China is the second-largest economy in the world after the United States. Some may even argue that it has already surpassed the U.S. to become number one after factoring in the PPP (Purchasing Power Parity).
Instead of chasing a double-digit GDP growth, the Chinese leaders are now focusing more on raising the living standard of their people. This policy is apparent in the current and the last Five-Year Plan by emphasizing boosting domestic consumption as the economy’s key driver. Moreover, following the rapid urbanization and the emergence of a substantial middle class, the Chinese consumers have a massive appetite for various non-necessity products and services, including but not limited to luxury goods.
The unprecedented pandemic has put a halt to the global economy. With its cooperative citizens and some stringent uncompromising measures, China has proven to be one of, if not the most resilient countries that can withstand the storm with an early bounce back of its economy. The unison of patriotism has nurtured a rapid diffusion of Guochao (literally means “National Wave” or “National Hip”) in recent years. Many lifestyles products embedding an overt Chinese element in their design are top-rated, not only among the mature consumers but also the youngsters.
Headquartered in Hong Kong, Chow Tai Fook is a leading jeweler with over 4,400 stores across China. It has rolled out a full range of premium jewelry inspired by the Imperial Palace, quickly becoming one of the best sellers. International brands such as L’Oreal have also seized this trend by collaborating with the National Museum to offer five limited edition lipsticks that reflect China’s artistic heritage. The containers of the lipsticks feature some classical Chinese elements harmoniously married with the French origin of the cosmetic brand. These collector’s items are well sought after by Chinese consumers who appreciate the best of both worlds.
Many local Chinese brands in various sectors, including sportswear (e.g. Li Ning) and high-tech sectors (e.g. Huawei) are riding on the tide and have gained much popularity. Mobilizing the consumers to support local brands is actually not something new in China. Back in the 60’s and 70’s, Chinese consumers both resided in China and overseas were encouraged to buy more Chinese merchandise to show their support for their country. Yet, what is happening today is utterly different from the previous campaign. Instead of pushing the consumers to make a purchase decision purely based on blind faith regardless of product quality, the current movement is driven by the Chinese consumers themselves, who are astute shoppers.
The “Patriotic Paradox” study conducted by Ogilvy more than a decade ago revealed that the nationalistic feeling of Chinese consumers does not necessarily lead to the preference of local brands. The consumers in China are actively hunting for products with good quality and originality rather than focusing on where it is made. International brands are not necessarily from the west but having product quality at a global standard. As such, Chinese brands can command the same level of respect or even pricing if they are up to the gold standard in the eyes of the users. Hence, Chinese fashion designers such as Ming Ma and Angel Chen have a huge fan base in China. They are globally renowned designers, famous for their mix of contemporary design and nostalgic cues, not necessarily because they are Chinese.
Today, the Chinese consumers are presumably even more discerning than those respondents interviewed by Ogilvy. They are frequent travelers and have gained extensive exposure to the different cultures and leading global brands. Even consumers in the lower-tier cities are quickly catching up, thanks to technology that enables them to learn about the latest trends and product innovation at their fingertips.
The positioning of Chinese brands these days is also very different from their predecessors. Chinese brands are no longer confined to the lower-end market with the selling of basic and affordable items. The primary markets of Huawei in the past used to be the developing markets, but now it is a major contender for global 5G infrastructure and is regarded as a significant challenger to the traditional telecom giants. In an article published by the SCMP on August 11, 2021, Xiaomi plans to beat Samsung to become the number one smartphone brand in three years despite major hurdles, such as US-China geopolitical tensions and cutthroat competition in the industry that have retarded its ability to convert the affluent Western consumers. Whether Xiaomi can step up to be the world number one is not the focus here. The fact that it is in the position to claim this jewel in the crown potentially is already a testimony that Chinese brands are operating in the top league globally.
The rise of Chinese brands is not the natural by-product of the rise of China. Like any brand from any country, made-in-China products will be scrutinized by the most demanding consumers, and they will be judged pound-for-pound next to their western counterparts. Indeed, the ultimate choice made by the consumers is the moment of truth and “may the best man win”.