Competition Between Foreign and Domestic Brands: A Study of Consumer Purchases in China

Abstract

Thirty years after the beginning of reforms, China continues to be a magnet for multinational corporations that view the country as a must-win market. However, competition has intensified in the country as more domestic brands gain market share. The fear of a backlash of foreign brands among multinationals has led them to search for new strategies for continuous growth. Based on a large-scale consumer survey in China, this study examines the purchase patterns of foreign and domestic brands across a number of product categories. The results suggest that purchase and ownership of foreign brands in both consumable and durable goods vary greatly across geographic markets and product categories. While foreign brands continue to lead in a number of product categories, domestic brands are gaining ground in some markets including the first-tier cities, highlighting the intense competition for the mind share of consumers. The evolving competitive scenario in China has significant implications for both foreign and domestic firms in brand management and marketing strategies.