{"id":7508,"date":"2021-04-20T06:45:20","date_gmt":"2021-04-20T06:45:20","guid":{"rendered":"https:\/\/focus.cbbc.org\/?p=7508"},"modified":"2025-04-23T09:54:15","modified_gmt":"2025-04-23T09:54:15","slug":"do-chinese-consumers-still-want-to-buy-british","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/do-chinese-consumers-still-want-to-buy-british\/","title":{"rendered":"Do Chinese consumers still want to buy British?"},"content":{"rendered":"

Will your company become the next H&M? Domestic brands are becoming more popular in China as Chinese consumers no longer presume that foreign goods are better than their domestic rivals and brands fall foul of nationalist rhetoric, writes Joe Cash. So, do Chinese consumers still want to buy British?<\/h2>\n

This question has become more pressing after leading Chinese e-commerce platforms began de-listing popular Western brands such as H&M last month. This came after the Communist Youth League unearthed a statement issued by the Swedish retailer a year earlier, stating that it wouldn\u2019t source cotton from Xinjiang. Chinese netizens threatened to boycott H&M products, while its stores hurried to cover their shop signs. Is this evidence that Chinese consumers no longer want to buy from foreign brands, British ones included?<\/p>\n

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Thankfully for foreign companies trading in China, it\u2019s not that simple. There is, as yet, no blanket preference for Chinese brands amongst local consumers; foreign brands are thriving here, too. But events in geo-politics are beginning to have a greater impact on consumer goods brands sold in the China market.<\/p>\n

This phenomenon is part of a broader trend known in Chinese as guochao<\/em> (\u56fd\u671d), which can be translated as \u2018the rise of the national brands,\u2019 and refers to a situation in which political or socio-economic undercurrents promote the rise of Chinese domestic brands.<\/p>\n

The last time guochao<\/em> was a major issue for foreign companies selling into the China market was during the late 1990s and early 2000s. At that time, foreign companies were predominantly competing with socio-economic forces that were promoting the rise of Chinese brands<\/a>; Chinese companies had access to cheap labour and could manufacture substitute goods at a fraction of the cost of their foreign rivals.<\/p>\n

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The new forces pushing guochao<\/em> are far more complicated to navigate, with the two most pressing being millennial consumer preferences and rising nationalist sentiment. Foreign firms need to be particularly wary of these two factors because they can easily lead to a boycott of their goods, as Western brands have recently discovered the hard way. While there is a whole host of other factors pushing guochao<\/em>, these are the only two with the potential to alienate foreign brands from the China market.<\/p>\n

The sectors most susceptible to guochao<\/em><\/h4>\n

The sectors most susceptible to guochao<\/em> are those in which China developed manufacturing capability during the late 1990s and early 2000s. Chinese companies successfully managed to reverse engineer products that they used to manufacture cheaply for foreign brands 20 years ago and are now launching their own versions that are often more innovative than the originals.<\/p>\n

China\u2019s millennials have cottoned on to this, and are increasingly likely to buy from Chinese brands as a result. Millennials also tend to have higher levels of disposable income than previous generations and are more inclined to believe in local manufacturing capabilities. To this generation, a product that is \u2018Made in China\u2019 isn\u2019t cheap and tacky; rather, it is seen as likely to be cheaper because it is new and innovative.<\/p>\n

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China\u2019s technology sector provides a good example. Whereas Chinese consumers used to flock to buy Apple iPhones bearing \u2018Made in China, Designed in California\u2019 stickers, they are now choosing to buy Huawei phones that were both designed and made in China. In 2015, Apple and Huawei held 14% of the smartphone market in China apiece, but today, Huawei enjoys 39% market share, while Apple holds just 8%.<\/p>\n

To counter such risks, some foreign companies have acquired Chinese brands to front their sales into the local market, putting a barrier between their shareholders and Chinese consumers who might react negatively to broader political currents. A number of American breweries, for example, have acquired Chinese provincial beer brands, with US brands having become increasingly unpopular in the world\u2019s largest beer market thanks to the political climate.<\/p>\n

Sectors that appear less susceptible to guochao<\/em> include the automobile, packaged food and beverages (particularly milk and products consumed by infants), and cosmetics industries. L\u2019Or\u00e9al, Lanc\u00f4me, Olay, and SKII remain the biggest selling cosmetic brands in China, for example.<\/p>\n

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Technological factors driving guochao<\/em><\/h4>\n

The role of Baidu and China\u2019s e-commerce<\/a> platforms in driving the guochao<\/em> phenomenon cannot be overstated, thanks to the role the search engines and their algorithms play in directing consumers to products.<\/p>\n

During guochao<\/em> phase one, consumers were mainly influenced by a product\u2019s price, packaging and analogue advertising when considering making a purchase. Now, products are predominantly advertised online<\/a> on news sites or on pages maintained by key opinion leaders (KOLs).<\/p>\n

KOLs and popular user responses on sites such as Xiaohongshu (Little Red Book) play a key role in driving Chinese consumers<\/a> to buy, and make it far harder for foreign brands to control the environment for their product. Furthermore, millennials form the consumer group most likely to be engaging with content relating to politics and China\u2019s tensions with the wider world. A full 63% of users searching for information around terms such as \u201ctrade war\u201d are under 30 and otherwise browsing the internet and e-commerce platforms, according to Baidu. This is an unhelpful situation for foreign brands, considering that millennials also constitute the most active consumer group in China.<\/p>\n

Does this mean that British brands are at a disadvantage when selling in China?<\/h4>\n

While there is no doubt that the guochao<\/em> phenomenon has a powerful effect, Chinese and British brands alike are susceptible to falling foul of netizens. Chinese brands that aim to grab the attention of Chinese consumers by being overly reliant on being Chinese risk being perceived as clich\u00e9d or insincere too.<\/p>\n