---
title: "A Brief History of White-Label Products: What Exactly Are We Talking About When We Discuss 'White-Label'?"
description: "What exactly is a 'white-label' product? In a narrow sense, the definition is clear: it refers to private labels of large retailers, with retail giants like Walmart, Aldi, and Sam's Club, as well as local brands like Hema, being the most typical examples. The boundaries of the broad 'white-label' are much fuzzier, encompassing cheap electronics from obscure e-commerce sellers, unbranded clothing similar in style to famous brands, and daily necessities marketed as 'manufactured by the original factory of a certain brand.' There are also two other terms with equally vague definitions that are often used to describe these diverse products: 'factory goods' and 'generic brands.'"
author: "江睿杰"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2024-06-08"
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# A Brief History of White-Label Products: What Exactly Are We Talking About When We Discuss 'White-Label'?

> What exactly is a 'white-label' product? In a narrow sense, the definition is clear: it refers to private labels of large retailers, with retail giants like Walmart, Aldi, and Sam's Club, as well as local brands like Hema, being the most typical examples. The boundaries of the broad 'white-label' are much fuzzier, encompassing cheap electronics from obscure e-commerce sellers, unbranded clothing similar in style to famous brands, and daily necessities marketed as 'manufactured by the original factory of a certain brand.' There are also two other terms with equally vague definitions that are often used to describe these diverse products: 'factory goods' and 'generic brands.'

What exactly is a 'white-label' product?
In a narrow sense, the definition of 'white-label' is clear: it refers to private labels of large retailers, with retail giants like Walmart, Aldi, and Sam's Club, as well as local brands like Hema, being the most typical examples.
The boundaries of the broad 'white-label' are much fuzzier. Cheap electronics from obscure e-commerce sellers, unbranded clothing similar in style to famous brands, and daily necessities marketed as 'manufactured by the original factory of a certain brand' all seem to fall under the current discussion of 'white-label.'
There are also two other terms with equally vague definitions that are often used to describe these diverse products: 'factory goods' and 'generic brands.'
Narrow and broad 'white-label' products are completely different in business practice, yet they are placed under the same concept, perhaps because they do share two common points: the pursuit of low prices and opposition to traditional 'brands.' By tracing the origins of both narrow and broad white-label products, we can also understand the complex interactions among consumers, channels, and brands, thereby better understanding the current prevalence of white-label products in the Chinese market.
**To Discuss 'White-Label,' First Discuss 'Brand'**
Brand is the premise of white-label. Before the birth of modern brands, all products were neither white-label nor not. The 'brand,' which is strongly tied to trademark image and intellectual property, is a recent development of the last hundred-plus years.
The English word 'brand' originally means 'burn mark.' In murals from nearly 5,000 years ago, there are scenes of people branding livestock to mark ownership and deter theft. Marking products could also ensure product quality, as it made it easier to hold producers accountable.
Of course, the 'brand' of that period had little commercial value. Large-scale industrial production was not yet widespread, consumers had limited choices, comparisons between similar products were made through on-site inspection and word of mouth, and a stable price system did not exist. Many goods were priced individually or per customer, and there was no modern 'brand premium.'
It was not until the Industrial Revolution, with rapid developments in transportation and logistics and a massive expansion of production capacity, that the situation changed. The market was flooded with goods, both in total quantity and variety, making it difficult for individual consumers to accurately assess the value of goods. At this point, brand endorsement became an important reference, and the so-called 'brand premium' emerged.
From then on, the brand became the facade of a product, closely tied to pricing, target audience, and other major business issues.
Almost simultaneously with the emergence of brand premium, counterfeiting of famous brands also stepped onto the historical stage. Flexible manufacturers realized that 'riding on the coattails of big brands' could bring astonishing profits, and more and more counterfeit goods entered the market, eventually forcing countries like Britain and France to enact laws in the mid-19th century to regulate brand use and severely punish counterfeiting.
To better identify whether brands were being misused, trademark registration systems were also established in the second half of the 19th century.
The big brands we know today, such as Coca-Cola and Louis Vuitton, originated in this period. Modern brands with unique names and logos, registered with national institutions and holding exclusive rights, only became the norm in commercial life at this time. Brands began to become one of the important foundations of the market economy.
**Narrow White-Label: 'White-Label'**
The rise of brands meant an elevation in the status of manufacturers in the consumer market. Early modern brands were all established by producers. For example, the earliest registered brand in the UK was the brewery Bass Brewery, and in Germany, it was the steel company Krupp.
But as the variety and quantity of goods increased, the chain from production to retail lengthened, and retail purchasing became a highly specialized task. Thus, the status of large-scale retailers capable of sourcing high-quality goods also rose.
Retailers began to develop their own brands. For example, Marks & Spencer in the UK sold clothing and food under its own brand 'St Michael.'
In the 1930s, retail underwent another major transformation with the emergence of a new format: the supermarket. Unlike the department stores that had been prevalent since the 19th century, supermarkets primarily sold low-unit-price food and daily necessities, with fewer high-priced categories.
This made cost control a major focus of supermarket operations, and 'white-label' goods were born.
