Your daily roundup of the best of The Wall Street Journal’s coverage:

China Property Malaise Spreads to Furnishings: China’s property prices fell for the fourth straight month in December, adding further pressure on Chinese consumers at a time when both the domestic and global economy increasingly depend on their spending. (Subscriber content)

U.S. Lawmakers Ask for Huawei Probe: Six U.S. lawmakers have asked the State Department to investigate whether Chinese telecommunications-equipment maker Huawei Technologies Co. has violated U.S. sanctions on Iran by supplying it with sensitive communications technology that has been used for censorship. (Subscriber content)

China to Ease Yuan Clearing: China is developing a payment system that will make it more efficient for banks to clear yuan funds across its borders, in another move aimed at promoting the global use of the Chinese currency. (Subscriber content)

Audit Shows Local Financing Flaws: Chinese government auditors said they found more than 530 billion yuan (about $84.2 billion) worth of irregularities in local-government debt, in a potentially revealing but incomplete look at an increasingly important part of the nation’s financial system. (Subscriber content)

Fewer Hong Kong Property Deals: With the market volatile and mortgage rates rising, the number of property transactions in Hong Kong fell to a five-year low in 2011, the city’s largest real-estate agency said. (Free)

China Telecom to Launch U.K. Mobile Services: China Telecom plans to launch mobile services in the U.K. in the first quarter after securing a network deal with British mobile operator Everything Everywhere Ltd., as the Chinese company seeks to drive growth in its mobile business and tap overseas markets. (Subscriber content)

Apple Plans IPhone 4S Launch: Apple plans to launch its newest iPhone model in China on Jan. 13. (Bottom of article.) (Subscriber content)

MillwardBrown

Baidu, China’s 6th most valuable brand according to MillwardBrown.

China's Top 20 Brands in 2011

View Slideshow

 

A list of the top 20 most valuable brands in China as determined by MillwardBrown in the 2011 edition of "BrandZ Most Value Chinese Brands."

Outside of China, the majority of consumers can’t name a single Chinese brand.

According to research from agency Millward Brown and media company WPP on the top 50 most valuable Chinese brands, 83% of consumers beyond China’s borders couldn’t recall a Chinese brand or company.

That message is significant, given that China wants badly to create its own global brands, said Adrian Gonzalez, head of Greater China at Millward Brown. Chinese companies like appliance maker Haier and computer electronics company Lenovo that aspire to global household names will need to better distinguish themselves to become more recognizable to the world’s consumers, Mr. Gonzalez said.

At home, it’s a different story.

The brand study, which analyzed financial information of listed companies’ brands and paired it with data from a survey of 35,000 consumers, reveals that value of Chinese brands has grown by to $325 billion in the past year, up 16% from a year earlier.

The top Chinese brands–ranging from banks and telecommunications to fashion and food companies– are not only competitive in pricing, but are resonating and connecting emotionally with Chinese shoppers, the study said. Chinese companies are also narrowing the wide gap they once had with multi-national counterparts, which had for years built better trust and service for Chinese consumers.

Dairy giant Mengniu (18) and its rival Yi Li (22) have proven themselves, even after having been implicated in a 2008 scandal in which the chemical melamine added to milk caused the death of an infant and illnesses in 300,000 others, to be on par with foreign competitors, such as Swiss food company Nestle SA, and are offering products of similar quality, Mr. Gonzalez said. Technology companies, such as Sina (25) and Baidu (6), are creating new programs and products specific to Chinese needs.

Sina, which operates China’s most popular Weibo microblogging service, saw its brand value increase 244% compared with last year, according to the report.

“We’re seeing in many cases now that foreign companies feel the best way to succeed in China now is through acquiring a Chinese company,” Mr. Gonzalez said, adding that a decade ago that was not the case.

Results of the study reveal another shift occurring within China: a fall of the country’s state-owned enterprises. While China Mobile, the top Chinese brand, and state-owned banks still dominate the Chinese brand landscape, seven of the 14 brands on the list that lost ground with consumers were state-owned. China Mobile held on to its No. 1 ranking from last year but dropped 4% in value in 2011. Bank of China (4) fell 17%.

“Government protectionism is starting to wear thin,” the study said – a marked contrast with the study’s 2010 results.

Don’t expect the fall to transfer beyond state-companies, the study’s authors said. If there’s any wake up call to foreign brands—even outside of China— it’s that Chinese brands are on the rise.

To see a list of the top 20 Chinese brands and how much they’re worth, click on the slideshow tab above.

– Laurie Burkitt. Follow her on Twitter @lburkitt

Reuters

China’s top private company, according to the All-China Federation of Industry and Commerce.

