Chinese trust own products over foreign brands

BEIJING, Oct 29 (Reuters) A large and growing proportion of mainland consumers trust local brands over foreign ones, offering lessons to foreign and domestic brands hoping to cash in on a rapidly growing market, according to consultant McKinsey&Co The survey comes amid recent international scrutiny of the quality of Chinese goods following scandals involving products ranging from toothpaste and pet food to toys and fish.

Based on a McKinsey survey, 52 per cent of more than 5,500 respondents said they trusted Chinese brands exclusively, up from 46 per cent in 2005. Five per cent of respondents said they trusted foreign brands exclusively, it said.

''This survey is a lesson for foreign marketers who still believe they can attract Chinese consumers by emphasising their product's foreign country of origin,'' said Andrew Grant, head of McKinsey's Greater China practice.

Chinese consumers' low level of trust in foreign brands appeared to be consistent across different city tiers and income levels, said McKinsey.

But Chinese firms needed to close the quality gap with foreign products to take advantage of the preference for locally made products, it said.

''Chinese companies are leaving billions of dollars on the table by not closing the innovation and quality gap with their foreign competitors,'' said Grant.

More than 20 million toys made in China have been recalled worldwide over the past four months due to potentially dangerous levels of lead and hazards posed by small magnets that can be swallowed.

Beijing has responded to the controversy over China-made goods by insisting the issue is limited to a few errant companies and hyped by foreign media as well as being driven by a protectionist agenda in some countries.

McKinsey interviewed more than 5,500 consumers in 28 cities and 6 county seats across China at the end of 2005 and 2006 for the survey, covering all city tiers and income levels.

Driven in part by nationalist sentiment, and in part by increasing confidence in the quality of homegrown goods, more than 70 per cent of respondents said they preferred Chinese brands when buying household, pharmaceutical, healthcare, and beauty products.

The survey also found that Chinese consumers often did not know the origin of the leading foreign brands that they bought.

For example, nearly 80 per cent of respondents believed that a US brand of toothpaste was Chinese, while 85 per cent of respondents thought a European brand of yoghurt was Chinese.

REUTERS SYU KP0936