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Ann Xie, senior director of the digital retail consulting practice at J.D. Power China, said digitalization in after-sales service, dealers' efficiency and customer satisfaction have greatly improved, but they are not fully optimized or utilized.

Another vendor has been selling "TCM mooncakes" on Taobao. The ingredient table claims the cakes contain prepared rehmannia root, Chinese angelica, white peony root and chuanxiong, four common TCM ingredients. The advertisement for the mooncakes touts their "clot-absorbing" and "nourishing" effects.

Answers sought for casual workers' security in the new gig economy

Another key to the success of high-growth insurgent brands is their decision to have narrow product ranges, according to Derek Deng, a Bain partner who also focuses on consumer products.

Apart from policies to reduce taxes and fees unveiled at the beginning of the year, China has announced more policies to support the real economy and technological innovation, which will help reduce enterprises' burden by more than 1.3 trillion yuan this year, Liu said.