Shopping in supermarkets these days, Chinese consumers are often dazzled by the endless selection of products both foreign and domestic, old and new, and written in Chinese and English.
With consumer frenzy in the air, manufacturers might ask: Which brands are Chinese people's favourites? Which hold the highest loyalty among Chinese consumers? And most importantly, which brands are the most competitive in the Chinese market?
A report unveiled this week by Sinomonitor International, a Sino-Japanese independent market trends monitoring company established in 1997, ranked the most sought after brands in 27 industries in 2003.
The industries targeted were IT, daily necessities, food and drink, pharmaceuticals and the financial sector. The products ranged from colour TVs to instant noodle, from toothpaste to alcohol and from personal computers (PCs) to bank cards.
Consumers chose the TCL King colour TV, Haier air conditioner, Motorola mobile phone, Lenovo PC, Rejoice shampoo, Peony Card and Ping'an Life Insurance as their favourite brands in their respective categories.
The report is based on data collected as part of the China Marketing and Media Study (CMMS). For the past seven years, researchers have been tracking more than 70,000 Chinese consumers in 30 major cities between the ages of 15 and 64.
The CMMS is conducted by Sinomonitor in co-operation with British market research group BMRB International and US software firm Telmar. The study covers over 5,000 brands in the Chinese market.
According to Forest Ma, CMMS research manager, the competitiveness index of the surveyed brands is calculated based on consumer share, ratio of loyal clients among all consumers, and market share growth indices.
"In terms of the number of people surveyed, this might be the biggest market survey so far in the Chinese market," said Ke Huixin, researcher with the Survey and Statistics Research Institute under the Beijing Broadcasting College.
"It is a serious, systematic research result," said Ma Hao, professor of management at the China Economic Research Centre at Peking University.
According to Echo Zhan, CMMS marketing manager, the survey discovered three main trends in China's consumer market.
First, domestic brands are gaining lost ground on their foreign rivals.
Among the 27 industries covered in the report, 16 hold domestic brands as the most favoured.
In the household electrical appliance industry, which makes products such as colour TVs, air conditioners and washing machines, all the top three brands are domestic.
In the PC field, topping the competitive list are also domestic brands including Lenovo, Founder and TCL.
"It is an exciting result," said Wang Weiqun, editor-in-chief of Successful Marketing magazine, co-sponsor of the report. "After 25 years of opening and reform, China finally has established the first batch of competitive local brands."
However, local companies still lose out to foreign brands in certain products such as shampoo, cosmetics, mobile phones and toothpaste.
For example, the top three shampoo brands are Procter & Gamble products like Rejoice, Pantene and Head & Shoulders.
But for the detergent sector, consumers prefer to go domestic as witnessed by Zhejiang Nice. Its Diao brand is ranked the top competitive brand in this field, followed by Amo from Unilever and Tide from Procter & Gamble.
Nice's success is owed to its strategy of capturing the low-end market, which had been ignored by international brands, in the first phase and shifting to the high-end market in the second phase.
In the mid 1980s, Nice's predecessor -- Lishui Chemical Plant -- was ranked 117th among China's 118 chemical plants in terms of sales. But in 2002, Nice's sales revenue reached 6 billion yuan (US$720 million), two thirds of the industry's total.
Going S. Korean
The second trend in China's consumer market is the increasing popularity of South Korean brands, especially Samsung and LG, particularly in 2002 and 2003.
In the mobile phone sector, Samsung has replaced Ericsson and holds the top three brands in China.
Meanwhile, in the household electrical appliances sector, which is dominated by domestic brands, LG successfully gained a foothold as it ranked third in refrigerator brands deemed most competitive.
Even in the daily necessities sector, such as toothpaste, LG has become a growing threat to industry leaders Colgate and Crest. Although not listed in the top three competitive brands, LG has the highest growth index among all toothpaste brands.
"In my opinion, South Korean companies, such as Samsung, spare no effort to get and study all available information about its consumers, that is one of the key factors supporting their success," said Zhang Zhongliang, director of the China Economic Monitoring Centre affiliated with the National Bureau of Statistics.
Moreover, these companies invest heavily in market research, which gives them a head start when trying to sell to a new market, said Ma of Peking University.
For example, with competition in China's household electrical appliances industry becoming cut-throat, LG positioned itself in the high-end market introducing high-tech digital products which soon attracted a lot of attention.
Samsung last year even won four world-class awards in technology innovation.
"Domestic enterprises must learn from South Korean firms," said Li Guangdou, a renowned marketing expert and general manager of a Beijing-based advertising company. "In the past, South Korean products were synonymous with low-grade products. But now, Samsung has become one of the world's 100 most valuable brands."
Good time, not long time
The third trend in China's consumer market is that although domestic brands are gaining a foothold on their foreign counterparts, customer loyalty is weak.
"Low loyalty has become the new bottleneck restraining further development of domestic brands," the report said.
Taking the household electrical appliance industry as an example again, although the top five competitive brands in colour TVs are local, Japanese brands such as Sony, Panasonic and Toshiba are among the five brands enjoying the highest loyalty. The other two are Haier of China and LG of South Korea.
"There will be a long way to go for domestic brands," said Ma. "Although we have some famous brands such as Haier now, the gap between domestic brands and foreign brands remains huge."
Experts attributed the low loyalty rate to the fact that domestic companies don't pay enough attention to building up their brands.
"Local brands should strive to live longer, rather than live better," Li said. "A recent survey indicated that the average life-span of Chinese enterprises is seven years. How can those short-lived enterprises create brands which can last long?" he added.
"I like foreign brands because they ensure stable quality and good service," said Lin Li, a 35-year-old woman shopping in Beijing's Ito Yakado Shopping Centre, putting LG toothpaste into her basket. "Of course I hope there will be a day when I can no longer tell the difference between domestic and foreign brands. I care only for quality and service."
(Shanghai Star January 9, 2004)
