Why are there no Canadian brands in the top 100?

Post ImageBusinessWeek recently released the 100 Top Brands for 2006, using data provided by Interbrand. Of the 100 brands on the list, not a single one is Canadian and I found myself wondering, why not? First, let’s look at how the list is built:

To even qualify for the list, each brand must derive about a third of its earnings outside its home country, be recognizable outside of its base of customers, and have publicly available marketing and financial data.

Interbrand doesn’t rank parent companies, which explains why Procter & Gamble doesn’t show up. And airlines are not ranked because it’s too hard to separate their brands’ impact on sales from factors such as routes and schedules.

Considerations include market leadership, stability, and global reach—or the ability to cross both geographic and cultural borders. That generates a discount rate, which is applied to brand earnings to get a net present value. BusinessWeek and Interbrand believe this figure comes closest to representing a brand’s true economic worth.

Are Canadian companies failing on each of these points? I set about to find out. The first thing I did was google top companies in canada. The first result is the website for Canada’s 50 Best Managed Companies, and the second is the 50 best companies to work for in Canada. Maybe that’s a clue already! Do the same search for the United States and you get results like “North America Best Companies Lists”, “Top 200 companies in the United States”, and “World’s Best Companies”. Perhaps the stereotype is true and we’re too nice to each other, so we don’t have lists of top companies, but lists of people who we think are nice and just happen to run companies.

Anyway, I altered the search to be for the largest companies in Canada, and I found a Forbes list, compiled in November 2005. Here’s a rundown of the top ten:

  • Five of the companies are Canadian banks, which almost by definition (and no thanks to our government) fail to derive a third of their earnings outside the country.
  • Two are insurance and diversified financials, which I assume fall into the same trap as the banks.
  • Two are oil and gas companies, one of which is actually controlled by an American company (ExxonMobil owns around 70% of Imperial Oil’s stock). The other is EnCana, and I can only assume they focus mainly on Canada as well.
  • Which leaves us with BCE, a parent company, thus failing to be considered for the list.

The rest of the list is very similar – lots of financial and oil and gas companies, and most of the rest are firms I haven’t even heard of, which suggests to me they are parent companies or conglomerates. Perhaps the only three on the list that I think might have a chance are Bombardier, Nortel, and Research In Motion.

And yet, they aren’t on the list. Bombardier surely earns some coin outside the country – it’s even the subject of their latest ad campaign. I guess they don’t count as a market leader? Nortel was once a market leader, but perhaps cannot be considered one anymore. I guess they also fail on the “stability” requirement. And Research In Motion simply isn’t big enough.

There are probably many reasons that the top 100 brands don’t contain a single Canadian brand. Maybe we’re too focused on selling inside Canada and not abroad. Maybe Canadian companies simply can’t get big enough to get on the list due to our rather small population. Maybe most of the big companies in Canada are actually owned by foreign investors. I’m not sure, but if you have an opinion, I’d love to hear it. Regardless, it seems odd that we don’t make the list.

Here’s the “Nation’s Cup” final score for the top 100 brands:

  • 51 are from the United States
  • 9 are from Germany
  • 8 are from Japan
  • 8 are from France
  • 6 are from Britain
  • 5 are from Switzerland
  • 4 are from Italy
  • 3 are from South Korea
  • 2 are from the Netherlands
  • 1 is from Finland
  • 1 is from Bermuda
  • 1 is from Sweden
  • 1 is from Spain

Nothing against the fine people of Bermuda, but if they can get on the list (at number 49 no less), why can’t Canada?! Something isn’t right here. If you ignore the ever recovering and economically troubled Russia, Canada is the only G8 member to not make the list. That’s not the only surprise though – there’s more:

  • Of the top 10 countries by GDP (nominal), only Canada and China are not in the top 100 brands list. (Interesting how the brands list more or less follows the GDP list too, in terms of order). I’m fairly certain that China will be on the list in the next five years, but will Canada?
  • Canada is ranked higher in the 2006 World Competitiveness Yearbook than every country on the list except for the United States, yet we don’t have a top brand.
  • We’re behind only Finland and Sweden in the 2005 Environmental Sustainability Index (pdf), yet we don’t make the top brands list.
  • Only Switzerland, the United States, and the Netherlands are ranked higher than Canada in the 2005 Globalization Index, yet we don’t crack the top 100 brands.

Maybe the problem is population density? Of the top ten countries by total area (so the largest in the world), the only country to appear on the top 100 brands list is the United States. Perhaps population density is really important in building a strong brand? The next country is France, which is the 48th largest country by area. In terms of population, Canada isn’t too bad. We’re larger than five of the countries in the top brands list. Maybe our geographical size is a detriment? It’s as good a guess as any at the moment.

I want to believe that Canada has some excellent, world-class companies, but lists like these make it hard to do so. I know we’ve got a lot of bright, talented business people here in the north, so why aren’t our companies making it on the world stage?

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