Innovation is "in the DNA" of China's top brands, which are dominated by consumer electronics companies, according to the annual BrandZ Top 50 Chinese Global Brand Builders Report.
In the report, released in London on Tuesday by WPP and Kantar Millward Brown, in collaboration with Google, consumer electronics remains by far the best-performing category, dominated by brands such as Lenovo Group Ltd (No. 1), Huawei Technologies Co Ltd (No. 2), Xiaomi Inc (No. 5). E-commerce giant Alibaba was ranked third, and Air China fifth.
The report states: "The growth of the ranking from 2017's 30 brands to this year's 50 brands is in part due to the rapid pace at which Chinese businesses are pursuing global expansion. Many of China's brands are championing President Xi Jinping's 2013 Belt and Road Initiative, answering China's clarion call for a new era of globalisation in what has been called the biggest development push in history.
"Chinese brands are at the forefront of innovation, and its global brand-builders are helping to establish 'Brand China' as innovative, cutting-edge and pioneering. China's insatiable appetite for new technology is fuelling the growth of many brand categories and powering innovation at an incredible pace," the report said.
Doreen Wang, global head of BrandZ, Kantar Millward Brown, said that "Chinese brand builders aren't just concerned with reaching a wider global audience, they are aiming to change customers' perceptions, too."
"Brands that succeed in China's formidably competitive marketplace are not just outgunning the competition in terms of innovation, they are deploying an equally powerful weapon - branding," Wang said.
She said challenges remain for Chinese brands, but millennials are boosting the companies.
"While negative perceptions of some Chinese brands may persist among older generations of consumers, there is a shift in attitude among younger generations. Younger consumers are turning to brands such as Lenovo, Alibaba and JD.com because they are united by their love of cool, affordable products and services, regardless of their country of origin."
The BrandZ Brand Power score calculates the strength of the brand with consumers in the crucial markets of France, Germany, Spain, the UK, the US, Australia and Japan.
Those markets are identified as locations where brands need to be successful for them to be considered truly global.
The score is calculated by Kantar Millward Brown using an algorithm applied to 168 Chinese brands across 12 product categories. The algorithm relies on three data sets to calculate the rankings: Google Surveys, Google Search Volume and WPP's BrandZ database.
Other highlights of the study:
Innovation is the top factor attributed to the growth of Chinese brands, and perception of innovation is highest among consumers aged 18-34 years (millennials).
Digital media (43 percent) and in-store display (22 percent) are the most important ways to drive Chinese brand awareness among international consumers.
The UK demonstrates the most positive attitude toward Chinese brands.
"The companies behind China's brands are taking a more active role on the world stage. They are increasingly shaping the conversation at a category level, as well as helping to support economic growth in developing markets in many ways, not least by investing in infrastructure," said David Roth, chairman of BAV Group and CEO EMEA & Asia, The Store WPP.
"China's brands are not only changing the way that people around the world think about brands, they are also changing the way those people think about 'Brand China,'" he said.