Brand Finance launches Nation Brands 100

• The Top 100 Nation Brands have been ranked by Brand Finance plc with the USA, Germany and China topping the report
• Eurozone crisis affects the Nation Brand vales of Greece, Ireland and Japan who are ranked as the Top 3 biggest Losers
•  Further chaos in Europe has seen the brand values of Spain, Austria, Italy and Hungary plummet
• Developing nations such as Croatia, Estonia and Turkey emerge as brand success stories of 2011 against a backdrop of an uncertain economy

The Brand Finance UK recently released its annual Nation Brands 100 list which was topped by the USA followed by Germany and China.

It said the world’s most valuable nation, the USA, had a very bad year in 2011. The US lost over half a trillion dollars in value and downgraded from a brand value of AA to AA- and now had a lower brand rating than neighbouring Canada.

Despite the London riots and talk of a double dip recession, the United Kingdom remains a steady brand and keeps its position as the 5th most valuable Nation Brand thanks to the success of the Royal Wedding and the upcoming Olympics in 2012.

Greece, Ireland, Spain, Austria, Italy and Portugal all feature in the Top 10 Losers and have all fallen down the table. Greece and Ireland have been hardest hit with each nation shedding 40% of their brand value. The EU’s total brand value fell by 4% as confidence in the bailout system and continental governments remains at an all time low.

Brand Finance UK also said 2011 has seen nation brands such as Croatia, Turkey and Estonia feature in the Top 10 Winners for the first time. Whilst the majority of the continent struggles with the global financial crisis, previously developing nations have now emerged as stable and business friendly countries compared to their European counterparts. Following the tragic earthquake and nuclear disaster in Japan, the country’s brand value dropped by $679 billion. Slow growth, recession and a shrinking work force has severely hampered the nation which saw the largest drop in its brand value.

As the world struggles with economic turmoil, the Brand Finance Nation Brands 100 reveals the startling affect the current climate has had on the brand value of 100 countries. However whilst some countries have slid down the league table, 2011 has been a year for developing countries to emerge victorious against a backdrop of an uncertain economy.

The brand value of the G7 developed economies fell by $1.436 trillion as America saw its credit rating downgraded, Japan suffered from its tragic earthquake, and Europe floundered in an increasingly dangerous debt crisis. America held its position as the world’s most valuable brand, but is losing ground compared to emerging markets like India and China. The two Asian giants China and India dominated the list of fastest growing brands. While China’s national brand saw a faster increase, India received a higher brand strength rating. Especially on the issue of national reputation and respect for government, India continued to out-pace China. Investors were drawn to China’s economy, but worried about its political system and growing social problems.

India and China’s impressive performance is mirrored across the developing world, especially in the BRIC economies (Brazil, Russia, India, and China). The collective value of the BRIC national brands increased by $1.4 trillion. There was also strong growth in other emerging markets, notably in Latin America and South East Asia.

Countries, like corporations, have brands; reputations that shape the decisions of foreign consumers, travellers and investors. These brands can be positive (“German engineering”) or negative (“Pakistani engineering”)! Countries seeking to boost their exports, encourage foreign investment, or attract tourists need to therefore actively build strong Nation Brands. This important economic asset should not be left to chance.  Building a strong Nation Brand requires a cohesive national branding strategy. A nation must coordinate many economic agencies, government bodies, and regional authorities to develop a consistent message. Countries that have been able to do this, especially Singapore and Malaysia, have seen impressive economic rewards.

For countries just as much as companies – or people – the first impression is incredibly important. Before knowing anything about a Sri Lankan product, foreign consumers will make a decision based on their impression of the country as a whole. The impression that foreigners have of a country thus has huge economic implications.   Brand Finance’s Nation Brand 100 sheds light on this and measures the value and the strength of 100 country brands.

Using data from the IMD and WEF, Brand Finance gave each country a score from 0-100 on economic infrastructure and efficiency, brand equity, and their economic performance.

This was used as a nation rating which is a measure of the overall brand strength, called the “Brand Strength Index” (BSI). This BSI is represented by a letter grade from D to AAA+( weak to strong).

Brand Strength is a measure of the total score that is derived from the following three categories: Infrastructure &Efficiency: Rating for how easy it is to do business in a country; (e.g. Presence of internet connections, education levels, skilled workers etc)

Brand Equity: Rating for the reputation of a country as a society, rather than an economy; (e.g. Is the local culture open to globalisation, does the country’s political reputation encourage investment etc)

Economic Performance: Rating for the size and performance of an economy (e.g. Value of exports, GDP growth)  By applying this score to the size of a country’s economy, Brand Finance calculated the total value of their brand.

Sri Lanka overview

While its small size means that Sri Lanka’s brand value is only US $23 billion which ranks it at No 76, Sri Lanka was the second highest-rated brand in South Asia behind India. Like other South Asian states, Sri Lanka has strong economic performance, but is weaker on measures of Brand Equity. This indicates that Sri Lanka’s political and social reputation poses a drag on its Nation Brand.

Sri Lanka’s tragic civil war had a strong impact on the country’s Nation Brand. By comparing Sri Lanka with other countries that are recovering from military conflict, Brand Finance analysed Brand Sri Lanka’s performance in reforming and redeveloping its reputation with business people and investors.

Low ranks for Brand Equity seem to be a feature of post-conflict societies. Strong scores on the other ratings seem to do nothing to pull up persistently low Brand Equity ratings. Sri Lanka and Georgia have performed better than other post-conflict societies, but still much worse than comparable economies. Sri Lanka did fare better than Lebanon, Bosnia-Herzegovina or Nepal. This shows that post-conflict societies need brand strategies, not only economic strategies in order to recover and create the levels of tourism, investment, and export growth that their economies need.

Compared to other countries with similarly rapid GDP growth rates, Sri Lanka has a very low brand strength.  Countries compared against included Estonia, Kazakhstan, Peru, Nigeria, Mozambique and India. The country has been unable to develop a strong brand with a national image in order to appeal to foreign businessmen, investors, and tourists.   

While Sri Lanka is currently doing well economically, a strong Nation Brand is key to building a sustainable and established economy that is able to attract FDI in a competitive market and to command export price premiums  Sri Lanka’s national brand is currently hindering, not aiding, its success.

What must Sri Lanka do?

An understanding of the strengths, weaknesses of the country and how it impacts the national brand is vital in order to create strategies to build its brand abroad.

Doing so requires analysis and quantifying the commercial impact of Brand Sri Lanka     on FDI, Tourism, and exports.

Identifying key markets and demographics where Brand Sri Lanka has strong growth potential would also be crucial. There will also need to be benchmarks to measure the return on investment of Government campaigns.

This allows the relevant Ministries and other Government agencies to target, measure, and improve the performance of their branding activities leading to incremental improvements nudging it to a better brand positioning.

Brand Finance is an independent global business focused on advising companies and governments on how to maximise value through effective management of their brands and intangible assets. Brand Finance has performed thousands of branded business, brand and intangible asset valuations worth trillions of dollars throughout the world.

Its clients include international brand owners, tax authorities, IP lawyers and investment banks. Its reports have been accepted by various regulatory bodies, including the UK Takeover Panel.

Brand Finance is headquartered in London and has a network of international offices in Amsterdam, Athens, Bangalore, Barcelona, Cape Town, Colombo, Dubai, Geneva, Helsinki, Hong Kong, Istanbul, Lisbon, Madrid, Moscow, New York, Paris, Sao Paulo, Sydney, Singapore, Toronto and Zagreb. Brand Finance Sri Lanka Managing Director is Ruchi Gunewardene.