KFC named China’s most powerful brand
The survey, conducted by Millward Brown, has formed the basis of a series of reports on China by the British broadcaster, and includes three food and beverage companies in the top 10, with McDonald’s in seventh place and Coca-Cola in ninth.
Between 2011 and 2013, the brand researcher carried out almost 60,000 face-to-face and online interviews with consumers in 10 Chinese cities as part of their market research in the country.
The company then analysed its findings for the BBC, ranking brands on how "meaningful", "different" or "salient" they were and how easily they came into consumers' minds.
Thirteen of the top 20 brands are from the US, two from Germany, two from France, one from Italy and one from the Anglo-Dutch conglomerate Unilever. South Korea's Samsung is the only Asian brand on the list.
Filip for Yum!
The findings will provide some good news for the embattled, Yum! Brands-owned fast food chain. Last week, headlines across China accused KFC of serving ice cubes that were 12 times dirtier than toilet water - and 19 times the national bacteria level standard - after an official broadcaster released a report that was also damning for other fast food operators. The brands named have since apologised.
They also suggest a dramatic change in confidence among consumers towards foreign-owned brands, in a similar way to what we have been seeing with the infant formula market.
"Our research shows that in the last three years, trust in Chinese brands has eroded quite dramatically," said Millward Brown's Peter Walshe.
"This is an opportunity for well-known and well-supported international brands to make their move as consumers start to value quality and experience as much as price."
Learnings in practice
Based on the research, the BBC’s business section has recommended a number of measures for success for brands looking to move into China.
Aside from getting in early as a pathway to entry - Coca-Cola, for example, sold more than a million bottles in Shanghai in 1948, making it the biggest-selling city outside the US - the broadcaster stresses the importance of embracing the differences of China’s market.
"Never assume what works for your mature markets will work for China. Success comes for those who stay relevant to the needs of the Chinese consumer," it quoted a McDonald’s spokesman as saying.
The BBC also recommends brands to be bold when entering China. KFC is a case in point here in terms of numbers, and already has 4,400 restaurants in the country and expects to add another 700 to that figure over the course of this year.
McDonald's, meanwhile, claims to be opening 10 restaurants a week, and during 2012-15 Coca-Cola will invest US$4bn in expansions.
Companies should also devise a strategy that looks beyond the major cities of Shanghai and Beijing and embrace China’s second- and third-tier cities, while also investing in the best local talent and securing top-level joint-venture partners, according to the report.