Tuesday, February 14, 2012

Image-driven Brands Poised for Growth in China

Today, the Wall Street Journal had an intriguing story on the brand preference of the burgeoning working class in China and how they are increasingly willing to pay for genuine brands versus fakes.

The article quotes a young man who captures the growing sentiment in China about fake brands:
"The difference of buying real and fake products is how you feel after."..."I can wear a label I've paid for and  feel proud." 

More proof? 95% of Chinese women between 28 and 35 said they'd be embarrassed to carry counterfeit handbags, according to China Market Research.

Image-driven brands that offer self-expressive benefits stand to gain most from this trend. Fashion apparel, jewelry, and beauty product categories are great examples.

Automotive is another image-driven category. Luckily, it's hard to "knock off" a car. Instead, auto manufacturers will continue to benefit from the growing middle class that can afford a car. This trend is clear from the latest earnings from auto manufacturers, even the Big 3, that demonstrated strong growth in Asia.

Unfortunately, I doubt software brands will be impacted by this trend. US and Chinese governments, in conjunction with technology companies, will need to continue their crackdown on intellectual property infringement to help this category. Also, software provides more of a functional benefit (not self-expressive) and the fakes function like the genuine articles because it's just digital code after all. Thus, offering less incentive for people to pay more for the authentic versions.

Image-driven brands like Nike are well aware that all this will further accelerate growth for them in China. As a marketer observing from the outside, it's fascinating to watch US consumerism sweep across China.


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