Private label food sales in China hit $55 billion in 2025, up 17% from the year before. Chinese supermarket chains are racing to build their own brands. For foreign importers, this is both a warning and a business model. The warning: if your category lacks strong brand identity, a retailer’s house brand will displace you. The business model: some foreign brands are now manufacturing for Chinese retailers under white label, with margins that beat their branded business.
What Is Happening in Chinese Retail
- Sam’s Club, Hema, RT-Mart, and Yonghui all launched significant private label food lines in 2025-2026
- Sam’s Club China private label (Member’s Mark) is already outperforming branded equivalents in several categories
- Categories most affected: snacks, beverages, dairy, cooking ingredients, and supplements
- Chinese consumers increasingly accept private label in ambient grocery: 62% buy it regularly
- Premium private label is the growth segment: retailer-branded product at imported quality pricing
Two Brands, Two Different Responses
A European biscuit brand watched their Chinese distributor lose 15% of shelf space to Sam’s Club Member’s Mark biscuits in 18 months. Their response: invest in brand building on Xiaohongshu to create consumer demand that pulled from retail, not pushed by the distributor. It worked. Branded demand on platform generated reorder requests from retailers, not the other way around. The private label threat became a brand-building trigger.
An Australian food manufacturer took the opposite route. They accepted a white-label manufacturing contract for a Chinese retailer’s private label olive oil line. Their facility, their formula, retailer’s brand. Volume: 200,000 units per year. No marketing spend. No brand registration cost. Predictable revenue. They see it as a distribution channel, not a brand compromise.
A UK supplement brand chose to co-exist. Their branded product sits in Watsons. Their white-label formula sits in a Chinese pharmacy chain’s own line. Two separate contracts, two separate buyers, no conflict clause. Revenue from both channels covers their China entry costs in year one.
How to Respond to the Private Label Surge
- Strong brand: invest in Xiaohongshu and Douyin content to build consumer pull that private label cannot replicate
- Unique formulation: proprietary ingredient, patented process, or protected recipe that a retailer cannot easily copy
- White label opportunity: if your facility can handle volume, Chinese retailer private label is a legitimate revenue stream
- Premium positioning: price well above private label and justify it with origin story, certification, and influencer endorsement
- Speed to market: private label takes 6-18 months to develop; get your branded product established before the retailer decides to copy it
For the full picture on how foreign food brands position against Chinese private label and build lasting distribution, read this analysis on the food industry in China on Marketing to China.
The Distributor’s View: When the Retailer Asks for Your Recipe
A German biscuit maker had been on shelf with a Chinese membership retailer for two years. Then the buyer asked for a meeting. Sales were fine. The retailer wanted a private label version of the best seller, made in the same factory, at 22% less. The brand’s first reaction was anger. Their second was fear that saying no would mean losing the listing.
We helped them run the numbers before the next meeting. The private label run would fill a second shift that was half empty. So we proposed a different recipe, not a copy: other flavor, other pack size, no brand name, and a minimum annual volume. The branded line kept its shelf space by contract for three years. The factory now ships both, and the private label deal covers most of its China logistics costs.
- Never give the retailer your exact best seller. Offer a close cousin.
- Tie any private label deal to a written guarantee for your branded listing.
- Ask for annual volume commitments. Private label without volume is just a price cut.
- Keep your own brand alive outside that retailer, so one buyer cannot dictate terms.
“Brands treat private label as a betrayal. It is a negotiation. The ones who walk in with a cost sheet and a clear red line usually walk out with two revenue lines instead of one.”
Pierre Yves, Asia Pro Distribution
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We have seen brands lose shelf space to Chinese private label and brands that turned the same trend into a new revenue line. The strategy depends on your product, your facility, and your goals for China. Asia Pro Distribution can help you assess both options and connect you with the right Chinese retail or distribution partners. Contact us to discuss your position.
