Chinese consumers’ preference for foreign brands improving

The dark years of the pandemic were not kind to many foreign brands in China. At times, it was challenging to get foreign products through ports into China. Propaganda fed concerns that foreign products could be tainted with the virus. Nationalism spiked, largely driven by rising geopolitics, but not helped by fewer people travelling and studying outside of China. The influential daigou channel took a significant hit.

All this was happening while Chinese brands were upping the standard of their goods and marketing, and evolving to meet changing consumer needs. Many decision makers from foreign brands were stuck outside of the country, impacting their ability to adapt strategies fast enough to keep up with the rapidly changing market.

Taking these factors into account, it is no surprise that most consumer categories saw domestic brands’ market share and preference accelerate over imported brands.

For some time, we predicted that foreign brands’ fortunes in China would improve once borders opened up again. Although the China market has emerged from Covid quite different from when it went in, there are some bright spots forming.

We expected when Chinese travellers and students started heading overseas again, it would remind them of the many great lifestyles, cultures and products in foreign lands - things they didn’t hear about during three years of closed borders and state propaganda. Although a relatively small share of Chinese travel and study abroad, they are some of the most active on social media, so their experiences reach far and wide among the general Chinese public.

Similarly, decision makers are travelling back to China in droves, giving them a firsthand view of how China has changed. This has helped them make more informed decisions about China and rebuilt relationships with local teams, partners and customers. It has also meant that China is no longer ‘out of sight, out of mind’.

These factors appear to be starting to improve sentiment for foreign brands. A global consumer survey released by PWC has found that Chinese consumers’ preference for foreign brands over domestic has started to improve from last year, with the biggest rise in the consumers who are “much more likely to buy” foreign brands.

It is still early days for Chinese returning to their jetsetting ways, but Chinese travellers’ intentions are looking positive. Results of a survey released by organisers of the ITB travel conference found that 80% of Chinese respondents plan to travel abroad in the next 12-months, with around half of those planning to travel more frequently than in the past, if possible. This echoes many similar surveys which point to Chinese consumers’ clear intention to travel overseas.

Increasing visits from decision makers to China, coupled with growing international travel driving affinities for foreign products is positive news for international brands in China. Nevertheless, China’s market landscape is more complex and fragmented than it has ever been, so foreign brands will need to augment increasing preferences for international products with thoughtful and resonant branding and strategies, something which China Skinny is ideally placed to assist with.

Speaking of international travel, many destinations should see a few more Chinese visitors over the next couple of weeks with the Mid Autumn Festival and Golden Week holiday. Although still a way off pre-pandemic levels, the trajectory of travellers is looking promising.

For our readers who are travelling over the national holiday, we hope you manage to dodge the crowds and have a great break. We’re off next week for the holiday, but will be back on the week of October 9.