Guochao in marketing in China

Riding the Guochao: How Chinese nationalism influences consumption and how foreign brands can navigate cultural confidence

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Chinese nationalism has always been an important aspect of China’s cultural identity, but in recent years it has had a greater impact on consumption trends. In the past, foreign brands had dominated a lot of consumer markets and have had a leg-up on presumed quality. Now the tides are turning,  and we see domestic brands starting to take off. A new trend among Chinese younger generation has sparked a new interest for homegrown products. We first saw evidence of a new trend in Li-Ning’s fall collection during the 2018 New York Fashion Week. Guochao (国潮 lit. National Tide) is a Chinese trend relying on the younger generation’s interest in China’s culture, traditions and domestic brands.

Starting in the fashion industry, Guochao has since gained in influence and spread to other Chinese consumer markets such as the foods and drink industry and is now a major influencing factor for marketing in China.

. Li-Ning collection at the 2018 New York Fashion Week copies traditional Chinese clothing and plays on national pride.

Source: Goldthread. Li-Ning collection at the 2018 New York Fashion Week copies traditional Chinese clothing and plays on national pride.

From Chinese nationalism to Cultural Confidence

The evolution of a culture-defining phenomenon

Chinese nationalism is a defining cornerstone of the modern Chinese society. Even though it takes roots in the sinocentrist ideology of the communist revolution and other pillars of Chinese culture such as Confucianism, it has since largely evolved into the concept of “Cultural Confidence” (文化自信).

The term has become a buzzword in China in recent years and represents a way for China to project soft power abroad and also the renewed cultural interest from the Chinese people for their cultural heritage. This cultural pride is carried by China’s rich cultural heritage and the recent economic upturn the country has known since the Deng Xiaoping era. The Chinese government has been pushing this trend forward as it supports the Chinese Dream, a key concept of Xi Jinping’s vision of Chinese society.

"Cultural Confidence" has gained in popularity in the last 4 years in China

Source: Baidu Index. “Cultural Confidence” has gained in popularity in the last five years in China

The impact of Chinese nationalism on Chinese consumer markets

The cultural renaissance China is having has a direct impact on consumer trends by redefining what makes a product desirable. For a long time, foreign brands had an advantage in China’s consumers market as they are usually associated with a qualitative or prestigious image, a trend that is still prevalent today. However, recent years have shown that China’s buyers have been more sensible to Chinese trends and that Chinese brands have overall managed to fulfill Chinese consumer’s needs more efficiently. 

Chinese nationalism helps foster this rise of domestic Chinese brands, not in an antagonistic way toward western brands (although the trade war has contributed to that effect), but rather in a new found confidence and pride toward Chinese homegrown products. The pride is accentuated by the Chinese economic miracle, seen by many in China as a way to “get back” after the Century of Humiliation by catching up to the West, a phenomenon known in China as 屌丝逆袭 (diaosinixi), literally “loser strikes back”.

These Chinese trends have pushed the rise of domestic brands on Chinese consumer markets, a constant that foreign investors now have to take into account when marketing in China.

Domestic Chinese brands have been on the rise in several industries. Here, the Chinese smartphone market

Source: IDC. Domestic Chinese brands have been on the rise in several industries. Here, the Chinese smartphone market

Guochao appeals to national pride and profits from a consumer-led economy

Guochao is, in many ways, the perfect embodiment of the new wave of Chinese nationalism. Starting in the fashion industry, this trend is the manifestation of Chinese consumers’ newfound interest in Chinese cultural heritage and their will to buy domestic brands. The Guochao sentiment is at its strongest among young adults who have grown in an ever more prosperous China and thus have a strong feeling of national pride. This generation also happens to be China’s main growth engine by, according to McKinsey, representing 60% of China’s spending growth despite making only 25% of the population.

This makes Guochao a trend to take seriously, as it concerns a segment with high spending potential but also because it has spread to other industries than just fashion. Today, Guochao’s influence can be observed in the food industry and the cosmetics industry, but also the entertainment industry where martial art and historic Chinese movies and TV shows are extremely popular. Chinese online retailers such as Taobao and JD.com have regular sales and events that have given even more reach to this trend.

The embrace of Chinese cultural heritage can be observed among many brands across many industries. Here, Hao Xiang Ni's premium packaging for a red date and mushroom soup. guochao

Source: Mintel. The embrace of Chinese cultural heritage can be observed among many brands across many industries. Here, Hao Xiang Ni’s premium packaging for a red date and mushroom soup.

Foreign brands’ answer to a market increasingly influenced by nationalism

Although foreign brands are still prominent on the Chinese consumer market, Guochao represents a change in Chinese consumers’ habits that cannot be ignored. In the luxury sector, Western brands have already made moves to appeal to the new wave of Chinese nationalism.

We can cite Gucci’s collection Gucci Tian, which is heavily reliant on Chinese imagery or a very luxurious mahjong set created by Tiffany and Co. Paying attention to cultural factors is all the more important while doing marketing in China that it can have disastrous consequences when not done properly: in 2018, a marketing campaign from Dolce & Gabbana featuring a Chinese woman struggling to understand how to eat Italian food provoked a huge public backlash and last year, Versace and Coach sparked outrage when they sold a shirt listing cities with their respective countries but leaving a blank space for Hong Kong’s country, suggesting that the city is not part of China.

The Gucci Tian collection is a clear attempt to pander to Chinese consumers guochao

Source: brandchannel. The Gucci Tian collection is a clear attempt to pander to Chinese consumers

Takeways to successfully market a foreign product in China alongside the Guochao

  • While the newfound Cultural Confidence of the Chinese younger generations has been an engine to boost domestic brands’ sales in China, the trend has not dethroned Western brands from their leading position on the Chinese consumer market.
  • However, it is important for future foreign prospects to give good consideration to Chinese cultural pride in the future as it is gaining in popularity, but also because cultural faux-pas can have disastrous consequences for a brand image in an increasingly patriotic society.
  • The luxury industry is spearheading the Western adaptation to this new trend, a wise choice considering that China is set to become the world’s largest luxury market by 2025.

Author: Camille Gaujacq

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