Sinorblog / Ecommerce in China / How foreign brands can successfully position..
5 min read

How foreign brands can successfully position themselves in China

May 11, 2017 |   Stephen Drummond

Global marketers can no longer rely on "foreignness" to add premium value to their foreign brands in the Chinese market. But in some categories, health and safety concerns have seen a comeback in overseas brand relevance.

It’s important to understand the historical context to evaluate where we are today with regard to the foreign-local brand dynamic in China. More than 20 years ago, there was a black and white distinction between ‘premium’ foreign and local brands in most categories. In the 1970s and 80s, low quality local products were the norm and Chinese consumers had to accept that reality, they literally had ‘not much choice’.

As international brands - usually everyday FMCG products - entered China in the 1980s, they initially had a kind of rarified status, with sexier packaging, exotic names, a promise of better quality and of course status. But these brands had a high price-tag to match, becoming aspirational but out of reach.

For example 20 years ago there was high demand for Lux Bar Soap ‘grey’ imports over the locally made version. While there was no real difference in the product, people were willing to pay an imported premium.

Colgate Toothpaste was widely available and had extremely high preference ratings linked to its ‘foreignness’, (it was fully imported) but at 13rmb compared to the local price for toothpaste of around 2rmb few consumers could justify the price gap.

Over the last 2 decades, there have been many changes to this foreign-local dynamic. International brands have had to make themselves more relevant by making themselves more accessible in pricing and they have invested a lot in making themselves culturally appropriate. They have become ‘more local’. At the same time, many Chinese brands have got their act together.

What was once a gulf between foreign and local brands has become a grey area in terms of product quality and importantly consumer perception.


In the mid-90s, Chinese Department stores were full of bland boxes posing as TV sets or washing machines while brands from Western companies positively dazzled next to them in contrast. These days however you’d be hard pressed in a blind brand test of the actual products to tell the difference. The real difference remains in the price tag between a TCL and a Sony and of course the brand’s status, but the pragmatic Chinese consumer has largely woken up to that.

It’s important to note is that every category has its own unique story in the foreign-local dynamic.

Luxury remains almost exclusively the domain of European brands – not unlike the rest of the world.

There are now a dizzying array of configurations which have muddied the whole, once simple divide in the ‘foreign-local’ dynamic.

In many categories Chinese consumers now have these ‘grey area’ choices:

Foreign brands – including prestige brands – that are now made locally

Most models from the ‘big three’ German luxury brands: Audi, Mercedes and BMW are made in China. Consumers know this but it has not dented the prestige foreign association of the brand.

Foreign brands with unique Chinese characteristics

In the race for relevance, many overseas brands have adopted Chinese ingredients. Pantene (and others) with Black Sesame – a traditional Chinese essence believed to make ‘black hair blacker’.

Foreign brands launching locally competitive economy versions

Colgate set the pace with the launch of a 3.9 RMB ‘basic’ Anti-Cavity paste in the late 1990s which made them directly competitive with local brands. Since then Nestle have launched a 1RMB ‘wafer’ and P&G’s Tide launching a locally priced ‘White’ version to go head to head with improving local brands like Diao Pai.

Foreign Brands that have been bought by Chinese companies

Roewe is a vehicle marque created by the Chinese automaker SAIC Motor in 2006. Roewe vehicles were initially based on technology acquired from defunct British carmaker MG Rover. SAIC was unable to purchase the rights to the Rover brand name and created the Roewe marque as a replacement.

Chinese brands that have been ‘bought’ by, and now manufactured by, international companies

Zhonghua Toothpaste, China’s ‘national’ toothpaste brand, has been made under license by Unilever for decades. Unilever as a recognized brand in its own right in China has merchandised the fact that the brand is now made to international standards.

Chinese brands with internationally sourced ingredients

This is a relatively recent phenomena driven heavily by recent food and safety scandals particularly in milk, general dairy and infant formula. For example Biostime, a Chinese milk formula company sources all its product from France and heavily promotes that fact. It also shows the financial power of many cash-rich Chinese companies as they seek brand credibility.

Chinese brands that are developing international stature (or at least attempting to do so)

Lin-Ning endorses a number of athletes and teams, both in China and around the world and has/had sponsorship deals with stars like Shaquille O'Neal (retired), José Calderón of the New York Knicks, Cleanthony Early of the New York Knicks, Glenn Robinson III of the Indiana Pacers, Evan Turner of the Boston Celtics, and Dwyane Wade of the Miami Heat. Then there’s Haier and Lenovo who leverage their global popularity to reinforce their credentials within China.

There’s another notable perspective on how Chinese consumer see overseas brands.

Many Chinese consumers support for the presence of overseas brands, but not necessarily because they offer better status or (especially not) value, but because their competitive ‘quality’ presence has actually pushed local brands into improving.

In contrast to some Western markets where ‘foreign’ brands are often politically demonized for ‘taking away local jobs’ and in general compromising local brands and businesses, the Chinese see overseas brands as having an important role in improving life in China.

This article is a guest contribution by Stephen Drummond, Chairman and Chief Strategy Officer, Y&R Advertising China. Stephen is also a member of the Advisory Board for the Access China Summit, to be held on the 21st June at Dockside in Sydney. The event is organised in partnership between Sinorbis and Ashton Media and is designed to help Western brands capitalise on the opportunity presented by the growing demand for international products in China. For information about the Access China Summit and to register, please visit the conference website.

Don't forget to share this post!

Ready to get started?