Tim Min once drove BMWs. He considered buying a Tesla.
Instead, Min, the 33-year-old owner of a cosmetics start-up in Beijing, bought an electric car made by Chinese Tesla rival Nio. He likes Nio’s interiors and voice control features more.
He also considers himself a patriot. “I have a very strong inclination towards Chinese brands and very strong patriotic emotions,” he said. “I also loved Nike. Now I see no reason for that. If there is a good Chinese brand to replace Nike, I will be very happy to do so. “
Western brands like H&M, Nike and Adidas are under pressure in China for refusing to use cotton produced in the Xinjiang region, where the Chinese government has waged a wide-ranging campaign to crack down on ethnic minorities. Buyers vowed to boycott the brands. Celebrities have given up on their sponsorship contracts.
But foreign brands are also facing increasing pressure from a new generation of Chinese competitors who manufacture high-quality products and sell them through smart marketing to an increasingly patriotic group of young people. There is a term for it: “guochao” or Chinese fashion.
HeyTea, a $ 2 billion milk tea start-up with 700 stores, wants to replace Starbucks. Yuanqisenlin, a four-year low-sugar beverage company valued at $ 6 billion, wants to become China’s Coca-Cola. Ubras, a five-year-old company, wants to replace Victoria’s Secret with the most non-Victoria’s Secret product: wireless sports bras that emphasize comfort.
The anger at Xinjiang cotton gave these Chinese brands another chance to win over consumers. As celebrities cut their ties to foreign brands, Li-Ning, a Chinese sportswear giant, announced that Xiao Zhan, a member of a boy band, would become his new global ambassador. In 20 minutes, almost everything Mr. Xiao used in a Li-Ning ad was sold out online. A hashtag about the campaign has been viewed more than a billion times.
China is experiencing a consumer brand revolution. His younger generation is more nationalist and is actively looking for brands that can align with this confident Chinese identity. Entrepreneurs are rushing to create names and products that resonate. Investors are turning their attention to these start-ups amid declining returns from technology and media ventures.
When patriotism becomes a selling point, Western brands are put at a competitive disadvantage, especially in a country that increasingly requires global companies to follow the same political lines as Chinese companies.
Consumer protests in China are “a historic turning point and will have a lasting impact on Chinese consumers in the long run,” said Min. “Chinese consumers don’t want to eat the same crap that foreign brands feed them. It is essential that foreign brands respect Chinese consumers as much as Chinese brands. “
Foreign brands are far from being made in China. Its drivers helped boost Tesla’s deliveries. IPhones remain immensely popular. Campaigns against foreign names come and go, and local brands that place too much emphasis on politics risk unwanted attention if political winds change quickly.
Still, interest in local brands marks a significant change. After Mao, the country manufactured few consumer products. The first televisions that most families owned in the 1980s were Japanese. Pierre Cardin, the French designer, reintroduced fashion with his first fashion show in Beijing in 1979, bringing color and talent to a nation that during the Cultural Revolution wore blue and gray.
Chinese born in the 1970s or earlier remember their first sip of Coco-Cola and their first bite on a Big Mac. plot. We rushed to buy Head & Shoulders shampoo because its Chinese name, Haifeisi, means “hair that flies by the sea”.
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“We went through European and American fashion, Japanese and Korean fashion, American streetwear fashion, even Hong Kong and Taiwan fashion,” said Xun Shaohua, who founded a sportswear company in Shanghai that competes with Vans and Converse.
Now may be the time for Chinese fashion. Chinese companies are making better products. China’s Generation Z, born between 1995 and 2009, does not have the same attachment to foreign names.
Even People’s Daily, the traditionally sober official Communist Party newspaper, is entering the branding market. She started a streetwear collection with Li-Ning in 2019. In the same year, she published a report with Baidu, the Chinese search company, called “Guochao Pride Big Data”. They found that when people in China searched for brands, more than two-thirds searched for national names, compared with only about a third 10 years earlier.
As with so many things in China, it can be difficult to say how much of the guochao movement involves politics. Building homemade brands fits perfectly with the Communist Party’s desire to make the country more self-sufficient. The authorities also want the Chinese to buy more: domestic consumption represents only about 40% of China’s economic output, much less than in the United States and Europe.
Patriotism aside, entrepreneurs argue that their ventures are based on a solid business base. Similar trends have occurred in Japan and South Korea, both now with strong brands. Local actors are better acquainted with the skills of the country’s supply chains and how to use social networks.
Mr. Xun’s sports brand has half a million followers on Alibaba’s Taobao market and sells at the same prices as Vans and Converse, or even a little more expensive. He said that his brand competed by making shoes that fit better with Chinese feet and offering the preferred colors locally, such as mint green and fuchsia. It sells exclusively online and partners with Chinese and foreign brands and personalities, including Pokémon and Hello Kitty. At 37, he is the only person in his company who was born before 1990.
Guochao fashion has also reinvigorated older Chinese brands, such as Li-Ning. For many years, sophisticated urbanists considered the brand, created by a former world champion gymnast of the same name, ugly and cheap. Its characteristic red and yellow color combination, after the Chinese flag, was mockingly called “fried eggs with tomatoes”, a common Chinese dish. Li-Ning was losing money. Its shares were in a losing streak.
Then, the company launched a collection at New York Fashion Week in early 2018. Its bold look, combined with bold Chinese characters and embroidery, created buzz at home. Its shares have risen nearly nine times since then. Now, Li-Ning’s sophisticated collections sell for $ 100 to $ 150 on average, at the same level as Adidas.
As ambitious as these entrepreneurs are, almost everyone I spoke to admitted that Chinese brands have yet to compete with megabrands like Coca-Cola and Nike.
Alex Xie, a marketing consultant who works with companies in China, used the sportswear industry as an example. Nike has been a leader for years over Chinese brands in research and development. It has a deep network of relationships in the world of sports. It works closely with athletes to develop better shoes, sponsors many events and teams, including football, basketball and athletics teams from China.
“He simply has a much closer relationship with his customers than any Chinese brand,” he said.
But for these western megabrands, the cotton dispute in Xinjiang is a major challenge that can help their Chinese competitors. While previous outrage against Western brands like the National Basketball Association and Dolce & Gabbana has passed very quickly, this fight can last, many people said.
“In the past, some Western brands did not understand or respect Chinese culture, mainly due to a lack of understanding,” said Xun. “This time it is a political issue. They violated our political sensibilities. “
Then, like any experienced Chinese businessman who knows what topics are sensitive, he asked, “Couldn’t we talk about politics?”