China's private labels are entering a new development phase. On one hand, retail channel competition is intensifying and consumer demands are continuously diverging; on the other, retailers and manufacturers are both rethinking the relationships among product development, supply chain collaboration, and value creation. Private labels are no longer just a tool for price competition but are gradually becoming a key lever for enterprises to rebuild product strength, organizational capability, and differentiation. On March 17, at the 11th China FMCG Conference, Fang Xianli, initiator of the Private Label Production-Research Collaboration Platform and executive director of Hangzhou Bimaide Brand, shared his thoughts and explorations on the development stages of China's private labels, changes in consumer demand, and collaborative creation between retailers and manufacturers. The following is a transcript of his speech (with some deletions), compiled by New Distribution for our readers.

China's Private Labels Are Still on the Rise

China's private labels have not yet reached a highly mature stage, but they are far from just starting out. A more accurate description is that the industry as a whole has just passed the 1.0 stage and is in the early 2.0 stage, with a few leading companies already entering 3.0. The so-called 1.0 refers to low-price imitations; 2.0 refers to high cost-performance, benchmarking against major brands; and 3.0 begins to move toward quality, health, personalization, and creating demand. This is why it is difficult to summarize the entire reality with a single statement like "China's private labels are at level X." The Chinese market is large enough, and the differences among enterprises are also significant. Some enterprises have already made private labels a core engine, with sales exceeding 1 billion yuan; some treat them as a differentiation tool; and many are still in the exploration stage, with insufficient resource investment and unclear top-level design. According to the quadrant classification from this survey, leaders account for 22.2%, strategists for 27.8%, growers for 14.8%, and explorers for 35.2%. Explorers and growers together account for exactly half, indicating that the market is far from being set. From an industry sentiment perspective, the judgment that "it is still moving upward" is also evident. In the survey, the confidence index for China's private label industry is 60%, the long-term share forecast exceeds 40%, and consumer purchase intention reaches 88.1%. These data indicate that this market is still expanding and still leaving room for latecomers.

Private Labels Cannot Rely Solely on Cheapness

More critical than the market stage is the change in consumer mindset. For a long time, the most direct labels for private labels were cheap, substitute, and white-label. They could sell mainly due to price differences. However, this survey shows that the driving forces behind consumer purchases of private labels have changed: "quality trust" has for the first time caught up with "price affordability," and consumers' expectations for product quality, trust, and additional services have significantly risen. Today, private labels still need to talk about price, but talking only about price is no longer enough. Behind this are two practical changes. First, products with low prices and poor quality may generate the first wave of transactions, but they are unlikely to lead to repeat purchases. Second, consumer segmentation is becoming increasingly fine, and different groups have clearly different expectations for private labels. Consumers aged 18-25 are more easily attracted by packaging design and novelty; new white-collar workers aged 25-35 pay more attention to ingredient lists, low calories, and functionality; family customers aged 30-45 focus more on repeat purchases, trust endorsement, and family scenarios; and mature customers aged 40 and above tend to prefer basic daily necessities and stable purchases. Today, when making private labels, you cannot just ask "can we make it?" but rather "who are we selling to?" This is also why private labels are pulling retailers back into customer research. Truly valuable products usually capture three types of needs: undiscovered needs, unmet needs, and needs with clear pain points. Whether you can identify these three types determines whether a product is following trends or engaging in effective innovation. There is another often-overlooked issue: imitation is not scary; blind imitation is. Today, many companies are studying Sam's Club, Aldi, Hema, and Pangdonglai, and are looking for "same-style" products. This is not surprising in itself; in the history of private label development, imitation has always been an important action. The problem is not imitation, but rushing to replicate others without understanding who the customers are and what the pain points are. Even if such products are launched, they are likely to fail to sell.

