Made-in-China

The « Made in China » takes revenge

For a long time Chinese-made products were associated with low-cost and poor quality. The toxic chairs” sold by French distributor, Conforama, gave stinging allergic rashes to some 400 customers. The harmful dyes t-shirt” which sent a little girl in hospital stuck the knife deeper.

Fed up with the scandals, the world’s second-largest economic power has decided to shed its cheap image.

Inspired by countries such as Japan which used to have a connotation of low-end during the 50’s, China is working on changing its reputation. Manufacturers are seeking to move upmarket by offering qualitative and innovative products whilst maintaining competitive prices.

This initiative is supported by the Government, setting measures for quality control in order to reassure importing countries. It has implemented norms and regulations in its domestic market and created two entities, the AQSIQ and CNAS to supervise the procedure.

Investing in the future is part of the plan. The Government has allocated a more prominent budget for its universities to retain Chinese talents and attract foreign students. R&D is at the very heart of the new Chinese strategy.

The path from imitator to innovator, China conquers the world

China was viewed as the world’s “workbench” rather than as a global innovator. Now it can be proud of its technology sector. The Middle Kingdom has developed its own brands. It no longer plagiarizes or produces for others, it creates added-value items appealing to foreign consumers.

Lenovo is the perfect example of the Chinese success story. In 2013, the brand beat its American competitor, Hewlett-Packard, becoming the world’s leading PC maker operating in 160 countries. Lenovo wants to position as premium by offering top quality and advanced products yet produced with the soul of craftsmanship.

Huawei is another good example. When Samsung and Apple avoid to communicate on product origin, Huawei proudly spells it out at the back of its packaging.

In 2015, the brand announced earnings up 33 per cent from previous year, reaching 5.4 billion €. Still far behind Samsung and Apple, Huawei is however catching up very quickly.

To climb up the value chain and boost sales, Huawei and Leica partnered to set up a new R&D center to be situated at Leica’s headquarters in Germany.

The rise in unexpected fields

Not content to succeed in China, some brands dream of taking on the world.

Chinese brand Herborist is one of the few premium cosmetic brands with international ambitions. The brand reworked its positioning, combining Chinese identity with international design codes. In 2015, Herborist opened its first French store in Paris on the famous “avenue de l’Opera”. The store features a spa, offers a tea ceremony and Thai Chi classes. The brands flashes the Chinese chic in Paris.

The national preference

There was a time when one needed to purchase French to be elegant, American to be cool and German to be strong. This time is over for the Chinese. Buying local is seen as a patriotic deed.

The study “Future of China” conducted by Ifop for OMD showed that 40% of the Chinese prefer local brands and 25% always purchase them, mostly for the quality. Only 9% declare to favor international brands because of their superior quality.

That is all the more true in lower tiers (Tier 3, 4 and 5) where international brands are not always available.

Local brands have the advantage to better understand the population’s needs and they also benefit from a larger distribution channel allowing to meet demand faster than international competitors.

The emergence of emotional-value brands

The emotional drivers play a more and more important role in the purchasing process of Chinese consumers.

The economic boom over the past 3 decades, the access to new products and the growing internationalization transform the Chinese population. They are increasingly sophisticated and tangible product benefits (price, quality etc.) are no longer sufficient to trigger purchase.

Chinese brands know now how to engage and convert consumers. “Lifestyle” brands such as Icicle, Zuczug and JNBY use their proximity to appeal to the Chinese.

Icicle is a clothing brand inspired by Chinese traditional values, endeavored to bring harmony between human and nature. Zuczug is worn by Chinese celebrities and JNBY, inspired from Chinese modern art, opened several concept stores in big cities including Paris.

A unique case: the Chinese footwear brand, Feiyue, was copied by… the French!

The “Made in China” Feiyue by Shanghai Shenglong Shoes are sold 39 rmb (5€) in the country. The French copy is sold 80€ by Feiyue Shoes Holding and was seen in magazines worn by Orlando Bloom and Poppy Delevingne.

To conclude, the “Made in China” is more and more associated with quality.

The Chinese manufacturers have realized that fast and low-cost production no longer generates growth. Chinese brands are able to build innovative yet still cheaper smartphones, tablets and PC. Leaders in the technology sector have fierce challengers!

The reputation of “Made in China” is slowly improving but actions must be taken by the Government to fight the scourge of counterfeiting, detrimental to the development of Chinese companies abroad.

 

Article written by Thi My Nguyen, Market Research Manager at Ifop Asia.