Baidu, Lenovo top Chinese brand charts

14 August 2012

BEIJING: Baidu, Lenovo and Tsingtao are among the ten top brands set to benefit from the continued development of China's consumer marketplace, Barron's, the business title, has argued.

In a new report, Barron's named Baidu, the search engine, as one domestic player that is well placed to exploit China's consumption boom.

The company already retains a 79% share of the $4bn Chinese search ad sector, and delivers nearly half of the nation's mobile searches.

Tencent, a diversified online group, was another leading operator. Its instant messaging site boasts 721m members, while its social network has 552m users, a figure standing at 373m for its microblog.

"Tencent has so far been the most successful company at monetising its user base," Joseph Tang, Invesco's investment director, said. Tencent's revenue rose by 45% in 2011 to $4.5bn.

China Mobile, the wireless network with 683m users, assumed "top brand" status despite struggling to build a 3G audience. A $48bn "warchest" and the strong "attachment" consumers have to their phones were two of the main reasons for this in the study.

Great Wall Motor was tipped to be the automaker best able to attract customers from the 82% of urban Chinese households earning between $6,000 and $16,000 a year, ahead of Geely, a major rival.

"I actually think Great Wall has a better quality perception in SUVs and trucks than Geely does in cars," Earl Yen, portfolio manager of CSV Capital Partners, said.

Haier, the appliances manufacturer, is also in a strong position as it has 7,000 Chinese stores. For its part, Lenovo, the IT group, was credited for boasting high levels of recognition in the Chinese countryside, predicted to be a key future battleground for the industry.

Turning to drinks, Kweichow Moutai was flagged up by the report, having seen revenues jump by 74% last year. Moutai makes up 53% of alcohol volume sales in China, and Kweichow Moutai is regarded by Credit Suisse, the investment bank, as a "number one pick".

Tsingtao, the brewer, holds 14% of the beer market, leaving it behind Resources Enterprises on 22%. It is, however, more established in the increasingly crucial premium segment. Beer consumption rose by 5% in China in 2011, with Tsingtao's volume up by 13%.

The next member of the list was Yunnan Baiyao, which manufactures traditional medicines, and has moved into fields like bandages, skin creams and capsules. It now possesses 10% of the toothpaste market, and saw sales more than triple to $1.8bn from 2006 to 2011.

Li-Ning, the sportswear group, made up the top ten. However, the study added that no domestic luxury, food, womenswear or airline brand has achieved a dominant role at present. "In some cases, there's still time for a local champion to emerge," it said.

Data sourced from Barron's; additional content by Warc staff