China rediscovers national pride

Seven years ago when China revealed plans to join the World Trade Organisation, Western brands and businesses were all the rage in the People's Republic.

by Fortune
Last Updated: 23 Jul 2013

Now there is a backlash against mindless acceptance of Western influences, represented by moves to close a Starbucks that has been located in the Forbidden City for seven years.

At the same time, there is a growing fondness for Chinese brands as the country shakes off its reputation for producing low quality goods.

Wealthy Chinese who were once enamoured of Western food and fashion labels are now embracing Chinese-designed clothing, Chinese modern art and Chinese clubs and restaurants are becoming hip.

'Sinofication' is a challenge for the Western companies that are investing heavily in China, having long believed that the market holds untold fortune for them.

Although there is little evidence yet that Western brands are suffering as Chinese culture rediscovers its confidence, Chinese companies are gaining market share in sectors such as passenger cars and consumer electronics. The 2008 Olympics could add to the growing nationalistic fervour.

Clever companies are tapping in to the trend. For example, Motorola sold 2m units of its Motoming mobile phone handset after dropping the keyboard and replacing it with a touchscreen that uses a stylus for Chinese handwriting. It is also taking a more local approach to advertise its Crazr phone in China.

Sony is also fighting back against the growth of Chinese electronics brands such as TCL with a flat-screen TV that hangs on a wall like a scroll, after observing that Chinese houses have more wall space than Japanese ones.

Yum Brands, owner of the fast-food chains KFC, Pizza Hut and Taco Bell, is also adapting to the new China. It is creating fast-food Chinese restaurants called East Dawning. Although development is slow, Yum anticipates that the brand could eventually be extended globally.

Ultimately, Western companies will have to be quicker to keep up with the pace of Chinese innovation in order to stay ahead of the game.

China's New Cultural Revolution
By Sheridan Prasso
Fortune, June 4, 2007
Reviewed by Jennifer Whitehead

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