Are you joining the “Made for China” trend?

An increasing number of Western brands are launching new products, or even brands, catering to consumers in emerging markets.

Are you developing products catering to the needs and likes of well to do Chinese customers?

That’s where the money is right now, and Western brands are still favored over local ones.The combination of perceived quality with a bit of local tailoring, love or exclusivity is hence an intelligent way of finding new customers.

Products tailored to their needs and wants

Like all consumers, Chinese, Indian, Brazilian, Russian and Middle Eastern consumers are keen on products tailored to their needs, wants and desires, either for practical reasons or simply because of cultural pride.

Affluent Chinese prefer foreign brands

This phenomenon is spawned by the fact that economic and consumption power is shifting towards emerging markets. And considering that, according to McKinsey, affluent Chinese consumers prefer foreign brands to Chinese ones it’s clear that it’s worth while for Western companies to focus on Chinese customers. Add to that the fact that China’s retail sales may outstrip those of the United States already in 2016 and it makes even more sense to cater to the new Chinese middle class.

Shift to emerging markets

China’s wealthy shrugged off the recession. Actually only 8% of them changed their luxury shopping behavior in 2009 (46% of Americans and 51% of Europeans, however did) . Forty four percent of China’s wealthy instead increased their spending during the global downturn.

Global growth moving to BRIC

About 80% of global growth is likely to take place in emerging markets. The figure could go even higher if India were to facilitate imports of luxury goods. Not to mention if commodity prices go even higher which will increase wealth in Russia. So there is a need for Western companies to create both uniqueness and make consumers in emerging markets feel they belong. For companies who manage to do so, the new rich in BRICs offer a world of opportunity.

Some Made for China products

Trendwatching, one of the world’s leading trend firms have singled out some products created by Western companies for Chinese customers. Levi’s dENIZEN, a new jeans brand for Asian/Chinese customers with slimmer fits. For wealthy customers in Shanghai Dior offer very expensive Shanghai Blue Phones. Shang Xia is Hermés’ Chinese brand of ready-to-wear and decorative arts inspired by Chinese culture. When Cloé celebrated five years in China they created a limited edition of Marchi handbags to mark the occasion. The limited edition of BMW’s orange metallic M3 Tiger was very popular in China. Not least since it was released to coincide with the Chinese year of the Tiger.

Apple “Designed in California, Made for China”

In Apple’s Shanghai store staff started wearing red t-shirts with that slogan in Mandarin. A play on the words on the back of all iPhones “Designed by Apple in California, assembled in China”. And the Chinese loved it.

Introducing cheaper brands in China

Honda (Li Nian), Nissan (Venucia) and GM (Baojun) are creating and introducing less expensive cars for China since many customers in emerging markets still have less to spend than their counterparts in the West.

So have you jumped on the Made for China bandwagon yet? Or are you aiming for the Indian, Russian, Brazilian or Middle Eastern markets instead – or – as well? If so, what markets have been most successful for you? What new products have proved to be hits in the different countries? If not, can you really afford to ignore the new emerging middle classes?

(Photo: PhotoXpress – chinatiger)

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35 Responses to “Are you joining the “Made for China” trend?”

  1. GuyW Says:

    There's no question of the allure, and power, of international brands in emerging markets. In fact, in most emerging economies consumers spend proportionately more of their income on such "luxury" items than is the case in developed markets.

    This, together with the fact that many emerging markets have much stronger growth than in the developed economies and the huge populations in these new markets, makes them a natural target for the world's (read: West's) leading brands.

    The interesting thing to watch will be how long it will take for Chinese, Indian, Brazilian, etc., brands to make their mark on the world stage and become brnads that global consumers aspire to own. Japan was an early post-war success story in this area, followed by South Korea. Can the BRIC countries follow suit?

  2. catarinaalexon Says:

    Glad we agree Guy. Good point about how long it will take before BRIC countries come up with leading brands that global consumers are keen to own. Japan and South Korea managed to do so mainly when it comes to cars and electonics. Will be interesting to see if one of the BRICs launch a brand to rival say Chanel and Hermés.

