Nokia (Helsinki: NOK1V). The survey also contains a few other surprises, including the absence of Hewlett-Packard (NYSE: HPQ) from the list of top desktop and laptop computer brands, as the former global PC leader struggles with a China identity crisis.
All of this shows that building and maintaining brands is a tough business in China, a market where consumer loyalty is weak and low prices are often the most important factor in buying decisions. That said, the fact that Dangdang and Nokia are still considered top brands also shows a certain lingering effect, since both of these names were once leaders in their fields but have fallen off investor radar screens in the last two years as their leading positions have weakened.
Let's take a closer look at the results of the government-funded survey compiled by the China Brand Research Centre, which cover a wide range of areas from chewing gums to electric razors and cars. Tencent was the clear leader among Internet companies, winning recognition as the top brand in online games and coming in second for its microblogging and web portal services. Alibaba also scored well in its core e-commerce area, taking first and second places for comprehensive online shopping websites for its Taobao and Tmall sites, respectively.
But in a surprising result, Dangdang took third place in the shopping website category, beating out better funded and often bigger rivals like Jingdong Mall, also known as 360Buy, as well as Suning.com (Shenzhen: 002024) and Walmart's (NYSE: WMT) Yihaodian. Dangdang also took the top spot for online bookstores, showing it still has strong name recognition in its original business area.
Dangdang's strong showing on the survey contrasts sharply with the rapid decline of its financial position, which has fallen sharply into the red for more than a year as it struggles to compete with its better funded rivals.These survey results show that despite its rapid decline, Dangdang's name still clearly has some value in China consumers' minds. But it could quickly squander that asset if it doesn't reverse its decline soon, and I wouldn't be surprised to see Dangdang's name either drop a few notches or disappear completely from this survey next year.
Meantime, I was also surprised to see that Nokia was named the second most valuable mobile phone brand in China, beating out Apple (Nasdaq: AAPL) and behind only global leader Samsung (Seoul: 005930). Again, this result probably reflects the fact that Nokia was China's leading mobile phone brand for years until recently, though it has fallen a long way in the last two years after it failed to anticipate the rapid rise of smartphones. Reflecting how far it has fallen, the company didn't even make it onto a list of the top 10 smartphone brands in China in the fourth quarter, even as relative unknowns like Gionee and Xioami made it onto the list.
While Nokia and Dangdang both made surprisingly strong showings, HP was completely absent from the list for top three desktop and laptop PC brands, with Lenovo taking the top spot in both categories. I suspect the same turmoil that has gripped HP's global headquarters over the last two years has also caused it to lose its focus in China, and I doubt it will regain its position anytime soon as it rapidly loses relevance in the market.
Bottom line: Nokia and Dangdang both still have an important China asset in their strong brand recognition, but will probably lose that advantage if they fail to reverse their declines soon.
To read more commentaries from Doug Young, visit youngchinabiz.com