A Deeper look into China: What global brands are facing in China and how do they compete with domestic competitors today?

The evolution of Chinese consumers’ preference and inclination towards Chinese brands is one of the foundations of the shift to competition with global brands. Here are some reasons why domestic brands in China are rising.

• Improved perception: Chinese goods were previously considered less fashionable and reputable compared to imported global brands. However, Chinese brands have undergone a big transformation, with established companies innovating and new brands emerging, gaining recognition and influence both domestically and internationally. The trust in the “Made in China” built up. Chinese consumers choose Chinese goods as a symbol of trust in terms of high quality and value for money. This trust extends beyond specific brands or product categories, encompassing the entire "Made in China" concept. This trend is particularly with younger generations (GenZ+) that view international brands on an equal footing with Chinese brands.

• Improved quality and safety: Chinese brands have evolved from being associated with low quality and imitation to now representing innovation, fashion, and modernity. They have invested in design and kept up with the latest trends, attracting consumers. One example pertains to safety. Chinese consumers have become increasingly cautious about the ingredients used in skincare products. They have discovered that certain products of global brands contain potentially unsafe preservatives and other ingredients. This has prompted them to shift towards Chinese skincare brands that offer safer alternatives.

• Cultural identity connection: Wearing Chinese brands has become a fashion statement and a source of pride for Chinese consumers. Chinese brands like Li Ning have embraced unique designs and gained popularity among the younger generation, offering a distinct style that sets them apart from global brands. Younger generation appreciate the modern interpretation of traditional cultural elements in Chinese products, pursue unique Eastern aesthetics, and use Chinese brands to express their individuality and identity. 

• Cost-effectiveness and product access: Chinese brands are often seen as more affordable compared to global brands, making them a popular choice among consumers. Chinese consumers find value in purchasing Chinese products that offer similar quality at a lower price point. Also, China's rapid development of the digital economy have provided Chinese brands with new opportunities to connect with consumers. Low-cost digital marketing and product digitization have become unique advantages for Chinese brands.

Key success factors for global consumer brands to succeed in China

Best practices for global consumer brands to win in China market:

• Emphasize unique brand values and heritage: Global consumer brands should highlight their distinct qualities and brand values that set them apart from domestic brands. This could include emphasizing their heritage, global appeal, innovative technologies, or exclusive collaborations. By showcasing what makes them unique, international brands can attract consumers who seek differentiated experiences. One recent example of a beauty brand, struggling in the skincare cut-throat market, used its heritage and uniqueness in suncare and life products to differentiate and win market share.
• Focus on premium quality and craftsmanship: Positioning international brands as providers of premium quality products can help them stand out. By emphasizing superior craftsmanship, attention to detail, and the use of high-quality materials, international brands can appeal to consumers who value craftsmanship and are willing to pay a premium for it. Luxury goods such has Hermes and Chanel continue to emphasize their craftmanship and give inspirational high-quality products still resonates very well with Chinese consumers.
• Adapt to local preferences: Understanding and catering to the specific preferences and needs of Chinese consumers is crucial. International brands should conduct market research to identify trends, consumer behavior, and cultural nuances in China. This can help them tailor their products, marketing strategies, and customer experiences to better resonate with Chinese consumers, and avoid the pitfall of a Westernized lens disconnect to Chinese realities.  
• Offer exclusivity and limited editions: Creating limited-edition products or exclusive collaborations can generate excitement and demand. By offering unique and limited availability items, global consumer brands can tap into the desire for exclusivity and novelty among Chinese consumers. This strategy can help create a sense of urgency and drive sales. We observe a surge of “cross-overs” or collaborations between brands of different universes or even international x Chinese brands. For example, MAC Cosmetics launched a special collection during the last 11.11 with one trendy Chinese activewear brand Li-Ning.
• Strengthen online presence and e-commerce: With the growth of e-commerce in China, global consumer brands should establish a strong online presence and optimize their e-commerce strategies. This includes leveraging popular Chinese platforms such as Tmall, JD.com, and social media channels (Weibo, WeChat, Douyin, Red, Kuaishou) to reach a wider audience. Offering seamless and convenient online shopping experiences can help international brands capture the attention of Chinese consumers. An anecdote that might become an enduring trend moving forward: in 2023, a Chinese brand, Proya, topped L’Oreal in 11.11 festival, a first in the history.
• Foster Partnerships with Chinese Influencers: Collaborating with Chinese Key Opinion Leaders (KOLs) and influencers can help international brands tap into their large and loyal followings. By partnering with influential individuals who align with the brand's values and target audience, international brands can increase their visibility and credibility among Chinese consumers.

The Dos and don’ts for global brands marketing in China

 Dos

• Be culturally aware, with adaptation to Chinese culture and language
• Dare distinction in the brand storytelling to create authenticity, uniqueness and emotional connection
• Leverage Chinese digital platforms and power of local KOLs & Influencers
• Set up data-driven measurements to steer marketing performance

Don’ts

• Don’t disrespect Chinese culture or convey anti-China messages
• Don’t discount the brand, with excessively promotional tactics, but rather think long-term
• Don’t overprice product or brand when entering China market, consumers are digital savvy and can compare