---
title: "New Challenges Test Chinese-style Marketing"
description: "China's marketing landscape has evolved from a 'dual low' (low price, low quality) phase to a new era requiring value-based products and consumer-oriented strategies. As the market matures, Chinese enterprises must adapt to new challenges, including industry consolidation, technological advancement, and the rise of e-commerce, to foster global brands and lead in O2O integration."
author: "刘春雄"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2014-10-11"
language: "en"
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---

# New Challenges Test Chinese-style Marketing

> China's marketing landscape has evolved from a 'dual low' (low price, low quality) phase to a new era requiring value-based products and consumer-oriented strategies. As the market matures, Chinese enterprises must adapt to new challenges, including industry consolidation, technological advancement, and the rise of e-commerce, to foster global brands and lead in O2O integration.

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The current basic pattern of marketing in China is characterized by "dual low" products and the near-completion of industry consolidation. This aligns with the overall consumption level that China has historically had.

After the reform and opening-up, the fundamental issue facing Chinese marketing was the contradiction between strong consumer desire and insufficient purchasing power, marking a phase of consumption from nothing to something. During this stage, it was normal to buy the minimum quality at the lowest possible price. The prevalence of counterfeit and shoddy goods was not only due to unscrupulous manufacturers but also because consumers tolerated them, as having something was better than nothing. This led to the "dual low" pattern (price at the bottom line, quality at the bottom line).

Academic criticism of Chinese marketing is also based on this pattern. My defense of Chinese-style marketing with Mr. Jin Huanmin is partly because it is a result of adapting to the reality of Chinese marketing and is normal, as the most important marketing principle is "survival of the fittest."

Some criticize the low level of Chinese manufacturing. In fact, Chinese manufacturing can be categorized into several types: First, OEM manufacturing, where product quality meets the overall consumption level of developed countries and is high. Second, manufacturing for the domestic market, where the lower level is determined by domestic consumption levels, reflecting consumer demand. Third, manufacturing for domestic brands exporting to international markets, which is determined by the international community's overall perception of China and is related to marketing capability, not manufacturing level.

The domestic market has largely passed the stage of quantity satisfaction and entered a stage of quality satisfaction. This is reflected in the slowdown or decline in growth rates of volume and total value across industries.

This is the reality facing China's economy: except for new industries and a few high-value products like automobiles, almost all industries have undergone industry enlightenment and popularization.

From a quantity satisfaction perspective, most Chinese industries have entered a state of saturation. For example, in the first half of 2014, the instant noodle industry saw sales revenue decline by 1.9% year-on-year, and sales volume drop by 5.9%.

**Background of New Chinese-style Marketing**

Unlike 30 years ago, China is now the world's second-largest economy, and the number of Chinese companies in the Fortune Global 500 is second only to the US. More importantly, China's marketing environment has undergone significant changes.

First, the main contradiction in the Chinese market has shifted to the conflict between market prosperity and industry downturn. The previous "dual low" product pattern can no longer meet consumers' new demands.

Second, after stages of industry enlightenment and industry blowout, most Chinese industries have completed or are completing industry consolidation. Many high-concentration industries have achieved oligopoly, giving rise to large or giant enterprises.

Third, China's modern commercial system is now very complete. Although there are still two commercial systems—the distribution channel system and the terminal system—modern retail commerce has taken root in China overall, driven by urbanization and the expansion of supermarkets into rural areas.

Fourth, except for a few high-tech fields, the technological level of most industries has greatly improved, and R&D capabilities have been significantly enhanced.

The changes in China's market environment and corporate capabilities mean that the foundation for Chinese-style marketing—the magic weapon for Chinese enterprises' survival and growth—no longer exists. It is time to say goodbye to Chinese-style marketing and embrace new Chinese-style marketing.

**New Chinese-style Marketing**

We believe new Chinese-style marketing has the following characteristics:

First, the mainstream product system has changed, upgrading from the original "dual low" product system to a value-based product system. The biggest change in consumers is often reflected in the mainstream product system. What products to use to satisfy consumers is determined by the understanding of consumers. Now, we can see significant changes in some industries:

In the declining instant noodle industry, Uni-President has launched "Gexing" (a new product), and although the outcome is unpredictable, it reflects a change in market perception.

In the first round of competition, Bright Dairy fell behind in the race with Yili and Mengniu, but Bright easily turned the tables with Mosilian (a yogurt product). In 2013, Mosilian's single-product revenue reached 3.22 billion yuan, a year-on-year increase of 106.5%; its gross margin was 50%, 20-30 percentage points higher than ordinary milk, beyond imagination.

In the beer industry, there was once a strange phenomenon where beer was cheaper than mineral water. However, beer upgrading is now rapid, and canned beer sales are growing quickly.

Overall signs indicate that China's main product system is transitioning from price-sensitive to value-oriented. Before long, a new mainstream product system will form. In new Chinese-style marketing, this will be the biggest change.

Previously, some said multinational companies' marketing was 1P marketing (product, brand), while China was the true 4P marketing. Now, Chinese companies are also paying more attention to products, gradually moving closer to 1P marketing.

The contradiction between market prosperity and industry downturn is actually the result of the mainstream product system failing to meet consumer needs, which can only be resolved through product upgrading and innovation.

Second, marketing will shift from competition-oriented to consumer-oriented, and from front-end competition to back-end competition. In the past, Chinese marketing competition was more about front-end competition, such as price and channel competition, aimed at getting closer to consumers. Future competition will be back-end, such as product R&D, aimed at pleasing consumers—consumer-oriented competition.

Third, world-famous brands will be born in the Chinese market. The reason the US has so many world-famous brands is that its industry leaders are naturally world-famous, even if they don't operate globally; they are still sought after.

Future world-famous brands born in China will not be because they are sought after by the world, but because they are sought after by Chinese consumers. With such a large market capacity, the domestic market alone is enough to give birth to world-famous brands.

Brands are consumers' admiration. In the past, Chinese consumers admired the world, only recognizing world-famous brands, not Chinese brands. Now, Chinese people have enough confidence to look at the world on an equal footing or even from above, and it is time for world-famous brands to emerge in China.

Fourth, in the new O2O business structure, China will lead the world. In over 100 years of retail revolution, China has never caught up. However, in the new round of retail revolution—the integration of e-commerce and offline (O2O)—Chinese companies are at the forefront.

For a considerable period, China's distribution channel system, terminal system, and e-commerce system will coexist, but e-commerce's transformation of China's commercial system far exceeds that in many developed countries.

Fifth, as high-tech companies like Huawei, ZTE, and Lenovo bring their terminal products to the world, the image of Chinese products globally will change. Chinese marketing will gradually go global and will have the capability to market to the world in high-tech fields.

Sixth, in the field of new media communication, Chinese companies will also be at the forefront. Traditional media are controllable, and strength determines control over media. In the internet age, communication is decentralized, and "loser counterattacks" often happen. In this regard, Chinese companies are not behind.

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