Brand South Africa starts to slide on a decline in ethical standards

A list of most valuable nation brands puts the US as leading the country, ahead of the likes of China, which has shown remarkable growth over the past year, and Germany – while brand South Africa, although two places lower than 2016, added to its value.

“The effect of a country’s national image on the brands based there and the economy as a whole is now widely acknowledged. In a global marketplace, it is one of the most important assets of any state, encouraging inward investment, adding value to exports, and attracting tourists and skilled migrants,” said David Haigh, CEO at Brand Finance.

Haigh said the most important trend to emerge in this year’s study is the gradual shift of the global centre of gravity from West to East.

“Asia is on the march, while established Euro-Atlantic nation brands stagnate. Particularly striking is the rise of China, which is narrowing the value gap with the United States at breakneck speed,” he said.

Brand Finance is a global consultant firm that ranks the nation brands of 100 leading countries annually.

With a value of US$21.1 trillion, the United States remains the most valuable nation brand in the world, but mere growth of 2% year on year is putting its dominance at risk in the long run, Brand Finance said.

It said that the US’s nation brand value’s stagnation can be attributed to macroeconomic challenges, like the declining participation rate caused by the mass-retirement of baby boomers, ultimately contributing to a slow pace of GDP growth compared to previous expansions.

“However, perceptions of Donald Trump’s presidency are not exactly helping Brand America either. Trump’s administration is seen as increasingly unpredictable and although tax relief promises can boost FDI in the short run, a failure to fulfill them, considering that many propositions of new legislation fell through in Congress, will make investors’ confidence disappear.”

Brand Finance said that the dynamic between American and Chinese nation brands is mirrored by the broader trends of Western stagnation and Asian advance. Established European nation brands, such as Germany, Netherlands, Belgium, Switzerland, Sweden, Austria, recorded either a decline or a negligible growth of value.

At the same time, Asian nation brands have continued to grow at breakneck speed. Vietnam, the Philippines, Thailand and South Korea have all added between 37%-43% to their nation brand value.

Where South Africa ranks

The advisory firm noted that Iceland is the fastest growing nation brand of 2017, up 83% from 2016, “and may only continue to enjoy unrivaled growth in the near future”. It said that the country’s tourism industry is booming and expanding its share of GDP at the expense of the traditionally dominant fishing sector.

“Thanks to the hit television show, Game of Thrones, which films most of its winter scenes in Iceland, the country has seen a record 1.8 million foreign visitors in 2016, up 40% from 2015,” Brand Finance said.

South Africa dropped two places on the list; however, it recorded brand value of $222 billion – up 13% from 2016.

Jeremy Sampson, director, Africa at Brand Finance said a key factor in SA’s slippage is all the negative media coverage, not just locally but internationally, featuring the decline in ethical standards.

“(President Jacob) Zuma, the Guptas and their associates have created an environment where multinational companies have found it possible to push the local ethical boundaries, it would seem without the knowledge of their international parents, and so moving around huge amounts of money.

“Implicated to date are Bell Pottinger, KPMG and McKinsey, all working with government agencies. This all has a negative impact on the standing of the country brand. It is also a very dangerous situation, as further slippage increasingly becomes a red flag to existing and potential inward investment.

Brand Finance measures the strength and value of each country’s brand, using the same method as when valuing the world’s largest companies. the company ranks the performance of each country using dozens of data points across three key pillars: Goods & Services, Investment and Society.

Read: The most valuable banking brands in South Africa in 2017

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Brand South Africa starts to slide on a decline in ethical standards