Haier Becomes China's Most Valuable Brand

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Last updated at: (Beijing Time) Wednesday, December 04, 2002

Haier Becomes China's Most Valuable Brand

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Beijing Famous Brands Property Assessment Co. released its report on China's most valuable brands 2002 last Monday, indicating "Haier" worth 48.9bn yuan ranking 1st for the first time, while the 46bn yuan worth of "Hongtashan" down to 2nd place after a seven-year dominance.

According to the report, besides "Haier" and "Hongtashan", brands valued at 20bn yuan or above also include "Changhong" and "Wuliangye" with respective values of 26.6bn and 20.12bn yuan, followed by another 32 brands such as "Legend", "TCL', "FAW", "Midea" and "Jiefang".

Property assessor Chen Gang with the company noted that "Haier's" ranking above "Hongtashan" should not be interpreted as Haier Group having a higher operation and management level, but rather it results from the enterprise's opening and the macro-environment of competition. As early as the 1990s, when Hongta Group, as the state monopoly industry, was the country's biggest cigarette-producing base. However, due to the severe local protectionism and falling profit-making capability, "Hongtashan" had a modest value rise from 32bn yuan in 1995 to 46bn yuan in 2002, up only 43.8 percent in eight years. By contrast, "Haier" registered an 18 times value increase during the same period, which directly benefited from the widest opening-up and fiercest competition in the trade of household electrical appliances.

At the time of market assessment in 1995, only "Hongtashan" and 'FAW" had a market magnitude of over 10bn yuan, while there are nine enterprises with value topping 10bn yuan this year, among them the values of "Haier", "Hongta", "FAW" and "Legend" groups all exceed 30bn yuan. However, the average growth rates of all chosen brands dropped from 42 percent in 2000 to 21 percent in 2001. Analysts held that the rapid growth in 2000 was attributed mainly to brand expansion, group restructuring and enterprise mergers and acquisitions (M&A) in recent years, while in 2001 major efforts shifted to internal enterprises perfection and integration. With the expansion of the base values of brands, it is obviously unrealistic to maintain an annual 25-percent growth rate as was done in the past, but there is still space for a 15-percent growth rate each year.

The said company also maintained that the key driving force of China's most valuable brand lies in group operation of these brand-centered enterprises through property regrouping or merger and acquisition. This year, brand-name enterprises have invested in or purchased around 730 enterprises, which yielded 40-80 percent of production and marketing volumes. The adoption of the expansion method makes it possible not only to channel the brand value into capital stock, thereby drastically reducing advertising input, but also to form a rational marketing layout.

The report reveals that the market of brands can be made even more concentrated since many Chinese industries are still under protection or semi-protection and so market competition is inadequate. For instance, the auto industry and the household appliances industry will be ultimately dominated by three to five major brands. Under the current circumstances wherein the market concentration of brands is not high, Chinese enterprises, in the face of world competition, have no alternative but to protect the market at the expense of profits.

By PD Online Staff Zhu Lizhen

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