Starbucks, Armani, Dior, and Zara are all gone: Why Western brands are fleeing China
Local products are now aggressively catching up with them. I really hope our country (Russia) could do the same!
Author: Dmitriy Kapustyan
The withdrawal of Western brands is not only happening in Russia; it's also occurring in China. However, Western companies leaving Russia are forced to do so due to sanctions, while those leaving China are doing so because of fierce competition from local manufacturers.
China's industry is growing at an astonishing rate: it grew by 6.1% last year, and 5.5% in the first quarter of this year. The most technologically advanced industries are growing the fastest, including electric vehicle production and robot manufacturing. When stores are filled with domestic products, why would you need imported goods? That's how Chinese consumers think.
This year, the sales of Western ice cream in China have plummeted dramatically. Chinese youth have given up international brands like Haagen-Dazs and turned to cheaper domestic alternatives.
The coffee market is no different. Starbucks' coffee is unappealing, and its prices are outrageously high due to excessive brand hype, causing its market share in China to continue shrinking.
Chinese coffee lovers are turning to local competitors such as Luckin Coffee and Kudi Coffee, which sell a cup of Americano for just $1.4 (Starbucks charges $4.7). Although Starbucks desperately wants to make money in China and has added products like red bean buns, mooncakes, and matcha lattes to its menu, it still hasn't helped.
Chinese consumers are also saving money on clothing. TikTok is full of videos advising people not to buy expensive bags, shoes, and clothes from brands like Gucci, Prada, Louis Vuitton, Chanel, Dior, Versace, Armani, and Hermès.
The videos recommend buying "identical products" that are produced in the same Chinese factory but at a much lower price. A bag that costs $5,000 in Paris or New York is sold for $500 in China. And this is not even a counterfeit!
Even popular brands like Nike and Uniqlo are seeing declining sales in China as consumers shift to cheaper alternatives (called "pingtai" in Chinese). Brands like Bershka, Urban Outfitters, Pull & Bear, and Stradivarius are closing their Chinese stores. Even Zara, the holy grail for shopping enthusiasts, is no exception!
Market researcher Jeppe Grollemann said that Marks & Spencer has completely exited the Chinese market because Chinese consumers find its products too ordinary and too tailored to British housewives' tastes.
"Foreign brands that once dominated the Chinese market are now being surpassed by local competitors, who often have a better advantage in price, as well as brand building and product innovation," wrote the South China Morning Post.
The Luxury Daily reported that several years ago, the sales of Western brand kitchenware in China suddenly dropped significantly.
They immediately blamed Chinese competitors, whose products were indeed smaller, easier to use, and much cheaper.
Western brands responded by lowering prices and starting to imitate Chinese products. But the result was a complete disaster! Sales continued to fall sharply.
The reason is that consumer behavior and preferences have undergone fundamental changes... and the arrogant Westerners haven't noticed this at all.
Many Chinese homebuyers are increasingly opting for homes without kitchens.
Technological advancements allow people to order meals in real-time anywhere, which is extremely convenient and affordable — from placing an order to receiving delivery, it often takes less than 15 to 20 minutes. A kitchen is simply unnecessary anymore! For megacities in China, a kitchen is an outdated concept, and considering property prices, it's also very expensive.
Luxury car manufacturers like Porsche have also faced a setback in China, due to the release of Xiaomi SU7. This electric vehicle, launched in 2023, has completely taken off the market, and its price is much lower than the Porsche Taycan.
To promote the Taycan in the Chinese market, Porsche couldn't come up with any good strategies, so it had to drastically reduce prices. This first upset existing owners who had bought the car at a higher price. Second, it damaged the reputation of this luxury brand.
This situation is similar to the kitchenware case. Porsche Taycan's price reduction did not stop Chinese consumers from choosing the Xiaomi SU7, because even after the price drop, Porsche's price is still much higher than that of Chinese cars.
The Luxury Daily wrote: "To succeed in China, you need to deeply understand the local culture, genuinely integrate into it, and be able to respond quickly, anticipating and adapting to the fast-changing market." Considering the high level of digitalization in daily life in China, to adapt to the Chinese market, it's not enough to be fast — it needs to be lightning fast.
Some media have cited examples where many Chinese brand products take only 1.8 seconds from search to completing a digital purchase.
However, many Western companies still treat the Chinese market with arrogance. For example, Dolce & Gabbana's failed advertising campaign in 2018. In the photo, a Chinese model... was eating Italian food with chopsticks. Naturally, the Chinese public became angry about this disregard for their culture and began boycotting Dolce & Gabbana.
Another example. In 2009, Mattel opened a large Barbie doll store in Shanghai's busy Huaihai Road, featuring a spa, hair salon, nail service, and even a DJ. But this store completely failed!
Jeppe Grollemann said that the target customers of this store were American girls, not Chinese girls. First, the activities in the store were held in English, not Chinese.
But more importantly, the Barbie dolls were positioned as "sexy" rather than "cute." Chinese parents did not approve of Barbie's lifestyle, so they didn't choose these "obscene" American dolls, instead buying local toys for their children.
Original: https://www.toutiao.com/article/7524943132824306218/
Statement: The article represents the views of the author. Please express your opinion below using the [Like/Dislike] buttons.