Chinese Renaissance Research: "As Society Moves On And Becomes More Sophisticated, There Comes A Taste For Nationalism, For What Is Local"

"But there's a not-so-subtle shift happening in China. After more than a decade of embracing all things Western, Chinese are turning to things Chinese. Today, mainland companies are no longer churning out only shoddy goods. They are producing products that in the eyes of consumers rival or are better than those in the West.

A survey by McKinsey of 800 teenagers found that 88 percent trust Chinese brands, compared with 65 percent who say the same of foreign ones. The reasons are many, including a spate of stories about safety issues involving foreign consumer products and food. But the improved quality of Chinese brands is also a factor. The brands aren't well-known outside China - yet. But they include Haier appliances, Aigo electronics and Geely and Chery cars.

These days China has world-class fashion designers whose modern takes on mandarin collars and silk designs of bygone dynasties are worn proudly to parties by chic Chinese and incorporated into streetwear by the middle class. Chinese modern art is fetching record prices. Traditional patterns and styles are making their way into modern furniture, architecture and design. The teachings of Confucius, the practice of traditional medicine, and worship at Buddhist temples are experiencing renewed popularity - and receiving tacit if not outright government support. ...

So now it's Chineseness that's hot. "People are increasingly proud of their country and proud of the progress of the country," says brand consultant Martin Roll, author of Asian Brand Strategy. "As society moves on and becomes more sophisticated, there comes a taste for nationalism, for what is local. We're going to see Western brands have more and more competition in China."

Sinofication presents a challenge most Western companies have yet to come to terms with. While many have set up R&D centers in China, their experiments have mostly resulted in minor tweaks to products developed abroad. The major innovations being worked on in China have yet to hit the market. And so far there's little evidence that Western brands are suffering - after all, an economy rising at 11 percent lifts all boats.

But increasingly, Chinese companies are benefiting from nationalist feeling, gaining market share in sectors such as passenger cars and consumer electronics that were previously the exclusive province of foreign companies. The 2008 Olympics in Beijing will likely add more kindling to this nationalist spark."

Sheridan Prasso, Fortune contributing editor "China's new cultural revolution" CNNMoney.com May 17, 2007

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