From Labubu to Luckin Coffee, Chinese retail chains are betting big that American consumers can revive the growth they’re losing at home — and relying on cultural relevance and competitive pricing to make it happen.
A Business Insider analysis of top Chinese brands shows how they’re expanding their empires by opening brick-and-mortar stores beyond their borders.
Some of these brands may be looking to replicate the phenomenon of Labubu dolls, which have swept social media this year and have fans going to extraordinary lengths to snag one.
Business Insider found that in New York City alone, 20 Chinese retail chains have opened more than 40 stores across the food, beverage, and fashion sectors over the past two years, based on an analysis of company websites and announcements. Despite the US-China trade war, they aren’t showing signs of pulling back.
We zoomed in on six top brands from China that are expanding in the US for clues as to how they’re trying to win over American shoppers: Pop Mart, a toy company behind Labubu; Miniso, a home-goods retailer known for trinkets and character plush toys; Haidilao, a Sichuan-based hotpot giant; Luckin Coffee, the fast-growing coffee chain that sees Starbucks as its main competitor; Chagee, a tea chain that went public in New York in April; and Urban Revivo, a fashion label commonly thought of as Asia’s Zara. The companies did not respond to requests for comment.
Luckin Coffee, for example, opened its first two US stores in New York City in June and immediately caught the media’s attention as a challenger to the US’s leading coffee chains. Founded in 2017, Luckin had expanded to thousands of locations in China through coupon-driven marketing and surpassed Starbucks’ sales in the country by 2023.
“Luckin sees Starbucks as vulnerable to lower-priced competition,” said Russell Winer, marketing professor emeritus at New York University’s Stern business school, who recently returned from Shanghai. “They’re coming to the US and trying to position themselves between Starbucks and cheaper coffee chains, such as Dunkin’ Coffee, by offering competitive prices and good quality.”
The international expansion of Luckin and other Chinese brands comes amid sluggish consumer demand in China. China’s July consumer prices were unchanged from a year ago, while producer prices fell 3.6 %, extending their two-year slide, according to the National Bureau of Statistics — two signs of weak consumer sentiment.
As consumers in China become increasingly price-sensitive, retail brands, especially in the food and beverage industries, are caught in price wars. They rely on low prices to maintain customer traffic but see no real growth in domestic revenue.
Diversifying revenue beyond China has increasingly become necessary for these retail chains.
Many Chinese retail brands initially see Southeast Asia as a gateway for international expansion. The region offers lower labor costs, similar consumer interests, and proximity to existing supply chains in China. Tea chain Chagee opened its first overseas store in Malaysia in 2019 and expanded to 156 other international locations before entering the US market. Apparel brand Urban Revivo similarly established more than 400 stores in Southeast Asia prior to launching its first US store in New York City’s SoHo neighborhood this year.
But now the pace of expansion into the US market is accelerating. Beverage brands Luckin Coffee, Cotti Coffee, and Mollytea all landed in New York within two years of first stepping overseas.
Source: https://www.msn.com/en-us/money/companies/ar-AA1Lvbyh
