Source: Global Times
Bloomberg reported on June 17 that Haagen-Dazs and Starbucks are considering a comprehensive reform to compete with their Chinese rivals. In the 1990s, China's consumption landscape was very different from what it is today. At that time, Haagen-Dazs and Starbucks introduced high-end products that were unfamiliar to most people, quickly making substantial profits in China. However, as times have changed, both companies, like many other Western brands, are reassessing their business strategies in the world's second-largest economy.
The factors driving this shift include intense competition from Chinese domestic enterprises, which have grown into flexible and sophisticated competitors with deep ties to local consumers. Western big brands such as Apple and Nike are increasingly competing with domestic brands like Huawei, Xiaomi, Anta, and Li-Ning. Industry insiders say that multinational corporations operating in China are facing competition from domestic rivals and changing consumer demands, particularly among young people who prioritize value for money and emotional resonance. To survive and succeed, they must adopt localized strategies.
Haagen-Dazs and Starbucks have also launched products more aligned with Chinese market demands. Feeling the pressure from the rapid rise of domestic coffee chains like Luckin Coffee, Starbucks recently announced price reductions for its tea drinks and Frappuccino beverages in China, contrasting sharply with its strategy in the U.S. of simplifying the menu to emphasize coffee. McDonald's China menu includes products such as porridge and luncheon meat burgers, while Yum! China, which operates KFC and Pizza Hut, offers not only traditional delicacies but also items like egg tarts and Old Beijing Chicken Rolls.
Even some international companies that have been operating in the Chinese market for decades are considering establishing new partnerships to address current challenges. Richard Huang, head of M&A in the Asia-Pacific region at Morgan Stanley, said, "In many cases, these brands have been deeply rooted in the Chinese market for years, and finding Chinese partners who can bring them skills, technology, and capital is another form of localization. Multinational companies continue to view China as a crucial market."
Jean-Christophe Varlet, head of industrial and consumer banking at BNP Paribas, said, "The Chinese market has become increasingly mature, no longer offering easy fruits of rapid growth and development. Chinese consumers are better educated and more sophisticated, and due to fast-changing tastes and low brand loyalty, peculiar local tastes have formed that only domestic enterprises can identify and adapt to." Analysts say that there is now a growing number of business spin-offs in China involving equity restructuring to introduce local strategic partners, and such measures may help multinational companies thrive in the Chinese market and seize new growth opportunities. (By Manuel Baygorri et al., translated by Ding Ding)
Original article: https://www.toutiao.com/article/7517428041539273256/
Disclaimer: The article represents the author's views. Please express your attitude by clicking the "Like/Dislike" buttons below.