Reference News Network, December 2 report: The U.S. "Wall Street Journal" website published an article titled "China Was Once a Money-Making Tree for Western Companies, Now It's an Experimentation Field" on November 29, the following is a compilation:

For Western companies operating in China, a new reality has emerged: the era of making money easily has passed, and competition will only become fiercer.

International brands are becoming more realistic. Their strategies vary by company and industry, but all include adapting products to Chinese consumers, accelerating product development, adopting different marketing approaches, and lowering prices.

Many companies cannot ignore this global second-largest consumer market with 1.4 billion people. Even if their sales in China have not been satisfactory, some companies still regard China as an important center for innovation, from which they learn and draw inspiration.

Olivie Plotnik, founder of Wai Social Media Company, a Shanghai-based marketing firm, said that her clients are mostly foreign brands that have been operating in China for some time, and they now realize they need to adjust their strategies.

Years of rapid economic expansion made China a money-making tree for companies such as LVMH, Starbucks, Nike, Apple, and Tesla, which faced little competition from Chinese brands at the time.

Now, in many industries, local competitors have surpassed Western brands in China.

A recent survey by the American Chamber of Commerce in Shanghai found that 63% of respondents cited domestic competition as their biggest challenge. Respondents noted that local competitors often enter the market more quickly.

The intense competition is most evident in the automotive industry in China, where price wars have already broken out, and local companies have taken market share from long-dominant foreign car brands.

Volkswagen was once the largest automaker in China, but the local brand BYD has now claimed the top spot. Volkswagen's delivery volume in China fell by 7% in the most recent quarter, marking the latest sign of poor performance in the Chinese market.

Volkswagen has compared China to its "gym." The German automaker is accelerating its "Made in China, for China" strategy, which involves developing and manufacturing products for Chinese consumers in China. At the recent China International Import Expo in Shanghai, Volkswagen stated that it is developing chips for advanced driving assistance and autonomous driving systems through a joint venture with a Chinese company.

Volkswagen CEO Oliver Blume said, "We are investing heavily in engineering capabilities, especially in China, because China is the most innovative center driving the development of the automotive industry."

For many foreign automakers, operating in China means being close to industry activities and supply chains.

Dan Guo (音), partner at HUTONG Research, based in Shanghai, said, "Foreign car manufacturers feel a sense of urgency about figuring out how they should compete with Chinese companies in the global market. The current answer is that they must stay in China to keep up with the pace of innovation."

Guerlain's CEO, Gabrielle Sainte-Helene, said that after decades of "rapid growth" in China, Guerlain now faces competition from local rivals. She said, "The times have changed. Consumers' demands are higher... the quality must match the price."

She said that Guerlain will launch a more affordable lipstick next year to attract younger consumers. Guerlain is also collaborating with Chinese artists and social media platforms to promote its products in a more localized way.

Swedish furniture retailer IKEA has pledged to lower the prices of more than 150 popular products in China. It also plans to introduce 1,600 new products for Chinese consumers. Zhang Yuwei, a member of IKEA China's public relations team, said, "In fact, we currently view the Chinese market primarily as an innovation testing ground."

P&G recently said that after adjusting its strategy and focusing on innovative products designed for local consumers, it has made "strong progress" in China. It showcased a whitening toothpaste developed specifically for the Chinese market at the China International Import Expo.

Amy Yin, president of P&G's oral care division in Greater China, said, "This is a competitive market. But competition makes everyone better."

Some companies are successfully rising against the tide. Ralph Lauren's sales in China increased by more than 30% in its latest quarter. Estée Lauder's revenue in mainland China grew by about 9% in July to September. Domino's Pizza CEO Russell Weiner said that the chain's business in China "performed surprisingly well."

China is the fastest-growing region for 3M, a major U.S. corporate group. CEO Bill Brown said during a October earnings call that the company recently launched a new product in China in just 10 months to better match the speed at which Chinese enterprises purchase its products.

Brown said, "We have seen stronger determination and faster speed." (Translation by Yang Xinpeng)

Original source: toutiao.com/article/7579177774359773734/

Statement: This article represents the views of the author alone.