Competing on price alone is not enough to counter the growing influence of Chinese brands, which are increasingly combining affordability with innovation, premiumisation and localisation strategies.
According to data analytics firm Euromonitor, brands seeking to defend market share in Southeast Asia should focus on strengthening unique selling points and accelerating localisation efforts rather than relying solely on discounting.
“Established brands tend to compete based on pricing, but it is key to focus on strengths that cannot be easily replicated instead,” said Euromonitor’s Insight Manager Nathanael Lim at FHA 2026, where he shared insights on how to respond to the rise of Chinese brands in the region.
“Within Southeast Asia, rapid localisation is key to staying relevant and competitive here. So understanding your product strategy is key before we talk about pricing.”
This insight is crucial as Chinese brands first capture market share with competitive pricing before focusing on localising branding and increasing cultural relevance to their target audience.
This suggests that incumbents relying solely on price competition may struggle to sustain market share if they fail to differentiate through localisation and clear product advantages.
How Chinese brands build market share
Lim noted that the foodservice and packaged foods sectors are underpenetrated by Chinese brands compared to the electronics and beauty spaces, leading to them driving brand awareness through lower pricing as an initial strategy.
“The Chinese adopt a very different business strategy altogether. When they first enter the market, it’s not about the profitability. Even if they’re not able to profit they’re willing to rapidly expand and experiment and this means giving a lot of price discounts to gain the market share. That’s one of the key differences between Chinese brand strategies versus traditional business models that has enabled them to succeed in capturing the market share,” Lim said.
He cited Luckin as an example. The China-based coffee brand is shifting towards premiumisation as it recently launched a premium outlet in Shanghai, which was a shop space that previously belonged to Starbucks.
Luckin’s parent company, Centurium Capital, has also bought over Blue Bottle’s global physical café operations and consumer packaged goods (CPG) business from Nestle in April. This allows Centurium to capture the premium, artisanal specialty coffee segment.
“The whole idea is to capture market share first and create brand awareness later, even if it means not earning profits in the first few years,” said Lim.
Why price competition alone is insufficient
With Chinese e-commerce platforms like Taobao and Tmail offering attractive discounts, and fast-expanding retailers like Scarlett doing likewise, the instinct is to follow suit.
“While many Chinese brands tap on low pricing, which consumers are attracted to, I think it’s more important to know that Southeast Asian consumers are willing to spend on quality,” said Lim.
Premiumisation remains a significant growth driver in Southeast Asia, with consumers increasingly willing to pay more for products offering health, quality or functional benefits.
For example, Amazon Fresh expanded its premium European range into Singapore in response to strong customer demand. Major brands including Carlsberg and Mars Wrigley have also highlighted premiumisation as a key strategy for growth in the region.
“If your brand positioning highlights a good health attribute, maybe immune support, or helps in mood management, consumers are willing and prepared to pay for more. So it goes back to product strategy – how your product is positioned to win consumers rather than following trends like lowering pricing,” Lim added.
Beyond localisation and honing unique selling points (USPs), Lim identified four other strategies increasingly used by successful Chinese brands in Southeast Asia.
Key strategies of Chinese brands
1: Online-first direct-to-consumer (D2C) strategy
Brands focus on e-commerce to drive brand awareness and reach in a short time. The strategy shifts completely away from waiting for supermarket shelf space, focusing instead on “interest e-commerce” on Douyin and “seeding marketing” on Xiaohongshu (RED). This converts entertainment directly into impulse grocery sales.
2: Digitalisation and service innovation
The Chinese invest in digital-first strategies, faster service times, and relentless technological innovation.
“This is innovation beyond technology. Businesses use digitalisation and mobile apps to spur innovation but we need to look at new services to improve consumer experience, quality and service,” Lim explained.
“For example, if you’re operating a food service channel it’s no longer limited to food innovation but shop concept ambience, is this meant for families, pets or different other things. So identifying what innovation can be leads to beyond your product and technology.”
3: Heavy investment in KOL marketing
Southeast Asian consumers tend to be influenced by key opinion leader (KOL) marketing, and Chinese brands are increasing spending in this space.
Wuqiong Food, a brand known for its packaged meat snacks, launched a massive national ad campaign featuring top actor Dylan Wang in May.
Karry Wang, leader of Chinese boy band TFBOYS, was brought on to represent various packaged convenience snacks and confectionery lines, including Snickers, Stride Gum, and Coca-Cola’s Chunyue water.
The approach demonstrates the scale of marketing investment Chinese brands are willing to deploy to rapidly build awareness among younger consumers.
4: Affordable premiumisation
There is increasing focus on affordable premiumisation.
In the fast-moving consumer goods (FMCG) and packaged food sectors, Chinese brands are moving away from pure discounting. Instead, they are positioning ingredients and formats as premium and better-for-you to win over increasingly value- and health-conscious consumers.
Rather than competing solely on price, Yili premiumised its offerings by launching high-quality probiotic yogurt beverages, specialized cheeses, and value-positioned but creamy ice cream lines that rival established Western brands.
Haidilao, known globally for its hotpot restaurants, has built a packaged food arm that includes a range of self-heating hotpots, soup bases, and quick-cook noodle meal kits that use the exact same ingredients from their restaurants. It offers an “elevated dining experience at home” for a fraction of the restaurant cost, typically retailing under SGD5 (USD3.90).
Facing trade barriers and market access challenges in the US and Canada, Chinese firms are scaling rapidly in Southeast Asia, noted Lim as he posed a rhetorical question.
“Chinese brands are still actively expanding into underpenetrated categories, so incumbents need to closely track their growth in the target markets – this means assessing Chinese expansion in the global south. So which markets are they going to next and how can I defend my market share – by going into markets they’ve not gone into, or looking into categories that are not going there?”
As Chinese brands continue expanding into underpenetrated Southeast Asian categories, the challenge for incumbents may be less about matching discounts and more about strengthening local relevance, differentiation and consumer trust.
