---
title: "Under the Pandemic, How Can Chinese Brands Break Through?"
description: "A recent article calling for discussion on the economy has gone viral, reflecting anxiety and hope about China's economy amid the pandemic. While most analyses focus on industry-level impacts, this piece examines the macro and micro changes in Chinese brand building under the new variable of the pandemic, and how Chinese brands can maximize certainty in a changing landscape."
author: "陆星集"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-02-18"
categories: "Brand Marketing, Management & Methods"
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# Under the Pandemic, How Can Chinese Brands Break Through?

> A recent article calling for discussion on the economy has gone viral, reflecting anxiety and hope about China's economy amid the pandemic. While most analyses focus on industry-level impacts, this piece examines the macro and micro changes in Chinese brand building under the new variable of the pandemic, and how Chinese brands can maximize certainty in a changing landscape.

A few days ago, an article titled "It's Time to Talk About the Economy" went viral, expressing people's anxiety and hope about China's economy under the extended pandemic. Subsequently, I saw more and more similar reports. However, these reports share a common feature: most of them study from an industry perspective, discussing which areas may face difficulties and which may see new opportunities. This article, instead, attempts to analyze from the perspective of brand building, examining the macro and micro changes in Chinese brand building with the new variable of the pandemic, and how Chinese brands can strive for maximum certainty in the changing landscape.

**-01- Under the transmission of pandemic tension, money will be spent on brands with more certainty**
The impact of the pandemic on the economy largely depends on the scope of the spread and the time needed to contain it; it's too early to draw conclusions, but for Chinese companies, it's never too early to prepare.
The most direct result is that businesses face operational difficulties, residents' disposable income and savings decline, and people become more cautious in consumption.
This directly leads to a result: people will delay decisions on non-essential expenses, and for necessary expenses, they will spend money on products that are more stable, more certain, and more trustworthy. In simple terms, those are products with better brand building.

**-02- International high-end brands still have significant advantages in the game**
In recent years, with the fragmentation of media, many companies have begun to pursue new ways of brand building, such as video live streaming, influencer marketing on Douyin, Kuaishou, and Xiaohongshu, and writing articles on WeChat official accounts to attract followers. These have become the so-called "miracle cures," and we've been playing with them happily, creating an illusion that some international brands are aging, and we are full of confidence in the rise of Chinese emerging brands.
But if we observe during this pandemic, we will find that the above conclusions are not accurate.

**First, the momentum of traditional international brands is still strong.** When people's demand for "certainty" and "security" rises, this brand momentum will shift from invisible to visible.
For example, the 3M N95 standard masks, which were widely noticed during the SARS outbreak in 2003, have occupied the mental awareness of the brand category due to their outstanding performance in multiple epidemic preventions, becoming synonymous with high-level medical protective masks in the minds of the public.
So, in the case of the pandemic outbreak, 3M became a specific target. I used Baidu Index to analyze searches for 3M, another international brand Honeywell, and a well-known domestic mask brand, and found that the difference in attention between the first and second/third brands in the mental awareness category is tens to infinite times (not targeting any third party).
This to some extent shows that centralizing brand building to make it the "default option" in consumers' minds, subconsciously turning it into a standard, common sense, and an unthinking choice, has a huge impact on consumer decisions.

**Second, while we admit that international brands still firmly occupy some areas in the mid-to-high-end mental awareness, we cannot assume that all international brands are doing the right thing in brand building.**
Take Adidas, which caused an earthquake in the brand field last year. The brand publicly admitted that due to overemphasizing so-called "performance advertising" (i.e., fragmented, traffic-based ads paid per click) in its market work over the past several years, it has paid a huge price in core brand building: consumers' awareness of the Adidas brand has declined. I also did a data comparison (not targeting any third party):

**-03- Polarization of Chinese new brands**
We have to admit that with the development of supply chain e-commerce, some suppliers have started to develop together with Pinduoduo and Yunji models, focusing on lower-tier markets, and have also gained valuable growth. But they are not yet truly brands.
No growth comes without a price. The cost of this **de-branded growth** is **further compressing or even abandoning brand building investment, entering an era of pure cost-price blood battles, relying on cost reduction and price cuts to exchange for volume.**
Everyone knows this is not a long road. At least, it's a riskier road. The charts cited above show that when uncertainty increases, brands that occupy mental awareness have a significant advantage over products without brand awareness. So, we see that even supply chain e-commerce has started a large number of new brand incubation plans.
For Chinese companies, another choice is to carry out **product innovation and quality upgrades, relying on brands to gain higher premiums and longer-term competitiveness. This is the right path, but also a harder one.** Why? We'll analyze later.

