In 2019, the “BrandZ Top 100 Most Valuable Chinese Brands” list was released, marking the 9th time WPP and Kantar have published this list in China. From the list, it is evident that new categories of “platform” and “ecosystem” have been added. Meituan, Dianping, and Ele.me have been categorized as “lifestyle service platforms”; meanwhile, Haier, traditionally seen as a home appliance company, has been categorized as “home appliance/IoT ecosystem,” making it the only brand recognized as an “IoT ecosystem” in this year’s list. As a brand report published by Kantar, a professional research and consulting company under WPP, its authority is unquestionable. Therefore, the question worth our attention is why a new category has been created?

(Kantar BrandZ Global President Wang Xing introduces Haier’s ecosystem brand)

Chinese companies are increasingly focusing on their brand development. The role of a brand is self-evident; during the process of corporate management, the establishment of a brand influences customer choices and perceptions through the transformation of consumer emotions, forming a financial result of consumption, which is the value of a brand. A brand is an important asset for a company, and the development of a brand can never avoid the evolution of the times. Giants retreat, and new stars rise; thus, the issue companies often face is how to meet changing user demands and upgrade brand strategies after significant changes in the era.

The history of world business is also a history of brand rises and falls. Comparing the top ten companies by market value globally, in the 1990s, the banking industry led the way; after 2000, telecommunications companies surged ahead, and by 2019, we find that internet companies occupy more than half of the list. This reflects the changes of the times. Therefore, BrandZ’s establishment of the IoT ecosystem brand category this time represents an important shift in the era: with the development of the internet, the long-discussed Internet of Things (IoT) will bring about significant changes in the future brand definition and construction process. The era disrupts industries and shapes brands; thus, in the IoT era, the growth of a brand is not merely a marketing issue but a matter of corporate strategy and business models.

From Internet Economy to IoT Ecosystem?

Traditional enterprises still view branding from a marketing promotion perspective, lacking the ability to adapt to the tremendous changes brought about by new technologies and markets. The companies that survive are those that carve out a market through innovation in branding and business models. The internet has given brands and sales a perspective based on the transformation formed by internet platforms and traffic, without relying particularly on traditional channels. Centralization and elimination of intermediaries will ultimately lead to the demise of channels, which is a lesson the internet has taught Chinese enterprises; this is the internet economy.

As traffic concentrates on platforms, the mobile internet, based on LBS technology characteristics, has made the internet economy more efficient. The benefit of a traffic pool is that, according to the development of internet brands, traffic is concentrated in the hands of industry giants, with domestic examples like BAT and international examples like Google, Facebook, and Amazon. This highly concentrated traffic forms monopolies, which is no different from the brand influence of traditional enterprises. Through traffic aggregation, marginal costs continue to decrease, but marginal returns also diminish, which is why in recent years, the domestic demographic dividend has disappeared, and internet companies have struggled to grow.

Enterprises must recognize the value of branding; a brand brings influence and appeal, which is traffic. All brands exhibit centralized characteristics, so even today, the more one attempts to decentralize, the more one falls into the prisoner’s dilemma of platform centralization. In the long run, decentralization will be inevitable.

(Haier’s ecosystem brand value reaches $16.272 billion)

The establishment of the “IoT ecosystem” category by BrandZ is also a prediction: with the development of technology and the improvement of application scenarios, the IoT is approaching a critical point of explosion. Internet thinking has disrupted many traditional industries, allowing us to witness the power of internet thinking. The arrival of the IoT era will inevitably lead to the emergence of new models that meet the requirements of the IoT era. From this perspective, understanding the brand category of “IoT ecosystem” makes it easy to imagine its future significance.

Reconstructing Brands: From Ecosystem to Ecosystem Brands

In the internet era, there was a popular saying: the wool comes from the dog, and the pig pays the bill. This can be simply understood as the internet era’s output of commercial value, usually based on innovation in business models, thereby shifting the value chain of the industry. From another dimension, competition between enterprises is also cross-border; those who eliminate you may not be your peers. In the internet era, industry boundaries have become blurred. For example, research has found that a significant reason for the decline in instant noodle sales in China is the prevalence of internet delivery models; another example is that Xiaomi, which is not primarily a hardware-focused mobile manufacturer, has created an ecosystem based on the Xiaomi phone system MIUI and its subsequent extensions.

The “IoT ecosystem” brand established by BrandZ this time is fundamentally different from the past internet ecosystems. The author believes that while internet companies have always emphasized ecosystems, they are merely based on traffic and advertising conversion rates, which is significantly different from a true ecosystem centered around user experience. Facing the IoT, internet companies have not escaped the traffic pool mentality, which is why the idea of “entry point” in smart home is prevalent. The influence of mobile internet on traditional PC internet has led to fragmentation, which has restructured the internet. In the IoT era, it is not merely about point-to-point connections of hardware and sensors, nor is it just the traffic and data of the internet era. The IoT model aims to construct an ecosystem that allows every participant in the ecosystem to engage in boundary-less collaborative innovation, collectively providing scenario services based on the personalized needs of users, thereby enabling each participant to gain corresponding value sharing.

Haier Group Chairman and CEO Zhang Ruimin views the IoT as a community economy, shared economy, and experience economy, with the core being the interconnection of people. In practice, Haier promotes the transformation of the IoT ecosystem model through the “three lives” system of “ecosphere,” “ecological income,” and “ecological brand.”

