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The Made in China initiative behind Chinese brands

Chinese brands with global appeal are the goal. It has been 10 years since the Chinese government declared its intention to help Chinese companies build global brands. Its reasoning was simple. Chinese businesses were booming. China had become the world’s factory. But Chinese companies produced shoddy goods and China gained a global reputation for being only capable of creating cheap, low-quality products.

Chinese manufacturers mostly worked as subcontractors for foreign companies, like Foxcom for Apple. These companies put their western brand names on the Chinese-made products and sold them at premium prices. When Chinese companies manufactured identical, or almost identical wares, and put Chinese brands on them, consumers, both global and Chinese, disdained them. Even at a fraction of western brand prices, Chinese brands struggled to find a market.

In 2014, the Chinese government adopted a strategy of investment in domestic innovation, called the “Made in China 2025” initiative. This included the launch of a new government department—the International Academy of Brand Science. They have persevered doggedly with it ever since. The Institute’s task is to encourage brand building by Chinese companies and teach them how to do it. This is a bit the case of the blind leading the blind – it’s part of the Chinese government bureaucracy after all.

The emergence of local Chinese brands

But, step by step, things have been improving for Chinese brands. Circumstances have helped.

In China, consumers now have a better standard of living and more money to spend. They are looking for higher quality products, regardless of origin. By cutting China off from the rest of the world, COVID forced consumers to turn to what was available locally. Government actions and geopolitics have helped immensely. Trade wars, the consolidation of power by Xi, clamp down on Hong Kong, disputes over Taiwan and the South China Sea, mounting friction with the US and Europe not only over trade, but over national security, Chinese espionage and hacking, and Russia’s invasion of Ukraine have polarized the world and led Chinese consumers to see the West as hostile. A new trend has emerged, ‘Guochao’ (national pride).

Local brands have upped their game. They’ve improved their quality and entered the luxury market. They’ve learned how to market astutely, and in ways that fit the domestic market better than global rivals – adapting products to Chinese culture and responding faster to local trends.

BrandZ says that the top 100 brands in China have grown their value 265% since 2014 and are now worth over $1 trillion. Chinese brands now dominate lists of the top brands in China. Domestic labels’ share of the 40 top beauty brands’ China online sales rose to 50% in 2023. The fastest growing, Huaxizi (Florasis), hugely popular among China’s Gen Z, was launched in 2017, and already has sales of almost $1 billion.

Huaxizi—a Chinese beauty brand

How have local Chinese brands done this?

By integrating classical Chinese stories and aesthetics into its stories, incorporating wisdom from ancient Chinese on the use of plants, flowers, and animal fats to change appearance and basing whole product launches on traditional Chinese stories.

By reacting swiftly to local trends. Huaxizi and other local brands were quick to start marketing on Douyin, TikTok’s Chinese app. It reaches a much wider audience of young consumers than traditional e-commerce channels, and uses local celebrities and influencers. Western companies, such as L’Oréal didn’t catch up with the trend. According to the Financial Times, if the local cosmetic brands, Judydoll and Joocyee, spot a lipstick shade that is losing momentum or a new trend that is about to take off, they can adjust the production within a month, compared to western brands which take 4-6 months to respond.

Chinese brands go global

We are about to see a major surge of Chinese brands onto the global market. There have always been some—Lenovo was an early example—but they were few and far between. Two brands spurred the momentum—TikTok and Shein. TikTok, owned by ByteDance, has surpassed Facebook to become the world’s most downloaded app, used by a third of US adults, 43% of whom get their news from it. Shein, originally known as ZZKKO, has swept the globe with its ‘fashion forward designs, endless assortment, and dirt-cheap prices.’ Launched in 2008, it is now the world’s largest fashion retailer, with over $30 billion revenues, and is planning a New York IPO.

The Chinese brand explosion looks about to really take off in 2024. The reason – electric vehicles. China is now way ahead. BYD (Build Your Own Dreams) makes cars that are ‘snazzy, whizzy and cheap’. It is the largest car maker in China and overtook Tesla globally in the fourth quarter of 2023 with sales of 526,000 vs. Tesla’s 484,000. China’s total car exports were 5 million in 2023. China is forecast to double its share of the global automotive market to 1/3 by 2030, overtaking Japanese, American and German car brands. The value of the BYD brand is already estimated at $10 billion.

The Super Bowl sent the signal. Temu, owned by the Chinese e-commerce giant Pinduoduo (PDD Holdings), is spending money like water to create awareness and sales in the US. Its Super Bowl ad, showing animated people shopping like billionaires for 99 cents, aired 5 times at $7m a pop, and was completely inescapable.

Meanwhile, the Chinese government’s investments in brand building are gaining traction. China is the most active participant in the ISO committee which has published the first global standards for brand valuation and evaluation. It has big plans for 2024, including a ‘Global Brand Day.’ This is a souped-up version of the China Brand Day which it launched in 2017 at the Shanghai World Expo. Events are planned not only in China, but also at the UN in New York. It’s already true that to have a brand that’s respected in China, you must have a billboard in Times Square. If you go, you’ll see lots of them.

What does this mean for marketers?

The coming of global Chinese brands signals an end to US global brand dominance. The Chinese trajectory with global branding will follow the classic disruption curve—start with products that are lower priced and at the lower end of the quality range, then move up, becoming more premium, step by step. It’s not just the US that will be affected. French and Italian luxury brands should watch out. South Korea has already made big inroads into the beauty market. China will follow.

We believe this is a good thing for branding. As brand acumen becomes more distributed and centers of brand excellence arise in former developing markets, this will multiply the variety and richness of brand experiences, reflecting different origins and cultures. China is on the fast track. We can expect global Latin American, Middle Eastern and African brands will follow.




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