Chinese parents buy foreign as domestic brands attempt revival

On a typical day in Shanghai, housewife Scarlet Liu starts by dressing her one-year-old daughter, possibly in American-branded clothes, then cooks her breakfast using a French machine and takes her out in a Dutch stroller.

For baby formula and toys, the young mother turns to brands from more countries, such as Japan and Germany, but few are Chinese.

Now 31 years old, Liu is one of many young parents in China's big cities, such as Beijing and Shanghai, who are turning to foreign-branded baby products that are believed to be safer and better made.

"Safety is always my prime concern when I shop for my daughter," said Liu. "I would do everything I can to keep her away from toxic or substandard stuff."

Chinese parents, troubled by persistent food safety scandals, particularly the melamine-containing milk powder incident in 2008 that left at least six infants dead and many others suffering kidney problems,are known for buying foreign dairy products for their children.

Data show about three-fifths of all baby formula sold on the Chinese market, worth around 60 billion yuan (9.6 billion U.S. dollars) in total, is from foreign brands.

Now the younger generation is taking the preference a step further by surrounding their children with foreign-branded toys, clothes, and other products.

"The foreign brands have good reputations and I trust them," Liu said.0 In addition to buying at local maternity and infant product stores packed with foreign brands, many parents ask families or friends who go overseas to bring back baby products or shop online.

The overwhelming purchasing power of Chinese tourists abroad, whose numbers topped 98 million last year, has led some countries to issue limits on the volume of baby formula each customer can buy at one time.

On Taobao.com, China's most popular online shopping platform, so many shop owners sell products they purchased overseas that the new business model has become a popular term in Chinese, "dai gou," which literally means "purchasing on others' behalf."

A report released by the China e-Business Research Center shows the volume of "dai gou" deals reached 7.67 billion yuan in 2013, a 58.8 percent jump from the previous year. Baby products were one of the major categories of goods bought through "dai gou" channels.

Aside from domestic websites, more and more Chinese are placing orders directly on foreign shopping websites, which offer more varieties of quality goods at lower prices.

Zhang Hongxia, professor of consumer behavior at the Guanghua Institute of Management under Peking University, told Xinhua that Chinese customers used to buy foreign-branded products to make themselves look good, but as they have become wealthier, they now spend more sensibly.

"Parents who can afford foreign baby products usually stay away from domestic brands out of distrust in their quality," Zhang said. "Chinese brands are now mostly consumed by parents with lower incomes."

HOW CAN CONFIDENCE BE RESTORED?

It only took a few scandals to ruin consumers' confidence in Chinese baby products. But how can it be restored?

In the latest effort, the government renewed production permits for 82 baby formula producers as of Thursday, with 51 producers failing to obtain permits or being asked to delay applications for renewals.

The lists of producers with renewed permits have been publicized online to invite public supervision. They are the result of a half-year campaign after the China Food and Drug Administration unveiled a revised regulation to step up standards for domestic infant formula producers.

At the workshops of Shanghai Chenguan Dairy Co. Ltd., about 3,000 visitors came to the visitor aisle last year to see with their own eyes how milk powder is manufactured there.

Zhang Yanjie, deputy general manager of Chenguan, said they had encoded each product so that consumers could trace back to where and how the products were made, from raw materials to marketing.

Zhang Hongxia said the best way for Chinese brands to rebuild consumers' confidence is to make quality products, target specific customer groups, and publicize their products to earn public praise.

"As a Chinese saying goes, 'To forge iron, one must be strong,'" she said.