China the Brand

Last week I was working in Lusaka, although quite frankly I could have been in Beijing. I stayed in a 5-star Chinese Hotel and used its impressive Congress venue. The place was ultra-modern and as clean as a whistle. Everything worked; the Zambian staff were polite and helpful. All my fellow guests were smart Chinese government and business people. There was no smoking, shouting or spitting. The only alarming experience was to be found in the dining room where the breakfast buffet contained some dishes that alarmed me. Especially since I had narrowly avoided eating stewed donkey the night before – selected in error by a Zambian waiter with an ordering tablet he was ill-equipped to navigate. In fairness to him, we were both working on the pictures as all the text was in Mandarin.

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This was in fact an object lesson in the regional penetration of a huge brand. Indeed, Brand Finance -one of the world’s leading independent valuers of brands – revealed recently that China is now the fastest growing nation brand on the planet. Up US$3.1 trillion from 2016, this growth figure is equal to the entire nation brand value of Britain.

In relative terms, China’s nation brand value grew 44% year on year, or at a 20-times faster pace than the United States’. However, at US$10.2 trillion, China’s nation brand value is still only half that of America’s so sustaining growth will be key to narrowing the gap. David Haigh, CEO of Brand Finance, commented: “This year’s 19th National Congress of the Communist Party of China marks the end of the Central Committee’s five-year term which has seen a revolutionary change in China’s approach to brands. In a virtuous circle, Chinese brands and the transformed national image of China as an emerging global power are reinforcing each other and further add to the country’s attractiveness to investors and tourists.”With a value of US$21.1 trillion, the United States remains the most valuable nation brand in the world but its meagre growth of 2% year on year is putting dominance at risk in the long run. The brand’s stagnation can be attributed in part to macroeconomic challenges, like the declining participation rate caused by the mass-retirement of Baby Boomers. But Trump’s administration is seen as increasingly unpredictable and although tax relief promises may boost FDI in the short run, failure to deliver will make investor confidence disappear.

On the African continent, Beijing sees prime opportunities to expand its economic and, most significantly, geopolitical influence. Through its immense economic power, China has established itself as a leading player here. As journalist Eleanor Albert notes, few countries can equal China’s form of “commercial diplomacy”. For China, Africa may also appeal as the final link in an extensive strategic design. In 2005, a report issued by the United States’ Department of Defence coined the term “String of Pearls”. This referred to China’s plan to secure its energy supplies via a network of military and commercial installations across the Indian Ocean.

Today, China has indeed developed a network of friendly nations in the region proximate to its most significant shipping routes. Just as Africa has supplied China with the mineral wealth necessary to develop its economy, so too will outposts across the Indian Ocean enable Beijing to defend its access to energy resources in the event of conflict. Whilst Brand China presents itself as a harbinger of development and prosperity for Africa, its grander strategic ambitions may suggest a different future-  both for us and our donkeys.

 

Chris Harrison leads The Brand Inside

 www.thebrandinside.com

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