Korean media: Foreign brands are "not working" in the Chinese market!
November 20, Korean media "Asia Today" published an article stating that the Chinese market has become a new focus for global companies. With the rapid growth of local brands, it is increasingly becoming a challenging market for foreign enterprises.
Multinational companies such as BMW, Uniqlo, and IKEA have recently all lowered their profit expectations. Anna Mändz, CFO of Nestlé, said: "In China, we previously only focused on expanding our distribution network, but now we are shifting to a consumer-centric strategy." Nestlé explained: "We will restructure our distribution system to directly enhance consumer demand."
Foreign car brands are facing intense price competition in China. The sales of BMW, Mercedes-Benz, and Porsche have all declined.
The fashion industry is no exception. The parent company of Uniqlo, Fast Retailing, saw a decline in sales and operating profit in China. Uniqlo has 900 stores in China, but its sales have been affected as consumers shift to online discount platforms such as Taobao under Alibaba.
Nike's sales in China have also declined for five consecutive quarters, facing fierce competition from domestic brands such as Anta and Li-Ning. Nike has been promoting with American star athletes such as LeBron James and Ja Morant, but there are no clear signs of consumer recovery.
French-based global beverage company Pernod Ricard reported a 27% drop in sales in China.
However, the luxury market has shown relatively strong performance. LVMH, the parent company of Louis Vuitton, announced that its sales in China during the third quarter exceeded expectations. Analysts believe this is due to innovative store experiences, such as its "Oceania Boutique" opened in Shanghai.
Cecile Cabannes, CFO of LVMH Group, said: "New store experiences and innovative initiatives have directly sparked consumer interest."
The rise of Chinese brands is spreading across all industries. As of August this year, domestic Chinese cars accounted for 69% of the market share, nearly doubling from 38% in 2020.
In the coffee market, Luckin Coffee is catching up with Starbucks. A cup of Luckin latte costs 9.9 yuan, about one-third of the price of Starbucks.
The landscape of the cosmetics market is also changing. Frost & Sullivan, a market research company, predicts that by 2025, the market share of domestic Chinese cosmetics brands will exceed foreign brands for the first time, reaching 50.4%.
Experts believe this is not just a cyclical adjustment, but a structural change. The combination of differentiated consumption patterns, the rise of local brands, and the new concept of "value for money" makes it difficult for foreign enterprises to maintain market dominance solely through brand power.
A South Korean industry insider said: "The strategy needed for the Chinese market is not simply entering the market, but requires a deep understanding of local culture and consumer sentiment. On the other hand, the rise of local brands has now become an irreversible trend."
Original: www.toutiao.com/article/1849275073690695/
Statement: This article represents the views of the author.