China Market Watch: Foreign Brands Lose Popularity, Slowing Property Sector to Affect Economy

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Foreign brands losing popularity among Chinese consumers

Market reports have shown that the popularity of foreign brands’ consumer goods are gradually being over taken by domestic Chinese competitors.

Foreign brands’ market share fell from 33.5 percent in 2006 to 30.2 percent last year, having only increased market share in four out of 26 product categories.

Domestic brands have been employing more natural and health oriented marketing strategies to gain greater market share, and are able to adapt to the changing consumer base quicker than their foreign counterparts. This is mainly due to their deeper understanding of Chinese consumers’ preferences, and their ability to make faster marketing decisions.

A more stable economy and steady wage growth has fueled consumption, contributing 77.2 percent to China’s economic expansion in the first quarter of this year, an increase of 64.6 percent from the previous year.

Economy to be negatively affected by slowing property sector

China’s property sector, which is closely tied to the performance of the domestic economy and credit cycle, is set to cool, after a brief boost in the first half of this year.

The National Bureau of Statistics reported 8.8 percent growth in the first five months of this year, surpassing the 6.9 percent economic growth in the first quarter.

But analysts estimate that the sector will slow, negatively affecting the economy, even aspects such as commodity prices and government revenue. National property sales have already started to stall, with the sales growth rate dropping to 12.6 percent in May, compared to 20.1 percent during January to April this year, and 36.2 percent in December 2016.

The most significant slowdown has occurred in first-tier cities such as Beijing, Shanghai, and Shenzhen. Beijing’s sales of secondary home units fell from 30,737 in March to under 10,000 in June.

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Volvo’s new car models purely electric

Chinese-owned carmaker Volvo is set to become the first traditional auto manufacturer to produce only electric vehicles its line up of new models.

Though it will still produce earlier combustion model engines, all new lines of cars will be either hybrid or purely electric run cars between 2019 and 2021.

Since being bought by Hangzhou-based Geely Holding Group, Volvo has increased its focus on electric cars, aiming to sell a million by the year 2025.

The move reflects the direction that most car manufacturers are going in. Many other car makers are developing purely electric models, but finding the right balance between affordable models able to be mass produced is an expensive and taxing process.


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