Foreign brands no longer top choice
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It's very important for China to have strong local brands. Most of profit goes to company that is owner of the brand not to company that is manufacturing product:
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Foreign brands no longer top choice for Chinese customers, says survey
Chinese customers are no longer swayed by the lure of foreign brands and would instead prefer to buy more brands that are made in China, a survey said.
According to the 2013 China customers' loyalty study conducted by marketing research firm Epsilon, six out of the 10 Chinese respondents endorsed foreign brands. However, there is a growing preference to buy products that are made in China. Local-brand supporters have grown to 43 percent from 31 percent in 2011, the report said.
Such trends are already visible in the Chinese fashion industry. In March, China's first lady Peng Liyuan sparked off a craze for Chinese brands after dressing up in Chinese-made apparel for diplomatic visits.
Her elegant dressing code was dubbed by netizens as "Liyuan style". Analysts argued that Peng's support for domestic labels had stirred interest in local products and also helped attach a new, sophisticated image to Chinese-made clothes.
"Since local brands started to improve quality, establish appeal and step up their sophistication, they have garnered a bigger share from Chinese shoppers," said Viven Deng, client services director of Epsilon China.
Chinese brands have started to win hearts not only from buyers pursuing extensive product features, but also from picky local consumers who previously stuck to foreign labels, she added.
Qi Lulu, a Beijing college student, who used to be a customer of leading international clothing brands such as Burberry and Polo Ralph Lauren, said she now focuses more on local brands.
"I buy dresses online, and I have found some domestic brands that have exquisite taste," the 22-year-old woman said. Recently, Qi fell in love with a Beijing brand called Liebo, which featured traditional Chinese flavors and colorful patterns.
Self-branded products from other industries, such as cars and consumer electronics, are also growing in popularity. More Chinese people said they would support Chinese-made cars, especially after the Diaoyu Island dispute between China and Japan. Currently, Japan is still the major car vendor in the Chinese car market.
With a more than 1.1 billion mobile population in hand, China has grown into the world's biggest smartphone market. The country manufactured the most number of smart devices, 224 million units, across the world last year.
Four out of the top five smartphone vendors in the Chinese market are domestic brands, with the South Korea-based Samsung Electronics Co the only international player in the list.
Huawei Technologies Co and ZTE Corp even successfully ranked as the world's third and fifth smartphone manufacturer in the fourth quarter last year, according to research firm IDC Corp.
"Previously, Chinese consumers blindly worshiped foreign brands because they were not confident of their own products," Deng with Epsilon pointed out. But since they have gradually widened their knowledge, Chinese buyers have become more mature in their purchases, she said.
"When a Chinese brand absorbs some advanced technologies and forms world-class vision, it will be able to create products that are more suitable for the Chinese market," Deng said. "That is why we say that a local label, based on its deep roots in Chinese culture, can easily touch your heart strings."
The convergence between foreign and Chinese brands will execute a bigger influence as well. "It will be very hard to tell if a brand belongs to China or a foreign country in the future," said Regina Leung, vice-president of the marketing division at Epsilon International.
"Chinese brands, such as Haier and Lining, have expanded overseas and acted as real international players," Leung said.
The widely reported economic slowdown has not dented Chinese consumers' confidence in the future or their enthusiasm for domestic and overseas brands.
The Epsilon survey finds that 75 percent of the respondents in China are optimistic that their individual or family economic prospects will improve significantly over the next 10 years, 11 percentage points higher than the 2011 survey.
"When a car shifts from 100 miles an hour to 69 miles per hour, it's still going pretty fast. The Chinese economy is growing at 7.5 percent and this is still an enormous growth opportunity, especially in terms of under-served customers," Scott Price, chief executive officer of Wal-Mart Asia, said.
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It's very important for China to have strong local brands. Most of profit goes to company that is owner of the brand not to company that is manufacturing product:
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Earlier this year, ABC's "Nightline" show went into the Chinese factories of Foxconn, where most of the world's Apple products - iPads, iPhones and Mac computers - are manufactured. The investigation revealed that workers earn just $1.78 per hour, work long hours and live in dorms with fellow employees.
Asymco analyst Horace Dediu used the "Nightline" report to estimate that Apple pays labor costs of between $12.50 and $30 for every iPhone it makes, which represents just 2-5% of the iPhone's sale price.
The New York Times has harshly criticized the labor practices of Apple's factories, and featured an interview with a former employee of Foxconn, who said, "Apple never cared about anything other than increasing product quality and decreasing production cost .... Workers' welfare has nothing to do with [Apple's] interests."
Profit
So if the materials cost roughly $188, and Dediu has calculated that an additional $93 is spent on manufacturing its smartphone, (a cost that includes the labor costs, transportation, storage and warranty expenses) we reach a total of about $281 to manufacture an iPhone that retails at $649. This represents a profit for Apple of $368 per iPhone.
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