Oct 12, 2019

Chinese consumers shun American products

Illustration: Rebecca Zisser/Axios

American brands are facing challenges in the Chinese market, as trade and geopolitical disputes wage on for the two countries, the Wall Street Journal reports.

Why it matters: Western executives had long-established plans to dominate the Chinese market, but global consumer brands now have a smaller market share in China than at any other time since the last financial crisis, per WSJ.

The big picture: U.S. companies have "miscalculated how difficult it would be to gain a permanent foothold in a country that has turned toward patriotism," the Wall Street Journal writes. Chinese consumers want more products that showcase their pride in being Chinese.

  • Chinese brand recognition is increasing in the market as the quality of goods continues to improve.
  • Chinese consumers are rejecting some foreign brands "because they have run afoul of Chinese politics," writes the Wall Street Journal.

The impact: Consumer spending in China on foreign products is extremely important since it contributes to about 1/3 of global growth, according to WSJ. If more Chinese consumers don't buy foreign products, it will force Western companies to rely on domestic buyers and markets.

  • 70% of smartphone sales in China came from foreign brands Nokia, Samsung and Apple as of 2011; while in 2019, 71% of smartphone sales were from Chinese brands Huawei, Oppo and Vivo, per WSJ.
  • Meanwhile, Pizza Hut and KFC have responded to the shifts by incorporating more locally influenced products.
  • Carrefour and Uber, among other American companies, have decided not to enter the Chinese market because it'd be too complex or costly for them to navigate.

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