**-04- ROI is not the ROI you see**
The rapid development of e-commerce over the past 20 years has given internet traffic advertising a head start. This is because brand owners believe that since the underlying channel changes have occurred and the voice of offline sales is gradually declining, online ads that can achieve a "click-to-purchase" closed loop are not only suitable for the shift of consumption platforms but also more direct and measurable in promoting consumer behavior.
In plain terms, in the minds of many advertisers, **"see-click-order" is a perfect closed loop.**
But is consumption really that simple?
Perhaps because traffic ads are getting more expensive and less effective, advertisers are forced to deeply study the ROI of traffic-based ads. This research is not trivial; a surprising result emerged—a research report shows that before the final consumer purchase behavior occurs, there are as many as 20 interactions and touchpoints with the brand.
In simple terms, the reason ROI is eye-catching in the early stage but fails later is due to statistical methodology issues. Most statistical models calculate the cost-effectiveness ratio based on the last click before purchase, but they cannot account for the fact that before the "last click," consumers may have had many interactions with the brand through word-of-mouth from friends, TV, elevator media, etc.
The insight from this conclusion is that **re-studying the path of brand rise, rather than one-sidedly believing the ROI conclusions of performance ads, is a deeper wisdom.**

**-05- Why are some old brands rising?**
Looking closely at the Chinese mid-to-high-end brand market in recent years, there are two driving forces.

