Chinese flock to home-grown brands in golden opportunity for investors
A Li Ning outlet in Sanlitun, Beijing, China, March 27, 2021. /CFP

A Li Ning outlet in Sanlitun, Beijing, China, March 27, 2021. /CFP

Chinese consumers are flocking to home-grown brands due to growing patriotic emotions, new way of consumption brought by the pandemic, and fresh investment opportunities.

A record high of 18 Chinese companies entered the 2021 BrandZ Top 100 Most Valuable Global Brands ranking, compared with 17 in 2020, according to a report by research consultancy Kantar on June 21. 

The brand value of Chinese firms grew significantly among international competitors, with TikTok skyrocketing 158 percent to become the second-biggest riser after Tesla. The social commerce platform Pinduoduo – a newcomer that was not on last year's list – saw its brand value surge by 131 percent from a year ago, the report said.

Meanwhile, "guochao," or "Chinese fashion trend," has driven demand for domestic brands and products that often incorporate Chinese traditional culture and style. The percentage of keyword searches for Chinese brands surged to more than two-thirds among all the searches on Baidu, up from only about one-third 10 years earlier, according to a report jointly released by the search engine and the Research Institute of

In lockstep with demand, investors have been pouring funds into local consumer brands this year.

Chinese consumer firms raised 69.7 billion yuan (about $11 billion) from primary market investors in the first five months, more than double the year-earlier amount, according to Cygnus Equity, a Chinese boutique investment bank, Reuters reported.

"Beauty products, food and beverage brands are the most popular. Recently hotpot and ramen brands are particularly coveted," said Ming Jin, managing partner at Cygnus.

Up to 200 brands are currently seeking new capital from investors, bankers and investors said.

Nayuki last week raised $656 million in a Hong Kong float, which gave it a valuation of $4.4 billion, more than double the level in a December funding round.

Weilong Delicious Global Holdings, whose flour-based spicy sticks sell for under 5 yuan per pack, raised 3.56 billion yuan in May from big name investors including Tencent, Jack Ma's Yunfeng Capital, Hillhouse Capital and Sequoia Capital China. The snack maker was valued at nearly 70 billion yuan.

Sequoia-backed Genki Forest, a soft drink brand seeking to challenge Coca Cola, said it was valued at $6 billion after an April fundraising, 10 times more than 18 months earlier.

Its fundraising attracted investors such as Louis Vuitton owner LVMH's private equity arm and Singaporean state investor Temasek.

During's online shopping festival this month, sales growth of Chinese brands was 4 percent higher than international brands. The growth in their customer numbers exceeded that of international brands by 16 percent, said.

The recent Xinjiang cotton ban imposed by several global brands including H&M, Nike and Adidas over concerns about alleged rights abuses in the region, which offended many Chinese consumers, was another catalyst. China said it is a political maneuver that violates international trade rules and sabotages global industrial and supply chains.

Shares of domestic sportswear producers Xtep, Li Ning and Anta have risen 196 percent, 60 percent and 38 percent, respectively, since April.

(With input from Reuters)

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