The Daily TLDR

The Soft Power Surge of Chinese Consumer Brands

Historically, China was known for producing lower-value goods, which limited its 'soft power.' However, an emergence of successful Chinese consumer brands and cultural products is changing this narrative. By moving up the value chain, China is naturally cultivating greater global soft power, mirroring the post-war expansion of American companies.

Labubu, Pop Mart, and the TikTok Effect

Pop Mart, the brand behind the wildly popular Labubu figurines, exemplifies this rise. Pop Mart's shares have soared, and its global reach extends across the US, including the heartland. Its annual revenue has more than tripled since 2024. Much of this success is attributed to TikTok, another major Chinese cultural export, where unboxing videos of Labubus by everyday users and celebrities like Lisa have generated massive hype.

TikTok's influence in the US is substantial, ranking among the top five social media apps and introducing a generation of young Americans to Chinese brands. This platform fosters an online shopping culture that is already second nature to Chinese consumers, who are far ahead of US consumers in using mobile apps for retail and in-store payments.

Mobile-First Strategies and Global Expansion

Chinese companies, having matured during the mobile-first e-commerce era, are now leveraging these strategies globally.

Luckin Coffee is a prime example. It surpassed Starbucks as China's largest coffee brand in 2023 by revenue and operates three times as many stores. Luckin's success stems from its mobile-only ordering system, which keeps costs down and allows for low-priced drinks. It is now expanding to the US, adapting its menu to local tastes (e.g., pumpkin spice items).

Brazil is another key market for expansion, sharing similarities with China: growing urban centers, a burgeoning middle class with higher spending capacity, and a young population willing to embrace digital tools. E-commerce apps like Temu and Shein are highly popular there, and other Chinese companies, such as the food delivery giant Meituan, are planning major investments.

Challenges and Geopolitical Headwinds

Chinese brands face significant challenges, notably geopolitical uncertainties, including tariffs, US government investigations, and data privacy scrutiny (e.g., Huawei and past scrutiny of TikTok). The government actively encourages global expansion, partly to combat domestic price deflation caused by intense competition, allowing companies to seek higher profit margins overseas.

Despite the challenges, Chinese brands are becoming deeply entrenched in daily life. This familiarity is subtly shaping perceptions. Pew Research Center data shows that younger Americans (18-34), who are heavy TikTok users, view China more favorably than older generations. For many users, these brands are seen simply as 'an app' or 'a retailer,' which is the essence of soft power—being nebulous and unidentifiable.

However, concerns remain regarding sustainability (will the rapid growth of companies like Pop Mart lead to a bubble?) and customer retention (Temu's retention rate is significantly lower than Amazon's). Ultimately, the longevity of these brands will depend more on sound business strategy than on politics, ensuring that the world continues to incorporate more Chinese products and services into daily life.