Telecom Signaling Industry News

TMCNet:  Chinese brands beating global rivals [Khaleej Times (United Arab Emirates)]

[July 30, 2014]

Chinese brands beating global rivals [Khaleej Times (United Arab Emirates)]

(Khaleej Times (United Arab Emirates) Via Acquire Media NewsEdge) Senior executives at companies such as The Coca-Cola , Procter & Gamble and Colgate-Palmolive are being forced to adapt as the challenge posed by local firms intensifies in a slowing economy.

With green-tea flavoured toothpaste and pickled plum juice, an army of Chinese retailers is tapping local tastes to whittle away market share from global rivals that are banking their future growth on the world's second-largest consumer market.

Senior executives at companies such as The Coca-Cola , Procter & Gamble and Colgate-Palmolive are being forced to adapt as the challenge posed by local firms intensifies in a slowing economy.

Last year, China's 1.15 trillion yuan ($185.31 billion) consumer goods market grew at 7.4 per cent annually, half the rate of three years ago, according to a report this month from Bain & Company and Kantar World Panel.

In this tougher market, both local and foreign brands are targeting the same customers, and increasingly, the domestic firms are winning: nearly two-thirds of foreign brands surveyed lost market share in China last year, according to the report.

"The good domestic brands are closing the gap really quickly and are able to play off the idea that they know how to develop something that a Chinese person is going to want," said Ben Cavender, a principal at China Market Research Group.

Understanding the needs of Chinese consumers has given local companies an edge. Privately-owned Jiaduobao Group, or JDB, makes canned herbal tea which it says can put out internal "fires", playing on a concept in traditional Chinese medicine. The firm also sponsors a popular TV talent show, The China Voice.

"Our campaign around 'fearing internal fire' has helped JDB herbal tea become the highest selling canned drink in China," said Wang Yuegui, a senior executive at the firm.

JDB accounted for 6.1 per cent of the soft drinks market in 2013 by value, up from 4.2 in 2009, according to data from consumer consultancy Euromonitor. Coca-Cola had 13.1 per cent, while Pepsi had 3.9 percent.

Many of the Chinese firms taking on the international conglomerates are little-known abroad, but their local know-how is helping them broaden their appeal at home.

Hawley & Hazel, a joint venture owned by Colgate-Palmolive and its Hong Kong-based founders, makes Darlie toothpaste which leads the domestic market according to Kantar and Bain, playing to Chinese tastes with green tea and jasmine flavours.

Another popular toothpaste brand is made by Yunnan Baiyao Group, which uses its history as one of the biggest and oldest traditional Chinese medicine makers in the country as a selling point.

Taiwan-based drinks maker Tingyi Cayman Islands Holding, which bottles and distributes PepsiCo products in China, also says it makes a point of developing traditional Chinese flavours such as snow pear and pickled plum.

"There are a lot of things that Chinese prefer localised," said Bruce Rockowitz, chief executive of Global Brands Group and former CEO of global sourcing firm Li & Fung. "Foreign brands haven't adapted well enough." In a bid to fend off competition, market leader Coca-Cola launched small-sized products, which helped boost its China sales. It also offered shoppers discounts, like rival PepsiCo.

Coca-Cola, however, saw its market share drop more than three percentage points to 13.1 per cent last year, while PepsiCo fell 1.8 percentage points to 3.9 per cent, according to Euromonitor data.

Coca-Cola International president Ahmet Bozer said he was happy with the company's nine per cent sales volume growth in China during the second quarter.

Pepsi said in an e-mail to Reuters that its China revenue grew by low double-digits in the second quarter.

It also said its relationship with Tingyi and a research and development centre in Shanghai helped it develop products geared to the local market.

(c) 2014 Khaleej Times. All Rights Reserved. Provided by SyndiGate Media Inc. (

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