The literal meaning of 'white-label' is 'blank label.' Supermarkets were reluctant to pay high brand premiums to big brands, so they sometimes directly commissioned factories to produce goods of similar quality. These commissioned goods would be given a blank label, and after receiving them, the supermarket would affix its own trademark and sell them. These were white-label goods, later broadly referring to all 'private labels' that retailers directly commission from factories.
Price is the most obvious advantage of white-label goods. Products from big brands carry a brand premium and also require an entry fee to enter retail channels, making their final prices much higher than white-label goods. White-label goods sold through the supermarket's own brand and channel advantages save on brand marketing and channel intermediary costs, allowing them to maintain profit margins while capturing more market share through low prices.
With the economic recovery after World War II and the continuous increase in car ownership, large suburban supermarkets were quickly accepted by consumers in markets like the US and Europe. Supermarket operators felt their channels growing stronger, and the motivation to produce white-label goods for higher profits grew increasingly strong.
An important turning point was the oil crisis of the 1970s. This crisis led to soaring prices, making consumers more price-sensitive for daily necessities, which further pushed relatively affordable white-label goods into the mainstream.
Aldi, a supermarket chain primarily focused on private labels, began significantly expanding overseas markets in the 1970s. Private label goods accounted for over 15% of total retail sales in the US by 1980. Traditional retail giant Walmart had to launch its own white-label brand 'Great Value' in the 1990s to meet consumers' growing demand for value for money.
In essence, white-label is a special type of brand whose image is tied to the retailer, backed by consumer price sensitivity and the strong position of large channel operators. The 'private labels' popular among Chinese offline and online retailers today also fall into this category.
**Generic Brands, Factory Goods, Shanzhai, and Counterfeit Products**
The rise of retailer private brands was driven not only by consumer price sensitivity but also by the great abundance of product supply. Because supply is abundant, supplier substitutability increases, and in many categories, the profit share from manufacturing (or OEM) is far lower than that of brand owners (or private label channel operators).
After joining the WTO in 2001, China grew into the 'world's factory' in just over a decade, backed by tens of millions of factories of all sizes. The goods they produced, besides supplying big brands and large channel operators, mostly flowed into the market in other forms, which is the broader white-label.
Theoretically, these products cannot be said to have no brand. According to regulations, they always need a brand name, but in practice, these names are either unimportant or themselves operate in a gray area, which is the source of different types of products like generic brands, factory goods, shanzhai, and counterfeit goods.
In the early days of reform and opening up, trademark designs similar to famous brands appeared to confuse consumers. For example, book publishers produced works by 'Quan Yong' or 'Jin Yong Xin' to pass off as Jin Yong's martial arts novels, and shoemakers used 'adimas' or 'adidos' to imitate adidas.
Unlike directly misusing well-known brands, these borderline imitation behaviors are sometimes difficult to judge and carry much lower legal risk. For instance, 'Doublemint' gum sued 'Shenjian' gum for trademark infringement due to similar packaging, but the court did not support the claim.
Even today, on live-streaming e-commerce platforms, there are many brands with obvious imitation characteristics, such as 'AOWO' or 'ONVO' similar to OMO, and 'Ticle' similar to Tide.
In the vast 'real world outside the Fifth Ring Road,' 'generic brands' have always been an important choice for consumers. The brands with the highest market share often have not yet entered these areas or lack the motivation to penetrate them, and consumers in these markets are relatively more price-sensitive. Generic brands objectively meet their market needs in an imperfect but more practical way.
'Shanzhai' is another concept with similar but fuzzier implications. 'Shanzhai' originally referred to small workshop-style producers whose products often closely resemble famous brands in appearance and configuration.
But as the term became widespread, many cheap, little-known products also came to be called 'shanzhai,' especially electronics like mobile phones and computers. At this point, 'shanzhai' basically meant 'generic brand.'
Compared to 'counterfeiting,' which carries higher risk and low profit ceilings, 'generic brands' offer more business opportunities but also much greater uncertainty.
Not all industries are suitable for generic brands to thrive. In clothing, food, and daily necessities, there have been many examples of generic brands rising from scratch, but the once-popular shanzhai electronics rarely survived the market's screening.
Ten years ago, smartphones and smart tablets became popular. In 2013, global tablet shipments increased by 52.5% year-on-year, and many manufacturers jumped into the 'device war.' Even factories that originally only made motherboards or did assembly began to brand themselves, hoping to grab a share of the rapidly expanding market. However, these 'generic' tablets mostly failed to survive a few years, following the fate of shanzhai phones.
Around the same time, some clothing and food brands that now have brand reputation were quietly established, such as the snack brand 'Three Squirrels' founded in 2012 and the sun-protection clothing brand 'Banana Under' founded in 2013. Their annual revenues have now reached billions of yuan.
Generic electronics rarely succeed, but generic clothing and food often produce rising stars. Behind this stark contrast lies specific industrial logic. Electronics update rapidly and have long supply chains, making it difficult for generic manufacturers to maintain high competitive barriers or achieve technological advantages that big brands cannot surpass.
