Foreign brands lose ground in China's consumer goods market

Foreign consumer brands are losing more market share to local players in China due to a weaker presence in smaller cities where growth is stronger, according to a study released on Wednesday.

Foreign players lost the most ground - between 3.8 per cent and 4.8 per cent - in personal-care products, fabric softener and cosmetics, it said.

The study, by global consulting firm Bain & Company and market research company Kantar Worldpanel, tracked purchases by 40,000 mainland households over three years and analysed data in 106 non-durable consumer goods categories.

Domestic brands, it showed, gained share over their foreign competitors for the third year in a row, accounting for around 70 per cent of the market value in 26 categories. While losing in most categories, foreign brands did make gains in eight, including toilet paper, beer, hair conditioner and chewing gum.

"An important reason [for foreign brands' declining share] is that they usually focus more on top-tier mainland cities and their products sell mainly through hypermarkets. But growth in these big cities has slowed in recent years and people are showing an increasing preference to shop online or in smaller supermarkets," Bain & Company partner Bruno Lannes said.

Last year, the value of the overall urban retail market rose just 2 per cent, compared with 7.7 per cent growth in lower-tier cities.