Which nation brands are the most valuable and strongest in 2020? And which factors are influencing them? Brand Finance, in its recently published Nation Brands Report shares insights into the sometimes mysterious world of country performance and nation reputation. TPBO caught up with Parul Soni, Associate at Brand Finance, to gauge her views on the report – and on nation brand leaders in this turbulent year.
Parul, Brand Finance just published its Nation Brands 2020 ranking, the annual report on the most valuable and strongest nation brands. Which findings did you find the most intriguing?
It is hard to avoid discussing the topic of COVID-19 when referencing anything this year and the same can be said for this year’s Nation Brands report, which showcased the profound impact that the pandemic has had on the world’s nation brands.
The true damage to nation brands is demonstrated in the numbers – our findings showed that the top 100 most valuable nation brands lost US$13.1 trillion worth of brand value in total this year – a drop from US$98.0 trillion in 2019 to US$84.9 trillion in 2020.
The downward trend of nearly all the world’s most valuable nation brands is unsurprising, due to the economic impacts of COVID-19 on nations’ GDP forecasts, inflation rates, general economic uncertainty, and diminished long-term prospects.
Having said this, I think that we can remain more optimistic than we would have initially been, with forecasts looking less dire than predicted, and with the announcement of a working vaccine beginning to be rolled out, the future is certainly looking brighter.
What do you mean by ‘nation brands’?
A nation’s brand is how a country or place positions and promotes itself as a place for people to visit and invest in, and is used to build a reputation for their quality of goods and services, as well as talent. It is much more than the application of corporate marketing concepts and techniques to countries.
Nation branding allows a country to rise in the esteem of its neighbours, market its resources and compose the face it presents on the international stage.
On the other hand, a country’s nation brand also facilitates location branding efforts for corporates. Location branding encompasses nation, region and city branding and marketing, through which both local and global businesses strive to create visual, emotional, and perceptual connections with locations in order to market their products and services.
The concept of nation and location branding stems from the idea that places evoke strong emotional connections that are highly effective in conveying characteristics and perceptions associated with the location.
Sweden’s reputation as a global design capital, the precision of Germany’s engineering, and Japan’s efficiency, or Italy’s reputation in luxury fashion are perceptions and associations that countries have earned and established for themselves through a history of performance in the field over the years. These reputations have been cleverly and effectively used by global brands to supplement and communicate their brands’ messaging as well as by countries to promote themselves on the world stage.
Which are the benefits of strong nation brands?
A strong nation brand is not only relevant internationally, but also has significant benefits domestically. Brand Finance’s Nation Brand Impact Framework identifies 4 key areas that a country’s nation brand has significant benefits for:
1.Investment: Domestic and inward
A strong nation brand will encourage local commerce to invest domestically as opposed to investing overseas. It will attract Foreign Direct Investment, including business relocation. The nation’s brand image should represent the characteristics that make the nation a desirable place to do business.
2. Talent: Domestic and international
Citizens should be encouraged to study and work locally rather than going overseas to avoid ‘brain drain’. At the same time, a strong nation brand will be attracting foreign students and skilled workers to study and work in the country to contribute to the local economy.
3. Goods & Services: Domestic and exports
Locally made products and services should be promoted both locally and internationally, encouraging increased consumption of local products, increasing exports, and reducing imports.
4. Tourism: Domestic and foreign
A strong nation brand will promote local destinations to both local tourists encouraging domestic travel as well as international tourism.
In addition to these, a strong nation brand also contributes to national pride and engagement domestically and is the face that nations use to leverage and exercise their soft power on the world stage for greater prosperity and growth for their citizens.
How do you measure nation brand strength?
Brand Finance determines the relative strength of nation brands through a balanced scorecard of metrics evaluating brand investment, brand equity, and brand performance. For the first time this year, the nation brand strength methodology includes the results of the Global Soft Power Index – the world’s most comprehensive research study on nation brand perceptions, surveying opinions of over 55,000 people based in more than 100 countries.
In order to calculate nation brand strength, we look at each nation’s performance across 7 pillars: Business & Trade; Governance; International Relations; Culture & Heritage; Media & Communications; Education & Science; and People & Values. Each of these pillars has various sub-measures, which come from a combination of publicly available data sets, such as IMF, WEF, World Bank data, and our annual Global Soft Power Index survey data.
This year, Germany is the world’s strongest nation brand. Long renowned for its strong and stable economy and for being particularly well governed, Germany scores well across the majority of our data points. Angela Merkel’s long tenure as Chancellor has provided a stable presence against the backdrop of unstable and erratic counterparts.
Who are currently the nation brand champions, according to your study?
The US and China remain a cut above the rest, claiming first and second position in the 2020 Nation Brands ranking, recording brand values of US$23.7 trillion and US$18.8 trillion respectively. But relations between the two nation brand champions remain particularly fragile because of the US-China trade war that has consumed both economies over the past few years.
Long-standing leader, the US has recorded a 14% brand value loss to US$23.7 trillion, following yet another turbulent year. Now home to both the most cases and deaths of the virus globally, the world’s largest and strongest economy continues to encounter harsh criticism and questioning on the global stage. With Biden announced as the winner of the 2020 presidential election, in one of the most controversial and polarising races in American history, the country is likely to chart a new course and change many of the policies pursued under the incumbent president.
Unlike the US, China’s brand value has managed to remain largely stable, recording only a modest 4% drop this year. The Chinese government’s quick response to the COVID-19 outbreak, paired with its targeted stimulus measures in recent months, have resulted in the nation becoming the first major economy to recover from the pandemic and is currently expected to be the only G20 economy that will grow this year.
Japan, Germany, and the UK make up the remainder of the top 5 in this year’s ranking.
Which are some of your key learnings from the research, which you could share with nation brand managers?
At a time of great uncertainty, and increased scrutiny of the handling of COVID-19 and the related economic, social, and health crises, nation brand managers need to, more than ever, be informed about how the brand they are managing is being perceived around the world.
This is evident as countries with longstanding success in the field of nation branding, such as the US, are now suffering from the devastation caused by the pandemic. While unlikely suspects like Ireland and Vietnam are benefitting from some of the fastest growth and improvement in their nation brand values.
In a world where people’s beliefs, preferences, and values are rapidly evolving, an understanding of how this is impacting nation brand values will be critical to navigate brand positioning and marketing as we begin the road to recovery. How nations are seen during this crisis can, to large extent, have long lasting effects on the nation brand’s reputation, influence, and perceptions.
The relevance, importance, and impact of nation brands and soft power is impossible to ignore. Governments and corporates alike can use their understanding of how their nation is perceived to harness its potential and amplify the benefits that policies and strategies can help achieve. Identifying a nation’s strengths and weaknesses to either improve infrastructure, frameworks, and policy or to address misconceptions, will allow nations, its corporates, and its people to achieve their potential and access opportunities otherwise missed.
More about the Brand Finance Nation Brands Report 2020 HERE. Brand Finance is a TPBO Knowledge Partner on nation brand value and soft power. More about the company and services provided by Brand Finance, HERE.