U.S. brands struggle as consumers shift to local products in China

In April 2025, a survey conducted by TD Cowen revealed that U.S. brands are losing favor with Chinese consumers, particularly as economic growth in China slows down. Following in-person interviews with 2,000 consumers across significant Chinese cities, the survey found that the overall preference for Western brands dropped from 14% to 9% within a year. As local brands gain traction, particularly in areas such as sportswear and beauty products, American companies are reportedly facing increasing risks. The report also indicated that consumers are becoming more cautious regarding spending, with expectations of declining income affecting purchasing decisions. The survey also pointed to specific brands like Estée Lauder and Nike facing significant challenges in China. Estée Lauder experienced an 11% drop in net sales in the Asia Pacific region during the quarter that ended in December 2024, attributed to weakening consumer sentiment in China, Korea, and Hong Kong. Similarly, Nike observed a loss of consumer preference across various categories, while Chinese competitors like Li-Ning and Anta witnessed a rise in their popularity. These developments suggest that American brands are perceived as offering less in terms of value and product quality. Moreover, amidst existing trade tensions, these findings underscore an increasingly challenging environment for Western brands. Although the survey was conducted before trade war tensions escalated, analysts believe that uncertainty remains high, and households are likely to maintain a cautious outlook on spending. The anticipated coffee boom in China is also under scrutiny, as frequency of coffee purchases among consumers appears to be declining. In response to growing trade tensions, Chinese leaders acknowledged the impact on businesses and signaled potential measures to support struggling sectors. However, no full stimulus measures have been announced. Analysts have pointed out that the macroeconomic situation presents a daunting challenge for brands looking to capitalize on the lucrative Chinese market, which many view as a potential growth opportunity. With preferences shifting towards local brands and spending habits evolving, the landscape for American companies in China may require substantial adaptation moving forward.