**The first is the self-upgrade of consumer groups.** Whether it's the rise of young users' spending power, the booming national trend movement, or new brand incubation, all reflect that user groups are pursuing higher consumption quality. This provides an opportunity for Chinese brands to compete with international brands in the high-end market.
So, to answer the question raised earlier: how should we step onto this "harder path"?
I believe the most macro choice is to choose differentiation.
We can see that when international brands are increasingly digitalized in their marketing, pursuing diversified media combinations and indulging in social seeding, Chinese brands that choose to go against the trend have achieved a certain degree of success.
The core approach of these **successful brands is anti-fragmentation and central ignition.** They do not abandon online channels and fragmented communication methods (no one can abandon them in this era), but rather make more reasonable arrangements and resource allocation in the energy ratio of the entire brand explosion.
For example, Feihe Infant Formula, a company that was shorted at the end of last year, quickly repelled the short sellers. Feihe's stock price broke through HK$10 per share, and its market value exceeded HK$90 billion, meaning the short sellers were completely defeated.
Feihe was able to defeat the short sellers because its performance maintained high-speed growth, and its sales volume ranked first in the industry, surpassing all foreign brands.
"Feihe has surpassed all foreign brands and become the number one brand in China's infant formula market," according to a Nielsen report last year. Feihe's offline market share reached 13.9%, and overall market share was 11.9%, far exceeding the second brand, and continuing to show an upward trend.
Why has Feihe achieved such results? I believe there are two reasons. **First, in terms of "technological content," which foreign brands used to emphasize most,** Feihe has taken a direct PK stance, such as actively undertaking national-level research projects like the National 863 Program and the Ministry of Science and Technology's 12th Five-Year Plan projects.
Another example is that at the end of 2018, China's first academician workstation for dairy engineering was established at Feihe, laying a solid foundation for achieving independent control of raw materials for infant formula, helping to break the situation where raw material supply is constrained by foreign companies, and strongly empowering the sustainable development of China's dairy industry.
While **enhancing its own technological competitiveness, Feihe also adopted a central ignition strategy, forming a series of tactics based on craftsmanship quality, with the strategy of "more suitable for Chinese babies' constitution,"** and using central ignition facilities like Focus Media as a basis, establishing an image of a mental refresher that ignites among mainstream groups, putting the brand on an important track toward sales of 20-30 billion yuan. It's worth mentioning that during this pandemic, Feihe's public welfare efforts were also commendable.
Bosideng's route is similar: on the one hand, it fully benchmarks against and even surpasses international brands like Canada Goose in hardware; on the other hand, it partners with international stars to change the brand's gene from functional to fashionable, and then ignites and communicates to consumers through central platforms like Focus Media.
Some may ask, why are these all old brands breaking through? In fact, central ignition is not only used by old brands. There are also new brands like Luckin Coffee, which rose in a very short time, almost all budget on Focus Media, at the elevator entrances of office and residential buildings, with Zhang Zhen and Tang Wei as spokespersons, constantly telling urban white-collar workers, "Little blue cup, who doesn't love it?" In one year, it sold over 88 million cups of coffee, and 18 months after founding, it went public in the US with a market value exceeding $8 billion. Whether new or old brands, is there a commonality between them?
Yes, it's **seizing the dividend of new central brand ignition facilities.**
In the past, international brands' tactics were to occupy the hypermarket dividend in channels, and in communication, they had budgets far exceeding domestic brands, allowing them to dominate mainstream channels like TV advertising dividends, so their brand momentum was much higher... But these two dividends have now disappeared. However, international brands' path dependence and consumption of existing brand momentum stock have led many international companies to indulge in micro marketing successes, feeling good about themselves while continuously following the fragmented and dust-like internet. This instead gives domestic brands, both old and new, suffering from brand weakness, the opportunity to overtake in reverse.
Due to their high brand momentum stock, international brands have not yet shown signs of decline in the high-end market in the short term, and may even see explosive growth. For example, in Li Jiaqi's sales statistics, international brands like Estée Lauder contribute a much higher revenue share than domestic brands.
But as traffic becomes more expensive, and even the more you buy, the higher the price, international brands have to bear higher expenses while also engaging in "lowest price live streaming direct sales" and "e-commerce promotions." The short-term brilliance may make offline distributors, who are already suffering from snow and frost, even more unprofitable.
**In an era of stock competition, price and volume are often both killed, and price wars are a corporate dilemma.** The traffic dividend has ended, and traffic costs are rising, prompting everyone to rethink how to build brands, because brands are the continuous free traffic, brand power can improve traffic conversion rates, and brand momentum can bring product premium capabilities.
The wisdom of Chinese brands is to go against the trend and use centralized saturation attacks.
We have used the term "central ignition" multiple times. Here, I need to explain this concept. **Central ignition is composed of centralization + ignition.** Our centralized target is 300 million urban middle-class consumers, so the prerequisite for centralization is to reach this group at once, ensuring all target audiences are exposed to one thing;
**The other concept is ignition, which means stimulating group attention,** reminding them to "come see the new ad," and even making the ignition itself a topic attribute through clever marketing methods. There are too many successful cases, like Platinum Wedding Photography, Boss Zhipin, and recently Yiche.com, which were ignited on elevator media last year.
So, using this viewpoint to look at traffic ads, have you seen people discussing traffic ads? In the past month, how many traffic ads can you remember?
Advertising is only a part of brand building, but it is also the most important part because it is the step that ultimately reaches users and carries brand information.
Theoretically, any advertising is like "medicine cannot be stopped"; once you start, you must continue. But the key is that traffic ads can be compared to Western medicine with drug dependence; once stopped, you immediately feel terrible. Brand ads are more like comprehensive conditioning in traditional Chinese medicine; they help you establish brand mental awareness. Once awareness is established, the marginal cost of advertising decreases. It is also like the saying in the Yellow Emperor's Classic of Internal Medicine: "When righteousness is within, evil cannot invade." Its role is to help you build increasingly strong brand momentum, and this improvement is semi-permanent and can have a long-term effect.
Many companies think brand building is ineffective. In my view, it's because they haven't found the switch in consumers' minds.
Many companies think brands are not as effective as promotions and traffic grabbing. Indeed, brand advertising has a turning point from quantitative to qualitative change. Before reaching the turning point, there is an increase in awareness but no obvious sales effect; after the turning point, there is a clear sales spillover effect.
So, not every company can have a brand. Only those that find competitive strategies, positioning methodologies, and at the same time concentrate on central platform ignition in communication, and continuously invest in optimizing channels and user operations, can win the strategic turning point.
But the difficulty of this choice is that there are not many platforms in China that can carry out central ignition now.
In the past, it might have been national TV stations. But with the decline in TV turn-on rates, the viewing windows for central ignition are narrowing. That's why internet companies spend billions to appear on CCTV Spring Festival Gala every year—in 2015, WeChat sent 500 million yuan in red envelopes from New Year's Eve to the fifth day; in 2016, Alipay distributed 800 million yuan; in 2018, Baidu distributed 900 million yuan; in 2019, Kuaishou paid over 1 billion yuan in marketing costs... These are typical internet companies with strong fragmentation capabilities. For example, BAT are the only three internet platforms in China with 1 billion users; Kuaishou and Douyin are the fastest-growing new media with the highest daily active users; Alibaba is even the largest advertiser in China...
These companies, which themselves have extremely strong fragmentation capabilities and unparalleled internet discourse power, are vying to choose central ignition to enhance their brand building. Can't this make some brands overly obsessed with "fragmented communication" think deeply?
Unfortunately, there is only one Spring Festival Gala, and the Spring Festival only comes once a year, while the Chinese brands hoping to explode are numerous. This brings us to the facilities in China that can carry out centralized brand ignition besides the CCTV Spring Festival Gala, which is Focus Media's elevator media.
In my view, Focus Media has two values:
**First, it is unavoidable.** Its foundation for central ignition is to capture the closed life scenes that 300 million urban mainstream audiences pass through daily, using extreme saturation attacks to break through mental barriers, forming volume advantages in limited space, using high-frequency centralized ignition to counter fragmented communication, and using saturation attacks in limited living spaces to counter social communication in the infinite internet world.
**Second, the communication rules of Focus Media's elevator media are not simple incantations or fatigue bombing.** On the contrary, accompanying Focus Media's development over more than a decade is a series of systematic brand ignition theories represented by positioning theory and competitive strategy, as well as the gradual maturity of professional service institutions. This makes user investment in Focus Media not a brand adventure but a well-prepared battle with rich theoretical support.

