Even though Chinese companies are making a name for themselves in the popular market for electric cars, both at home and abroad, many people in the world’s second-most populous country are ready to buy goods with foreign labels.
For example, Liu Wenming, who lives in Shanghai, is ready to get more foreign goods for his stores all over China.
It will be a great time for me to buy all over the country in March, April, and May. He told MarketWatch over the phone, “I’ll be at trade shows in Shanghai, Chengdu, Guangzhou, and Beijing.”
Next year, China will be packed with foreign names showing off their goods. Throughout the year, consumer goods expos will be held for a wide range of goods that Chinese consumers would rather buy with foreign brands than Chinese ones. These include dining ware, cosmetics, food and drinks, baby care, cars, and many other things.
China’s share of the world market for electric vehicles, which is less than brands like BYD 002594 +0.50% 81211 0.00% Li Auto 2015 +6.13% and 0HKY 0.00% LI +3.60%, hit 76% in October. One of the biggest auto shows in the world, Shanghai’s in April, will have both foreign and domestic brands, as well as joint ventures like the one between FAW 000800 -0.12% and Volkswagen VOW +1.23%. VWAGY -0.21% VWAPY went up by 0.44%.
Liu said, “Consumption is starting to pick up a bit, and people are hungry for foreign brands.” Several towns in China are his business partners, and they mark up foreign goods for Chinese buyers. For example, in Shanghai, there are stores that sell toys and clothes, and in Beijing, there are stores that sell cosmetics.
There are a lot of events going on right now that promote foreign goods. This is a big improvement from before the pandemic, when buyer confidence dropped and China’s economy grew more slowly than usual.
But there are signs that businesses and customers are getting used to the new era of slower macroeconomic growth and are learning how to buy and sell within their means.
Wang Ming, whose three-person firm connects Chinese merchants with abroad buyers, said, “I’m seeing more interest from Chinese buyers and more interest from foreign firms that sell here [in China].”
Earlier this month, the country’s top leaders, led by President Xi Jinping, said they were making growing consumption the country’s most important economic goal. The powerful Politburo, led by Xi, said this would be done with boost measures, such as a “moderately loose” monetary policy in 2025, which means that interest rates will be lowered even more in the future.
The group also promised a “more proactive” approach to fiscal policy, which experts saw as allowing the central government to borrow more money to boost the economy in many areas.
Zhaopeng Xing, senior analyst at Australia & New Zealand Banking Group, said, “The language in this Politburo meeting statement has never been seen before.”
Experts say that foreign companies that do business in China should focus on what Chinese customers want and their competitors more than on bigger economic trends.
“Foreign brands could do better if they had a more targeted approach to audiences and made products, propositions, and touch points that were better suited to them,” said Mark Tanner, managing director of China Skinny, a consulting firm in Shanghai that works with Chinese consumers. “They shouldn’t just try to appeal to ‘Gen-Z’ or even ‘Chinese mothers.'”
“Along with making and implementing a smart strategy, I’d make sure that companies are structurally set up to understand the market and adapt to it quickly,” he told MarketWatch. “This means reducing the steps and gates for decision making to make sure they can compete with quick domestic competitors and continue to attract and retain China’s best and brightest.”
Tanner’s company keeps track of foreign consumer brand expos and trade shows that are coming up in China.
From late January to early February, China’s busiest shopping time, Chinese New Year, will happen. Some foreign brands have already started holiday-themed ads. In China, this is the start of the Year of the Snake.
Burberry BRBY -0.17% is a British high-end fashion brand. BURBY +0.54% has released clothes and scarves with a snake stitched on the letter “B.” They have also hired famous Chinese actress Zhang Jingyi to be in a series of short films.
On Weibo, which is like Twitter in China, the term “Burberry 2025 CNY collection” got more than 12 million views very quickly and stayed there for days as a top trend.
The Scotch whisky brand Glenfiddich has worked with the modern Chinese ink artist Zhang Yu to make a line of bottles with holiday themes.
Claudia Falcone, who is in charge of Glenfiddich’s global brand, stressed the importance of combining the best parts of foreign products with the customs of the local market. “The Lunar New Year is all about unity and harmony,” she said about the holiday marketing for the whisky brand.
But Wang from Shanghai said this about smaller brands or brands that are new to the Chinese market: “It doesn’t matter if you’re Starbucks (SBUX+2.17%) or you’re just trying to get Chinese consumers to notice your products for the first time.” You should learn about the culture, work with reliable Chinese partners, and be ready to change your home-market plan if necessary.
