Brands determine the image of the nation and the situation of their economy. As the world becomes more globalized, brands are considered as one of the most important assets, that attracts investments, skilled migrants and tourists. The Brand Finance Nation Brands report evaluates the benefits for a nation through a strong brand and plausible economic harms that can be brought by a poor brand management by a country. The objective of the report is to put forward the importance for governments, trade bodies and businesses to ensure proper strategic management of their nation brand.
BRAND AMERICA GREAT AGAIN
The most valuable nation brand for this year is USA as the country’s values shoot up 23 per cent to 25.9 trillion USD as per the report. This is a result of the rapid expansion of US economy and as the months go by, the growth is expected to continue.
The decrease in the tax rates has been one of the biggest boost for flourishing the business environment in the US, resulting to an upgrade in their brand rating and Brand Strength Index (BSI) score. While the score went up from 83.8 in 2017 to 85.6 in 2018, the brand rate upgraded from AAA- to AAA. With the combination of increasing GDP and business-friendliness, US has also witnessed higher consumer sales, construction orders and increase in the other indicators of growth.
CHINA’S BOOM CONTINUES
Despite the increasing tension between China and US, i.e. their trade war, China depicts a strong hold in their brand performance as the brand value rises by 25 per cent to 12.8 trillion USD, reflecting the sturdiness in the Chinese economic performance. Cities such as Beijing and Shanghai have maintained a world top infrastructure along with a workforce filled with highly qualified human capital. These cities have been one of the major contributors to China’s high brand value as these cities are known as some of the best spots in the world to conduct business affairs.
China has two extra points in their BSI score as compared to the previous year and has depicted a faster growth compared to any other large region. Along with the success in terms of brand score growth, China’s role on the global stage has significantly increased. The nation has been putting in effort in order to contest climate change while USA, on the contrary, has been prioritizing self-interest rather than adapting a cooperative energy policy. Brands like Alibaba and Huawei strengthen the power of the nation brand, leaving a mark in the global market and economy through their nation brand.
GERMANY GETS AHEAD
Germany takes the card for the fastest growing brand among the top 50 of Brand Finance Nation Brands 2018. The rise in Germany’s brand value has been 28 per cent jumping to 5.1 trillion USD in the last one year. The nation has also managed to become Europe’s most valuable nation brand and the third in the world. Along with the strong growth, Germany has more than doubled the lead over the fourth brand in the table, from US$582 billion in 2017 to US$1.4 trillion in 2018. The brand rating for the nation has been improved from AAA- to AAA as the position of the country on the global table solidifies both economically and politically.
AFRICAN ADVANCES
Democratic Republic of the Congo, Egypt, Kenya, Tanzania, Ethiopia, and Ghana from Africa have had tremendous growth between 28 per cent and 38 per cent year after year.
BRITAIN STANDS STRONG AND STABLE
While the mayhem of Brexit goes on, Britain has still manages to maintain its position on the global platform reflected through the nation’s a healthy economy with positive growth. The nation brand has managed to obtain 20 per cent growth year on year to 3.8 trillion USD and also replaced Japan in the fourth place.
TURMOIL THREATENS TURKEY
The Turkish airlines has come into limelight during the situation of an ongoing economic crisis that caused Turkey’s brand value to decline one third from US$570 billion last year to US$382. Crisis in the neighboring regions have also played a part in the turmoil. Therefore it should now be the goal of Turkish brands to be nurtured and become promising like Turkish Airlines which has had its brand value rise to 6 per cent over 2.0 billion USD.
SINGAPORE: PASSION MADE POSSIBLE
Singapore has accomplished in earning the title of the world’s strongest nation brand once again this year, earning the elite AAA+ rating and a Brand Strength Index (BSI) score of 92.4 out of 100. This reflects the attractive environment for investments and business opportunities. Along the years, Singapore has successfully developed a global reputation as a nation with high human capital and high quality of life. The country is also known as the technology hub for Asia and attracting most of the sector’s companies to open up new headquarters in that location. The infrastructure of Singapore works as an added benefit to attract visitors and investors all among Asia, turning to a powerhouse in the Asia Pacific positioned for connections with China, Hong Kong and Australia.
BANGLADESH: MAKING ITS WAY THROUGH
Bangladesh’s brand image has witnessed a rise to 257 billion USD in 2018 from 208 billion USD in 2017. Among the South Asian region, Bangladesh is the only country that has witnessed an improvement in the brand image and has the second highest brand value in the South Asian region. Along with the financial value, Bangladesh has also managed to gain an increase in the brand rating from A- to A.
Among the top 100 countries for highest brand image, there are four South Asian countries, which are: Bangladesh, India, Pakistan and Srilanka. Among these, India and Bangladesh have obtained a rank among the 50 most important brand images in the world, where India’s position fell from 9th to 8th whereas Bangladesh’s position went up from 44th to 39th.
