Foreign Brands Accelerate Landing in China Under Crisis

By the end of this year, a male cod liver oil company in Norway with over 150 years of production history will launch its products in China. One of the important motives for pushing them to enter the Chinese market is the shrinking of European and American markets brought about by the financial crisis.

“In recent years, foreign brands have become increasingly interested in entering the Chinese market, especially after the financial crisis.” Hu Yanrong, President of Dachang Huajia China, told the reporter of the “First Financial Daily” that more and more brands are trying Open up the Chinese market, whether it is through the market expansion service company agent or self-entry.

According to Matsumoto Tadashi, general manager of Japanese drugstore brand Sakura Kobayashi, all current business conditions in Japan are declining. Only the drug and makeup market can maintain an increase of nearly 10%. However, the annual growth rate of the Chinese drug and cosmetics market is about 30%. It is also up to 30%. Leading Japanese drug makers, including Welcia, Fuji Pharmaceuticals, and Kejia Kalai, have rushed to China.

According to Chunzi, a clothing design designer based in Shanghai, nearly 200 Japanese apparel companies have recently moved to China and each has received tens of millions of government funds. Our reporter was informed that a large Japanese company is seeking to purchase several high-end residential buildings in Shanghai to build a Japanese community for Japanese nationals working in China.

The strong spending power and rapid economic growth of the Chinese have also made some foreign brands trying to open the Chinese market unrealistic expectations of China. “They will think that even if a Chinese only buys a pen, 1.3 billion Chinese people will be a big market.” Hu Yanrong said.

Hu Yanrong said that the actual situation in the Chinese market is not so simple. First, many international brands have entered or are about to enter the Chinese market. The competition here has been fierce. Second, China has a vast territory and the business models needed in different places are different. As a result, the costs and risks of conducting commercial activities in the Chinese market have increased significantly.

However, the Chinese economy itself is also facing tremendous pressure, and various uncertainties are also intensifying. Will this affect the increase in consumerism and the pace of foreign brands entering the Chinese market?

Hu Yanrong said that in the past, economic growth in China has created considerable spending power. This kind of spending power will continue. Compared with other markets in the world, China is still an attractive region, although challenges will be encountered here. "After all, the attractiveness of the foreign brands' home market and other markets has been relatively low, and the space for expansion has been very limited."