BEIJING — With the central government poised to prod consumers to buy even more this year, China’s domestic brands are gearing up with expansion plans aligned with the country’s ever-growing consumer market.
China’s homegrown brands, and especially those located or listed on the stock exchange in Hong Kong, are increasingly grabbing more of the attention and market share, like Hong Kong-listed shoe giant Li Ning. That company and a growing number of others have upped their game to compete with major international brands within China. Shanghai Tang is another such brand, along with Metersbonwe.
Analysts say the year ahead will bring more of that growth, but it may not increase faster than overall domestic consumption. In other words, it’s not likely that Chinese brands will grab a larger share of the market than they already have.
Lan Feiyan, a retail market analyst based in Shenzhen, said projections are for a 10 percent increase in retail sales for China this year. Recently released statistics show retail sales grew by a record amount last year, thanks in large part to central government economic stimulus spending. According to official figures, retail sales rose by 15.5 percent last year over 2008, the largest increase since the mid-Eighties.
The government-backed spending drive is apt to continue this year, with no plans in sight to change China’s economic stimulus spending efforts.
Kong Jun, a Shanghai-based industry analyst, said domestic brands expect 17 to 18 percent sales growth this year over 2009. Kong pointed to the growing urbanization of China and the domestic consumption that comes with it.
“This is a great push for domestic apparel brands,” said Kong.
But Matthew Crabbe, director of market research firm Access Asia, said the real question is related not to sheer growth numbers, but rather to retail profits. Growth is a given, but financial success is a different matter.
“It could be that domestic retailer revenues grow by over 15 percent, but then so will the retail market in certain regions, so that will just be surfing the wave, rather than any real growth in competitiveness,” said Crabbe. “What will count is growth in tougher, more mature regions, where I suspect profits will be increasingly tight this year.”