A great article from 24/7 Wall Street listing the Top 10 American brands in China. The full article reasons that while population growth over the last 40 years (667M to 1.3B) in China has been an attractive market for growing these brands, it is also the rise of the Chinese middle class that has substantially contributed to the success of these brands.
There were a couple of "wows" for me here. First, KFC number one? Wow! NB: McDonald's doesn't get a mention in the Top 10. Second, Microsoft as No. 3 has a 99% market share? Wow!! NB: The article also mentions Microsoft believes four-fifths its Windows products are pirated. I could go on... maybe one more. For the first time, GM sold more vehicles in China and than the US. Anyhow, enough of my "wows" here's the list of the Top 5. The Top 10 can be found in the full article by clicking here.
1. KFC
- Market share: 40% (Yum! Brands)
- Industry: fast food
- Competition: McDonald’s
KFC has become a sensation in China. Since the first restaurant opened in Beijing in 1987, the chain has grown to more than 3,200 locations in 650 cities, according to Bloomberg. McDonald’s (NYSE: MCD), the second most prominent fast food chain, operates 1,100 locations. McDonald’s commands only 16% of market share, while Yum! Brands (NYSE: YUM), which owns KFC, has 40%. KFC is so hugely popular that the company’s target is to increase its number of restaurants in China to 20,000. China accounted for 29% of Yum! Brands’ measured-media ad spending and 36% of its worldwide revenue in 2010, according to Ad Age. While McDonald’s restaurants in China have an almost identical menu to those in the U.S., KFC offers local patrons a number of more familiar dishes, such as Chinese-style porridge for breakfast.
2. General Motors
- Market share: 12.8%
- Industry: automotive
- Competition: BYD, Toyota
General Motors passed Toyota Motor (NYSE: TM) in the first half of 2011 to become the largest automaker in the world. It is also the top-selling brand in China. GM’s presence in the country is still expanding. In the first half of 2010, the company sold more vehicles in China than in the U.S. for the first time ever. At that time, China accounted for a quarter of the company’s global sales, according to the New York Times. Since 2000, the company’s market share in China has grown from 3.4% to 12.8%. Last year GM sold more than 104,000 LaCrosses, one of its most popular models in China. GM operates in China through joint ventures with a number of Chinese companies, such as SAIC Motor.
3. Microsoft
- Market share: 99.3%
- Industry: PC operating systems
- Competition: N/A
Microsoft dominates the PC operating systems market in China. According to web analytics company Baidu Tongji, the company has about 99.31% of market share. Apple’s Mac OS and Linux have virtually no representation. Due to rampant piracy, however, Microsoft only makes a fraction of the revenue it would make if everyone in China bought software directly from the company. Nearly 80% of PC software is pirated in China. According to Microsoft CEO Steve Ballmer, the company’s revenue in China will only be about 5% of what it is in the U.S., despite almost equal sales of personal computers in the two countries, the Wall Street Journal reports.
4. Boeing
- Market share: 52%
- Industry: commercial aircrafts
- Competition: Airbus, Embraer, Bombardier
Boeing currently has more than 50% share of the Chinese market for commercial aircraft, according to Forbes. The company’s presence in China most likely will increase in the coming years. Air passenger trips in China have increased 16% from 2010. Boeing expects the aviation market in China to more than triple over the next 20 years, requiring an increase of about 5,000 planes valued at $600 billion. Boeing and China have a two-way relationship. According to Boeing-China President David Wang, speaking to CNC World, “China is already Boeing’s biggest customer outside of the United States and Boeing is the largest purchaser of made-in-China aviation parts and components.”
5. Nike
- Market share: N/A
- Industry: sportswear
- Competition: Li Ning, Adidas
Nike is China’s leading manufacturer of sportswear. It is followed in market share by Chinese company Li Ning, which holds one-third of the market, and Adidas, although some research puts Adidas in second place. In June Nike reported annual revenue of $2 billion in Greater China, according to Reuters — double the amount made by the company in 2007. Although Chinese companies currently hold a significant market share, they are locked in heated competition to keep up with the expansion of foreign rivals. Concerning sportswear in China, HSBC noted in a report that, “Local brands will lose more market share to imported brands over the next 12 months as the former struggle with inventory issues, while the latter benefit from consumers trading up.”
The rest of the Top 10 lines up like:
6. Coca Cola/Sprite
7. Procter & Gamble
8. Intel
9. Starbucks
10. Apple
Click here to read the full article.
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