China's private labels undercut national brands by 16%

House brands still pocket 15% higher gross margins as category outgrows retail by 7x.

Private label products in China are growing rapidly, and retailers are treating them as a core margin strategy rather than a discount fallback.

S&P Global Ratings forecasts the category will reach up to 20% of China's retail mix over the next eight years, up from under 10% of fast-moving consumer goods’ sales amongst the top 100 chain stores in 2025.

Private-label foods generate gross margins 12% to 15% higher than national brands, according to the Private Label Shanghai Council.

For daily goods, the premium is 8% to 12%. Consumers are not being asked to sacrifice much on price either — in 2025, private-label products were 16% cheaper than branded equivalents per NielsenIQ, yet still delivered gross margins 8% to 15% above national brands to retailers.

Industry estimates put private-label sales growth at roughly 15% annually — five to seven times the 2% to 3% projected for overall retail.

That gap reflects both consumer demand for value and a structural shift away from slotting fees, where tighter regulation and e-commerce competition have eroded supplier-funded income, pushing retailers to build merchandise margins instead.

Moreover, data capabilities are proving decisive as JD.com's private brand, JD Jing Zao, built on user behaviour, search profiles, and review feedback, posts a new-product success rate above 90%, compared with an industry average of 10% to 20%.

At the other end, Yonghui Supermarket's top two private-label lines remain below 5% of sales as of 2025, despite the retailer expanding its sourcing and manufacturing strategy as far back as 2018.

In February 2026, Meituan agreed to acquire Dingdong Maicai for approximately US$717m, with the target's private-label portfolio cited as a key attraction.

S&P expects larger retailers with stronger sourcing, distribution, and data capabilities to widen their lead, while smaller operators struggle to match product variety, quality, and pricing consistency.