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Scandal-Hit Samsung Still Asia’s Top Brand

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Pacific Money

Scandal-Hit Samsung Still Asia’s Top Brand

South Korea can boast Asia’s most valuable brand, but Japan leads on innovation.

Scandal-Hit Samsung Still Asia’s Top Brand
Credit: Wikimedia Commons/ Hans Olav Lien

South Korea’s Samsung Group has shrugged off business and political scandals to be ranked Asia’s most valuable brand in the latest global survey by Brand Finance. But the leader of the innovation race may still be Japan, which rules the roost in patenting new inventions, according to a separate study.

U.S. technology powerhouses Google, Apple, Amazon, AT&T, and Microsoft took the top five places in the “Global 500 2017,” the 2017 survey of the world’s most valuable brands by London-based consultancy Brand Finance.

However, Samsung gained a place from last year’s survey to rank sixth with an estimated brand value of $66.2 billion, up 13 percent from 2016. This came despite the disastrous recall of its Galaxy Note 7 smartphone and a corruption scandal linked to the Korean president. The South Korean conglomerate still expects profit growth in 2017 despite its recent woes, with record earnings from its memory chip business helping its shares hit a series of record highs in January.

No other South Korean companies placed in the top 50, although conglomerate Hyundai Group ranked 60th with an estimated brand value of $19.9 billion, while rival SK Group placed 62nd with $19.3 billion in value.

China’s largest bank, ICBC, ranked as Asia’s second-most valuable brand and the world’s most valuable banking brand, taking the 10th spot with an estimated brand value of $47.8 billion. It was followed by telecommunications firm China Mobile in 11th place with an estimated value of $46.7 billion, while China Construction Bank ranked 14th with an estimated brand value of $41.3 billion.

Other Chinese companies to make the top 50 comprised e-commerce giant Alibaba (ranked 23rd with $34.8 billion); Bank of China (29th with $31.2 billion); oil and gas companies Sinopec (32nd with $29.5 billion) and PetroChina (33rd with $29 billion); Agricultural Bank of China (34th with $28.5 billion); and telecommunications firms Huawei (40th with $25.2 billion) and Tencent (47th with $22.2 billion).

According to Brand Finance, Chinese banks’ brand value growth has been rapidly outpacing European and North American competitors.

“The nation’s vast population, organic expansion, foreign M&A [merger and acquisition] activity and positive relationships with Chinese consumers are a few common attributes Chinese banks share which serve to explain the immense growth of this industry. Not only has China’s ICBC claimed the title as the most powerful banking brand, it also dethrones Wells Fargo as the most valuable financial brand in the world,” the report said.

Japanese companies were also represented in the top 50, led by 12th-ranked automaker Toyota with an estimated brand value of $46.2 billion and 15th-placed telecommunications firm NTT with $40.5 billion in estimated value. Conglomerate Mitsubishi Group also made the top 50, ranked 35th with $27.9 billion in estimated brand value, while automaker Nissan placed 42nd with $24.7 billion.

However, no Asian brands were included among the world’s top 10 “most powerful brands,” which was led by Lego, Google, and Nike.

Google’s success in displacing Apple as the world’s most valuable brand with an estimated brand value of $109 billion compared to Apple’s $107 billion was attributed to growing competitive pressures facing Apple in China, along with its apparent complacency.

“Apple has struggled to maintain its technological advantage, with new iterations of the iPhone delivering diminishing returns, while the Chinese market is now crowded with local competitors,” Brand Finance chief executive David Haigh said.

“Apple has been living on borrowed time for several years by exploiting its accumulated brand equity. This underlines one of the many benefits of a strong brand, but Apple has finally taken it too far.”

Haigh also pointed to a link between strong brands and stock market performance, highlighting the importance of such rankings for investors.

“It was found that investing in the most highly branded companies would lead to a return almost double that of the average for the [U.S. benchmark] S&P 500 as a whole,” he said.

According to Brand Finance, its annual survey evaluates corporate brands globally based on factors including marketing investment, familiarity, loyalty, staff satisfaction, and corporate reputation, along with the proportion of revenue generated by each firm’s brand.

Japan Leads On Innovation

Japanese companies may trail their competitors in brand value, but the nation remains a clear leader in Asia in innovation, according to research by Clarivate Analytics. Clarivate’s 2016 “Top 100 Global Innovators” report found that Japan ranked as Asia’s leading innovation hub, accounting for 34 of the top 100 most innovative organizations and second only to the United States’ 39.

While down from the 40 listed in the previous year’s survey, Japanese firms represented ranged from automakers Honda, Nissan, and Toyota to household goods firms Sony and Yaskawa Electric, manufacturers Daikin Industries and Kobe Steel, and hardware makers Kyocera and NEC.

Elsewhere in Asia, South Korea had three representatives, comprising household goods maker LG Electronics, energy firm LSIS, and electronics maker Samsung Electronics, while China and Taiwan had one firm each: telecommunications firm Huawei and hardware maker MediaTek, respectively.

“Mainland China makes a reappearance this year with Huawei again making the list following its debut appearance in 2014. Huawei showed significantly improved performance in globalization, which accords with its strategy to develop a ‘global response to global needs,’” the report said.

Among industries, hardware and electronics makers accounted for 29 percent, followed by manufacturing and medical (15 percent), automotive (9 percent), chemicals and cosmetics (9 percent), and pharmaceuticals (7 percent).

According to Clarivate, the key factors for successful innovators are significant investment in patent development along with ongoing investment in research and development (R&D) and a diverse and adaptable range of technology.

The top 100 firms listed spent more than $227 billion on R&D and generated more than $4 trillion in revenue in 2015 – “a clear example of activity that drives economic well-being and competitive advantage.”

“As evidenced by the huge R&D outlay made by the companies represented in the Top 100 Global Innovators list, the commitment to keep the fires of innovation burning brightly does not come cheaply. In the case of the 39 companies who have now been on our list for six straight years, this fact is made all the more poignant by the fact that our study was launched in 2011, when much of the world was still feeling the effects of the Great Recession, and many companies were loath to make the kinds of investments needed to keep their underlying IP infrastructures running at full capacity,” the report said.

Clarivate’s survey ranks patent and citation data by volume, success, globalization and influence, including all organizations with 100 or more patented new innovations from the past five years in its analysis.

For Asia overall, the latest brand value and innovation rankings suggest the region’s innovative strength has continued to pick up speed, even while regional and global economic growth has softened. Converting the region’s innovations into brand value would appear to be the next challenge however, if Asia is to topple the U.S. tech titans from the top of the global leaderboard.