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Global brands lose ground in China

Posted June. 20, 2023 08:04,   

Updated June. 20, 2023 08:04


With the reopening of China, a notable consumer trend called Guochao, or "China-chic," has emerged, signifying the growing prominence of native Chinese brands among the younger generation. As a result, global brands that have entered the Chinese market are experiencing sluggish sales as the allure of China's homegrown brands takes center stage.

According to data from Morgan Stanley, a prominent global investment bank, the Wall Street Journal reported on Sunday that global brands like Adidas, Procter & Gamble, and L'Oréal are witnessing a decline in their market share in China. This can be attributed to the slow recovery of the Chinese economy as well as Chinese consumers favoring domestic brands over these international counterparts when making their purchasing decisions.

According to Euromonitor, L'Oréal's market share in China has been declining steadily from 2016 to 2021. In contrast, Perfect Diary, a home-grown Chinese cosmetics brand, has achieved remarkable success since its online launch in 2017. It became one of the top-selling brands in China just in five years by offering products that provide excellent value for money. Additionally, a newly established Chinese local brand, Huāxīzǐ, has made significant strides in the Chinese cosmetics market, capturing a 15 percent market share in 2021.

Adidas ceded its second place to Anta Sports, a Chinese local sportswear brand, in 2021. Morgan Stanley has predicted that Adidas' market share in China will decrease from 19 percent in 2020 to 11 percent by 2024. Furthermore, Yunnan Baiyao's toothpaste is outselling the toothpaste from P&G in China.

The Guochao trend is emerging due to the escalating Sino-U.S. conflict, coinciding with the rise of Chinese Gen Z consumers who have received patriotism education in the consumer market. Notably, the Communist Party of China is actively promoting the use of domestic brands during crucial political events such as the National People's Congress and the Chinese People's Political Consultative Conference. Furthermore, western brands like Adidas have faced boycotts in China after making statements that criticized alleged forced labor in the Xinjiang Uyghur region.