Cashed-up Chinese consumers are buying more local brand names
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Wealthy Chinese consumers are spending up large on domestic brands sold online, according to new data from local e-commerce giant JD.
The data shows that 490 out of 572 high-performing brands which surpassed RMB100 million (US$14 million) in transaction volume from January to April this year were domestic. Out of 230 brands surpassing a transaction volume of RMB 300 million ($42.2 million) during the period, 79 were domestic brands – and 125 out of 151 brands surpassing RMB500 million ($70.3 million) were also domestic.
Key insights from JD’s data suggested that domestic brands are gradually becoming the top choice of Chinese consumers as quality improves, with the proportion of domestic brand consumption increasing year-by-year in 1st-tier cities as more well-educated and well-paid consumers buy more. Female consumers aged below 25 pay more for domestic brands and pay more attention to them, and in general, domestic brands are attracting more high-income consumers.
Furthermore, almost all consumers of domestic brands throughout last year were shown to be sensitive to product reviews, indicating an emphasis on product quality and the general pursuit of high-quality consumption.
Last year, growth rates of domestic brands in terms of the quantities of products, brands, and orders were all more than 20 percent higher than those of international brands year on year. That growth gap further expanded to 30 percent in the first quarter this year following the coronavirus outbreak.
In terms of transaction volume for domestic versus international brands for the whole of last year, the proportion of domestic brands in categories including maternal and baby, sports and personal care increased rapidly. In particular, facial cleansing products, female care products and other categories exceeded more than 150 percent on average. Imported products grew the most in categories such as toys and musical instruments, cleaning, and paper products.
E-commerce channels helped domestic brands reach lower-tier markets throughout last year, with 5th and 6th tier cities remaining the primary driving force of consumption of domestic brands. Even so, the situation is evolving in 1st tier cities, which are slowly turning to embrace more domestic brands.
Questions & Answers
Q.What evidence suggests Chinese domestic brands are improving in quality?
What evidence suggests Chinese domestic brands are improving in quality?
JD's data indicates that domestic brands are increasingly becoming the top choice for Chinese consumers due to perceived quality improvements. Last year, almost all domestic brand consumers were sensitive to product reviews, highlighting an emphasis on quality.
Q.Which demographics are particularly driving the growth of domestic brands?
Which demographics are particularly driving the growth of domestic brands?
Female consumers under 25 years old are paying more attention to and spending more on domestic brands. Generally, high-income consumers and those in 1st-tier cities, who are well-educated and well-paid, are also contributing to this trend.
Q.Which product categories saw significant growth for domestic brands last year?
Which product categories saw significant growth for domestic brands last year?
Domestic brands saw rapid increases in transaction volume in maternal and baby, sports, and personal care categories. Facial cleansing products, female care products, and other categories specifically exceeded 150% growth on average.
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