Made-in-China Goes Upscale as a New Generation of Brands Battles Slowdown

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Made-in-China Goes Upscale as a New Generation of Brands Battles Slowdown

Bloomberg Businessweek | August 6, 2024

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You’ve probably seen the new face of China Inc. on your Facebook, TikTok or Instagram feed without even realizing it.  With their sleek websites, localized ads and social media campaigns featuring users who appear to be American or European, it would be easy for the casual scroller to miss that these are made-in-China products. They’re representative of a new cadre of Chinese consumer-goods manufacturers.

The first generation of Chinese exporters found success by fabricating cheap, unbranded products for Western companies: dinnerware sets for Walmart or T-shirts for Gap. The next wave produced higher-end goods—think digital cameras, designer handbags and cellphones—but still on behalf of big-name foreign clients, such as Apple, Nikon and Prada.

Over the past couple of decades, only a small group of Chinese consumer-product companies set out to win over US or European consumers under their own names. Appliance manufacturer Haier and computer marker Lenovo relied on acquisitions of well-known Western brands to do that, with mixed success, partly because of integration challenges.

The new cohort of young Chinese brands, such as Narwal (robot vacs), Boox (e-ink tablets) and Laifen (electric toothbrushes and hair dryers) is charting a different course. Their pitches are based on product performance, touting technical advances meant to make your life easier. Generally their products are still cheaper than US competitors’, but not always. (At $499, Boox’s Air3 e-ink notebook is priced $100 more than comparable Kindle models.) All three sell directly to consumers, as well as through third parties.

None of these manufacturers is big enough yet to have gone public, but they’re racking up sales, as well as positive reviews on consumer recommendation sites in the US and elsewhere. They’re also drawing the attention of private equity and venture capital firms.

M any of these brands are well known at home, where they’ve benefited from the upswing in consumer nationalism to build substantial businesses. But the world’s No. 2 economy is slowing markedly. Consumers are spending less, and companies have responded by aggressively cutting prices.  For many Chinese manufacturers, the only real hope for revenue growth—or even just to preserve current levels of profitability—is to take on established companies abroad. Brand owners from mainland China filed more US trademark applications in 2023 than all other foreign applicants combined.  But their ability to sell premium options into Western contexts is not just a market issue, but also a political one nowadays.  Hence, the companies are looking at the possibility of manufacturing some of their products in the US, Europe and other Asian countries, “to prepare for tariff and demand changes.”

3 key takeaways from the article

1. The first generation of Chinese exporters found success by fabricating cheap, unbranded products for Western companies. : dinnerware sets for Walmart or T-shirts for Gap. The next wave produced higher-end goods—think digital cameras, designer handbags and cellphones—but still on behalf of big-name foreign clients, such as Apple, Nikon and Prada.  The new cohort of young Chinese brands, such as Narwal (robot vacs), Boox (e-ink tablets) and Laifen (electric toothbrushes and hair dryers) is charting a different course. Their pitches are based on product performance, touting technical advances meant to make your life easier.
2. None of these manufacturers is big enough yet to have gone public, but they’re racking up sales, as well as positive reviews on consumer recommendation sites in the US and elsewhere. They’re also drawing the attention of private equity and venture capital firms.
3. But their ability to sell premium options into Western contexts is not just a market issue, but also a political one nowadays.  

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Topics:  Global Economy, Chinese Companies, Tariff, Global Trade, Globalization, Europe, USA, Competition