Why U.S. brands like Nike and Starbucks struggle in China

China was once one of the most attractive and fastest-growing markets for many American brands.

With its population of more than 1.4 billion people and massive opportunities for businesses, companies were racing to take advantage of the boon that China could offer.

But in recent years, some consumer brands, including Nike, Starbucks and General Motors, have begun to see the tide turn. With rising geopolitical tensions, a surge in domestic competition and a disconnect from the Chinese consumer, American companies have lost ground in the region that once offered fuel for growth.

“China is such a big market. The numbers are so big so quickly when you talk about China that sort of everybody has wanted to try, and that’s why all brands went there,” Aaron Cheris, head of global retail practice at Bain & Company, told CNBC.

Yet those companies haven’t adjusted to the local market and its changing structures and needs, he said.

“If anything, the question isn’t what’s going wrong in China — it’s why isn’t that happening in the rest of the world,” Cheris added.

Cheris said price premiums for American products are often not worth it for Chinese consumers, and Chinese brands often have a fast innovation cycle and better distribution within the region.

“We’re just not nearly as developed. Our brands don’t necessarily think and develop quite in the same way,” Cheris said.

The U.S. and China have also been embroiled in geopolitical tensions over the past few years, especially with President Donald Trump‘s volatile tariff agenda. And while the political backdrop may be disincentivizing Chinese consumers from buying American, it coincides with a rise in pride for domestic brands as consumers look to buy more local.

Some of those domestic brands have also disrupted the broader industry, reset innovation cycles and launched price wars.

Still, some companies — such as Lululemon, Ralph Lauren and Kentucky Fried Chicken — are finding success in China with their products, a discrepancy Cheris said is due to “the basics” of their business strategies.

“Am I coming in with a good value? Did I have a compelling product that felt locally relevant? Am I advertising and making it available in the channels and stores that are winning in that market?” he said. “It really is a blocking and tackling and running your brand right kind of story.”

For more U.S. companies to turn around their China businesses, Cheris said, they’ll have to make sure the product is worth the price premium and quality.

“The key will be which brands take it seriously enough and really build enough local capability to do that, rather than just saying, ‘I’m going to take what I built globally and try to sell it to a Chinese consumer,'” he said.

Here’s how some consumer companies have seen their influence in China dwindle over the past few years: