Local Companies Use Digital Channels to Beat Multinationals

Local Companies Use Digital Channels to Beat Multinationals

China will overtake the United States and become the world’s largest online market by 2020, according to a new market research report. In the Chinese marketplace, online retailers are adopting omni-channel strategies to provide an integrated and seamless online shopping experience to the customers.

A perfect example of this can be found in its food and beverage sector. The country is currently the world’s largest consumer market for food and beverage products. Competition is intense, with companies trying to keep up with the increasingly sophisticated demands of a growing middle class.

For a long period in China, multinationals maintained a solid hold over the consumer goods industry, and in food and beverage specifically. But in recent years, local competitors have used digital channels to compete with the larger corporations.

In today’s blog, we’re going to look at how these local companies in China are using interactive brands to beat the multinationals.


DIGITAL CHANNELS

So how are these local companies competing with the larger, wealthier multinationals? According to the Nikkei Asian Review, it’s down to embracing the digital nature of Chinese consumers while also tapping into their aspirations. They provide three notable examples.

The first example is Three Squirrels, a premium snack seller known for its popular cartoon mascots. The company mainly offers dried fruit and nuts, including cashews and pecans. Calling itself “the best internet customer experience brand,” this year it became the largest snack brand in all Chinese e-commerce channels combined. The company places a strong emphasis on consumer feedback. It uses customer data to personalize the shopping experience, adjusting its product offerings based on consumer responses.

The second example is Jovo, a brand of baijiu (Chinese white spirit) that is aimed at China’s younger generation. The company has attempted to tailor its distribution channels and product identity around the interests of its target demographic. According to authors Tse and Meller, they have built a loyal consumer base by developing “a lifestyle community around its product that spoke to the desires of the younger Chinese generation.”

The third and final example is LePur Yogurt, a premium Greek-style yogurt startup founded in 2014. The company has won over health-conscious Chinese consumers with its emphasis on zero artificial additives and premium imported ingredients. Interestingly, an integral part of LePur's digital strategy has been its account on WeChat, a multifunctional Chinese messaging app. This has allowed consumers to participate in the company’s operations, recommending new flavors, branding and packaging.


THE FUTURE

What does the future hold for local players in the competitive online retail market? Companies like LePur and Three Squirrels have provided new entrants with a roadmap to success. They have profited by identifying niche consumer demands and offering products and services that specifically cater to these consumers.

There are examples all around the world that show local players can compete with invading multinationals. In Brazil, Grupo Positivo has a larger share of the PC market than either Dell or Hewlett-Packard. In Russia, Wimm-Bill-Dann Foods is the biggest producer of dairy products, ahead of Danone and Coca-Cola.

In emerging markets like China and Brazil, native companies have an advantage. They can capitalize on their knowledge of local product markets and utilize digital technologies to build brand awareness and sell their products. The question now is whether big multinationals can adapt?

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Published by Research and Markets

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