What’s in a Brand? About $35 Billion of Value for Alibaba

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What’s in a Brand? About $35 Billion of Value for Alibaba

Alibaba Group climbed into the top 10 of the world’s most-valuable technology brands, garnering the No. 8 slot in Brand Finance’s 2017 survey.

The Hangzhou-based e-commerce giant climbed four notches from a year earlier and is in elite company with brands that include Google, Apple, Amazon and Microsoft. Its brand value surged 94% to $34.86 billion from the 2016 league table, and has a strong brand rating of AA+, on a scale where AAA+ is the highest, the Brand Finance report said.

“Alibaba has created a fair and open portal for small businesses and enterprises. Its success stems from the opportunities to both open up and simplify commerce for Chinese communities, particularly rural ones,” the Brand Finance report said. “Its service has clearly underpinned brand value growth at home, but in order to accelerate growth abroad by aiding brand recognition, it is investing in marketing communications including joining McDonald’s,Coca-Cola and Visa as a major sponsor of the Olympics Games.”

Google unseated Apple for the highest brand value of $109 billion in the 2017 report. Apple had held the top slot for five years.

Brand Finance, a London-based consulting company, issues its brand-value report annually. The consultancy’s report attaches a value to brands by estimating future sales attributable to that brand and setting a rate it believes the brand could charge for royalties. It uses multiple inputs and then outputs a dollar figure, along with a letter grade for brand value and a Brand Strength Index (BSI) score on a scale of 0 to 100, benchmarked against competing brands. Alibaba’s BSI score rose 3.3% this year.

Overall, Chinese companies fared well in the Brand Finance league tables, with Huawei holding steady at number 10, while seeing a 28% rise in its brand value, now around $25.88 billion. Tencent, and its WeChat brand, both placed among the top-10 BSI scores for 2017.

“Many of these Chinese tech titans were virtually unknown just a few years ago and some are barely known aboutside their home market today, but are making waves financially and building brands that are rapidly gaining traction outside China.”

An earlier report from Brand Finance found a correlation between a brand’s strength and the performance of its share price.


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