Going back on yesterday post:

The latest China Market Research Group research (cited yesterday here) has revealed that trust towards American consumer brands is still an all time high, probably also due to China’s tainted milk scandal. 

Apparently, research findings showed that Chinese consumers trust foreign quality control standards to be higher in USA and thus preferred American consumer brands over local ones.Well, today I have happened to go through Alix Partners press release regarding their annual China Brand Power Index (released last week) and have been surprised to see that their findings point right into the opposite direction.

In fact the Power Index seems to show that domestic brands are actually the best preferred by Chinese consumers.

The Power Index surveyed 5000 respondents with more than 60 questions across eight consumer-goods sectors in five cities (Beijing, Shanghai, Guangzhou, Chongqing and Shenyang) on their relative preferences among the five timeless attributes of marketing: product, price, service, (store and in-store) access and (shopping) experience. 

Answers seem to clearly indicate that local brands are preferred over foreign ones as four of the most powerful brands by category ranked here are domestic.

The eight sectors on which the survey was based include alcoholic beverages, casual clothing, consumer durables, cosmetics, home products, home technology, non-alcoholic beverages and personal hygiene.

In the consumer durables and home technology sectors, Chinese brand Haier ranked significantly higher than many foreign brands for service. Also the best selected were: Tsingtao in alcoholic beverages, Hearttex in home products and Master Kong in non-alcoholic beverages.

Moreover, and surely quite surprisingly to many, respondents have indicated service to matter almost as much as product, with price ranking much lower, despite tougher economic times in China of late. Quite interestingly, this differs markedly with a similar survey conducted by AlixPartners in the U.S. this year showing that price now ranks well above service for American consumers!

Fred Crawford, chief executive officer of AlixPartners said that “the results of the survey confirm that you cannot simply transfer a Western model to China and expect it to work. It has long been assumed by many foreign brands that their product will sell, despite a lack of aggressive marketing, because it is ‘foreign’ and therefore perceived as better quality. But that is no longer necessarily the case.”

We definitely agree with the latest statement. Even though western appeal might retain a certain amount of allure, Chinese consumers are becoming increasingly knowledgeable about products and want brands to be honest about what they can deliver and keep to their promises.

Gaining Chinese consumers trust is thus becoming increasingly difficult. It is quite likely to assume that only those brands who will keep on delivering on their promises and investing in improving their brand performance at every touch point with consumers will be the one to reap profits.