Chinese consumers don't idealize American products the way they used to - and that’s bad news for Apple and Tesla
Business InsiderMay 10, 2018
For decades, Chinese consumers have prized foreign brands, thinking that products made by American or European companies indicated higher quality than domestic. Increasingly, that's no longer the case.
Chinese people born before 1985 have a "mindset that foreign brands are better" than Chinese ones, billionaire William Li told Business Insider during a recent interview at the 2018 Beijing Auto Show. But for those who were born after 1985, the mindset is different.
"When I first went to the United Kingdom in 1997, I thought that the difference between China and Europe was quite significant," Li said. "But for those born in the 1990s, when they visit Europe or the US, they do not think there is a significant different."
Li is the founder of electric car startup Nio, which is counting on that trend to help it compete with Tesla.
The change in perception among Chinese consumers is showing up in numerous markets in China previously dominated by western companies. A study by Credit Suisse released in March found that young Chinese consumers are increasingly showing a "domestic brand bias."
More than 90% of young Chinese consumers would prefer to buy domestic home appliance brands, according to the study. Meanwhile, domestic companies producing food, beverages, or personal care products increased their share of the market by 3.3% over the last decade to nearly 70%, according to Nielsen.
“Chinese consumers, especially the younger generation, don’t just believe the notion that foreign brands are better. Right now, Chinese consumers think China is good and ‘Made in China’ is not bad at all," Charlie Chen, head of China consumer research at Credit Suisse, told South China Morning Post in March.
The Chinese smartphone market is dominated by domestic companies — Huawei, Oppo, Vivo, and Xiaomi. Apple is the only foreign brand in the top five, but it has lost significant ground to the domestic brands in recent years.
Apple's market share is believed to be down to 37% from a 2015 high of 54%.