How consumer nationalism is changing the Chinese market and challenging Western companies

And that is how the floodgates of nationalistic consumerism were opened. Let’s look at a few examples.

The tip of the iceberg, which is also visible to us in the West, is represented by the rise of the tech and automotive ‘National Champions’, which we have already covered in a previous article. The meteoric rise of electric car brands such as BYD and Xiaomi is not solely down to subsidies and a well-judged, forward-looking national industrial policy, but also to Chinese consumers who now perceive their own technology as superior or better ‘suited’ to their needs than the long-established overseas brands.

Food & Beverage has also become a daily expression of national identity, and there is a noticeable ‘de-westernisation’ of the urban diet: Chinese coffee chains (such as Luckin Coffee) have taken on Starbucks by focusing on local tastes and a digitally native approach.

In Fashion & Streetwear, design is returning to a reinterpreted past, updated with a contemporary twist: modern cuts that incorporate traditional elements (such as knotted buttons or the use of local silks) but within an urban context. Luxury hotels are moving away from Western design in favour of a Neo-Chinese aesthetic. Consumers want products that have a ‘story’ to tell, in which they are the protagonists, not merely guests in a foreign culture.

And in the world of beauty too, following on from J-Beauty (from Japan) and K-Beauty (from Korea), C-Beauty has surprisingly emerged, with brands such as Florasis, Mao Geping and Perfect Diary offering lipsticks featuring engravings that resemble works of art carved from jade. They don’t just sell make-up; they offer a reimagined take on the aesthetics of the Han dynasty.

And it is not just a matter of perception. In fact, China has achieved technological supremacy in many sectors, making ‘Made in China’ a brand that consumers aspire to.

And the Guochao movement cuts across demographic lines, uniting different generations for various reasons: for young people, born into a prosperous and powerful China, it is a sign of cultural rebellion against the West; older people, on the other hand, embrace it out of nostalgia and because of the renewed quality of domestic products, which remind them of their country’s economic rise.

What are the implications for Western companies and managers?

For our companies, this marks a momentous change. It signals the end of the easy years of the gold rush, when anything you touched generated sales and profits. It marks the end of Chinese consumers’ ‘blind faith’ in Western brands, and the end of an era when simply putting a tricolour flag or an Eiffel Tower on a product was enough to justify a higher price.

Whilst Chinese consumers once looked to brands as a passport to feeling like citizens of the world, the isolation brought about by Covid has turned that passport into a burden; indeed, today a Western manager must not only sell ‘quality’, but must work twice as hard to overcome a barrier of mistrust that did not previously exist. Indeed, consumers now demand that brands speak to Chinese culture, but with the appropriate sensitivity, avoiding crass cultural appropriation (such as the classic mistake of using a dragon or random Chinese characters), which is invariably met with criticism on social media for Western arrogance.

For a Western manager, this is an additional – and by no means minor – obstacle: we are no longer competing against a local product, but against a sense of belonging.

And perhaps this is the lesson to be learnt from the Guochao. For us managers, it is no longer simply a matter of selling a product to Chinese consumers, but of negotiating with their pride.

Go East!

*Partner at FA Hong Kong Consulting