Since 2023, executives from global multinational corporations have embarked on a "rush to visit China," with a large number of foreign investment projects also landing in China. This trend not only reflects the confidence of multinational corporations in the prospects of China's economic development but also underscores the strategic importance of the Chinese market in the long-term development of multinational corporations.
As is well known, China is the world's second-largest economy and the second-largest consumer market. The rise of the middle-income group has driven an increasingly growing demand for high-quality products and services. This indicates substantial growth prospects for foreign brands in China. However, alongside the continuous rise of domestic brands and profound changes in consumer behavior, foreign brands in China also face numerous challenges.
According to the latest report "Insights of Executives of Multinational Corporations in China: Challenges and Opportunities for Brand Growth" released by PwC, over seventy percent of surveyed multinational corporations in China remain bullish on the Chinese market. Market size, economic growth, and consumer recognition are identified as the three key factors attracting multinational corporations to continue investing in brand building in the Chinese market.
Previously, PwC hosted a conference for executives of multinational corporations in Shanghai with the theme of "Rebuilding Brand Relevance," conducting on-site surveys of over 100 executives from different industries.
The results indicate that the majority of multinational corporations continue to be optimistic about the Chinese market. 75% of surveyed companies stated they have never considered relocating production and procurement out of China. Meanwhile, the Chinese government continues to enhance its support for foreign investment, such as with the previous release of the "Opinions on Further Optimizing the Business Environment for Foreign Investment and Increasing the Attraction of Foreign Investment" by the State Council. Over half of the surveyed companies believe that this recent policy to promote foreign investment is conducive to boosting corporate investment confidence.
In addition to its vast market size, China's comprehensive supply chain provides multinational corporations operating in China with stable expectations, becoming a significant factor attracting multinational corporations. However, multinational corporations also face multiple challenges such as geopolitical uncertainty, slowing market growth, and intense competition from local Chinese brands.
When focusing on specific industries, the challenges vary. For instance, slowing market growth is the primary challenge for finance and consumer industries. For the TMT industry, the rise of local brands and the impact of geopolitical uncertainty are the primary challenges. In manufacturing, the rise of local manufacturing forces poses the biggest challenge for foreign brands.
Facing these challenges, over seventy percent of surveyed companies have developed independent brand development strategies specifically for the Chinese market. However, less than half of the surveyed companies believe their independent brand strategy can adapt to the Chinese market. This highlights the need for foreign brands to continuously adjust brand strategies to adapt to market development amidst rapidly changing market dynamics. 25% of surveyed companies stated that they have not yet developed an independent brand strategy for the Chinese market, but most of these companies consider it essential and are either in the process of developing or planning to develop one.
"With the increasingly diverse demands of local consumers, multinational corporations need to continuously transform, accelerate their localization processes, enhance the relevance of their brands in the Chinese market, and create more diverse and sustainable brands for local consumers, thus winning more development opportunities," advised Huang Yaoho, Global Cross-Border Services China Managing Partner at PwC.