  3. Catherine Lockey Says:

    Nice visual Catarina – it really caught my attention. I had no idea the Chinese shrugged off the recession and only 8% of their wealthy changed their luxury shopping habits compared to 46% of the American wealthy. Many of my artistic clients will benefit from your information about the buying ability of the Chinese middle class. Thank you.

  4. catarinaalexon Says:

    My pleasure Catherine. If you can get them to adapt what they do to Chinese taste they can make a fortune. They just have to invest in a bit of market research and then make slight changes accordingly.

  5. catarinaalexon Says:

    Glad we agree Emdadul.

  6. keyuri joshi Says:

    Trends, marketing, and advertising are very intriguing fields of work to me. Your article is insightful and I appreciate the way that companies cater to the emerging markets. Of course, I'm biased to India!

  7. catarinaalexon Says:

    Thank you Keyuri. Products are being developed to suit Indian customer's needs and likes and companies who do so will definitely benefit.

  8. Philip Says:

    Its surprising how some multinational brands overlook these emerging markets. Apple has completely ignored the Indian Market – they should have given the same treatment as they gave the Chinese. Its the overlooking of trends that cause brands to loose a sizable chunk of sales that have been eagerly grabed by the competitive enterprenueral guys

  9. Kate F. Eaton Says:

    Catarina, although I'm not a producer or marketer of physical products, I found your post very encouraging. What a wonderful way to bring hope to struggling manufacturing firms – reminding them there are parts of the world eager to buy their products, if they're willing to tweak them to fit those markets. Always appreciate your insight on emerging trends.

  10. catarinaalexon Says:

    Agree with you Philip.

  11. catarinaalexon Says:

    Thank you Kate. Glad you agree with me. It's amazing that more companies haven't jumped on this bandwaggon. When it comes to US companies they would increase their products as well as create jobs in the US. But for some reason this has for many American companies become a complex issue. They feel they are letting the US down if they join this trend. As a matter of fact they are not, it's just a question of adapt or die, simply put.

  12. Jeannette Paladino Says:

    It's true that the emerging countries can't claim to own many well-known global brands, but they have the ability to make the products and services — what they need is the marketing know-how to create their own brands. After all, most of the most widely recognized brands are manufactured in developing countries.

  13. Susan Oakes Says:

    Hi Catarina,

    Most of the multinationals I worked with made sure they had a presence in these markets and they have probably increased their focus due to what you mentioned. What they do have to be careful about is the way they communicate the message as what may be fine in the western world will not translate well in other countries such as China. It is not only what they communicate, it is also how they communicate.

    Always learn something from your posts so thanks.

  14. Dennis Salvatier Says:

    My wife works very closely with the Chinese markets so I know that you're right on with your info. Two months ago one of the companies that she works with purchased Samsonite. An old American brand. Many people surely lost their jobs here in the states, but all the manufacturing was already taking place in China. Brands are more important now than ever.

  15. Gary Says:

    Catarina, kind of agreed with you. But not sure of your comments on increasing jobs in US. US company will make money for sure. But their manufactures are in those poor countries. The demand will demand for more capacities of those manufactures, which means more jobs for them.

  16. catarinaalexon Says:

    Good point Jeannette.

  17. catarinaalexon Says:

    Thanks Susan. Agree with you about the importance to communicate in ways that work in emerging markets. Have seen a lot of Westerners make huge blunders in the Middle East.

  18. catarinaalexon Says:

    Thank you for letting me know about your wife's experience of the Chinese market.

  19. catarinaalexon Says:

    Gary, manufacturing is moving from the West and is not coming back for the simple reason that Western factory worker's wages are far too high. But many companies keep executive staff in the West. Wouldn't you agree that 5 new jobs in the US thanks to joining the Made for China trend is better than none, or even people being made redundant?

    It doesn't matter what we feel about it. Jobs are irrevocably moving away from the West in order to keep companies profitable. So the only thing we can do is adapt.

