Have a few minutes? When you do take some of them to read this great piece by our friend Paula Rosenblum. Paula is widely respected in our industry, so note that your customers are reading this, therefore you should as well.
Welcome To The Next Chinese Century: Part 2
Paula Rosenblum, Oct 15, 2019
Back in February 2019, I wrote a piece called “Welcome The Next Chinese Century.” At the time, I focused on (mostly) the sudden appearance of signs advertising the chance to use Alipay and WeChat at the Miami airport. Shortly thereafter, I was buying a bottle of wine up in Merrick, NY and discovered that the liquor store I was shopping in also advertised and took Alipay. Merrick? Seriously? Last I knew it was primarily a Jewish and Italian suburb of New York City.
Since that time, we’ve watched the US go back and forth on tariffs, and we’ve heard about the current debacle in Hong Kong, which many of our brands have taken a stand on, while our government remains mute.
However, in any war with China, we appear to be coming out on the losing end. On October 12, the Wall Street Journal published a piece entitled “America Is Losing The Chinese Customer” (paywall). The long and the short of this article is that for political and taste reasons, the Chinese consumer is losing interest in American-made products. Our original logic beyond finding the lowest cost source of supply, was to create new markets for our goods and services, and it’s turning out to be flawed.
It’s easy for me to take a shot at tariffs, and I’ve certainly done so before. But the situation in Hong Kong is a bit more… complicated.
As I said in my first piece on the Chinese century, I’ve long supported reducing our dependence on China as a source of goods. But China is now a powerful enough market that it can also say “Never mind, we’ll buy our own domestic stuff, not yours,” too. And according to the WSJ, they are doing just that.
China is buying local. The WSJ took a look at 30 categories of merchandise and found around two-thirds of all retail sales in those categories are domestic brands. That could spell more trouble for US-based companies who rely on China for a real part of their overall sales growth. This applies to luxury and sport brands, but also apparently on food products. Here’s a quote from the article that should worry all of us: For years, American companies looked to China as a land of new opportunity. Now a new reality is settling in: The Chinese consumer isn’t about to save the day for Western brands. Read More