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2008 and guo chao
2008 was the best and worst of times for Chinese brands. The Beijing olympics was supposed to spur national pride. Included in this national pride was pride for Chinese brands – guo chao. Chinese athletics brand Li Ning took centre stage in the opening ceremony, screwing over Olympic official partner Adidas. For other olympics ambush marketing is severely restricted, but this was a national champion in China. Chinese pride usually means someone else’s humiliation, in this case Adidas.
Right after the Olympics in September that year, a major food adulteration scandal became public. Over 300,000 babies were harmed when melamine was added by baby formula. The reason why this was done was to boost its ‘protein content’ in tests. The main brand in focus was Sanlu – a local milk powder brand. Subsequent tests found that adulterated powder had been sold around the world, by multiple Chinese brands.
Chinese consumers hoovered up milk powder all over the world. Several countries and Hong Kong had to limit milk powder purchases, due to Chinese tourists and intermediaries cashing in on the demand for safe milk powder. During 2013, I was working behind the scenes at an agency for FrieslandCampina to try and combat the shortages in Hong Kong. The ban has been put in place indefinitely.
Move forward a decade and guo chao is mainstream
Everything is political, this is even more so in China. With the rise of Xi Jingping he sought to stop Chinese ‘irrational worship of the West‘. There are well loved domestic legacy brands in China, a prime example would be White Rabbit candy.
Along with this inflated Han nationalism has gone a pride in domestic brands. Huawei handsets are as expensive, if not more so than Samsung and Apple – which equated to a perception of similar quality. The fact that Chinese live most of their online lives inside WeChat dulls the difference in software. The operating system is no longer important. This is similar to the vision that Jim Clark had for the Netscape browser. If apps were on the web and ran through the browser, that would negate the stranglehold Microsoft Windows had on corporate and personal computing.
Young adults in China now favour products with Chinese cultural designs and products made in China – guo chao. In one survey 75% of Chinese consumers surveyed state they like products that incorporate Guochao design elements. Design and colour choice is particularly important: doesn’t just mean “made in China” but embracing traditional Chinese elements and inciting national pride. Foreign brands have struggled to maintain market share. Guochao brands have built a good consumer reputation and market share by relying on the advantages of lower price, practical and competitive levels of quality. They have also suffered from the perception of being a copy or imitation of more expensive brands. Domestic brands have managed to use e-tailing to get over established foreign brand advantages in market penetration. More consumer behaviour related content here.