Do Chinese consumers prefer Chinese brands?

Are Chinese consumers more attracted to Chinese brands?

China is counting an impressive and still increasing number of millionaires in US dollars, all willing to buy more and more expensive brands. So naturally, the country was until recently considered as a gold mine for foreign luxury brands.

However, CEOs seems to have forgotten a major point, and a new report by Thomas Gatley of GaveKal Dragonomics claims that multinationals have already started losing Chinese consumers while local companies are taking over these market shares. This point seems to be that Chinese consumers, in fact, do prefer labels that are ‘‘made by/in china’’.

A good example of that change lies in the automotive market in China, which still raises interests… and concerns. Indeed, recent events are changing the way international companies look to this specific market. First, while announcing its record earnings worldwide, Toyota Motors also reported a big slowdown in China. A second concern came from a new Chinese car which should go on sales soon: it is very similar to Land Rover, it is cheaper and has already reached thousands of pre-orders.

China continues to copy or “re-design”, produce and sell foreign cars. But generally for a much lower price. This phenomenon is also observed in other industries: clothes, electronics and appliances, which are originally designed in foreign countries and later copied in China.

yuan

Coming back to the automobile sector, in 2013, most foreign companies such as Ford, Daimler or Volkswagen have seen their sales rise by 70 percent. But in 2015, while Chinese automobiles brands sales increased by 30 percent, foreign brands only reported a 12% growth. Moreover, to better compete with its foreign fellows new Chinese brands pick up similar names, like Great Wall Motors, JAC Motors or Chang’An Automobile Group.

If you want to know more about the Chinese economy, here there is an interesting article about 5 interesting tips on the Chinese economy.

Chang’an Auto

changan auto

What is now surprising is that, if local Chinese companies are copying foreign ones, they are not putting quality aside. They succeed in offering similar products to famous brands, with a lower price but still a good quality. This situation not only put into danger international brands performances on the Chinese market but also on other markets, as Chinese brands slowly acquire the capacity to compete anywhere.

Xiaomi smartphone

Xiaomi photo

The same scenario occurs in many fields, and loads of companies are rethinking their strategies, trying to identify new competitive edges or striving to cut costs in order to keep up with the price war. A living example of this potential scenario becoming true is Xiaomi, the Chinese smartphone brand that became the leader in China and is now known overseas as the new powerful smartphone which is cheaper than Apple or Samsung devices.

Read more:

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