Core Insights - Global brands are reassessing the deep value of localization in light of China's manufacturing rise and consumer awareness upgrade [1] - The transition from "producing in China" to "innovating for the world" is a key focus for companies [1] Industry Overview - The modern industrial base in Wuxi, covering over 64,000 square meters, symbolizes the shift in global narratives [1] - The German brand Vaillant operates this facility, with an annual production capacity of 1.5 million units, while the wall-mounted boiler sales in China are projected to reach 2 million units in 2024 [3] - Approximately 40% of the factory's electricity comes from photovoltaic power, and it has achieved international LEED Gold certification, reflecting the growing importance of heating solutions among Chinese consumers [3] Consumer Behavior Changes - Consumer perception has evolved from "brand worship" to "quality recognition," with China's manufacturing value expected to account for nearly 30% of the global total by 2025 [4] - The overall scale of China's manufacturing has maintained the top position globally for 15 consecutive years [4] - The shift in consumer mindset indicates a more rational judgment, where consumers are clearer about their product needs and lifestyle preferences [4] Market Demand Diversification - The demand in the Chinese market has become increasingly diverse, reflecting the changing consumer mindset [6] Product Development Insights - Specific product requirements, such as higher adjustment ratios for wall-mounted boilers to accommodate varying water temperatures, are critical for usability [9] - Noise control is emphasized, with dedicated soundproofing labs focusing on psychological acoustics to ensure products operate quietly [10] - Smart features, such as remote operation and temperature settings via an app, are driven by Chinese customer demands, influencing global product upgrades [10] Global Innovation Impact - Innovations developed for the Chinese market are now influencing global products, with Vaillant exporting approximately 300,000 water heaters annually to over ten European countries [12] - The collaboration with Southeast University since 2019 has led to algorithm optimizations that cater to both local and international markets [12] Challenges for Multinational Companies - Multinational companies face the challenge of adapting to local market needs rather than merely replicating existing production systems [14] - China's market is evolving from being a traditional manufacturing hub to becoming a center for global innovation [14] Global Consumer Consensus - Successful products can achieve global recognition, as evidenced by the popularity of brands like Labubu among young consumers worldwide [16] - The operational strategies of foreign brands in China are shifting towards deep adaptation to local needs while maintaining core standards, leading to local innovations influencing global standards [16]

Core Viewpoint - Global brands are reassessing the deep value of localization in the context of China's manufacturing rise and consumer awareness upgrade, seeking a balance between global standards and localized demands while transitioning from "producing in China" to "innovating for the world" [1][3]. Group 1: Consumer Awareness Upgrade - The shift in consumer perception in China has evolved from "brand worship" to "quality recognition," reflecting a more rational judgment about products and lifestyles [4][5]. - By 2025, China's manufacturing value-added share is expected to approach 30% globally, maintaining its position as the largest manufacturing economy for 15 consecutive years [5]. Group 2: Market Demand Diversification - The demand in the Chinese market has become increasingly diverse, necessitating tailored product features to meet specific consumer needs [7]. Group 3: Product Adaptation and Innovation - The wall-hung boiler products require higher adjustment ratios to maintain comfort in higher inlet water temperatures prevalent in China, compared to Europe [10]. - Noise reduction involves a comprehensive approach, utilizing psychological acoustics to ensure products operate quietly and unobtrusively [11]. - Smart features, such as remote operation and temperature settings via an app, have emerged from Chinese consumer demands, influencing global product development [11]. Group 4: Global Innovation Hub - Since 2019, collaboration with Southeast University has led to algorithm optimization and sensor integration, resulting in products that appeal to European markets, with approximately 300,000 water heaters exported annually to over ten European countries [13]. - The role of the Chinese market has fundamentally shifted from being a traditional manufacturing hub to becoming a center for global innovation [15]. Group 5: Cross-Cultural Brand Recognition - Successful products can achieve global consensus, as evidenced by the popularity of brands like Labubu among young consumers in China and worldwide [17]. - The operational strategy of foreign brands in China has evolved to deeply adapt to local needs while maintaining core standards, leading to local innovations that can set global benchmarks [18].

Core Insights - The article discusses the rising debate around "consumption downgrade," suggesting that it may actually reflect a shift in consumer behavior towards valuing quality and practicality over brand prestige [2][3][5] - The perspective of Yu Donglai, founder of the supermarket chain "Pang Donglai," challenges the notion of consumption downgrade, arguing that consumers are becoming more discerning and are voting with their wallets against inferior products [3][4][5] Group 1: Consumer Behavior Changes - Consumers are increasingly prioritizing value for money, leading to a preference for lower-priced yet quality products, as evidenced by the success of platforms like Pinduoduo [15][16] - The shift in consumer behavior is characterized by a transition from passive acceptance of brands to active selection based on actual needs and value [5][6] - The concept of "consumption cognitive upgrade" indicates that consumers are now more focused on the practical benefits of products rather than being swayed by marketing or brand prestige [5][6][10] Group 2: Market Dynamics - Data shows that from 2020 to 2024, the average per capita consumption expenditure in China increased from 21,210 yuan to 28,227 yuan, reflecting a compound annual growth rate of 6.8%, outpacing the CPI growth [7][9] - The structure of consumption is evolving, with a notable decline in survival-type expenditures and a rise in service and experiential consumption, indicating a shift towards quality and experience [11][13] - The rise of platforms like Pinduoduo illustrates a successful model that combines low prices with quality assurance, challenging the traditional view that low prices equate to low quality [15][16] Group 3: Implications for Businesses - Companies must adapt to the changing consumer landscape by either offering exceptional value through low prices or providing superior experiences through enhanced service and quality [18][29] - Large brands are facing pressure to move away from reliance on brand prestige and instead focus on delivering tangible value and quality to consumers [28] - Small and medium enterprises can leverage localized operations and exceptional service to build customer loyalty and differentiate themselves from larger competitors [29][30] Group 4: International Perspectives - The article draws parallels between the current Chinese consumption trends and Japan's fourth consumption era, where consumers shift from materialism to valuing simplicity and quality [19][20] - This transition in consumer behavior suggests a broader global trend towards more rational and meaningful consumption choices, moving away from mere brand loyalty [21][22] Group 5: Future Outlook - The future of consumption is likely to be defined by a balance between quality and price, with consumers increasingly seeking products that offer real value [30][31] - Companies that can effectively communicate and deliver on the value proposition will be better positioned to thrive in this evolving market landscape [31]