http://www.forbes.com/sites/wadeshepard/2016/05/22/how-made-in-china-became-cool/#689145d23dab
Wade Shepard
A revolution in consumer sentiment has spread across China. “Made in China” no longer inherently means cheap, inferior, and unfashionable. The respectable Chinese brand has emerged, and some have not only caught up with their more established foreign rivals but have actually started to surpass them in China and beyond.
In 2011, 70% of smartphone sales in China were from three foreign brands: Nokia, Samsung, and Apple. At that time, the country’s myriad local electronics manufacturers and nascent domestic brands were thought to be little more than cheap impostors, lacking in quality and simply not carrying the same social-proof and status as the expensive and trendy foreign phones which dominated the market.
“Any self-respecting Chinese consumer wouldn’t be seen dead with a local brand,” Mark Tanner, the director of
China Skinny, a Shanghai-based consumer research firm, described the prevailing attitude of this period.
But now, hardly five years later, this has changed.
“Last year, eight of the top-ten [smartphone] brands were Chinese,” Tanner explained, “with Huawei and Xiaomi in the top spots and local brands quickly eroding the two foreign brands, Apple and Samsung.”
This year, the trend has continued. Oppo, a home grown Chinese hi-tech/media company, recently became the second most popular smartphone brand in China, whose 67% growth was enough to
propel it past Apple. According to
various reports,
seven of the top ten smartphone brands in the world are now Chinese. This includes Huawei, which is not only the mainland’s top handset brand but is currently slotted as number two in Europe and number three in the world.
LONDON, ENGLAND – APRIL 06: Richard Yu, Chief Executive Officer of Huawei Cunsumer Business Group and Henry Cavill attend the Huawei P9 global launch at Battersea Evolution on April 6, 2016 in London, England. (Photo by Anthony Harvey/Getty Images for Huawei )
Chinese brands are no longer inherently looked down upon, as they were just a few years ago. According to a recent
McKinsey report (PDF direct download link), 62% of Chinese consumers now prefer Chinese brands over foreign ones if the quality and price are equal. “Five years ago it would have been well under half,” Tanner said.
Tanner attributes this drastic about-face in consumer sentiment to four main factors:
1) Many Chinese brands have drastically improved the quality of their products
This is by far the most important driver of this transition: “Made in China” no longer equates to bad. Where China’s manufacturers initially found their niche filling the world’s markets with low cost products they are now also pumping out some of the most sophisticated, cutting edge, and high-quality items available, and consumer sentiment around the world has adjusted accordingly.
2) Chinese consumers are becoming more confident in the social-proof that comes with domestic brands
Foreign brands are no longer anything new in China. They’ve had a major presence in the country for the better part of a generation, and to the young, jet set of the country, international brands like Apple and Starbucks are on the decline as far as their ability to
help flaunt their wealth, sophistication, and worldliness and are becoming just a
normal part of the landscape — a handful of options to choose from among many others. As some high-end Chinese products are no longer functionally inferior to their foreign counterparts, the footing that international brands once had is eroding fast. The free-fall
descent of Apple in China— sales
dropping 26 percent so far this year — is just one example of this. According to Tanner, Chinese consumers no longer “need a foreign brand to show they’re cool.”
3) Buying Chinese brands is increasingly being seen as a patriotic act
The desire for Chinese people to support Chinese brands for idealistic or patriotic reasons is also rapidly increasing.
“People will feel encouraged to support a Chinese brand because they are a Chinese person,” Cody Chao, a watcher of China’s tech space, summed up this phenomenon matter-of-factly.
Key opinion leaders, such as the First Lady Peng Liyuan, who is very public about exclusively wearing only Chinese fashion, are bringing domestic brands into the forefront and having a major influence on China’s consumers. Tanner explained that in October 2012, World Luxury Association found that 86% of Chinese consumers refused to buy domestic luxury products because of their country’s reputation for cheap goods. Then, just 18-months later, after what has been dubbed the “Peng Liyuan effect,” this number fell to 9%, according to research by Added Value.
Chinese first lady Peng Liyuan attends a state dinner in Harare, Zimbabwe, Tuesday Dec. 1, 2015. (AP Photo/Tsvangirayi Mukwazhi)
“If we look back to 2011, 31% of Chinese consumers wanted to support Chinese companies by buying Chinese goods,” Tanner said. “Just a year later, it was 43%. It is representative of how fast Chinese consumers are maturing.”
4) Domestic cinema ushers in a renaissance of Chinese culture
Contemporary Chinese culture is being helped big time by the growth of domestic cinema, which is using its soft power to promote Chinese brands similar to the way that Hollywood promotes Western brands like Starbucks and Nike. In 2012, 47.6% of China’s box office was local films, but last year this rose to 62%, which is something that Tanner said shapes national pride and a preference for all things Chinese.
Some Chinese brands also often have an advanced understanding of their country’s multitudinous and complex markets, and are able to devise sales strategies and product features which are highly optimized for the local.
Oppo became a model example of a Chinese brand using locally targeted marketing campaigns and technological innovations to their advantage. With highly-promoted technologies, such as phones that can provide three hours of talk time from five minutes of charging, using Korean and Chinese pop stars as spokespeople, and filling lower-tier cities, where people are less likely to buy online, with a plethora of brick and mortar shops, they quickly rose to become the number two smartphone brand in the country.
WEST HOLLYWOOD, CA – JULY 28: ANTM Cycle 22 model Dustin McNeer attends the ‘America’s Next Top Model’ Cycle 22 Premiere Party presented by OPPO and NYLON on July 28, 2015 in West Hollywood, California. (Photo by Chelsea Lauren/Getty Images for NYLON)
The tides of China’s manufacturing empire are rapidly shifting, and consumer sentiment has been following closely behind. Where it was once only about making the largest amount of products as fast and cheap as possible, it’s now about quality, marketing savvy, and brand image. Five years ago Xiaomi did well by positioning itself as an acceptable alternative for people who couldn’t afford an iPhone or a high-end Samsung, which is a marketing strategy that no flies so well today.
“They don’t say that anymore,” Chao said. “They say, ‘We are good.’ This is a new trend for the Chinese smartphone industry, which is now about high-quality, high-price.”
“Chinese are inherently proud of what they’ve achieved in the past generation and are now realizing, ‘Hey, we’re actually a pretty impressive country,’” Tanner concluded.
