Contributed by Spencer Ball, Creative Director, Anthem Worldwide
(Anthem Worldwide is part of the brand development division of Schawk, Inc.)

Private label consumer products are a very different business in China than in the West. For Western retailers who grasp the difference – and some key additional nuances – it could prove to be quite lucrative in the coming decade. The difference starts in what private label represents in each part of the world.

Spencer Ball

In the U.S., for example, private label has played out against the backdrop of independent, iconic consumer brands. For example, Procter & Gamble and its product brands like Clairol, Crest and Duracell: for decades, these have held shopper confidence and commanded significant shelf space. Over the past four decades, competitors have made inroads only slowly, starting with bare-bones generics more than a generation ago, then sometimes-clumsy store brands, and finally today in more sophisticated private label brands whose packaging, marketing and distribution seriously rival those of the top CPGs/ FMCGs.

This evolution has been slow, requiring a gradual change in perceived value and cachet, as well as economic events that forced shoppers to look even harder at the price/value/image proposition of the products they buy. As a Research and Markets report summarized, “Private label tends to come to the fore after a high degree of market penetration and consolidation has been reached.” But, it adds, “China (as usual) is proving different.”

In very large part, this is because private label currently means something very different in China than in the West. A “generic” product is likely to be a local, traditional product not competing in more sophisticated categories. It’s generic because it “just is,” not to contrast with a branded alternative. A “store brand” raises concern of counterfeiting in a country where fakes are rampant, sometimes dangerous to use, and increasingly repugnant to shoppers whose sensibilities are maturing.

What we call “house brands” or “retail brands,” however, carry somewhat different baggage in China. Research shows that retail brands at Chinese store chains still have a somewhat negative perception – for lack of safety, quality and cachet. But retail brands from Western hypermarket retailers – Wal-Mart, Carrefour, Tesco – can leverage the cachet of those marquee brands and of the West in general.

But it requires careful tactics and a willingness to educate the customer who may not be familiar with the “third way” of a sophisticated- looking product that’s not a major Chinese brand or a major Western brand.

Some retailers have made the mistake of copying the national brand product, which raises suspicions of counterfeiting and can offend shoppers’ visual sensibilities, since Chinese product typography often carries far more cultural weight than Western fonts.

But as shoppers are educated about the connection between top retailers and their own brands, there’s been an upswing in popularity. These brands appeal to middleclass shoppers’ taste for Western products while offering a lower price and the assurance of quality. This last factor is key in a country where products can be so shoddy that retailers test light bulbs before the shopper pays for them, the way Western shoppers inspect a dozen eggs for cracks. In all, retail brand products can “punch above their weight” in major Chinese markets today, while also serving as a gateway to higher-priced products.

It took decades for much of the Western marketplace to evolve to the point where marquee brands like Target carry serious cachet and chains like Safeway offer logical and appealing retail brand portfolios that gratify shoppers’ aspirations and budgets. For smart retailers in China, it’s taking far less time.


Sources: “Retail Shopping Trends in China.” NielsenWire, December 14, 2010. “Private Label in China 2010: A Market Analysis.” Research and Markets, December 2010. “The Private Label Market of Our Century.” Private Label Magazine, January/February, 2011. “Store Brand Success Around the World,” NielsenWire, May 5, 2009. “The Scoop on China’s Private Labels,” Wainwright Gregory Yu in China Business Philippines, “Carrefour’s and Wal-Mart’s differing expansion strategies in China,” Oxford Institute of Retail Management, 2008.


Schawk, Inc. is a leading provider of brand development and deployment services, enabling companies of all sizes to connect their brands with consumers. With a global footprint of operations in 26 countries, Schawk helps companies create compelling and consistent brand experiences by providing integrated strategic, creative and executional services across brand touch points. For more information about Schawk, visit http://www.schawk.com. Follow Schawk on http://www.brandsquare.com and http://twitter.com/BrandSquare.