Trade war or not, China Inc already reining in American brands


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, Starbucks and Procter & Gamble’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 ($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 plays up 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 that co-authored the report.