Foreign Brands Losing Luster in China – China Real Time Report – WSJ

Move over Western brands, Chinese companies are taking over.

China’s 1.34 billion-plus consumers are filling their shopping baskets with Chinese-branded toothpaste, laundry detergent, juice, cookies and more, according to a new study from consultancy Bain & Co.

Local Chinese companies have become more competitive and are leveraging their strength in smaller cities, where growth rates are higher than in top cities like Beijing and Shanghai, according to the study, which looked at the shopping habits of 40,000 consumers.

The result is that foreign brands are losing market share in large consumer goods categories–such as personal care, home care and packaged foods– all across China, from its biggest to smallest cities, Bain said. And sales growth, which is dwindling as China’s economy slows, is going primarily to Chinese companies, such as fabric-softener maker Guangzhou Liby Enterprise and juicer Tian Di No. 1 Beverage, it said.

While that’s good news for Chinese brands, it’s nothing to cheer about for global companies, which have been banking on Chinese shoppers to boost their sales. China’s economy is also slowing, meaning that the days of easy money in China are over and tireless boardroom references to “China’s emerging middle class” as the saving grace may soon be put to rest.

Some companies, like Best Buy Co. and Home Depot Inc., have either exited or are rethinking their goals in China. Best Buy Co. sold all its remaining stores in China last year, citing online competition.

But there’s still growth for many foreign brands. Foreign makers of beer, chewing gum and hair conditioner are still gaining traction and market share from Chinese companies, according to Bain.

Below are charts from Bain & Co and Kantar Worldpanel showing how Chinese companies are standing up against foreign rivals at retail and in consumer products.

via Foreign Brands Losing Luster in China – China Real Time Report – WSJ.

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