Guochao (国潮), the term used to describe the current fashion for local brands and culture, represents a prominent trend that’s impacting the Chinese retail marketplace and one that is challenging international brands in China.
With the country’s growing manufacturing capabilities, increasing consumption power, and the rising interest in Chinese traditions and culture, local brand offerings are starting to trend across numerous industries.
Local Chinese brands are embracing this trend, upgrading their quality, modernising their image and strengthening innovation. In 2017, China’s State Council approved the very first ‘Chinese Brand Day’ to encourage local brands to drive innovation and development, and further grow their presence both at home and abroad.
Leading ecommerce platform Tmall is a driving force behind the Guochao trend; in 2017, the Alibaba-owned company began its ‘Fine Chinese Domestic Goods’ campaign in a bid to promote Chinese traditional products. The following year, it created a great deal of online buzz by bringing together 50 domestic brands in its ‘Guochao Coming’ campaign. This year, Tmall also launched ‘The New Chinese Goods Project’ which aims to help Chinese brands build awareness and drive growth both domestically and internationally.
In fact, consumer attitudes are also shifting. Mintel research indicates that Chinese consumers, today, are seeing domestic and foreign brands as being on par. In this case, regardless of country of origin, brands need to emphasise the benefits their products can offer to appeal to China’s increasingly discerning consumer.
Restoring confidence in ‘Made in China’ dairy products
In the past, Chinese consumers have been reluctant to place their trust in domestic brands, especially when it came to dairy products. While foreign brands still dominate the infant milk formula market, Chinese brands are catching up.
Leading Chinese dairy brands have made progress in regaining consumer trust over the past decade. Companies the likes of Mengniu, Yili and Feihe are working to ensure product safety and quality, and demonstrating strong research and development (R&D) capabilities by building overseas research centres with the aim of developing products that are suitable for Chinese consumers.
One of China’s most successful domestic dairy brands, Feihe Dairy, is the epitome of the Guochao trend. Aside from investing heavily in improving product quality—free-range, natural pastures, modern equipment and strict quality standards—the brand differentiates itself from foreign dairy brands by highlighting its suitability for Chinese infants. This is a messaging done right as Mintel research reveals that over three in five Chinese parents highly prioritise a product’s suitability for their baby’s physical health.
An advertisement by Feihe Dairy that emphasises its products’ suitability for infants in China.
Reinvigoration via the internet
Long-standing, established Chinese brands are quickly gaining popularity, particularly among the younger generation born in the 1980s and 90s. These consumers are the main buyers of traditional cultural offerings, emphasising how a revival in tradition, nostalgia and so-called ‘Chinese pride’ is in full swing.
Once perceived as outdated, unfashionable and only suitable for the old, a number of these established local brands have managed to modernise their image by launching spin-offs and crossover products. Aside from creating online buzz, these brands are now appealing to the younger generation who are seeking on-trend, fashionable offerings.
Well-known Chinese liquor brand Luzhou Laojiao launches perfume.
(Source: National Business Daily)
Traditional culture has been booming in China with over half of post-90s’ consumers saying that they are interested in nostalgia marketing, according to Mintel research. The Palace Museum, for instance, has developed its own fashionable intellectual property (IP) and has become a hit on social media. Besides being a retail success on e-commerce site Taobao, it is also continuously collaborating with different category players to generate further opportunities. In the wake of this success, food and drink companies and brands have an opportunity to create their own traditional cultural IPs.
Hao Xiang Ni Bird Nest, Red Date and White Fungus Soup leverages the Forbidden City IP to premiumise its product as a ‘royal-recipe beauty soup’.
Chinese packaged food brand Bai Cao Wei collaborated with the Summer Palace to launch a royal gift box for Chinese New Year.