China Inc. boasts some of the biggest corporate names in the world today: China Mobile Ltd., PetroChina, Industrial & Commercial Bank of China Ltd, just to name a few. But while the commanding heights of the world’s second-largest economy are still firmly in the hands of China’s state-owned enterprises, who are the overachievers in the private sector?

Two recent surveys try to answer that question. On Wednesday the China Europe International Business School released its eighth annual list of China’s top 100 private listed companies, after surveying the 2010 operating revenue of 1502 firms listed in Hong Kong, the U.S. and mainland China. And in late August the All-China Federation of Industry and Commerce issued its 2011 edition of China’s top 500 private enterprises, also ranked by operating revenue (pdf in Chinese).

The definitive word on who is the greatest of them all probably goes to the ACFIC, a quasi-government industry group. With the private sector’s great and good – many of whom are closely held – among its members, it can get the inside word on how much private firms are actually making. Still, some firms are notably absent from the list such as banks and financial institutions.

Ping An Insurance (Group) Company of China Ltd., which tops the CEIBS survey, doesn’t make an appearance on the ACFIC list. Instead ACFIC ranks telecommunications-equipment maker Huawei Technologies Co. as top dog, although its private status has been questioned by governments in the West wary of its seemingly close relationship with Beijing. Steelmaker Jiangsu Shagang Co. Ltd. comes in at number two on the ACFIC list, and electronics and home appliance retailer Suning Corp. comes in third.

CEIBS ranks Suning’s listed unit, Suning Appliance Co. Ltd, second.

The CEIBS survey is limited in that it only looks at listed firms, but its value comes in comparisons it makes with listed state-owned firms. According to CEIBS, China has 8.4 million private enterprises accounting for 74% of the country’s total number of firms. But if the earnings of publicly traded firms are anything to go by, state-owned firms still dwarf the private sector in size with the average listed private company generating only about 25% the total net profit of an average listed state-owned firm. However, private firms saw faster revenue growth as a group — 21.46% against 18.88% for state owned firms.

The thing that jumps out from both lists is the number of names from the consumer and retail sectors, areas in which state firms play less of a role. Home appliance makers Qingdao Haier Co. and Gd Midea Holding Co., and dairy producer China Mengniu Dairy Co. made the top 20 of the CEIBS list, and car company Zhejiang Geely Holding Group Co., food processor Yurun Group and beverage maker Hangzhou Wahaha Group Co. were in the ACFIC’s top 20.

Few are household names outside of China yet. But as a primer on the Chinese brands that could one day be advertising on television screens and magazine in Europe and the U.S., the lists offer an interesting snapshot.

– Dinny McMahon

Foreign companies in China increasingly report that they feel less welcome in China, in large part because of regulatory barriers to the massive Chinese market, which is more important for global businesses than ever, and because of increasing competition from Chinese companies whom they believe benefit from those barriers.

But John Deng, chairman of Nasdaq-listed microchip design house Vimicro, says the short-term losses of these companies will translate to long-term improvement in high-tech sectors. Vimicro, based in Beijing, is one Chinese company that has become competitive in the global market—it supples energy-efficient chips to Sony, Hewlett-Packard, Samsung and others—and though he says China should be open for foreign competition and investment, he thinks it’s natural for China to want to set its own technology standards, like third-generation mobile standard TD-SCDMA, and take other measures that will allow local companies to catch up with the rest of the world.

Innovation so far in China has mostly been done “through collaboration,” Deng says. Many companies follow U.S. and international standards, and build their business models around “leveraging local labor costs and environmental costs” rather than innovation.

The success of companies like Huawei, Lenovo and Haier world-wide is evidence that this is beginning to change, Deng says. He believes this will increase as time goes on, and that just as Japan and Korea have in a matter of decades become innovation powerhouses, China has the potential (and enough engineers) to be even better.

Deng, a delegate to China’s National People’s Congress, says making China less reliant on international standards and products will help local companies grow. And while foreign companies may feel squeezed in the short-term, giving Chinese companies and technology space to compete in China will in turn force companies world-wide to innovate, he says.
Foreign companies may feel their interests are hurt but “everybody will be better off … In general this is good and helpful,” he says.

Foreign companies have argued that their presence and investment are key to fostering innovation in China, but Deng said there are other important factors. He said China already has many innovative minds, but the current system encourages the nation’s top engineering talent to stay in universities and publish papers to meet grant quotas, whereas the government should be encouraging those top engineers to commercialize their research.

Deng has pushed this issue in his proposals at the NPC, the annual session of China’s legislature as well as better intellectual property protection, because he says once Chinese companies realize that innovation has a high potential for profit, they will invest more in research and development. He also proposes that China should encourage R&D investment by giving tax breaks to companies who invest in research.

Deng says China can be more than a manufacturing house for the rest of the world, but in order to achieve that, innovation is a must.

– Loretta Chao