This photo taken on November 6, 2022 shows people visiting the Uniqlo stand during the 5th China International Import Expo (CIIE) in Shanghai. STR/AFP via Getty Images
Global clothing brands like Uniqlo and Nike are facing a tough market in China as consumers increasingly turn to affordable, unbranded alternatives, according to SCMP.
Once popular for their balance of affordability and fashion, these middle-market brands are now struggling to attract buyers who prioritize functionality and value over brand names.
As explained by Mintel's report, 59% of Chinese shoppers now focus more on the product itself rather than the brand, a trend that has been encouraged by economic challenges in the country.
As reported by Fortune, Uniqlo's parent company, Fast Retailing shared that its revenue from mainland China has struggled in the nine months through May 31 due to a mismatch between its offerings and local consumer preferences.
This shift in consumer behavior has also impacted domestic brands like Li Ning and Xtep.
Li Ning, China's largest sportswear brand, saw its sales growth slow to 2% in the first quarter compared to 6% the previous year. Xtep experienced a similar decline, with sales growth falling to 10% from 20% during the same period.
Jessie Xu from Deutsche Bank noted that consumers are now less willing to pay high prices for brands unless they get better quality or unique features. This has led to the popularity of budget-friendly, unbranded goods on platforms like Douyin and Pinduoduo, which are taking market share from higher-end sites like Taobao and Tmall.
Analysts believe that this trend towards more affordable options is expected to continue over the next two years, driven by a lack of improvement in job security and income levels. Brands may need to adapt to this shift in consumer preferences if they hope to maintain their market position in China.
Join the Conversation