Even if they focus solely on producing low-priced, mass-market items, manufacturers struggle to compete with big brands in quality control because electronics quality control requires massive testing and optimization, which is a matter of human investment. Additionally, to improve economies of scale, manufacturers need to purchase as much as possible to lower costs, and generic manufacturers' purchasing power is hard to compete with big brands.
The situation is different for clothing and food. These two tracks have relatively short supply chains, and manufacturers can more easily master all core intellectual property, such as formulas and visual design. Moreover, quality control for food and clothing is relatively simple, unlike electronics, which may have unexpected bugs.
New brands can succeed if they can launch competitive products, target niche markets not well covered by big brands, and leverage internet marketing strategies and the fast-paced advantages of small size.
**Branding and Premiumization**
**Were the Main Narratives of the 'World's Factory'**
After reform and opening up, especially after joining the WTO, China was essentially a market that 'believed in brands,' and factories without brands were no exception. On one hand, regulation of product quality and protection of intellectual property made gray-area brand operations increasingly unsustainable; on the other hand, to enhance their value in the supply chain, factories often chose to move closer to brands, that is, to move up the smile curve.
One way was to establish new brands. In many consumer sectors, we can see local manufacturers' attempts to break through the ceiling, such as in food and daily necessities, as well as in beauty, outdoor equipment, and other fields.
Taking beauty as an example, around 2017, a new wave of local beauty brands represented by Perfect Diary quickly captured market share, with strong support from China's complete local R&D and production chain for beauty and skincare products. New brands were able to invest more resources in products and marketing and capture the market at a faster pace.
Another way was to enhance their value as suppliers and pursue cooperation with better brands. The most classic case might be the 'Apple supply chain' companies (Apple's suppliers).
Foxconn's parent company, Hon Hai Precision, started by making control knobs for black-and-white TVs. A few years later, it moved into higher-value-added personal computer connectors, and later added computer motherboards and smartphones to its business lines. Today, it ranks 20th in Fortune's Global 500 (2023).
Unlike most electronics giants, Hon Hai does not directly face consumers with its own brand but insists on OEM for big brands. However, the projects it OEMs are increasingly high-end and bring in more revenue.
Not having its own brand is both a reassurance to big brand clients, making them comfortable cooperating with Hon Hai, and it allows Hon Hai to focus on what it excels at—'manufacturing'—and do it well.
The development path of new energy vehicle battery giant CATL is similar. CATL originated from battery company ATL, which initially made small batteries for electronics like phones and computers. But later, management decided to move into the larger power battery sector, leading to the spin-off of independent CATL.
If the company had thought of creating a consumer electronics brand for the mass market during the electronics boom, it would likely not have achieved the success it has today.
Similarly, for factories producing high-tech products, securing big clients is more efficient than building a consumer-facing brand to sell more goods. For them, winning a good reputation among big clients is equivalent to building their own brand.
**The Current Rise of White-Label**
**Is a Shift in Transaction Trust**
The reality that the broader consumer market needs white-label products, and the pursuit of brands, have been two sides of the same coin since China became the 'world's factory.' The current prevalence of white-label may be because the 'pursuit of low prices' side is increasingly outweighing recognition of the 'brand' narrative.
The lowest prices often appear on short-video live-streaming platforms. For example, 0.01 yuan can buy 12 packs of tissues or a phone charger with a data cable, and less than 0.1 yuan can buy an umbrella. Most of these products, whose prices are not even a fraction of regular prices, are 'generic brands.'
As short-video live-streaming platforms penetrate deeper into lower-tier cities and rural areas, a large potential consumer base has been tapped. Compared to higher-income groups, they often value price more while also caring about quality. For them, generic brands are naturally more approachable than big-name brands.
Beyond releasing new consumer demand, short-video and live-streaming have also changed the way users build trust. Merchants originally relied on brands to build consumer trust, but now consumers rely more on recommendations from video hosts. Trust in hosts sometimes replaces trust in brands, or more accurately—the pursuit of low prices has outweighed trust in brands and the product value behind them.
This is fundamentally different from narrow retailer private labels. Private labels transfer brand credibility to the channel operator, while these ultra-low-priced products largely negate the value of brands. As low-priced generic goods gain momentum, channel operators must also offer more cost-effective white-label products to maintain competitiveness.
This has led to white-label and generic brands—two products with different business logics—being packaged together under the 'white-label' name, uniformly pointing to a consumption environment where the importance of traditional big brands is declining and consumer goods prices are also falling.
The rise of white-label is not a simple story of 'consumption downgrade.' It involves not only white-label itself but also touches on the essence of 'brand': Where exactly does the core value of a brand lie? To what extent can people make purchasing decisions without considering the brand, just following a host's or group leader's recommendation? Can building a brand still bring returns to enterprises?
There are no absolute 'standard' answers to these questions; they swing back and forth between two extremes, and different categories will have completely different spectrums. But after reviewing the brief history of brands and white-label, we find that trust is the foundation of retail. The important value of brands is to solve part of the trust problem, and the new platforms that constantly pursue low prices will eventually have to face this issue as well.
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**Recommended Reading**


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