Trade war or not, China Inc already reining in American brands 無論有無貿易戰 中國公司早已壓制美國品牌

Tue, Jul 10, 2018 - Page 14

As Beijing and Washington veer towards a full-blown trade war, American brands in China face what may be an even bigger threat: local rivals armed with innovative products and the Chinese government’s blessing. American household names like Apple Inc, Starbucks Corp and Procter & Gamble Co’s Pampers are seeing their dominance challenged, a potential threat to the hundreds of billions of dollars US firms make in China.

According to an analysis of data from Bain and Kantar, local brands snatched almost three-quarters of China’s 639 billion yuan (US$97 billion) market for fast-moving consumer goods — a category that includes items like soft drinks and shampoo — last year, up from two-thirds in 2013. The data, shared with Reuters, shows that US products like Pampers, Colgate toothpaste and Mead Johnson infant formula saw their market share drop around 10 percentage points in the past five years. The data was based on a survey of 40,000 urban households.

At the same time, savvy Chinese brands like SeeYoung, offering a popular silicon-free shampoo, and Pechoin, a maker of skincare products that uses local ingredients, gained rapidly. “Local competition is now extremely high on the agenda of foreign firms in China,” said Bruno Lannes, Shanghai-based partner with Bain & Co, the consultancy firm that co-authored the report. “In order to win in China now they need to beat not just traditional competitors,” he said. “But they need to win against local companies that are faster and more innovative than they had realized.”

American brands have long enjoyed a vaunted status in China. US fast food, beverages and coffee chains are ubiquitous in China’s cities, while consumers lap up US-branded infant formula, designer jeans, cars and smartphones. That dominance, however, is threatened by China’s push to bolster domestic brands by creating champions in certain categories and weeding out weaker players to improve quality.

Apple Inc’s iconic iPhone has seen its share of the country’s smartphone market stall at around 10 percent since 2012, according to data from the analytics firm Canalys, and has been overtaken by upstart domestic phone makers like Oppo, Vivo and the more established Huawei.

Starbucks, which boomed in China on the back of a budding coffee culture, said its same store sales growth in the country slowed to zero in the second quarter of 2018. The firm cited delivery issues, but it has also been facing a rising tide of small, fast-growing domestic rivals in China’s big cities.









Follow Up

Reading Comprehension


English soap and candle maker William Colgate established the William Colgate & Company in 1906 in New York after emigrating to the US. The company initially produced cakes of soap. On Colgate’s death in 1857, the company was reorganized and renamed Colgate & Company under the management of Colgate’s son, Samuel Colgate. Colgate Toothpaste, intially sold in glass jars, was released in 1873. In 1896 the company released the world’s first toothpaste in a tube, called Colgate Ribbon Dental Cream.

Another American company, the B.J. Johnson Company, began producing a soap made entirely of palm oil and olive oil in 1898. The soap was a runaway success, so much so that the company renamed itself Palmolive after its star product. Palmolive merged with another soap company, the Peet Brothers, and then purchased the Colgate Company in 1928 to become Colgate-Palmolive.

Did you know?

The world’s oldest-known formula for toothpaste was invented by the ancient Egyptians in 4 AD over 1,500 years before Colgate began marketing its toothpaste. Egyptian toothpaste was comprised of crushed rock salt, mint, dried iris flower and pepper, which were combined to create a cleaning powder surprisingly similar to today’s modern toothpastes. When the powder is mixed with saliva in the mouth it turns into a paste, and this is how ancient Egyptians used to clean their gnashers.

“You can’t put the toothpaste back in the tube” is a popular English saying. It means a situation has already happened and cannot be reversed.

(Edward Jones, Taipei Times)