Chinese retailers advised to create Private Brands

Brian Sharoff

Big retailers in China need to develop Private Brands as there is big potential in the market, Brian Sharoff, president of the Private Brand Manufacturers Association, said yesterday in Shanghai.

Retailers – especially supermarkets and hypermarkets – can find suppliers to produce products branded with their own name. These are known as Private Brand products.

“In developed markets, such a strategy has had a history of more than 20 years after retailers tried to seek more profit to differentiate themselves from the competition,” Sharoff said at the Shanghai Private Label Fair. “In China, it is still relatively new but has very big potential.”

Private Brand products are priced 20-30 percent below comparable national brands, but still offer retailers good profit margins because they deal directly with suppliers.

Sharoff said Private Brand products account for more than a third of retailers’ total stock in the United States or Europe.

In China, it is only 5 percent, according to the Shanghai Commission of Commerce.

But Sharoff warned retailers to be careful when choosing suppliers to guarantee quality while also maintaining a balance between Private Brand products and national brands to ensure customers are happy.

“The Shanghai Private Brand Fair offers a chance for retailers to meet good suppliers,” Sharoff said. “We hope such a fair can help to make Shanghai the capital of Private Brands in Asia.”

The three-day fair ends tomorrow at ShanghaiMart. More than 170 suppliers from 25 countries and regions set up booths at the fair while more than 2,000 retailers, including Tesco, Wal-Mart, Metro and Lianhua, China’s biggest supermarket chain, all participated.

Officials at the Shanghai Commission of Commerce added that exporters, who may still struggle in the aftermath of the global financial crisis, can become suppliers of Private Brand products. It provides a stepping stone to enter the domestic market and bypasses complicated procedures for selling brand-less products at big retailers.

Source: Shanghai Daily