It would seem that foreign brands in China are losing their popularity among Chinese consumers. This comes as a surprise as many Chinese consumers stressed how much they adored foreign goods, as they were considered to be more luxury goods. However, this turn has come as smaller cities throughout China are becoming more dominant buyers.
Personal care products, fabric softener and cosmetics lost most ground in Chinese market
The study that produced this data was performed by Bain & Company and Kantar Worldpanel. Between the two companies they tracked purchases that were made by around 40,000 homes over the course of three years. They then looked at all the data that was collected.
The companies found that domestic brands were gaining for the third year in a row. Most foreign brands saw loses in every category, except those listed beforehand.
Bruno Lannes, a partner with Bain & Company, talked about why domestic brands were taking over in these smaller areas when compared to foreign companies:
“An important reason is that they [foreign brands]usually focus on more top-tier mainland cities and their products sell mainly through hypermarkets.”
When looking at urban areas, last year the retail market in this area only increased by 2%. This is compared to a 7.7% retail market increased in lower tier cities. Chinese brands that have directed their products towards these lower tier cities are seeing a huge increase in the product that they are selling. It was also seen that many Chinese consumers are not making as many trips to the hypermarkets, instead, they are shopping their local supermarkets, mini-marts and convenience stores. These stores saw a 45% holding of the market, in terms of how much they sell throughout the year.
Chinese consumers are looking for items that are not only going to provide them with a quality product, but they are looking for products that help improve their life and quality of health. For example, the study found Chinese consumers were willing to pay more for certain products, like toothbrushes, bottled water, milk, yogurt, skincare products and juice. However, these same consumers bought cheaper tissues, fabric softeners and cleaners for the kitchen.