While all the other South Asian countries have their ministries working together to improve their brand image, Bangladesh lacks any such branding programs as of yet. Thus taking the loophole into consideration, the State Minister for Finance and Planning Mohammad Abdul Mannan stated that the country should become more open to investors and be more accepting of all ideas unless it does not pose a threat to the security of the state.
BRAND FINANCE NETWORK’S INSIGHTS
Nations as Tourism Brands: Jeremy Sampson
Brands and branding were viewed as the sanctuary of the FMCG crew in older times, however as time passed by, everything including people and countries became more brandable. Everything and everyone is in these days assigned a value and we choose our interaction, like our investors, based on that value.
Tourism has one of the highest potential to generate income for different countries and regions. As time passes by the competition among nations to attract tourists has been getting intense. Thus the brands are also aligned with the necessity of providing the best possible tourist experience. The tourism wallet is limited, and the brands have to try their best to fight and gain revenue from that limited wallet.
Attracting Green Field Investment: Laurence Newell
One of the biggest beneficiaries of the nation branding has been the corporate marketing world, which attains large values through these brands. They obtain insights on how the consumption pattern changes and how the brands satisfy the changing consumption patterns. Human behavior is highly predictable, whether it be the consumer or the investor and the job of nation brand managers is to keep studying about them. One of the pillar is to understand what motivates the investors to make decisions. Having the understanding of what is important to these investors and what is a driving factor for them to choose one nation over another is the key to becoming a top nation brand.
It is essential to prioritize on measurement and collection of the correct data along with being aware of what is not necessary for measurement and what is. The importance that is allocated to these investors will come in equal returns for the nations in terms of their brand values.
National Quality Mark: Samir Dixit
Different countries take different approaches to developing their brand images, such as tourism, FDI campaigns or hosting global events like Olympics. However, these attractions are considered to be inbounds for the nations, or in economic terminology, imported benefits. It is equally important to focus on the outbound of each country.
On a global platform, the choice is always more diverse for the consumers in the market. They can access goods with higher quality from different country with ease. They require an assurance from the governing bodies about the quality of the outbound and the solution to keep the native consumers in is to have a strong National Quality Mark which endorses quality and authenticity. A well-managed national quality mark is key to nation brand success which can result to benefits and fame for the country.
Opportunities for Gi Products: Ruchi Gunewardene
Every country has its own assets in terms of their climate, demographic, heritage and cultural diversity. These unique topographies in each country allows them to have their own exclusive commodities that can be utilized to become appealing to consumers in a global market. Trade is an opportunity for countries to showcase their exclusiveness and it is in the interest of the nation to protect the commodity and keep it true to its origins. This is necessary to avoid the replication of the product and degradation in terms of quality or assurance, avoiding unnecessary exploitation.
It is essential for branding managers to utilize the geographical asset as a center for strategizing in terms of branding and make the products more appealing with their differentiable features. The cultural heritage or the historical context of the commodity should be advertised in order to make them look élite and attractive to the global consumers.
METHODOLOGY
Royalty relief mechanism is the primary methodology of Brand Finance’s measurement of strength and value for choosing and evaluating the 100 leading nation brands and the largest companies in the world.
Step 1 – Nation Brand Strength
The data points of brand performances are accumulated and then utilized as reference in determining their position.
Step 2 – Royalty Rate
This rating is hypothetical which is assigned using the average rates seen during agreements among the different companies in each industry within an economy as references.
Step 3 – Revenues
For total revenues in the country, Gross Domestic Product is used as one of the suitable proxies and the forecasts are obtained from world economic outlook of IMF in local currencies and later the exchange rates are applied to individual brand values.
Step 4 – Weighted Average Cost of Capital (WACC) or Discount Rate
In account to cater for the risks in national economy, the discount rate is calculated, which represents the average cost of a brand’s sources of finance and the minimum return required on the brand asset.
Step 5 – Brand Valuation
The total brand contribution for the nation and the brand value along with the pure nation brand effect value is projected by the royalty rate applied to the revenue received.
NATION BRAND STRENGTH RATINGS
AAA + Exceptional; AAA; AAA -; AA + Very strong; AA; AA -; A + Strong; A; A –
BBB Developing; BB; B; CCC Weak; CC; C; DDD Failing; DD; D
DATA SOURCES
IMD, World Economic Outlook, FDI Intelligeno World Economic Forum.
Report Summarized by Afraim Karim
ABOUT BRAND FINANCE
Brand Finance is the world’s leading independent brand valuation and strategy consultancy. Brand Finance was set up in 1996 with the aim of ‘bridging the gap between marketing and finance’. For almost 20 years they have helped companies and organisations of all types (including government institutions, trade associations and nation branding agencies) to connect their brands to the bottom line.
