Chinese Companies Cracked the Code on Getting People Hooked

My occupational hazard is that I sometimes become a fan of the Chinese retail companies I report on.

In the past year, I’ve become a Luckin Coffee addict and discovered that Mixue’s soft serve is superior to McDonald’s.

And in August, as I stared at the sad “out of stock” notice on Pop Mart’s website, I shared bitter disappointment with hundreds of thousands of customers worldwide over the overwhelming FOMO from the mini Labubu.

That got me, a onetime Labubu cynic, thinking about how Chinese companies have slowly but surely mastered the art of conquering markets.

Now, these Chinese consumer juggernauts are using tried-and-true tactics overseas on their international consumer base, and it’s working.

Allison Malmsten, a public research director at Daxue Consulting, a China-focused strategy consultancy, said China has always been known as the factory of the world. We’ve been buying Chinese products all along.

“The difference is now that they’ve figured out that not only can they sell the products overseas, but they can also sell the brand,” Malmsten told Business Insider.

Global growth

Over the last few years, Chinese companies have dominated several industries, from F&B and fast fashion to automobiles.

Here are some noteworthy companies exporting their playbook to the West:

• Starbucks’ biggest competitor in China, Luckin Coffee, just set foot in the US, opening two new outlets in New York City in June.
• In March, budget bubble tea chain Mixue became the biggest publicly traded food and beverage company in the world after its initial public offering. Mixue has outlets in Southeast Asia and Australia, and according to local media, it’s set to open an outlet in Lower Manhattan.
• Fast-fashion giant Shein considers the US its largest market. But it’s also seen massive growth in other Western markets like the UK, where it reported a more than 56% profit gain in 2024 compared to 2023.
• Temu, a budget marketplace owned by the retail giant Pinduoduo Holdings, was one of the most downloaded apps by US Gen Zers in 2024.
• EV producer BYD‘s sales overtook Elon Musk’s Tesla sales in Europe in April.
• Pop Mart has drawn massive queues for its viral doll, Labubu, from South Korea to the UK. Pop Mart reported a 401% profit jump in the first half of 2025.
• Fans of TikTok, a social media platform owned by ByteDance, have been fighting hard against its divest-or-ban order in the US this year.

Hooking people with dopamine-inducing strategies

Chinese companies rely on dopamine-inducing, in-your-face marketing much more than their Western counterparts.

E-commerce apps like Temu and Taobao have busy interfaces with numerous pop-ups. The constant pop-ups and flashy ads screaming the latest discounts encourage customers to buy into a scrolling loop. And with more scrolling comes more spending.

Malmsten from Daxue Consulting said global players like Amazon focus on making their platforms seamless and easy to use.

But Chinese e-commerce platforms are geared to making the shopping experience entertaining.

Malmstem said Chinese companies have figured out that the most addictive systems have randomized rewards.

“You don’t know when the reward will come, that’s when something will be the most addictive,” she said.

Jacob Cooke, the CEO of Beijing-based e-commerce consulting firm WPIC Marketing + Technologies, said Chinese brands don’t rely on repetitive promotions.

“Instead of simply cutting prices, they layer discounts with loyalty programs, livestream flash events, and gamified shopping experiences that feel interactive,” he said.

Cooke said global players who use traditional “static” discounting can’t match that level of engagement.

For instance, Austin Li, a Chinese influencer who is known as China’s “Lipstick King,” has amassed a following of 35 million on Dou Yin, the country’s version of TikTok.

He sells beauty products and skincare on the live streams, which are filled with colorful pop-ups, banners, and a rolling rundown of everything he’s hawking.

Something new is always around the corner

These brands churn out new products at a record pace.

Cooke said Shein and Temu test thousands of products, identify hits almost instantly, and “push them to the right consumers with pinpoint accuracy.”

At their fastest, Chinese beauty brands like Florasis and Flower Knows take just three months from conceptualization to launch to get a new product line out the door.

The same goes for automobiles. Xiaomi, which started as a phone manufacturer, announced in 2021 that it would invest $10 billion in a new electric vehicle unit in the next 10 years. By the end of 2023, it had already launched its first car.

Jeffrey Towson, the founder of US and China-based retail consultancy TechMoat Consulting, contrasted this with Apple’s “Project Titan,” its EV line, which was rumored to have started in 2015 but never came to fruition.

“I can’t think of many Silicon Valley companies that work at the speed of companies like Xiaomi,” Towson said.

Now, this high-frequency product model is proving successful in Western markets.

“Western consumers are responding to this formula because they want the same variety and instant gratification Chinese shoppers have enjoyed for years,” said Cooke. “The model is proving globally transferable.”

Low-cost blind boxes make people want to take a gamble

Some companies, like Pop Mart, have a different MO.

Pop Mart has about 570 brick-and-mortar outlets in 18 countries. It also has nearly 2,600 vending machines, which it calls “Roboshops,” and a sprawling network of stores on e-commerce platforms.

Pop Mart’s secret sauce is its blind boxes — packaging that hides the toy inside. Step into any Pop Mart store, and you’ll see customers shaking the boxes, hoping that will help them identify which item they’ll pull.

Towson from Techmoat Consulting said that, at best, blind boxes induce reward-seeking behavior. But at its worst, it’s gambling.

“When you open a blind box, there’s a moment of excitement. You think, ‘Which one did I get? Oh, I didn’t get the one I wanted. Let’s buy one more,'” Towson said.

“So you’ve got reward-type behavior, which increases anticipation and increases repeat buying,” he added.

It’s not just Pop Mart that’s betting big on this playbook. Temu and Taobao’s aggressive advertising and random promotions work on similar principles of hooking customers with dopamine spikes.

Malmsten said this tactic is working exceptionally well on Gen Z and younger customers, because dopamine production is highest in youth.

“You get addicted to whatever was relevant at that age. So for millennials, that was YouTube and Instagram, and for Gen Z, that’s all Chinese apps — TikTok, Shein, Temu,” she said. “They’re coming of age during a time when China’s soft power is at its all-time high.”

Undercutting competitors

Chinese companies like Luckin Coffee, Shein, and Temu have snatched big slices of the consumer pie by being cheap.

Towson said Chinese companies operate on a 50% price, 80% quality system: Their price is half that of their competitors, but nearly matches their quality.

Malmsten said Chinese companies, unlike their Western counterparts, can expand fast because they are much more willing to focus on growth first and profit second.

For example, she said Luckin Coffee’s discounts were unsustainable, but “it works to get everyone to get their first coffee from Luckin and download the app.”

China’s domination has run into roadblocks

Despite being cheap, addictive, and fast, Chinese companies face unique challenges in the international market.

Regulatory hurdles are one such challenge, particularly with the Trump administration cracking down on the de minimis loophole, which allowed small parcels under $800 to enter the US tax-free.

“With Shein and Temu, the removal of de minimis in the US is potentially a big hamper on their ability to market in the country,” Malmsten said.

But Chinese companies that have expanded globally are forces to be reckoned with. Towson said they’re the strongest of the lot, after conquering domestic competition.

“Any company that’s going international has probably won at home already, which means they’re the toughest gladiator in the arena,” Towson said.

He added, “That means they’re the gladiator in the arena surrounded by 50 dead bodies.”