**-06- Has the VUCA era for Chinese brands arrived?**
From milk powder to cheese, from clothing to coffee, from the Uber-Didi battle to Bosideng PK Canada Goose, Chinese brands are rising in their unique way, closer to China's reality.
At this time, a new variable has appeared: the pandemic. The pandemic will inevitably greatly impact traditional brands that rely on offline channels. E-commerce platforms will inevitably see a surge in performance in the short term. New brands may also take advantage of this opportunity to rise, and good brands may decline under external forces. This brings a new question: Has the VUCA era for Chinese brands arrived?
**The so-called VUCA era means that we are facing a world of volatility, uncertainty, complexity, and ambiguity.** Although such changes originate from the innovation, development, and widespread application of science and technology, their speed of change and the impact on our lives, work, and concepts far exceed our imagination.
Simply put, if the brand market pattern before the pandemic was becoming increasingly clear, the emergence of variables has re-VUCA-ized this field. The superposition of various variables cannot be summarized by my single pen.
But in the face of a more complex era, brand is the core immunity, and the core antibody of a brand is certainty and centralization. Amplified to the whole era, people increasingly pursue certainty in the cold wind of fragmentation, and central ignition has become the only opportunity for those with great ambitions. This conclusion is unlikely to be overturned.

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## Citation metadata

- Publisher: New Distribution
- Author: 陆星集
- Published: 2020-02-18
- Canonical: https://xinjignxiao.com/en/articles/under-the-pandemic-how-can-chinese-brands-break-through-61cd624d/
- Original source: https://mp.weixin.qq.com/s/wSGoFpwlDI8FYq5ADB9u9A

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