  20. Rob Waters Says:

    Catarina/Gary not sure if this hits the mark but

    Made “for” China, “in” China seems to makes perfect sense it’s a market with massive potential, and the concept is not new.
    Take Toyota for instance (Japanese I know) their cars are made in the West for the West and I’m sure they don’t agonise over how many Japanese Manufacturing jobs are lost to the West through this strategy, (they would presumably sell a lot less cars if this were not their strategy).

    In China for China is also an emerging strategy for Industrial and infrastructure providers the “for” China element generally relates to specific local regulatory requirements. In some instances components are shipped to China in kit form for final assembly and this extra demand actually creates Western Manufacturing jobs!

    China is also experiencing significant inflationary pressure and although this would not necessarily impact on the “in” China “for” China concept, the decision to make in China for distribution the rest of the world is getting a little more complicated!

  21. catarinaalexon Says:

    Agree with you completely Rob.

  22. keepupweb Says:

    Catarina, After reading your article, I feel there's a glimmer of hope for US companies who want to manufacture products and export them to China. Unfortunately, it seems that the few US companies that still manufacture anything choose to outsource production. Interesting article.

  23. catarinaalexon Says:

    Thanks Sherryl, glad we agree. The trend of manufacturing moving from the West will continue, with the exception of some sophisticated assembly lines. One huge Danish company, for instance, is moving manufacturing to China because it's cheaper to transport the final products from China to Scandinavia then manufacturing them in Denmark. What choice do they have if they want to remain competitive i.e. stay in business?

  24. James Langley Says:

    Such a great post and a wonderful way to bring hope to struggling manufacturing firms, your encouraging words could help a lot. A huge population increase in their consumption such as China it clearly state that Western companies need to focus on Chinese customers.

  25. catarinaalexon Says:

    Thank you James. More Westen companies should join the "Made for China" trend. But for some reason, some Western companies seem to be of the opinon that China should adapt to them. Anyway, that's their loss.

  26. boredgamergirl Says:

    Think about it like this, it's about time we invaded their market as well!

  27. catarinaalexon Says:

    Yes, that's one way of putting it.

  28. Michael Says:

    I have found that conflict (Afghanistan) or hevaily embargoed countries such as Iran to be the most interesting markets.

  29. catarinaalexon Says:

    Interesting Michael. How do you get around the sanctions against Iran?

  30. Susan P Cooper Says:

    The shift from China being perceived as the producer to consumers was bound to happen with the new order of economic boundaries. I do not have a product per say that would be considered a lroduct for that market but I do know of others who do. I have watched with fascination as they struggle with how to attract and comminate with the Chinese consumer. Susan Oates is right when she talks about how the right form of communication is parimont when going after the Chinese market. Just my thoughts. :)
    My recent post Robert Mondavi Fume Blanc 2011

  31. catarinaalexon Says:

    True not only for China but Brazil, Saudi Arabia, India and so forth. Maybe the main thing is to present your brand the right way.

  32. becc03 Says:

    If I had a product to sell, I would certainly be on that bandwagon. Go where the demand is I say :)
    My recent post Makes your heart burst

  33. catarinaalexon Says:

    Yes it's the intelligent way to increase sales, isn't it Rebecca.

  34. @patweber Says:

    I do think I've heard that now, this China trend is slowing. That's why we see things happening in our USA stock markets – they are seeing it slow. Having said that, there is no doubt China's population is a magnet for business owners who have the products they want. I can tell from my Google analytics, right now it's not worth my time, energy or focus.

    Insightful as usual Catarina.
    My recent post How Would You Feel If This Was Your Last Day On Earth?

  35. catarinaalexon Says:

    Let's see what happens with the Chinese economy, Pat. Am not qualified to make a prediction. Glad we agree that it's a good idea to taylor for the needs and wants of people in emerging markets. Makes sense doesn't it. By the way, the expression "Made for China" applies to producing products tailored for any emerging market.

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