Many Chinese brands setting sights on US

28 January 2010

BEIJING: Many Chinese companies plan to enter the US in the near future, with Li Ning, the sportswear chain, being one example of a brand from the country that has true global potential.

The China Market Research Group has reported that 50% of consumer products companies based in the rapidly-growing economy intend to establish a presence in the US in the next five years.

At present, many of these firms are focusing on their home market – where retail sales improved by around 15% in 2009 – and areas like Africa and the Middle East, but this situation is set to change.

Shaun Rein, managing director of the China Market Research Group, said "in the next five years, Americans should be prepared to start seeing Chinese brands on the shelves of Wal-Mart, and not just the 'Made in China' label."

Li Ning recently opened its first store in America, based in Portland, and it has also signed sponsorship deals with players in the NBA, as it seeks to take on more established operators like Nike and Adidas.

Wang Lao Ji, which makes a range of herbal teas, is another organisation that Rein believes has made significant strides in building a strong brand capable of matching its multinational rivals.

It is currently the biggest player in the Asian nation's canned drinks sector, with sales of around $2.5 billion (€1.8bn; £1.5bn), a position it occupies despite the fact its products are twice as expensive as a can of Coke or Pepsi.

Rein argued that "Wang Lao Ji is taking market share from them both ... the company's marketing campaigns emphasise health and a way of life that resonate with Chinese consumers."

This latter point is often an area where foreign businesses come unstuck, with Marks & Spencer, the UK apparel chain, being one example of this trend, according to Rein.

While M&S aimed to provide the same range as in its stores elsewhere, with a target audience of 35–45 year old women, it failed to appreciate the aspirations of its potential customers.

"Chinese consumers ... all want to wear Louis Vuitton or equivalent high-end brands. Marks & Spencer should have made a better attempt to understand Chinese consumer behavior," Rein said.

As previously reported, young female professionals are one key driver of growth in many product categories in China, with brands like Omega and Lancôme, and chains such as Uniqlo and Zara, being particularly popular with this demographic.

Data sourced from Business Week; additional content by Warc staff