Local brands win Chinese consumers
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.