Foreign brands lose Chinese market share to domestic firms

Domestic rivals win over consumers with 'star' products and boost advertising

PUBLISHED : Wednesday, 02 July, 2014, 1:44am
UPDATED : Wednesday, 02 July, 2014, 2:04am

More than 60 per cent of foreign brands of fast-moving consumer goods lost market share on the mainland last year to more aggressive home-grown rivals, a study found.

The biggest market share losses for foreign brands - between 6.3 per cent and 7.5 per cent - were seen in personal-care products, cosmetics and carbonated soft drinks, sectors where they faced fierce competition from local brands, it said.

The study, released yesterday by global consulting firm Bain & Co and market research company Kantar Worldpanel, tracked the purchases by 40,000 mainland households from April 2011 to April this year and analysed data in 106 non-durable consumer goods categories.

"Domestic [fast-moving consumer goods] brands are becoming more competitive and did a lot of things right during the past three years," said Bruno Lannes, a partner at Bain & Co.

Jason Yu Jian, general manager of Kantar Worldpanel China, said local brands had won over more consumers in recent years with new "star" products, adding they had done a good job in online promotion and invested heavily in advertising.

"Many of them have made big progress in lower-tier cities and established a strong presence there," Yu said.

The study found that multinational brands enjoyed a market share of about 45 per cent in first-tier cities such as Shanghai, Beijing and Shenzhen last year, down 0.7 percentage point from 2012. In second-tier cities, their market share was 38 per cent, a fall of 1.7 percentage points, and in third-tier cities it shrank 1.4 percentage points to 28 per cent.

Foreign players still dominated the market in categories such as chewing gum, baby diapers, soft drinks and infant formula. They also saw marginal gains in their market share in hair conditioner, biscuits, shampoo, chocolate and beer.

Lannes said most of these categories were imported to the mainland by foreign brands, which still had an edge, thanks to their innovation and consumer trust.