Article at a glance:
In China's fast-growing market for consumer goods, most foreign companies sell premium brands to the most prosperous consumers. Several industry leaders have achieved sales of more than $1 billion, but the rest have failed to crack their first $100 million. To scale up, they will have to sell to the mass of consumers with middle and lower incomes. Few foreign companies have gone this route, however, because they fear hurting sales of their premium brands.
The take-away
To broaden the appeal of a premium brand, consumer goods companies can adjust a product's inputs and packaging as well as cut prices.
This article includes the following exhibits:
- Exhibit 1: Growth of China's consumer goods market, 1998–2003
- Exhibit 2: Disparity in GDP per capita for cities in China, 2003
- Exhibit 3: Value-priced vs premium brands in China's consumer goods market
- Exhibit 4: Top ten brands in China by spending on TV commercials