The 10 Most Popular US Brands In China

Intel AppleApple and Intel were two of the most popular American companies in China.

Photo: AP

The primary reason, it is often argued, that China is an important market for many large U.S. companies is that its population has doubled since the early 1960s. But the whole picture is actually more complex than that. China’s real appeal to American corporations is that the huge population growth has been coupled with a sharp expansion of the middle class. As a result, the Chinese market probably will become more important to consumer goods and technology companies in the next few decades than the U.S. is today.

These are 10 most popular companies in China >
China’s population in 1960 was 667 million, more than double that of the United States in 2010. China now has 1.34 billion residents. The increase would not matter much to companies if the population was still largely rural and poor, as it was half a century ago. But, in fact, the manufacturing industry that has become the engine of China’s GDP growth also has rapidly built a huge middle class, one made up primarily of factory workers. And this middle class continues to grow. The United Nations Population Division and Goldman Sachs (NYSE: GS) predict that China will have 1.4 billion middle-class consumers by 2030, compared to a forecast of 365 million in the U.S. The stakes for American companies in China are rising.

The most important consumer target markets for companies in China largely mirror those in the U.S. American companies find themselves competing with foreign multinationals for these sales.

Retailers, led by American companies like Walmart (NYSE: WMT), have begun to open thousands of locations across China. Much of the competition for the retail market there comes from corporations based outside America, particularly France’s Carrefour. The situation in the athletic gear market is similar. Nike (NYSE: NKE) has a strong sales base in China, but so does Germany’s Adidas. Li Ning, a Chinese company, is the second largest market share in terms of sales. General Motors (NYSE: GM) is the leader in the Chinese light truck and car market. Volkswagen sells nearly as many vehicles as GM. Several large local car companies are owned and operated, in part, by Chinese government-controlled entities.

American companies that need strong sales in China to maintain their positions as global leaders will face challenges unique to the People’s Republic. The level of piracy of Western goods is remarkably high. Microsoft (NASDAQ: MSFT) estimates that four-fifths of Windows OS software in China is pirated. Apple (NASDAQ: AAPL) iPhone knockoffs are widely available there as well. American corporations will have to fight the problem, but accept that it cannot be entirely conquered, or, in some cases, even significantly reduced. Even manufacturers like Boeing (NYSE: BA) and GM have to contend with the fact that their Chinese partners may “borrow” some of their expertise and patent-protected knowledge.

24/7 Wall St. has identified the American companies that have done the best job of tapping into this growing market. We reviewed America’s most iconic brands that are top sellers in the U.S. and abroad and reflect a cross-section of the economy. We then selected 10 companies with the largest market share in China by industry and product category to identify the most popular American brands with the most to gain — and the most to lose.

These are 10 most popular companies in China >
This post originally appeared on 24/7 Wall St.

10. Apple

Market share: 51%
Industry: tablets
Competition: Lenovo, Samsung

While Apple effectively has zero presence in China's operating system market, its smartphone market share is not bad -- fourth in the country, according to Reuters. But the company really shines in China's tablet market. According to consulting firm iResearch, Apple's iPad has a market share of 51%. Lenovo and Samsung are in second and third place, with 13.8% and 9.8%, respectively. A whopping 80% of consumers who are considering buying a tablet say their first choice is an iPad, reported TabTimes. According to Apple, the company's China sales for the quarter ended June 2011 increased six times from the same period the year before.

Source: 24/7 Wall St.

9. Starbucks

8. Intel

Market share: 14.9%
Industry: semiconductor
Competition: Samsung, Hynix

Intel (NASDAQ: INTC) is the world's largest semiconductor chip maker by revenue. China accounts for more than one-third of the world semiconductor market. It therefore makes sense that Intel is the leading semiconductor supplier for China. According to PwC, Intel had 14.9% market share as of 2010. In that year alone, Intel made nearly $20 billion in revenue in China. This was an increase of more than 26% from 2009, when the company was also the market leader. For the second quarter of 2011, PC shipments in China grew to 18.5 million, according to IDC, surpassing the U.S. for the first time.

Source: 24/7 Wall St.

7. Procter & Gamble

6. Coca-Cola/Sprite

Market share: 61.5%/26.9%
Industry: soda
Competition: PepsiCo

Sprite is the number one soft drink in China, with 26.9% market share, according to recent data from Nielsen. Sprite's manufacturer, Coca-Cola (NYSE: KO), holds a total 61.5% share of the soda market. It is followed by PepsiCo (NYSE: PEP), which has 29%, according to London-based researcher Euromonitor International. Coca-Cola currently has more than 40 factories in China, and it plans to invest $4 billion in bottling plants and delivery trucks over the next three years, according to Bloomberg.

Source: 24/7 Wall St.

5. Nike

4. Boeing

3. Microsoft

Market share: 99.3%
Industry: PC operating systems
Competition: N/A

Microsoft dominates the PC operating systems market in China. According to web analytics company Baidu Tongji, the company has about 99.31% of market share. Apple's Mac OS and Linux have virtually no representation. Due to rampant piracy, however, Microsoft only makes a fraction of the revenue it would make if everyone in China bought software directly from the company. Nearly 80% of PC software is pirated in China. According to Microsoft CEO Steve Ballmer, the company's revenue in China will only be about 5% of what it is in the U.S., despite almost equal sales of personal computers in the two countries, the Wall Street Journal reports.

Source: 24/7 Wall St.

2. General Motors

Market share: 12.8%
Industry: automotive
Competition: BYD, Toyota

General Motors passed Toyota Motor (NYSE: TM) in the first half of 2011 to become the largest automaker in the world. It is also the top-selling brand in China. GM's presence in the country is still expanding. In the first half of 2010, the company sold more vehicles in China than in the U.S. for the first time ever. At that time, China accounted for a quarter of the company's global sales, according to the New York Times. Since 2000, the company's market share in China has grown from 3.4% to 12.8%. Last year GM sold more than 104,000 LaCrosses, one of its most popular models in China. GM operates in China through joint ventures with a number of Chinese companies, such as SAIC Motor.

Source: 24/7 Wall St.

1. KFC

Market share: 40% (Yum! Brands)
Industry: fast food
Competition: McDonald's

KFC has become a sensation in China. Since the first restaurant opened in Beijing in 1987, the chain has grown to more than 3,200 locations in 650 cities, according to Bloomberg. McDonald's (NYSE: MCD), the second most prominent fast food chain, operates 1,100 locations. McDonald's commands only 16% of market share, while Yum! Brands (NYSE: YUM), which owns KFC, has 40%. KFC is so hugely popular that the company's target is to increase its number of restaurants in China to 20,000. China accounted for 29% of Yum! Brands' measured-media ad spending and 36% of its worldwide revenue in 2010, according to Ad Age. While McDonald's restaurants in China have an almost identical menu to those in the U.S., KFC offers local patrons a number of more familiar dishes, such as Chinese-style porridge for breakfast.

Source: 24/7 Wall St.

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