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China’s anger at foreign brands fuels local competition

Tim Min once drove a BMW. He considered buying Tesla.

Instead, Mr. Min, 33, of a Beijing cosmetics startup, bought an electric car made by Chinese Tesla rival Nio. He likes Nio’s interior, and the sound control function is better.

He also considers himself a patriot. He said: “I like Chinese brands very much and very patriotic.” “I used to like Nike too. Now I don’t see any reason. If a good Chinese brand replaces Nike, I will be very happy.”

Western brands such as H&M, Nike and Adidas are under pressure in China because they refuse to use cotton produced in Xinjiang. The Chinese government has launched a broad campaign against ethnic minorities in Xinjiang. Shoppers vowed to boycott the brand. The celebrity gave up the endorsement agreement.

However, foreign brands are also facing increasing pressure from Chinese competitors who produce high-quality products and sell them to more and more patriotic youths through smart marketing methods. There is a noun: “National Super League” or Chinese fashion.

HeyTea, a $2 billion milk tea startup with 20 stores, hopes to replace Starbucks. Yuan Qisen, a low-sugar beverage company with a history of 4 years and a value of US$6 billion, hopes to become China’s Coca-Cola. Ubras, with a 5-year history, hopes to replace Victoria’s Secret with non-Victoria’s most secret products: a cordless sports bra that emphasizes comfort.

The anger against Xinjiang Cotton gives these Chinese brands a chance to win consumers again. With celebrities breaking up with foreign brands, Chinese sportswear giant Li Ning announced that the men’s team member Xiao Zhan will become its new global ambassador. Within 20 minutes, almost everything Mr. Xiao wore in Li Ning’s advertisement was sold out online. The hashtags related to this event have been viewed more than one billion times.

China is experiencing a consumer brand revolution. Its younger generation is more nationalistic and actively looking for brands that can confidently align with the Chinese. Entrepreneurs are vying to establish names and products that resonate. At a time when the returns of technology and media companies are declining, investors are turning their attention to these start-ups.

When patriotism becomes a selling point, Western brands will be at a competitive disadvantage, especially in a country that increasingly requires multinational companies to adopt the same political line as Chinese companies.

Mr. Min said that China’s consumer protests are “a historic turning point that will have a lasting impact on Chinese consumers in the long run.” “Chinese consumers don’t want to eat the nonsense that foreign brands have been feeding them. Brands must respect Chinese consumers like Chinese brands.”

Foreign brands are far from complete in China. Its drivers helped drive the increase in Tesla’s deliveries. The iPhone is still very popular. The movement against foreign famous brands has come and gone. If the political wind shifts quickly, local brands that emphasize too much political color may receive unnecessary attention.

Nevertheless, interest in local brands is still undergoing major changes. After the Mao Zedong era, the country has very few consumer products. The first television that most families owned in the 1980s came from Japan. French designer Pierre Cardin reintroduced fashion in his first fashion show in Beijing in 1979, bringing color and talent to the country that wore blue and gray during the Cultural Revolution.

Chinese born in the 1970s or earlier remember that they drank Coca-Cola for the first time and sip the Big Mac for the first time. We watched movies from Hollywood, Japan and Hong Kong, which included plots about the wardrobe and makeup as well as plots. We are eager to buy a head and shoulder shampoo because its Chinese name “Haifeisi” means “hair fluttering on the sea”.

“We have experienced European and American fashion, Japanese and Korean fashion, American streetwear fashion, and even Hong Kong and Taiwan fashion,” said Xun Shaohua, who founded a Shanghai sportswear company that competes with Vans and Converse.

Now may be the time for Chinese fashion. Chinese companies are producing better products. Generation Z in China was born between 1995 and 2009, and they do not have the same attachment to foreign names.

Even the People’s Daily, the traditionally shaky Communist Party’s official newspaper, has begun to get involved in brand building. The company collaborated with Li Ning to launch a streetwear collection in 2019. In the same year, it and the Chinese search company Baidu released a report called “National Super Pride Big Data”. They found that when Chinese people search for brands, more than two-thirds are looking for household names, compared with only about one-third a decade ago.

As in the case of China, it is difficult to say the extent to which the overseas super movement involves politics. The establishment of its own brand coincides with the Communist Party’s desire to make the country more self-sufficient. Officials also want Chinese people to shop more: household consumption accounts for only 40% of China’s total economy, far below the level of the United States and Europe.

In addition to patriotism, entrepreneurs believe that their careers are built on a solid business foundation. Similar trends have occurred in Japan and South Korea, and they now have strong brands. Local companies have a better understanding of the country’s supply chain capabilities and how to use social media.

Mr. Un’s sports brand has 500,000 followers on Alibaba’s Taobao market, and its price is the same as Vans and Converse, or even higher. He said his brand competes by making shoes that better fit Chinese feet and offering local favorite colors (such as mint green and fuchsia). He only sells goods online and collaborates with Chinese and foreign brands and characters including Pokemon and Hello Kitty. At 37 years old, he is the only person in the company who was born before 1990.

The National Super League wave also revitalized China’s established brands such as Li Ning. For many years, experienced urbanites have believed that the brand was created by an ugly and cheap product of the same name by the former world champion gymnast. After the Chinese flag, its iconic red and yellow combination is derided as “eggplant scrambled eggs”, which is a dish that Chinese people eat every day. Li Ning is losing money. Its stock is at a loss.

Then, the company launched a collection at New York Fashion Week in early 2018. The combination of its avant-garde appearance, bold Chinese characters and embroidery has caused a sensation in China. Since then, its stock price has risen nearly nine times. Now, the average price of Li Ning’s high-end series is between US$100 and US$150, the same as Adidas.

Despite the ambitions of these businessmen, almost everyone who spoke to me admitted that Chinese brands still cannot compete with big brands such as Coca-Cola and Nike.

Alex Xie, a marketing consultant working with a Chinese company, uses the sportswear industry as an example. Nike has been leading the development of Chinese brands for many years. It enjoys a deep interpersonal network in the sports world. It works closely with athletes to develop better sports shoes, and sponsors many events and teams, including the Chinese national football team, basketball team and track and field team.

He said: “Compared with any Chinese brand, its relationship with customers is stronger.”

But for these big Western brands, the Xinjiang cotton dispute is a huge challenge that can help their Chinese competitors. Many people say that although previous anger against Western brands such as the National Basketball Association and Dolce & Gabbana has passed quickly, the swing may continue.

“In the past, some Western brands did not understand or respect Chinese culture, mainly because of lack of understanding,” Mr. X said. This time, it is a political issue. They violated our political sensitivity. “

Then, like any savvy Chinese entrepreneur who knows which topics are sensitive, he asks: “Can’t we talk about politics?”

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