The governmentâ€™s â€śMade in China 2025â€ť plan is not the only force driving Chinaâ€™s innovation push. A new breed of Chinese consumers – digital, millennial, and increasingly well-off – is powering disruptive trends that are particularly visible in the consumer goods sector.
M-Industry, the manufacturing arm of Switzerlandâ€™s largest grocery retailer Migros Group, is experiencing these changes first-hand. Patrick Glauser, Head of Operations and Business Development in China, shares some of the game-changing trends the company is encountering as it introduces its premium food and near-food brand Orange Garten into the local market.Are Chinese businesses disrupting the grocery retail industry?
Omni-channel formats are developing faster in China and they definitely have a disruptive character. Consumers here are already living the online-to-offline (O2O) experience. Hema is one example: an O2O supermarket from the Alibaba group, where every product in their physical store has a code that can be scanned for more information and product recommendations. RISO, another new initiative, combines grocery shopping with eating-in experiences. These formats foster new consumer habits and combine channels and categories in new ways. We have to be ready to play on this landscape by managing our distribution channels accordingly.Chinaâ€™s online retail market is already the worldâ€™s largest. Is it also the most advanced?
The behaviour of online consumers is certainly advancing more quickly in China than in other markets we are present in, including Europe. The ease of purchase is boosted by the fact that the shopperâ€™s personal details are saved and payments are made so easily. Another difference is Chinese shoppersâ€™ higher demand for online product information. They are always on the lookout for something new, more so than in Western markets. Since they invest so much time researching new goods and services, they expect extensive descriptions and reviews. Across a variety of platforms, it is necessary to communicate how your products are used, what is unique about them, and where they can be found.In this sea of goods and information, how do you make your brand stand out?
There are some cultural and communicational challenges when it comes to positioning our products. It is difficult from a management perspective to evaluate how a brand is coming across if you donâ€™t understand the subtleties of language or culturally-specific associations. On the other hand, the inquisitiveness of Chinese consumers works in our favour. Increasingly, they seek products they can trust in terms of quality, health, safety, and environmental sustainability – attributes which we absolutely fulfil with Orange Garten. They are also giving more and more thought to what lies behind a product: the brandâ€™s authenticity and lifestyle associations. As a Swiss manufacturer with a tradition of almost 100 years, we are able to bring many of these functional and emotional elements to the table.Are local competitors catching up with international FMCG brands in the premium segment?
Chinese companies and brands are improving their products and ingredients, but the biggest development is on a marketing level. More local competitors are positioning themselves to compete directly with international brands. We see it across all our categories: premium yogurt, bottled water, detergents, and cosmetics to name a few. If you see a box of Blue Moon detergent or a bottle of Nongfu Water, the packaging design has a similar appeal to that of a high-end international brand. However, the appearance of local premium products sometimes doesnâ€™t match the inside. There are inconsistencies in their messaging, pricing, or technical features. This is a big challenge for consumers.What is the main challenge you face when competing against local peers?
Chinese companies have the advantage of being culturally closer to the consumer. We try to overcome this by getting local knowledge into the equation with a team who truly understands the market and helps us foresee and react to trends, something we do in every market we enter. Furthermore, we foster intercultural competences through training and exchanges between our global teams and our headquarter in Switzerland. This way we remain authentic while allowing for adaptation.What can international players in this industry learn from their Chinese peers?
The fast prototyping and speed-to-market of Chinese companies is something we can and should learn from. It allows them to quickly gain consumer feedback on what works and what doesnâ€™t in terms of product, packaging, and marketing. We have high quality standards, and strong innovative capabilities when it comes to product development. However, when we are entering a new consumer market as complex and large as Chinaâ€™s, embracing this trial-and-error approach could help one understand the local market much more quickly.
Contact us at email@example.com for competitive insights and strategy support to succeed in the Chinese market.
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