Lo­cal brands win Chi­nese con­sumers

China Daily (Hong Kong) - - BUSINESS - By REN XIAOJIN renx­i­ao­[email protected]­nadaily.com.cn

In terms of rep­u­ta­tion and pop­u­lar­ity, Chi­nese brands are rapidly catch­ing up with their for­eign coun­ter­parts in China on the back of ever-im­prov­ing de­signs, trusted la­bels, and wal­let-friendly prices, mar­ket in­sid­ers said.

Dong Fang, 28, soft­ware pro­gram­mer, would prob­a­bly agree. She re­cently in­stalled a Xiaomi air pu­ri­fier in her flat in Shang­hai. Al­though Xiaomi started as a smart­phone brand, it is now rec­og­nized as a tech ma­jor with a big pres­ence in con­sumer elec­tron­ics.

“There are many items I wouldn’t mind buy­ing from do­mes­tic brands for my new home,” Dong said.

For non-lo­cal work­ers in Shang­hai, one of the world’s big­gest cities, tight bud­gets mean they will look for do­mes­tic brands that look de­cent and de­liver value for money, she said.

“Un­like many other brands, the Xiaomi air pu­ri­fier is de­signed in a min­i­mal­ist way. It’s not clumsy nor an eye-sore ob­ject in the liv­ing room,” she said. “Many Chi­nese brands are catch­ing up with for­eign brands in terms of prod­uct de­sign and func­tion­al­ity, which are top pri­or­i­ties for me.”

She buys even for every­day items like paper tis­sue, snacks and over­the-counter health­care prod­ucts, from Chi­nese shops such as Yanx­uan, the con­sumer goods branch of in­ter­net com­pany NetEase, Min­iso, the min­i­mal­ist Chi­nese home­ware store, and other lo­cal cos­metic brands.

Dong is just one in a sea of Chi­nese con­sumers opt­ing to buy lo­cal. Ac­cord­ing to a re­cent re­port by Kan­tar World­panel and Bain&Co on Chi­nese con­sumer be­hav­ior, young Chi­nese brands are quickly pick­ing up mo­men­tum and gain­ing mar­ket share from their for­eign peers.

Ac­cord­ing to the re­port, among the 46 emerg­ing Chi­nese fast-mov­ing con­sumer goods or FMCG brands, over half are achiev­ing an an­nual rev­enue of be­tween 100 mil­lion yuan ($14.7 mil­lion) and 500 mil­lion yuan, and 67 per­cent of them are grow­ing at least twice as fast as the in­dus­trial av­er­age.

“We have seen the emerg­ing brands grow­ing in China,” Yu Jian, gen­eral man­ager of Kan­tar in China, said. “It means the sec­tor was very unique and at­trac­tive, with po­ten­tial chal­lenges ahead if you want to win the mar­ket.”

Yanx­uan, which started with only 30 prod­ucts three years ago but to­day has 20,000, ex­plained the premium ad­van­tage for be­ing Chi­nese.

“Com­pared to our for­eign coun­ter­parts, we know more about the coun­try’s con­sump­tion up­grades, and the con­flict be­tween the in­suf­fi­cient sup­ply and the de­mand for high-qual­ity prod­ucts,” said a spokesman of NetEase.

“Price-wise, we work di­rectly with the man­u­fac­tur­ers, thus the sup­ply chain is shorter and the costs are lower,” he said. “Many in­ter­net-re­lated com­pa­nies such as Taobao, JD and Xiaomi have done a sim­i­lar thing after Yanx­uan proved a mar­ket suc­cess.”

He said it does not mean that Chi­nese do­mes­tic brands are squeez­ing for­eign coun­ter­parts out of the mar­ket. In­stead, they are help­ing cre­ate a bet­ter busi­ness en­vi­ron­ment with healthy com­pe­ti­tion.

Prophet, an­other global con­sul­tancy, also found that some global brands have been los­ing out on con­sumer loy­alty. Ac­cord­ing to its re­port in Oc­to­ber, just three of the top 10 brands fa­vored by con­sumers were for­eign-owned, while seven were Chi­nese.

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