A strong showing for domestic brands in various categories as China’s consumers’ increased spending power drives demand for both quality and value-for-money.
This year, the standing of only three brands in China—Chanel (3), Nike (6), Adidas (9)— remained unchanged in the coveted top-ten, as they witnessed Samsung’s top spot toppled by Apple for the first time.
Of note, China’s homemakers, unable to resist appliances such as the world's first voice-controlled intelligent showerhead by Haier, upvoted Philips (5), Siemens (8) and Haier (12) significantly. Meanwhile, Didi (21) and Alipay (25) gleamed as the two new entrants in the first quartile as ‘new-economy’ brands.
As the Chinese move up the economic ladder and consumer confidence reach higher levels, they are attracted to aspirational brands that signal they’ve achieved a certain level of success. Apple (1) may still be perceived as such a brand, but not for long as the stickiness of its ioS system is getting irrelevant due to the ubiquity of Tencent’s WeChat ecosystem. It’s fair to say Apple only managed to dethrone Samsung (2) because Samsung had it worse last year.
60% of online respondents in China are “very willing” to pay for premium products with high quality and safety standards, another recent Nielsen study highlighted. Samsung's Galaxy Note 7 blowing up clearly did not deliver on those expectations and lost its critical lead.
Indeed, the main factors that keep Chinese consumers loyal to a brand—any brand—are product quality, value for money and reliability, according to new questions posed by Nielsen to respondents this year.
Be warned, the gloss on the surface for Apple is being rubbed off by aggressive Chinese smartphone vendors Huawei (34) in top-tier Beijing, Shanghai, Guangzhou, and by Oppo and Vivo in lower-tier cities. They all score high in the product-quality and value-for-money meters, in particular, and next year’s ranking may reward them.
Providing value is something Chinese brands are “very good” at, according to Tom Doctoroff, senior partner at Prophet. “They are incrementally crawling their way up the value chains. So there is progress and momentum,” he said. Evidently, the number-one brand in various product categories is a domestic darling: China Life for insurance, Bank Of China for financial services, Air China for full-service airlines, Nong Fu Shan Quan for mineral water, Mengniu for milk, Tsingtao for beers, Moutai for spirits, SF Express for courier services, Tong Ren Tang for pharmaceuticals, Didi for ride-sharing transport, Master Kong for instant noodles, Lee Kum Kee for condiments, Blue Moon for detergent, Gree for air conditioners, Baidu for search engines, and China Mobile for telecommunications. The rare few sectors without any Chinese presence in this fiercely-protectionistic market are unscaleable products such as home audio or professional cameras.
Take Alipay (25), and its main competitor WeChat Pay (22), both exemplary of how China is ahead of the global curve for social commerce and electronic payment, said Peter Petermann, chief strategy officer of MediaCom China. This will have a “massive” impact on how brands will be sold in China in future, both online and offline.
Already, China has the most internet users in the world and now outpaces the US as the largest online consumption market. Taobao (52) is unsurprisingly at the peak in the e-commerce category, at the expense of Amazon (35) that dropped ten places. The retail story turns its own pages in the mainland. Event-based shopping on Single’s Day on 11 November has even become an entire carnival; while offline specialty and convenience stories are the main drivers of growth as middle-class consumers seek out unique offerings and effortless purchases.
An increase in specialty baby stores is set with China’s new two-child policy likely to birth five to ten million more babies each year. Brands have to pivot—fast—towards selling to the younger generation that is “developing a new sense of pride in their country”, noticed Mediacom’s Petermann. With ‘Made in China’ evolving into “a seal of approval” among the young, foreign brands cannot afford to take so long to learn the value of localisation, and Chinese brands must turn their heritage into a powerful and compelling story.
Take note though, marketing and advertising campaigns are largely ignored by loyalists in China. “The Chinese have always been suspicious about anything that has been spoon-fed to them,” according to Prophet’s Doctoroff. “And this leads to a lot of brand switching, because people do not really trust broadcast information,” he added. However, when done right—a clearly-articulated top down message through online opinion leaders “in a participatory manner”—Chinese consumers can be passionate brand advocates.
- Chanel (3) continues to hold the third position in China for the 3rd year.
- Lenovo (32) is the only brand of Chinese origin out of Asia’s top hundred.
- China’s smartphone users prefer the status of Apple (1) to Samsung (2)—for now.
- Siemens (8) refrigerators are hotter in China compared to homegrown Haier (12).
- New entrant Uber (26), ranked five places lower than acquirer Didi (21) is already non-existent in the market.