Chinese consumers are voting with their feet in the fast-moving consumer goods market, opting to spend on locally produced goods over foreign brands, according to a report published by Bain & Co and Kantar Worldpanel.

Local brands are gaining market share in the personal care sector, accounting for some 70 percent of the market, according to the report, although imported products are regaining ground in the skin care category.

Meanwhile, growth in China’s FMCG market has slowed from 12 percent in 2012 to just 4.4 percent in the first quarter of 2015 year-on-year.

“Consumers’ shifting shopping habits, the expansion of online channels and pricing dynamics have put the brakes on FMCG company growth in China once again,” said Jason Yu, China General Manager of Kantar Worldpanel. “These trends are forcing brands to quickly understand the changes in the market and successfully adapt to the ‘new normal’ they face.”

However, the news wasn’t all doom and gloom; prices are starting to recover in the personal care category, rising on average 5.4 percent. According to Bain, premiumizing categories, or those related to improving the consumer’s quality of life, are experiencing growth over and above China’s inflation rate of 2.5 percent.

“It’s a different game for FMCG brands in China,” said Bruno Lannes, Partner in Bain’s Greater China Consumer Products Practice and Co-Author of the report. “Without the advantages of volume growth or premium pricing, FMCG companies are seeking new ways to compete, such as offering more promotions, reviving ‘hero’ SKUs, or better managing their cost base.”

E-commerce is the fastest-growing channel, gaining ground at the expense of hypermarkets, while traffic for convenience stores and smaller format supermarkets remains relatively stable. Online sales grew by 34 percent last year and now account for 3.3 percent of all FMCG goods sold in China.

“Consumer behavior and new market trends have led FMCG companies, both foreign and local, to take a hard look at their cost structures and their operating models,” said Lannes.  “Cost-savings and faster decision-making and execution will enable additional investments that are necessary to make the shopper’s decision to purchase your brand an easy one.”