China’s anger at foreign brands helps its local rivals


Tim Min once drove a BMW. He considered buying a Tesla.

Instead, Min, the 33-year-old owner of a cosmetics company in Beijing, bought an electric car made by Tesla’s Chinese rival, Nio. You like the Nio interiors and the voice control functions better.

He is also considered a patriot. “I have a very strong inclination towards Chinese brands and very strong patriotic emotions,” he said. “I also loved Nike. Now I don’t see any reason for that. If there is a good Chinese brand to replace Nike, I will be very happy to do so. “

Western brands such as H&M, Nike and Adidas have come under pressure in China for refusing to use cotton produced in the Xinjiang region, where the Chinese government has carried out a broad crackdown on ethnic minorities. Buyers promised to boycott the brands. The celebrities dropped their endorsement deals.

But foreign brands are also facing increasing pressure from a new generation of Chinese competitors who make high-quality products and sell them through clever marketing to an increasingly patriotic group of young people. There is a term for it: “guochao” or Chinese fashion.

HeyTea, a $ 2 billion milk tea startup with 700 stores, wants to replace Starbucks. Yuanqisenlin, a four-year-old low-sugar beverage company valued at $ 6 billion, wants to become China’s Coca-Cola. Ubras, a five-year-old company, wants to supplant Victoria’s Secret with products more unrelated to Victoria’s Secret: non-wired sports bras that emphasize comfort.

The anger over Xinjiang cotton has given these Chinese brands another chance to win over consumers. When celebrities cut ties with foreign brands, Li-Ning, a Chinese sportswear giant, announced that Xiao Zhan, a member of the boy band, would become their new global ambassador. Within 20 minutes, almost everything Mr. Xiao used in a Li-Ning ad sold out online. A hashtag about the campaign was viewed more than a billion times.

China is experiencing a consumer brand revolution. Its younger generation is more nationalistic and actively seeks out brands that can align itself with that Chinese identity with confidence. Entrepreneurs are quick to create names and products that resonate. Investors are turning their attention to these startups amid falling returns for tech and media companies.

When patriotism becomes a sales pitch, Western brands are left at a competitive disadvantage, especially in a country that increasingly requires global companies to follow the same political lines as Chinese companies.

The Chinese consumer protests are “a historic turning point and will have a lasting impact on Chinese consumers in the long run,” Min said. It is essential that foreign brands respect Chinese consumers as much as Chinese brands do. “

Foreign brands are far from being made in China. Its drivers helped drive a jump in Tesla deliveries. IPhones are still immensely popular. Campaigns against foreign names have come and gone, and local brands that overemphasize politics risk unwanted attention if the political winds turn quickly.

Still, the interest in local brands marks a significant change. After Mao, the country made few consumer products. The first televisions most families owned in the 1980s were from Japan. Pierre Cardin, the French designer, reintroduced fashion with his first show in Beijing in 1979, bringing color and style to a nation that during the Cultural Revolution wore blue and gray.

Chinese born in the 1970s or earlier remember their first sip of Coco-Cola and their first bite of a Big Mac. We watched movies from Hollywood, Japan, and Hong Kong for the costumes and makeup as well as the plot. We rushed to buy Head & Shoulders shampoo because its Chinese name, Haifeisi, means “hair that flies through the sea.”

“We’ve been through European and American fashion, Japanese and Korean fashion, American streetwear, even Hong Kong and Taiwanese fashion,” said Xun Shaohua, who founded a Shanghai sportswear company that competes with Vans and Converse. .

Now could be the time for Chinese fashion. Chinese companies are making better products. China’s Gen Z, born between 1995 and 2009, do not have the same attachment to foreign names.

Even People’s Daily, the traditionally serious official newspaper of the Communist Party, is getting on the mark. He started an outerwear collection with Li-Ning in 2019. That same year, he issued a report with Baidu, the Chinese search company, called “Guochao Pride Big Data.” They found that when people in China searched for brands, more than two-thirds searched for national names, compared to just one-third 10 years earlier.

As with many other things in China, it can be difficult to say which part of the Guochao movement is related to politics. Home branding fits perfectly with the Communist Party’s desire to make the country more self-sufficient. Officials also want the Chinese to buy more: Household consumption accounts for only about 40 percent of China’s economic output, far less than in the United States and Europe.

Patriotism aside, entrepreneurs argue that their businesses rest on a solid business foundation. Similar trends occurred in Japan and South Korea, which now host strong brands. Local actors have a better understanding of the capacities of the country’s supply chains and how to use social media.

Mr. Xun’s sports brand has half a million followers on Alibaba’s Taobao marketplace and sells for the same prices as Vans and Converse, or even slightly more. He said his brand competed by making shoes that fit better for Chinese feet and offering locally favorite colors like mint green and fuchsia. It sells exclusively online and partners with Chinese and foreign brands and personalities, including Pokémon and Hello Kitty. At 37, he is the only person in his company who was born before 1990.

The guochao fashion has also revitalized older Chinese brands such as Li-Ning. For many years, sophisticated urbanites considered the brand, created by a former world champion gymnast of the same name, ugly and cheap. Its distinctive red and yellow color scheme, after the Chinese flag, was mockingly called “fried eggs with tomato,” an everyday Chinese dish. Li-Ning was losing money. His actions were on a losing streak.

The company then unveiled a collection at New York Fashion Week in early 2018. Its edgy look, combined with bold Chinese characters and embroidery, generated buzz at home. His shares have increased nearly ninefold since then. Now, Li-Ning’s high-end collections sell for an average of $ 100 to $ 150, on par with Adidas.

As ambitious as these entrepreneurs are, almost everyone I spoke to admitted that Chinese brands still couldn’t compete with mega-brands like Coca-Cola and Nike.

Alex Xie, a marketing consultant working with companies in China, used the sportswear industry as an example. Nike has years of leadership over Chinese brands in research and development. Enjoy a deep network of relationships in the world of sports. It works closely with athletes to develop better shoes, sponsors many events and teams, including China’s national soccer, basketball and athletics teams.

“It just has a much longer relationship with its customers than any Chinese brand,” he said.

But for these western mega-brands, the Xinjiang cotton dispute is a huge challenge that could help their Chinese competitors. While the earlier outrage against Western brands like the National Basketball Association and Dolce & Gabbana passed quite quickly, this fight could last, many people said.

“In the past, some Western brands did not understand or respect Chinese culture mainly due to lack of understanding,” Xun said. “This time it is a political issue. They have violated our political sensibilities ”.

Then, like any smart Chinese entrepreneur who knows what issues are sensitive, he asked, “Can’t we talk politics?”

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