Chinese consumers are increasingly favoring branded goods despite economic headwinds, according to the newly released China Online Consumer Brand Index from Peking University with support from Alibaba’s Taobao and Tmall Group. The index has revealed five consecutive quarters of growing preference for brands with strong equity, highlighting opportunities for brands that can capture the nuanced needs of China’s sophisticated middle-class and young consumers.
Drawing on transaction data from Taobao and Tmall, the inaugural index evaluates brands based on brand awareness, brand novelty, customer loyalty and customer satisfaction. By assessing spending allocations across varying levels of brand equity, the index complements other macroeconomic indicators such as retail sales and the Consumer Price Index (CPI).
Accompanying the index is the China Top 500 Online Consumer Brands list where international brands have established a strong foothold, accounting for one-third of the rankings. Apple leads the list, highlighting Chinese consumers’ affinity for high-equity brands.
Sector-specific analyses reveal distinct dynamics. In beauty, while international brands continue to dominate, consumers increasingly prioritize product efficacy over brand heritage. Global outdoor and sportswear brands remain strong, though domestic competitors are rising. In rapidly evolving categories like collectible toys and pet food, agility in adapting to local preferences has become critical for success.
Geographically, brand purchasing power in second-tier cities such as Hangzhou, Chengdu, Suzhou and Wuhan is nearing that of tier-one cities, presenting new opportunities for brands.
Drawing from top-performing brands in the study, here are three key insights for brands seeking to resonate with discerning Chinese consumers.
Insight 1: Efficacy Trumps Prestige
Chinese consumers increasingly value proven utility and effectiveness over brand prestige alone. Function-driven brands such as SkinCeuticals and Arc’teryx are outperforming established prestige competitors. SkinCeuticals, ranked #12 in beauty, has successfully positioned itself as a science-backed, results-oriented brand. It built credibility among high-income millennials familiar with medical aesthetics, with 45% of its Tmall customers under 30. Its products, such as the Phyto Corrective serum and A.G.E cream, have consistently topped Tmall sales charts, driven by strategic partnerships with dermatology professionals and clinical institutions—leveraging expert voices to build trust and influence.
Insight 2: Product Innovation is Key to Win
Brands excelling in dynamic sectors such as pet care and collectibles swiftly adapt to evolving consumer preferences. While global leader Royal Canin tops the sector, six out of the top seven pet food brands are local. Domestic brand ROSY FRESH, ranked #4 within its category, is succeeding with health-focused products crafted through innovative techniques. Low-temperature baking and freeze-drying preserves nutritional value while eliminating the need for artificial additives, which appeals to discerning pet owners.
Collectibles brands POP MART (#1 in its category) and Jellycat (#5 in its category) have gained immense popularity through unique character IP and personalization, tapping into young consumers’ desire for joy and self-expression. POP MART’s strategy of creating versatile, narrative-free characters fosters deep consumer engagement, fueling impressive growth, with total revenue nearing $1.8 billion in 2024.
Insight 3: Carving Out Niche Markets
In highly competitive sectors, innovation is key. Laopu Gold (#2 in its category), for example, disrupted China’s gold jewelry market by shifting away from traditional weight-based pricing to artisanal, “by the piece” collections. This repositioning elevated its brand perception to match global luxury brands. Its selective retail footprint, with just 36 offline stores, and a robust online presence via Tmall reinforce its premium positioning, creating sustained brand equity and value retention.
The Bigger Picture: Opportunities for Agile Brands
The study underscores the growing importance of agility and nuanced understanding of consumer preferences in China. Brands must innovate beyond conventional strategies to truly resonate with sophisticated Chinese consumers. Reflecting these insights, Tmall has pledged “unprecedented strategic resources” to assist brands in navigating this evolving consumer landscape.
