From coffee to cars: China’s brands seize the lead

Chinese domestic brands gained ground against international competitors across multiple sectors in the first half of 2025, with local companies outperforming foreign rivals in categories from coffee and electric vehicles to beauty and luxury goods. The shift reflects changing consumer preferences during economic uncertainty, with Chinese brands leveraging lower prices, cultural relevance and digital-first strategies to capture market share from established global players. International businesses are responding with deeper localization efforts and China-specific product lines as competition intensifies across key consumer categories. F&B: From coffee wars to snack showdowns The food and beverage category is where local upstarts are challenging established international players. Take coffee: Luckin Coffee has exploded to over 24,000 stores worldwide by mid-2025, dwarfing Starbucks’ 6,975 in China. Its secret? Cut-price lattes, tech-driven apps for quick orders, and a whopping 119 new drinks launched this year, helping it surge while Starbucks explores a partial sale of its China ops amid slowing growth. In Q1 2025, Luckin reported 41% YoY sales growth, outpacing Starbucks’ dip, thanks to its focus on affordable, health-infused brews that fit cautious urban wallets. It’s not just java — Manner Coffee is nipping at heels with artisanal vibes in Tier 1 cities, while KFC surprised everyone by selling 190 million cups of coffee in China last year, blending fast food with caffeine to challenge pure-play chains. On the packaged side, snacks and drinks see locals like Want Want and Master Kong chipping away at Coca-Cola’s dominance. Coca-Cola is still strong in juices and coffee thanks to nutrition-focused pivots, but domestic brands grew FMCG volumes 4.4% in 2024 (prices down 3.4% for affordability). For instance, Genki Forest's zero-sugar sodas have captured Gen Z with eco-packaging and viral Douyin campaigns, forcing Coke to amp up its low-cal offerings. What's next? With beverage growth stagnant in Q1 2025, domestic brands will lean on AI personalization (60% of consumers trust it) and sustainability, where 50% pay premiums for green products. Global firms might aim to deepen collabs, but if local brands keep undercutting on price and culture (think tea-infused twists), they could claim 60%-plus market share by 2026. Health and sportswear: Local hustle meets global muscle Sportswear’s booming, with China’s market closing on 5% growth in 2025, outpacing overall fashion. But Nike and Adidas are slipping – Nike’s share dipped as locals like Anta and Li-Ning surge. Anta grew faster than legacy labels in 2025 by blending tech like smart fabrics with cultural drops, such as CNY-themed sneakers. Li-Ning, meanwhile, tapped wellness trends — 63% of consumers upped fresh food and supplements — with yoga lines that outsold Adidas in lower tiers. Looking ahead, locals will expand digitally (Douyin influences 71% of discoveries). Global companies need deeper localization, like Nike’s AR try-ons, but if domestic labels keep innovating on affordability and eco, they could flip the script entirely. Cosmetics and skincare: Beauty battles get personal China’s beauty market is rebounding slowly, with L’Oreal forecasting 5% growth in 2025 after double-digit emerging market gains in H1. But domestic brands like Perfect Diary are staging comebacks. After a 2020 peak, it relaunched skincare-infused makeup in 2025, targeting 20 to 35-year-olds with prices under 100 RMB ($13.95), undercutting L’Oreal by 75%. Perfect Diary's live-stream strategy on Xiaohongshu built loyalty, helping it rank in the top 3 domestic beauty brands alongside Huawei and Li-Ning in popularity. Proya and S’Young are eyeing foreign M&A for growth. Next up? With acquisitions on the rise, domestics could globalize, but globals like L’Oreal will counter with China-specific lines. Insights show purpose-driven buys, focused on sustainability and health, will define winners. Household appliances: Subsidies spark local surge Appliance subsidies are game-changers for the industry in 2025, with 15-20% discounts driving energy-efficient upgrades. Haier and Midea are thriving: Haier exceeded $1 billion in transactions via trade-ins, while Midea’s smart appliances grew amid a market hitting $703.5 billion globally. Global players like Dyson face heat. Its vacuums compete with Midea’s affordable tech alternatives, but subsidies favor locals. The future? With pro-consumption policies boosting sales, locals will dominate emerging markets, but global brands could rebound via green collabs. Cars: EV locals accelerate past imports China’s auto market is electric: BYD sold 377,628 vehicles in June 2025, trouncing Tesla’s 71,599 China-made units. Nio and BYD dominate below $34,750, while BMW and VW still hold the premium end. The outlook: BYD will continue pushing for global domination in EVs, while many other Chinese domestic brands eye Europe, despite the looming tariffs. Hard luxury: Gold rush for domestic jewelers Laopu Gold is the star, with H1 2025 sales up 252% to 14 billion RMB ($1.95 billion). Rooted in Chinese craftsmanship, it is expanding to Hong Kong and Singapore. What comes next: More Chinese luxury brands will emerge, thriving domestically before expanding globally. The journey has just begun. IPs and entertainment: Cultural icons take center stage Labubu is challenging Hello Kitty. Already Pop Mart's ugly cute doll surged past Kitty in searches, with global hype redefining China’s cultural exports. In movies, Nezha 2 smashed $2.2 billion globally by mid-2025, topping animated history and outgrossing Hollywood in China. What’s next? Black Myth: Wukong and Labubu are creating blueprints for IP. Wrapping up: Domestic brands on the rise, but global firms are adapting In 2025, China’s brands are rewriting the industry rules, from Luckin's coffee coup to Laopu's gold glow-up, driven by purpose and digital engagement. Local businesses are eyeing global expansion, but global firms will localize harder. Though domestic brands have an edge, especially if they keep innovating, the battle’s far from over.

Sectors

Insights

Company

From coffee to cars: China’s brands seize the lead