Bloomberg Businessweek - USA (2020-12-07)

◼ BUSINESS Bloomberg Businessweek December 7, 2020

17

In 2008 atleastsixbabiesdiedand300,000fellill
afterdrinkingmade-in-Chinainfantformulatainted
withtoxicchemicals.Inresponse,manyChinese
parentsembracedforeignbrands,catapultingthe
likesofDanoneSA’sAptamilandNestléSA’sIlluma
tothetopofthemarket.Yetforthepasttwoyears,
theleadingformulabrandinChinahasbeenmade
byChinaFeiheLtd.,a Beijingcompanythatempha-
sizesitslocalrootsratherthanseekingtoobscure
them.“MoresuitableforChinesebabies,”thecom-
pany’sadvertisingboasts.
Incategoriesrangingfrombabyfoodandbottled
watertosportswearandskincream,Chinesebrands
areputtingpressureonglobalrivalsthatdependon
thecountryformuchoftheirgrowth.Whileincreas-
ingnationalismhasboostedthemomentumof
domesticproductsforthepastcoupleofyears,the
Covid-19pandemicis hasteningtheshift.Withprices
typicallylowerthanforeignbrands’,domesticprod-
uctshaveincreasingappealintimesofconstrained
householdbudgets,andthegrowthofonlinesales
hasweakenedthemultinationals’advantagesin
distributionandmarketing.“Chineseshoppersare
showingstrongerconfidenceinlocalbrands,”says
HelenWongofQimingVenturePartners,whichhas
backedlocalstartupssuchaslingeriemakerNeiwai
andcafechainCoffeeBox.“Thecoronavirusis accel-
eratingthetrendaspeoplestayhome,watchlives-
treaming,andshop.”
Investorshavepiledintodomesticcompanies
thatareovertakingmultinationalrivals,doubling
thecombinedvalueofChina’s 500 topbrandsin
thepastfouryearstoabout$3.8trillion,according
tomarketingconsultancyWorldBrandLab.Clothing
andshoemanufacturerAntaSportsProducts,which
in 2018 passedNiketobecomeChina’sNo.2 sports
apparelbrandbehindAdidas,is upmorethan50%
thisyearevenasthebenchmarkHangSengindex
hasfallen6%.SharesofChina’sbiggestbottled
waterbrand,NongfuSpring,havemorethandou-
bledsinceitsSeptemberHongKongtradingdebut.
YatsenHolding,ownerofcosmeticshousePerfect
Diary,a growingthreattothelikesofL’Oréaland
EstéeLauder,hasjumped75%sinceitsU.S.initial
publicofferinginNovember.

Localnamesaccountforsevenofthetop 10

cosmeticsbrands,upfromjustthreein2017,

accordingtomarketresearcherDaxueConsulting.

L’OréalSA’sMaybellinemakeuplinehasseen

itsshareinChinaplunge,to9.1%lastyearfrom

morethan20%in2010,accordingtoEuromonitor

International.Intheskincareandlotioncategory,

theshareofL’OréalParisdropped,to4.5%last

yearfrom5.6%in2014,puttingit neckandneck

withlocalbrandPechoin.Thegrowingstrengthof

Chinesecosmeticsmakerscanbetracedtotheir

smartonlinestrategy,accordingtoDerekDeng,

a partnerinShanghaiwithBain& Co.“Insurgent

Chinesebrandsaremorelikelytobedigitalfrom

DayOne,”hesays,whilemultinationalstendto

favorphysicalstores.

PerfectDiary,launchedin2017,nowstands

justbehindseveralEuropean-ownedbrands,with

4%ofthecrowdedmarketforso-calledcolorcos-

meticssuchaslipstickandmascara,Euromonitor

estimates.Itsadvertisingstressesthatitsprod-

uctscomefromthesamemanufacturersasDior,

Lancôme, and Armani but sell for lessthan

one-thirdtheprice.It’steamedwithMondelez

International’sOreosfora skinfoundationcream

(no,it doesn’tcontainground-upcookies;thebox

lookslikeanOreo).OnSinglesDay,theNov. 11

shoppingpaloozaorganizedbyAlibabaGroup

HoldingLtd.,PerfectDiary’sonlinestoreincluded

livestreamsofinfluencerspitchingproductssuch

asanimal-themedeyeshadow(co-brandedwiththe

DiscoveryChannel)featuringcolorsandpackaging

inspiredbyrabbits,deer,andfish.“We’veproven

wecanstandoutina highlycompetitivemarket,”

saysDavidHuang,chiefexecutiveofficerofYatsen.

Foreignbrands aren’tfinishedinChina,of

course.Theydominatecategoriessuchashigh-end

handbagsandluxurycars.EstéeLauderCos.sold

morethan2 billionyuan($300million)ofproducts

onSinglesDaywitha livestreamingcampaign,two-

for-onediscounts,andinstallmentpaymentplans.

AndKFC—stillthebiggestfast-foodchaininChina—is

supplementingitsfriedchickenwithproductssuch

asfast-cookingstinkysoursnailnoodles to cater

to diners stuck at home in the pandemic. “The

Where ‘Made in China’

Is Beautiful

● After decades of lagging behind foreign rivals,

domestic brands are increasingly competitive

Skincare

①L’OréalParis

②Pechoin

③Lancôme

Babyformula

①Feihe

②Aptamil

③Illuma

Sportsapparel

①Adidas

②Anta

③ Nike

▼ Top-selling brands in

China by percentage-

pointchangein market

share, 2010 to 2019

◼ Domestic brand

-1.

8.

12.