[News Terms] 'Guochao' That Challenged Global Brands

'Guochao (國潮)' is a term referring to the patriotic consumption tendency of Chinese people. It is a compound word combining 'Guo (國)', meaning China, and 'Chao (潮)', meaning trend or fashion, and refers to Chinese people purchasing domestic brands instead of foreign brands.

The Chinese MZ generation, Jiulinghou (90后, born after 1990) and Linglinghou (00后, born after 2000), who grew up experiencing the rapid growth of the Chinese economy since the late 1990s, have high national pride and a strong preference for domestic brands. As they have become the main consumer group upon reaching adulthood, this MZ generation is leading the Guochao movement.

Advertisement for products of Li-Ning, a Chinese sportswear brand known as a representative brand of 'Guochao'.
[Photo by Li-Ning official website]

The US-China trade dispute in 2018 marked the starting point of the Guochao craze. In March 2021, when global fashion brands such as Nike, Adidas, and H&M declared the cessation of using cotton from Xinjiang due to human rights concerns in China, Guochao heated up intensely and spread widely.

During the first generation of Guochao, consumption was mainly focused on daily necessities such as clothing and food, while the second generation expanded into high value-added areas such as mobile phones and automobiles. Currently, the third generation of Guochao is underway. In this third generation, patriotic consumption extends beyond products to culture, daily life, and hobbies.

The Wall Street Journal (WSJ) reported on the 18th (local time) that global consumer product brands struggling with China's sluggish economic recovery are suffering a double blow from Chinese people's Guochao. James Yang, a partner at Bain & Company's Shanghai office, told WSJ, "It is no longer enough just to bring in (foreign) brands and open stores."

Until five years ago, foreign brands dominated China's consumer market, but now many Chinese brands are rapidly expanding their presence in the domestic online and offline shopping markets. This is attributed to their ability to offer customized products appealing to Chinese consumers, while being affordable and significantly narrowing the quality gap compared to before.

This content was produced with the assistance of AI translation services.