Jenny Chan 陳詠欣
May 25, 2016

Why 'Made In China' is getting more thumbs-ups: Research

CHINA - “Made in China” once meant cheap or copied. That’s changing, according to recent reports from OMD and McKinsey, as the perceived quality of domestic brands strengthens and home-grown brands earn loyalty for their responsiveness.

Why 'Made In China' is getting more thumbs-ups: Research

In OMD's Future of China report released this month, which explored the outlook of 2,500 Chinese consumers in eight cities across tiers one to four, 40 percent of interviewees who buy local said quality is "improving all the time".

Tier one shoppers are forsaking foreign brands "in droves", according to OMD. Why? A focus on meeting customer needs, nimbler structures and processes and quick responses to changes are driving a shift in how consumers perceive, and now prefer, local brands.

Preference differs across China's different city tiers, of course. In tier three and four markets, where many foreign brands lack presence in terms of awareness and/or distribution, domestic brands have "absolute dominance", stated OMD.

Interestingly, tier two cities show the lowest preference for domestic brands, as consumers there are attracted by the novelty of international brands. Tier-one consumers, who experienced this influx of foreign products years ago, are more discerning now and "no longer blindly buy into the aspirational dream so many international brands seem to sell".

A greater liking for local brands transcends almost all product categories studied by OMD—from quick-service restaurants to body wash to home appliances (see below). This inclination towards local brands such as Xiaomi and Haier is almost two times stronger than that for their foreign counterparts, stated OMD. Today, categories where multinational behemoths still command cachet are limited to luxury goods, premium skincare, cars and sports apparel.

OMD expects other cities in China to follow this buy-local trend.

So does McKinsey, which conducted 10,000 in-person interviews with people aged 18 to 65 in 44 cities in March 2016.

McKinsey found that 62 percent of Chinese consumers now prefer Chinese brands over foreign ones, particularly in the mass segment of the market, where local brands are "winning market share from foreign incumbents through a much stronger product proposition".

However, local brands cannot rest on their laurels, advised the authors of both reports. A large number of Chinese brands still rely on low pricing as their main selling point, which is not sustainable in the long term. As Chinese consumers become more and more discerning, domestic companies will need to invest in building their brands to compete beyond pricing.


Related Articles

Just Published

24 minutes ago

M/Six names global CEO

UK and EMEA boss Jack Swayne steps up with long-serving global chief Jess Burley moving to executive chair.

38 minutes ago

SEC Newgate plans privatisation, eyes APAC acquisition

The PR agency has announced plans to de-list from the stock market and form a new company backed by private equity investment.

2 days ago

How to prepare for hybrid commerce: Chinese ...

As consumers seamlessly hop between physical and online, brands are expected to provide real-time stock information and personalised experiences across all of their touchpoints. But they must demonstrate a value exchange to consumers to collect the data they need.

2 days ago

Data shows brands don’t need social media accounts ...

Data from a Jing Daily report shows that luxury brands no longer rely on their own social media accounts in China with more engagement relying on KOLs.