"Heng Yuan Xiang" brand value - the classic case

The world’s largest plush manufacturer, Hengyuanxiang, who is well-known in East China and even in China, once took a brand with a value of RMB 600 million (calculated without profit assessment by an intermediary agency) to go to a bank to apply for a secured loan. No one wants to take over.

According to relevant sources, there is no precedent for the practice of guaranteeing loans with corporate brands in China. Liu Ruiqi, general manager of Hengyuanxiang, said: This incident reflects the embarrassing status of our country's corporate intangible assets in the market operation - well-known and not real.

He pointed out that if intangible assets are not truly recognized and cannot be freely circulated in the market, it will seriously restrict the development of enterprises. It is unlikely that Chinese enterprises will want to rapidly develop and surpass foreign advanced enterprises. "Intangible assets such as brands have been legally recognized, but there are still many problems in the actual market operations."

Cashmere was once known as "soft gold." In the era when demand for goods falls short of demand, it often becomes people's rush to shop. It is called "the emperor's daughter is not married". Therefore, Hengyuanxiang has been highly sought after by the market and consumers in the great opportunity, and has successfully achieved extraordinary development. It can be said that in the development process of Hengyuanxiang, the market and customers have given Hengyuanxiang much more advantages than other similar product companies, so that Hengyuanxiang still enjoys this blessing, that is, Hengyuanxiang is now proud of its “brand name effect”. ".

Therefore, Liu Ruiqi hoped that the “brand name effect” of the east wind would enable the company to achieve extraordinary development, so he naturally came up with the idea of ​​taking Hengyuan Xiang's branded guarantee loan, but he did not think that this actually made Heng Yuanxiang face an embarrassing situation. Heng Yuanxiang believes that the value of his own brand is as high as 600 million yuan. However, 5 or 6 banks, including state-owned and private companies, were found to have taken "closed doors." What does this phenomenon indicate?

Let us first listen to the voice of the financial community:

A bank account manager: “It is not operative to use a brand as a guarantee because the brand value is difficult to quantify and honor,” and why does the bank believe that you are worth 600 million? How do we input the security data when we operate?

HSBC related person: "Heng Yuanxiang did not find us, but companies to the bank loan is a set of risk monitoring system, companies can only obtain a loan through a series of assessments of the bank, and the brand itself is actually not a silver code, but a This kind of reputation only."

Citibank officials said: "The brand is a reputation in the end, and the credibility is only part of the entire enterprise. Citi wants to lend to a company and it cannot be considered only from the brand, but it is necessary to examine the status of the entire company."

Insiders pointed out that in fact, banks accept brand guarantees will take great risks. Because the company's operating performance, management policy and the quality of the operators may change the value of the brand, well-known brands are not "lifetime", today is a well-known brand and can not guarantee that it will still be. Banks do not dare to lend to companies only by brand guarantees. What they are afraid of is that if this company does not really have any money, the so-called well-known brands used as guarantees will not be able to be transferred out at all and will not be honored. But if you use a brand like Coca-Cola as a mortgage, then the bank may be able to operate, because that brand wants too many people!

In summary, although there are many voices, but in the final analysis it is a meaning. The current sales are also good, the industry's reputation is also good, Liu Ruiqi's personal brand is good, these can not be guaranteed in the financial credit of valuable assets Nor can it effectively support Heng Yuanxiang's brand value framework.

What does the voice of the financial community explain?

In fact, this gave us the answer to our question.

First, most of the perceptual predictions of brand value assessment are made. In the evaluation of brand value, the correct method should be to eliminate the cost of tangible assets by layers, and the rest can be the return of intangible assets. And this kind of income assessment is definitely not perceptual, but rational and quantitative.

As Mitchell Birkin, CEO of Intel’s brand management group, stated: “The value of a brand, like other types of economic assets, is the present value of future ownership earnings. It must be alive, auditable and reliable. , Feasible, but also fully consider the brand's profitability during the recession period.

In a word, the brand value here is in the form of credible and verifiable data, not just the evaluation of the capital scale and the perceptual estimation of past sales. Many Chinese companies, including Heng Yuan Xiang, have often entered a misunderstanding in assessing the value of a brand. They often use the output of the company's total capital, that is, sales over the years to assess the value of the brand.

This answers the previous question. Why do banks worry that this company will not make any money, and that the so-called well-known brands used as guarantees will not be transferred and won? So even an international big bank such as Citi can hardly undertake this business.

Second, Heng Yuan Xiang's brand power has not yet been truly formed. Let us examine what ideas and spirits it has left in the minds of consumers. There is much more to measuring whether a brand is a real brand. You must give the customer a comprehensive experience. How many similar brands can your brand replace in the market? For example, Coca-Cola covers a large number of alternatives, and customers sometimes have no choice but to buy it.

What is your brand in their mind? Not what? What kind of spirit and philosophy do you bring to them? From the perspective of current customer perception, Hengyuanxiang is a well-known high-quality, high-priced wool product in the minds of consumers. From the current sales point of view, Hengyuanxiang only fills the gap of market demand and is away from the real brands. There is still some distance.
Here we find another questionable answer. If you use a brand like Coca-Cola as a mortgage, then the bank may be able to operate. Why? Because countless examples show that Coca-Cola's millions of consumers around the world even choose him without hesitation, and will not or rarely choose other brands of beverages.

It is these "unforgettable" consumers who laid the foundation for the future profitability of the Coca-Cola brand. Whether or not Coca-Cola's boss has changed does not affect their love for Coca-Cola, the answer is that simple! This is also the main reason for the failure of the Hengyuanxiang brand guarantee loan!

Third, the evaluation methods and assessment levels of domestic brand assessment agencies lack the authority of international practices. If Chinese brands require different assessment agencies to evaluate, there will be significant differences in assessment results. Such results are difficult to obtain from the industry. How can the bank be relieved?

No wonder a well-known banker bluntly stated that guaranteeing with "Hengyuanxiang" is not realistic. In this article, the author can not help but want to insert a sentence, since Hengyuan Xiang believes that its own brand value is true and valuable, so it is better to assess it with an internationally recognized authoritative brand management and evaluation agency, perhaps this can make Chinese banks The family is convinced.

Liu Ruiqi’s ambition and strategic concept actually represent the thinking of most Chinese bosses. When we look back at the current rich people on the mainland, they will find that they are basically growing at high speed in a decade or two. In their thinking, there has been a set of formulas that can be made only through extraordinary development.

This is the rhetoric that many of our entrepreneurs dare to take risks and even say “only unthinkable things, things that cannot be done.” This is in stark contrast to the “doing the right thing” that is dictated by business owners and executives in Europe and the United States.

Liu Ruiqi’s courage and boldness in expecting the extraordinary development of the company is commendable, but the reality proves that under the current conditions of China and under the current brand power of Heng Yuan Xiang, this is obviously unrealistic.

Therefore, it is suggested that Heng Yuanxiang temporarily give up the idea of ​​rapid expansion, and use limited funds to strengthen its own core competitive advantage. Only in this way can we pool effective resources and achieve innovation on traditional competitive products in order to effectively create a market-perceivable quality. ", to win the favor of customers. To create a real brand, this is the way to go.

In short, judging from the current situation of Hengyuanxiang, it is too early to make extraordinary development and it is necessary to prepare for a protracted war.