Private Labels Are Not a Panacea

The Real Challenge Is Retailer-Manufacturer Collaboration

There is a common misconception in the industry that private labels are easy: just increase SKUs, change packaging, and lower prices, and the job is done. In reality, it is not like that. Private labels can certainly enhance differentiation and improve gross margin structure, but they are not a panacea, nor are they a business that anyone can succeed in overnight. First, it is a technical task; second, it is a systematic project. In this systematic project, the first test is strategic positioning. The survey found that the clarity of top-level design is a prerequisite for whether a private label business can succeed. Companies that clearly position private labels as a core strategic engine perform better in sales share, gross margin contribution, and growth expectations; those that treat them as a supplement, a KPI item, or a temporary action often waver as they go along. Going further down, the difficulty falls on the collaboration between retailers and manufacturers. There is a clear cognitive gap between retailers' high standards and manufacturers' self-assessment. 75.9% of retailers see quality control as the primary pain point, but only 43.3% of manufacturers believe they have significant shortcomings; 61.1% of retailers hope to gain cost advantages, but only 38.3% of supply chain partners can truly cooperate; everyone talks about joint R&D, but when it comes to mold opening, technical upgrades, trial and error, and failure costs, cooperation quickly stalls. Breaking it down, there are at least three practical barriers. The first is the contradiction between R&D response speed and risk bearing. Retailers want to see finished products as soon as possible, while manufacturers worry about upfront investments going down the drain. The second is the contradiction between data transparency and lack of trust. Retailers worry that factories will use the data to take other orders, while manufacturers cannot optimize production plans because they lack access to end-user data. The third is the contradiction between decision-making efficiency and organizational capability. Retailers lack composite talent, and manufacturers lack people who understand retail project management. Both sides want to move forward, but efficiency is consumed in the process. Trust, cost, and talent are the three core bottlenecks in current production-research collaboration. This difference becomes more evident in specific products. A typical example: for the same deboned chicken feet, different channels have different requirements for factories. Products for Sam's Club have stricter detail requirements, corresponding to customer-value-oriented procurement requirements; while some discount channels focus more on low cost, so factories naturally provide a different response. On the surface, it is the same category, but in essence, it competes on completely different product standards and supply chain capabilities. This also explains another industry change: more and more retail companies are starting to ask candidates in procurement recruitment whether they have private label development experience or factory-side experience. Job requirements have changed, indicating that business thresholds have also changed. Today, private label competition is not just about procurement bargaining power, but about comprehensive capabilities in product definition, factory collaboration, quality management, project advancement, and organizational coordination.

Who Can Create Value

Who Has a Better Chance to Stand Out

Looking at private labels today, the focus of competition is no longer simply increasing share, but deepening value. This "value" includes at least consumer value, channel value, supply chain value, and longer-term business value. First, look at the change in cooperative relationships. The relationship between manufacturers and retailers is shifting from "transaction" to "symbiosis." The survey shows that 66.7% of retailers are willing to try or have already tried channel-exclusive joint development models, 40% are willing to bind with quality factories through investment or equity participation, and more than half are interested in using AI tools to predict hit products. The cooperation model based solely on one-time procurement, price comparison, and a single order can no longer support the next stage of private label development. Next, look at categories with more future opportunities. The survey results show that health, home, and snack foods will be key directions in the next three years, with "health" being the most prominent. Among the top 5 categories retailers plan to focus on, 3 are directly related to health; home and daily necessities have a mention rate of 56.7% because they are high-frequency, essential, and suitable as entry points for user stickiness; alcoholic beverages entering the top 5 indicates that experience-oriented categories are also rising. In terms of methods, the next stage can basically be summarized into three things. The first is "smart selection," letting data and AI enter the closed loop of product selection, pricing, and feedback to improve the success rate of product development. The second is "co-creation," moving retailers and manufacturers from simple OEM to deep collaboration, establishing clearer mechanisms for benefit sharing and risk sharing. The third is "green practices," incorporating environmentally friendly materials, health orientation, and transparent traceability into the product system, so that private labels not only have price advantages but also a foundation for long-term operations. The judgment on China's private labels can no longer be based only on "how much share has increased" or "how many SKUs were made this year." More noteworthy are three things: whether companies have placed private labels in a core strategic position; whether products truly respond to consumers' new needs; and whether retailers and manufacturers have formed a sustainable collaborative relationship. From this perspective, China's private labels are indeed still on the rise, and the opportunities remain significant; but the threshold is much higher than before. Low prices can only open the first door; quality, trust, collaboration, and organizational capability determine how far this path can go. The next round of competition will not be just about share, but about who can truly deliver "value creation."