China Brand Day helping domestic brands raise competitiveness

90.7% of young Chinese and 61% of American millennials prefer to buy products made in China.

May 10 marked the second China Brand Day. China Brand Day was established by the State Council to propel the rise of national brands. On this day, all online and offline media outlets are encouraged to promote domestic brands. Over the past four decades, China has been an active player in the global economy and has grown into the world's largest manufacturing hub. But it has long been at the bottom of the global supply chain assembling products for major foreign brands. The Chinese government wants to change that by upgrading its industry to the high-end of the chain and adopting a growth model featuring innovation and indigenous brands. It is in this context that the China Brand Day assumes significance.

An emerging power of brand

This promotional campaign seems to have worked. Recently, Credit Suisse released the Consumer Survey Report of Emerging Markets in 2018. The results show that 87.4% of Chinese consumers prefer to buy domestic brands of household appliances. This is especially true for consumers aged 18 to 29 years old. In this age group, 90.7% of consumers said they prefer to buy domestic brands. According to a report previously released by Kearney Consulting Management, 71% of Chinese Internet users are showing more and more trust in major domestic brands.

"Chinese consumers, especially the younger generation, don't just follow the belief that foreign brands are better. Right now, Chinese consumers think China is good and 'Made in China' is not bad at all. Regardless of whether you like it or not, China is gradually becoming a major player in the world. The new generation of Chinese people are proud of their domestic brands," said Charlie Chen, head of the China Consumer research at Credit Suisse, according to a report in huanqiu.com, the website of the Global Times.

Some analysts say that in the next 10 to 20 years, young Chinese born in the digital age will become the largest consumer group in China if not the world. The total number of Chinese Gen Y (born from the 1980s to the mid-1990s) and Gen Z (born in the mid-1990s to the 2000s) is already equal to the total population of the United States. They will not only earn more money, but also spend more money compared to their predecessors. The famous host of China Skinny consumer research newsletter, Mark Tanner, described Chinese young consumers like this: “Different from their predecessors, due to a higher education level, higher urbanization rate and development of service industry, they are the most attractive group with greatest income potential. They are also more willing to spend more money than their predecessors. They have no idea of the thrift history the country has been through. As the only child in the family with wealth passed on by parents and even grandparents, their attitude toward life is more relaxed and freewheeling," reported sina.com. 

The change in the share of the Chinese smartphone market amply reflects this trend. Recently, IDC released the first quarter mobile phone market report in China. The report shows that in the first quarter of 2018, China’s top five vendors by shipments were Huawei, OPPO, VIVO, Xiaomi, and Apple, with market shares of 24.2%, 18.9%, 16.3%, 15.1%, and 11.3%, respectively. The top five account for a total of 85.8% of the market share, with the remaining 14.2% taken up by other mobile phone manufacturers. In the top five, Apple is the only foreign brand, which in recent years has lost its groove among Chinese consumers.

The trend has also been happening in the auto industry. In 2017, Chinese carmakers took 44.2% of the market. That's up from 38.4% in 2014. It is expected that domestic car brands can grow their market share to 65% over the next decade. To break down, Chinese brands have achieved dominance in both the SUV and MPV sectors. In the MPV market, Chinese brands have bumped out foreign brands from the top 10. In the SUV market, Chinese brands also monopolized the top 8. In the electric car market, the homegrown manufacturers boast of an overwhelming 94% of the market share. As one of the biggest electric car makers in China, Nio is groomed to take on Tesla, with its sales doubling to $2 billion in China in 2017.

“The main reason behind this trend is that the quality, design capability and technological value of domestic brands have been upgraded to meet consumer demand,” said Zhao Ping, director of the International Trade Research Department of the China Council for the Promotion of International Trade Academy. In his view, Chinese people used to believe that the quality of foreign products is better, but in recent years, domestic products have continuously improved in quality. Since domestic products are priced relatively low, and they offer more value for consumers. In addition, the positioning of domestic brands is more precise, and they can cater well to the individualized and diversified consumer demands of their target markets.

Breakthroughs around the globe

India is one of the world's largest smartphone markets, with huge growth potential. According to Counterpoint, an international market research company, in the first quarter of 2018, Xiaomi's mobile phone market share in India reached 31.1%, an increase of 137.4% year-on-year. Compared with Samsung, the second-ranked mobile phone supplier in the market, Xiaomi had a lead of 5 percent. According to the latest data released by the research organization Canalys, the top three smartphone vendors in the European market in the first quarter of 2018 were Samsung, Apple, and Huawei. Huawei’s share rose from 10.9% in the first quarter of last year to 16.2% in the first quarter of this year, and Xiaomi climbed from 0.4% to 5.3%.

The brand consultancy Monogram Group along with PR Newswire, recently revealed a survey on the preferences of young American consumers. It has made some interesting discovery. Among American Millennials, Chinese products are more popular than products from other major markets. What is even more surprising is that China ranks just behind the United States, Germany, and Japan, and surpasses France, Mexico, South Korea, and India in terms of brand preference. Sixty-one percent of respondents indicated that they are more willing to buy goods from China, and 58% of respondents said that they are likely to purchase Chinese-branded products in the next three years. For Chinese brands heard by young people in the United States, Lenovo’s personal computers were mentioned by more than half of the respondents, followed by Haier Electronics, Tsingtao Brewery, ZTE Mobile, Huawei Telecom, Hisense Electric, and Baidu’s search engine. This is particularly evident in the categories of office products, electronic products, and light bulbs, according to prnasia.com.

Still a long way to catch up

In 2017, among the Interbrand top 100 global brands, only Huawei and Lenovo are from China, which is still at a nascent stage in becoming a brand power. The main reason is that Chinese brands lack "core competitiveness". They lack core technologies and modern corporate governance. A recent case in point is the US Commerce Department's seven-year ban on ZTE's purchase of key US technology. The ban literally halts the company's operation which relies on US semiconductor chips to make smartphones. Besides, Chinese enterprises also lag behind in their brand marketing with brand positioning and core value resembling each other. Without distinct positioning, a brand can hardly pitch itself to the target market and retain consumer loyalty. 


Related Stories
Share this page
Touched Sympathetic Bored Angry Amused Sad Happy No comment

China Brand Day helping domestic brands raise competitiveness‘Avengers: Infinity War’ is on-track to have China’s biggest opening weekend box-office in historyChina may send ‘firefighter’ Wang Qishan to negotiate with US on tradeJack Ma encourages single staff members to marry within Alibaba, parents happyChina’s war on pollution targets illegal waste dumping‘It’s already a problem, not a benefit’: Chinese ambassador to US says cutting trade imbalance is in China’s interest tooNew Alipay initiative gives boost to small merchantsCommerce Secretary Wilbur Ross says China 'agreed to the concept' of reducing the trade deficit; Chinese vice premier visit up in the airBeijing to be built into a forest city by 2025: governmentVolkswagen in talks with China's Didi on taxi-hailing joint venture
< Prev Next >