周颖：国货春天来了——“一体两翼三引擎”中国国货品牌突围之路 - 2020-08-31

(Zhou Ying: Professor, Antai College of Economics and Management, Shanghai Jiao Tong University)
From the focus on quantity to quality, Chinese brands are shedding its traditional impression of being low-end and old-fashioned to become affordable and trendy. Everything happening nowadays have pointed to a new fact that that the prime time for Chinese brands has come. This conclusion is based on China’s four major incentives: First, policy incentives. In 2017, the State Council has assigned May 10 as the China Brand Day, a manifestation of the strategy to improve national strength through fostering quality brands; In 2019, the Ministry of Commerce established the “Double Quality Shopping Festival” and proposed upgrades in both branding and quality from the supply side. Since the Sino-US trade war, China has raised the consumption tax on imported products to 25%. The cost of purchasing imported goods has increased, thus bringing new opportunities for domestic products.
Second, economic incentive. According to data from the National Bureau of Statistics in 2018, domestic consumption contributed 76.2% to China’s GDP growth. The consumption structure of citizens continued to optimize, and the Engel coefficient dropped to 28.4%. According to NBS data in January 2020, GDP per capita in China surpassed $10,000 for the first time. Following the economic trajectory of Japan and South Korea, China is set to embrace the prosperity of local brands as people pay more attention to them. In addition, people tend to focus on cost-effective products after the pandemic, which has brought opportunities for the rise of affordable local brands.
Third, platform incentive. Platforms like Alibaba, JD, and Pinduoduo have launched multiple plans to support domestic products. From Tmall’s “Local Fashion” to an upgraded campaign dubbed “New Local Goods Plan”, Alibaba’s goal is to add three Chinese products to everyone’s shopping cart. It aims to nurture 200 domestic brands with annual sales of over 1 billion yuan and help 200 traditional brands surpass the annual sales target of more than 100 million yuan. In addition, it plans to cultivate 1,000 new product planners for local brands, and help 1,000 Chinese brands and intellectual property owners sell cross-industry. JD launched the "Chinese streetwear" initiative to endorse trendy local apparel brands to the younger generation. Pinduoduo also unveiled the "New Brand Plan" and "Shanghai Time-honored Brands E-commerce Plan", and promised to invest 10 billion yuan worth of marketing resources to help brands expand market share.
Fourth, consumption incentive. With China’s rising national strength and political and economic status, Chinese have boosted their own cultural confidence and regard  domestic brands as their preferred choices. High-quality and high-value Chinese products are favored by consumers, and Chinese brands are experiencing upgrade and transformation by going through quantitative to qualitative changes.
Chinese consumers are becoming more rational as they prefer more cost-effective products. Easy to use, good-looking, and affordable are the key traits in the people’s purchase decisions. Consumers are increasingly resonating with local brands, ushering in a ‘local fashion’ wave across the country. Based on most-searched keywords and product reviews, more and more consumers are choosing to actively search for Chinese brands or products.
Last year, a total of 299 brands made it to Tmall’s “100 million yuan sales club” during the Nov 11 Shopping Festival. Apart from established brands like Huawei, Gree and Haier, high-flying domestic brands such as Perfect Diary also leapfrogged to the premium sales league.
Chinese production has experienced different phases from “Made in China”, “Quality Made in China”, to “Smartly Made in China”. The development path of domestic brands can be categorized into three major approaches: technology-driven, brand remake, and national IP. Among them, the technology-driven approach, represented by Huawei and Xiaomi, has a special focus on science and technology; The second approach features the rebranding of local brands. Traditional brands have managed to revamp themselves through diversified marketing measures such as promoting product upgrades, participating in international fashion week, and cross-industry IP cooperation. By attracting a large number of young consumers, the reingoration of local products has become the inevitable trend.
From Shanghai Pechoin, Huili shoes, Big White Rabbit candies to Li Ning and the Forbidden City lipstick, terms such as "highlight of domestic products" and "national fashion brand" have frequently appeared in media reports. In 2018, Li Ning debuted the New York Fashion Week, where its “Enlightenment” series featuring original Chinese creativity were snapped up immediately on domestic e-commerce platforms. On Sep 4, 2019, Tmall teamed up with the three top Fashion Weeks in New York, Milan and Paris to launch a new "China Cool" project, which attracted industry-wide attention. Tmall led 9 major Chinese apparel brands to appear on the stage of the Fashion Week. Among them were the 80-year-old domestic brand Three Guns, and mature fashion apparel brand Peace Bird, breaking the stereotype of these brands being “old school” and “low-end” commonly held by young people.
The third approach is based on national IP building with a focus on culture. A growing number of domestic brands are exploring traditional culture and history, by combining tea, silk, opera, embroidery and paper-cutting with new technologies and trends. They enter the market with brand-new propositions and exhibit amazing dynamism. The products launched by the Forbidden City Taobao and the Forbidden City Cultural are highly sought after. Domestic animations such as "Nezha" also stand out. It’s hence apparent to tell that consumer’s awareness of Chinese culture has significantly increased.
In a nutshell, everything indicates that the prime time for Chinese brands has come.