Tim Min once drove BMWs. He considered buying a Tesla.
Instead, Mr. Min, the 33-year-old owner of a Beijing cosmetics sector, bought an electric car manufactured by Chinese Tesla rival Nio. He likes Nio’s interiors and voice control features better.
He also considers himself a patriot. “I have a very strong tendency towards Chinese brands and very strong patriotic emotions,” he said. ‘I used to love Nike too. Now I see no reason for that. If there is a good Chinese brand to replace Nike, I would be very happy. ”
Western brands such as H&M, Nike and Adidas have come under pressure in China for refusing to use cotton produced in the Xinjiang region, where the Chinese government has waged a wide-ranging campaign of repression against ethnic minorities. Buyer promised to boycott the brands. Celebrities have dropped their approval deals.
But foreign brands are also facing increasing pressure from a new breed of Chinese competitors who manufacture high-quality products and sell them through smart marketing to an increasingly patriotic group of young people. There is a term for it: ‘guochao’, or Chinese fad.
HeyTea, a $ 2 billion dairy business with 700 stores, wants to replace Starbucks. Yuanqisenlin, a $ 6 billion four-year-old low-sugar beverage, wants to become China’s Coca-Cola. Ubras, a five-year-old company, wants to replace Victoria’s Secret with most non-Victoria’s Secret products: wired, sporty bras that emphasize comfort.
The anger over Xinjiang cotton has given these Chinese brands another chance to win over consumers. While celebrities are cutting ties with foreign brands, Li-Ning, a Chinese sportswear giant, has announced that Xiao Zhan, a young band group, will become its new global ambassador. Within 20 minutes, almost everything Mr. Xiao carried on a Li-Ning ad, sold out online. A hashtag about the campaign has been viewed more than one billion times.
China is undergoing a revolution for consumer brands. His young generation is more nationalistic and is actively seeking brands that match the confident Chinese identity. Entrepreneurs are quickly rushing names and products that resonate. Investors are turning their attention to these businesses amid declining returns from technology and media operations.
When patriotism becomes a selling point, Western brands are competitively disadvantaged, especially in a country that increasingly requires global companies to show the same political lines as Chinese enterprises do.
“China’s consumer protests are a historic turning point and will have a long-term impact on Chinese consumers,” he said. ‘The Chinese consumers do not want to eat the same shit, but foreign brands have also fed them. It is essential that foreign brands respect Chinese consumers just as much as Chinese brands do. ”
Foreign brands are far from finished in China. Its drivers helped make a leap in the delivery of Tesla. IPhones remain hugely popular. Campaigns against foreign names have come and gone, and local brands that over-emphasize politics are daring undesirable attention as the political wind changes rapidly.
However, interest in local brands is still a major shift. Post-Mao, the country made few consumer products. The first televisions most family owned in the 1980s were from Japan. Pierre Cardin, the French designer, re-introduced fashion with his first show in Beijing in 1979, bringing color and flair to a nation that wore blue and gray during the Cultural Revolution.
Chinese people born in the 1970s or earlier remember their first sip of Coco-Cola and their first bite of a Big Mac. We watched movies from Hollywood, Japan and Hong Kong just as much for the cabinets and makeup as the plot. We hurried to buy Head & Shoulders shampoo because the Chinese name, Haifeisi, means ‘seafly hair’.
In business today
“We have gone through the European and American fad, the Japanese and Korean fad, the American streetwear fad, even the Hong Kong and Taiwan fad,” said Xun Shaohua, who founded a sportswear company from Shanghai that specializes in Vans and Converse compete, founded.
It may now be time for the fad in China. Chinese companies make better products. China’s generation Z, born between 1995 and 2009, do not have the same connection with foreign names.
Even People’s Daily, the traditionally official newspaper of the Communist Party, is engaged in trademarks. It launched a streetwear collection with Li-Ning in 2019. That same year, it issued a report to Baidu, the Chinese search engine called “Guochao Pride Big Data”. They found that more than two-thirds were looking for brand names among people in China, up from about one-third ten years earlier.
As with so many in China, it can be difficult to tell how much of the guochao movement involves politics. The building of home-made brands fits in well with the will of the Communist Party to make the country more independent. Officials also want Chinese people to buy more: domestic consumption accounts for only about 40 percent of China’s economic production, far less than in the United States and Europe.
Apart from patriotism, entrepreneurs argue that their businesses are based on a solid business foundation. Similar trends have occurred in Japan and South Korea, both of which are now home to strong brands. Local players know better about the capabilities of the country’s supply chains and how to use social media.
Xun’s sports brand has half a million followers on Alibaba’s Taobao market and sells at the same prices as Vans and Converse, or even slightly higher. He said his brand competes to make shoes that better fit Chinese feet and to offer colors that are locally favored, such as mint green and fuchsia. He sells exclusively online and collaborates with Chinese and foreign brands and personalities, including Pokémon and Hello Kitty. At 37, he is the only person in his company born before 1990.
The guochao fad has also rekindled older Chinese brands, such as Li-Ning. For many years, sophisticated urbanites considered the brand, created by a former world champion gymnast of the same name, ugly and cheap. Its distinctive red-and-yellow color combination, after the Chinese flag, was mockingly called “eggs fried with tomato”, an everyday Chinese dish. Li-Ning loses money. Its shares were losing ground.
Then, in early 2018, the company launched a collection at New York Fashion Week. The edgy look, combined with bold Chinese characters and embroidery, caused a stir in the house. Its shares have risen nearly ninefold since then. Now Li-Ning’s high-end collection sells for an average of between $ 100 and $ 150, just like that of Adidas.
Just as ambitious as these business people are, almost everyone I spoke to admitted that the Chinese brands still could not compete with mega-bands like Coca-Cola and Nike.
Alex Xie, a marketing consultant who works with companies in China, used the sportswear industry as an example. Nike has a year-long lead over Chinese brands in research and development. It enjoys a deep network of relationships in the sports world. It works closely with athletes to develop better footwear, and sponsors many events and teams, including China’s national soccer, basketball and track and field teams.
“It simply has a much tougher relationship with its customers than any Chinese brand,” he said.
But for this Western mega-brand, the Xinjiang cotton dispute is a major challenge that could help their Chinese competitors. While past outrage against Western brands like the National Basketball Association and Dolce & Gabbana has passed fairly quickly, many people may be left behind.
“In the past, some Western brands did not understand Chinese culture, or especially managed to respect it due to lack of understanding,” Xun said. “This time it’s a political issue. They violated our political sensitivity. ”
Then he asked, like any smart Chinese entrepreneur who knows what topics are sensitive, “Couldn’t we talk about politics?”