(upbeat music) - This may look just like your regular American fast food restaurant (speaking in Chinese) with a meal that comes with
a burger, fries and a drink. But if you look closely,
the wrapper proudly declares that this burger has been made in China. I'm sitting in Tastien. It's China's answer to McDonald's, and as you can see it, you have all this language
here made in China, a Chinese burger for a Chinese stomach, and you can see that
they've just got all sorts of Chinese imagery around. A little bit of McDonald's transported to Imperial era China. And Tastien is just one example of a Chinese brand
squeezing out US rivals. China once presented a huge
opportunity for American brands, but now local challenges
are eating their lunch and that threatens dominance
they have held for decades. (gentle music) China is the world's second
largest consumer market. The country has more than 1
billion shoppers were once seen as an untapped gold
mine for Western brands. This is Beijing's premier
shopping district, and you don't have to look far to see which companies
have taken center stage. There's American brands all around me. Over here we got Ralph Lauren, Tom Ford, and right behind me is
perhaps the best known of all of the brands, Apple. In the first quarter of 2024, Apple saw its smartphone sales fall 19% while that of its Chinese rival, Huawei Technologies saw its sales rise 70% For China, apple saw
its revenue fall by 8% to $16.4 billion, and Apple isn't the only American company that's been struggling a little
bit more in China lately. From luxury cosmetics firm, Estee Lauder, which is expecting sales in China to fall to retail giant Walmart, which has closed more than
a hundred stores nationwide over the past five years. Executives of some of
America's biggest brand names in China are increasingly worried about their weak
performance in the country. - Local brands are expanding
so rapidly in China. Any CEO who is worried
about his performance, his profits is going
to be affected by them. And we have seen stock prices fall. Nike stock prices fall, for
example, on the back of kind of weakening performance in China. - [Speaker] China. - China once represented almost a fifth of Nike's global sales. Nike has long dominated
China sportswear market, but that's changing. Younger Chinese consumers
are increasingly gravitating towards brands that incorporate elements of traditional Chinese culture and style, and it's allowed brands
like Anta right over there to make inroads in a market
that long has been dominated by Nike and other Western brands. Chinese consumers are trying
new brands like Anta on for size, and in many cases
they aren't going back. As the sponsor of the
Chinese Olympic team, Anta has found a place among
Chinese shoppers as a brand that matches growing
nationalist sentiment. - [Speaker] Anta supports
the new generation of Chinese Olympic athletes. - It was very much linked to very big and bold expressions of Chinese pride. So think about your large logos, red and yellow color combination. It's resonating, especially
with younger consumers today because they don't have
the same level of adoration for the West as the past generations. It's not about, you know, blind kind of, I'll buy something from
the West just by virtue of it being from the West. - American brands have reaped huge profits by capitalizing on changing
Chinese consumer tastes. Starbucks largely created
China's new coffee culture in a country long
dominated by tea drinkers, but supremacy is now under threat. At the end of 2023, Luckin
Coffee surpassed Starbucks's, China's biggest coffee
chain by sales and units. Analysts credit luck and success to its operating model, which requires minimal
staff to run their branches. Luckin prices its coffee
at a substantial discount, often up to 50% less than Starbucks. - You know, there's a
price war going around with coffee brands. Starbucks has largely avoided that. They are kind of committing
to their premium offering. They're focusing on what they do best. That should be the way for
many of these American brands who feel threatened because you don't want your brand identity to get lost as you follow the trend. - Starbucks executives
insist they won't cut prices as the company positions
itself as a superior brand. But sales for Starbucks have dropped 8% during the first quarter of this year, while Luckin's have surged 41%. That contributed to the
company lowering its forecast for the rest of the year. The announcement spooked the market causing Starbucks' share
price to plummet in May. The US coffee giant still has plans to make China its biggest market, but it's now in a race to win wallets. In 2023, Starbucks opened nearly 900
new stores across China, bringing its total in the
country to almost 7,000. But in that same year alone, Luckin opened more stores than the entire Starbucks
operation in the country and now has nearly 19,000 locations. - Luckin is expanding
very rapidly in tier two, tier three cities where
Starbucks might not have that big of a presence. It's really forging its
own brand story in a way that resonates with who
the new middle classes are. - American brands have had a near free run at the Chinese market for decades, but that's coming to an end. - I think to lose out on China
is a huge missed opportunity, not just in terms of dollars, but in terms of cementing
your brand presence in one of the largest consumer
markets in the world. - What was once an enormous opportunity for American companies
could come back to bite as Chinese rivals chip away
at their market dominance. But of course, the real question with this Chinese burger is not, you know, whether it is very Chinese or very American, it's about
whether it tastes good. (upbeat music)
