A harder road ahead

The most potent challenge of all for multinationals in China comes from local upstarts. When China’s economic opening began there were few domestic brands of any note. Multinationals had superior technology as well as slicker marketing. But local firms are catching up fast, and are winning over Chinese shoppers.
A study by Bain, a Western consulting firm, looked at 26 categories of consumer products, from confectionery to cosmetics, with combined sales of 542 billion yuan ($85 billion) last year. In value terms, they found that local brands gained market share in 18 categories last year, and now command 70% of their combined markets. As overall sales growth of such goods is falling, Western firms’ share is declining (see chart). The hottest brands on Chinese high streets are such things as Huiyuan’s fruit juices and Galanz’s domestic appliances rather than Western rivals’ offerings.
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A recent study by José Santos of INSEAD and Peter Williamson of Cambridge University’s Judge Business School shows that foreign multinationals are losing out to local firms in other emerging markets too, across a range of products.

 http://www.economist.com/news/business/21677213-life-getting-tougher-foreign-firms-fittest-can-still-flourish-harder-road