You can understand the ecosystem of the IoT era using Haier as an example. Haier is transitioning from home appliances to IoT smart devices, and then from IoT devices to network communities. Based on different hardware, usage scenarios, and the development of community ecosystems, the interconnection among IoT devices, the interconnection between people and devices, evolves into the interconnection of people, people and scenarios. This is the future of user experience scenarios under the IoT ecosystem, and the user value and ecosystem value it embodies are self-evident.

Taking the “Clothing IoT” ecosystem in Haier’s IoT ecosystem as an example, on the manufacturing end, clothing manufacturers represented by Hailan Home have seen a 200% improvement in shipping efficiency and a 50% reduction in labor costs after applying IoT technology, achieving digital management of garment factories. On the retail end, the smart fitting mirror of the Clothing IoT has made 3D fitting and smart matching a new trend, greatly enhancing user experience. Moreover, new retail stores can not only track sales data throughout the process but also customize main styles and popular products based on regional user purchasing needs. Data shows that through cooperation with the Clothing IoT, clothing sales stores have seen a 30% increase in inventory turnover, an 18% increase in user traffic, and a 15% increase in revenue. On the home front, the Clothing IoT can provide users with personalized washing and care plans, achieving intelligent management of clothing through the entire process of washing, care, storage, matching, and purchasing… It is evident that Haier’s IoT ecosystem model provides users with comprehensive services, linking ecological parties from different industries and fields together. This ecosystem has no organizational or platform boundaries, and its only goal is to continuously satisfy user experiences and iterate on those experiences.

(Haier Clothing IoT Smart Solutions)

In the past, traditional enterprises primarily focused on product sales. Besides after-sales service, it was challenging to maintain subsequent contact with users after a product was sold. The emergence of the IoT provides companies with new opportunities. Haier is no longer just an appliance manufacturer; from Haier’s ecosystem brand, we can see that Haier has become a connector across the entire chain and multiple fields, connecting upstream and downstream partners in the industry chain and exploring and meeting users’ personalized, comprehensive demand maps. In this way, users will always be in this ecosystem, becoming lifelong users, continuously receiving better user experiences. The various parties in the IoT ecosystem will also realize their value in the process of creating value for users.

Thoughts on Brand Operations: Ecosystem Brands and Corporate Strategy

The significance of ecosystem brands differs from what internet companies propose as ecosystems: the approach of ecosystem brands breaks through the boundaries of platforms. Internet companies often talk about brands but overlook the true decentralization, as the formation of platforms can easily lead to monopolies and reduce user experience. From the perspective of industrial hardware production, the strategy that internet companies want to adopt is to unify brands and form their brand moat. In contrast, the ecosystem brand model breaks this boundary; decentralization and moving away from platforms are the core characteristics of ecosystem brands. Only by constructing a win-win value of resources among all parties, rather than a platform-style dominance, can the value of ecosystem brands be realized.

From a brand management perspective, in the past, brands focused more on their own value, including financial value, measuring brand value based on financial data generated by the market. This is traditional brand value analysis. BrandZ’s first establishment of the “IoT ecosystem” brand category and its comprehensive valuation of Haier as an ecosystem composed of multiple interconnected enterprises in this year’s assessment represents a deep consideration and forward-looking insight from the international academic community, branding community, and business community: the IoT era is the era of ecosystem brands, and the growth and win-win of all nodes in the ecosystem loop are the core value of ecosystem brands.

To achieve the evolution from “brand” to “ecosystem brand,” for traditional enterprises, it is not a simple arithmetic problem of 1+1=2. To this end, Haier proposed the “one person, one order” model, where “one person” refers to employees; “one order” refers to user value; and “one” means the realization of employee value and the user value they create being unified. The ultimate result of the one person, one order is the enhancement of user experience. Ecosystem brands are not merely simple alliances or price transactions but are based on the value interaction of brand products and services of all nodes within the ecosystem loop. The ecosystem brand loop itself is based on the compound superposition effect formed by the IoT model.

The transformation from brand to ecosystem brand ultimately changes the structure of enterprises. The ultimate result of “one person, one order” still aligns with the value interaction endowed by “ecology.” The decentralization approach breaks the traditional pyramid organizational model of enterprises, which is an issue that corporate governance must inevitably face; at its core, it is a matter of the determination for reform.

“One person, one order” allows Haier to output user insights, technical standards, brand influence, and experience scenarios through the ecosystem brand model, constructing a decentralized brand ecosystem that integrates internal and external resources, enhances industry efficiency, and achieves value sharing among all parties. More importantly, the dependence of users on brands under the ecosystem brand is lifelong, and users will continuously interact with brands and create value, which is the key difference between ecosystem brands and the past and internet economy.

Returning to the BrandZ list itself, the reflections it brings to internet companies and traditional enterprises are: in the era of the Internet of Everything, the traffic and traffic pool thinking of the internet era may be part of brand strategy, but the foundation of internet competitiveness is traffic, while the foundation of IoT competitiveness is user experience. The competition among enterprises will shift from competition over resource elements to competition for lifelong users, making ecosystem brands a significant trend in corporate strategy.

As Haier Group Chairman and CEO Zhang Ruimin stated, the essence of the IoT is the interconnection of people. Connecting things is still a tool, not the goal; talent is. Haier’s ecosystem brand model innovation activates the connection between people and brands, enhances user experience and resource efficiency, and also creates more business opportunities. This is no longer a simple marketing action but an inseparable strategic layout with corporate strategy.

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