Getting your brand right in China is tough - Tom Doctoroff

Tom Doctoroff by Fantake via Flickr

Foreign brands in China have seen huge successes and massive failures. Tom Doctoroff gives in Gulf News his take on the difficulties of building a brand in this booming economy. Gulf News:

After setbacks for brands such as Home Depot, Best Buy and Barbie, which have closed stores or withdrawn after failing to win over Chinese consumers, the lessons of Huai Hai Road are germane.
"Anybody who comes into this market and thinks they can just plant their brand and let it grow will be sadly mistaken," Tom Doctoroff, north Asia chief executive of JWT, the advertising agency, said.
"Any [foreign] business model needs to be brought into alignment with Chinese cultural and consumer imperatives."
He points to Pizza Hut, Starbucks and Haagen-Dazs as the gold standard for foreign brand success in China. They took products alien to Chinese tastes and made them popular.
Pizza Hut and KFC, both owned by Yum Brands, localised their menu.
But adjusting to local tastes is not just about food, Doctoroff says. Pizza Hut, Starbucks and Haagen-Dazs all focused on eat-in, rather than carry-out, in China. "Barbie just got plonked down in China."
Even luxury goods companies have had to adapt their model, he says. The Chinese market for luxury goods is "broad and shallow".

More in Gulf News.

Tom Doctoroff is a speaker at the China Speakers Bureau. When  you need him at your meeting or conference, do get in touch.

Related articles

• Canadian owner of KFC, Pizza Hut and Taco Bell restaurants files for bankruptcy protection (windsorstar.com)
• Second wives key for luxury consumption - Tom Doctoroff (chinaherald.net)
• Fast Growth for Fast Food in India (fool.com)

The tin line between failure and success

Image by Fantake via Flickr

The March Newsletter of the China Speakers Bureau is now online, with the latest news about our speakers and an overview of the corporate failings in China over the past month, while their markets keep on growing. We look over Groupon, BestBuy, Mattel's Barby, Home Depot, Apple and many more. When you have not yet subscribed, you can look at it here.

Related articles

• Mattel got carried away with Barbie story - Paul French (chinaherald.net)
• Apple: A loser turns into a winner - Shaun Rein (chinaherald.net)
• Low profit margins force BestBuy out - Paul French (chinaherald.net)
• Barbie shuts up shop in Shanghai (punjapit.wordpress.com)

Mattel got carried away with Barbie story - Paul French

Image by Zingaro. I am a gipsy too. via Flickr

The sudden closure of Mattel's Barbie store in Shanghai seems to have nobody apart from Mattel, says retail analyst Paul French in the LA Times, today. He is sceptical about the firm's announcement they are merely changing plans.
The closure comes after other high-profile closures of retailers like BestBuy and Home Deposit.
The LA Times:

Paul French, the Shanghai-based founder of retail market-research company Access Asia, said Monday he was skeptical that the closure was planned.
"What’s better than a [successful] flagship store in Shanghai?" he said.
Instead, French said, Mattel probably overestimated its cachet in China and assumed Chinese women would embrace childish brands the way many women in Japan do with Hello Kitty and, well, Barbie.
"They got massively carried away with that store," French said. "Retail is all about square footage and I never saw enough people there to justify its size. The rent there would have been big."

Paul French by Fantake via Flickr

Paul French is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

Related articles

• WorldExpo2010: a feel-good show for China (chinaherald.net)
• Most-sought speakers in 2010 (chinaherald.net)
• Low profit margins force BestBuy out - Paul French (chinaherald.net)
• Hope for Mediamarkt in Shanghai? (chinaherald.net)

Best Buy's failure in China - Shaun Rein

Image by Fantake via Flickr

Even though Chinese consumers are spending more on expensive products like Apple, they shunned the Best Buy stories, explains Shaun Rein in CNBC. The economy of scale did not pay off:

According to our research, Best Buy in China was perceived as being too expensive, with many of their products priced higher than in local markets. Why buy a Sony DVD player or Nokia phone at Best Buy when you can pay less for the exact same product at a local store? Consumers will only be willing to pay more, like at the Apple stores, if they are buying something they cannot get elsewhere.
While scales of economy have allowed big chain stores in America to offer cheaper prices than niche players, local retailers in China are able to undercut prices because they pay less in salaries, benefits, rent and electricity. Rampant piracy in China also means local computers shops are willing to install counterfeit software in products, which makes it more appealing for customers.

More in CNBC

Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

Related articles

• Failing in a booming consumer market - Shaun Rein (chinaherald.net)
• American fear and anger towards China - Shaun Rein (chinaherald.net)
• China brands suffer from 'made in China' stigma - Shaun Rein (chinaherald.net)
• Educational reform key for China - Shaun Rein (chinaherald.net)

Failing in a booming consumer market - Shaun Rein

Shaun Rein by Fantake via Flickr

Home Depot and BestBuy were just two of the foreign companies in China that failed, while the consumer market is reaching record heights. Shaun Rein explains what they were missing in CNBC.
First, they get China's middle class wrong:

For one, Western brands need to understand there is no Chinese middle class in the American context. In the United States, the middle class tends to be a fairly static socio-economic group. People are born into it and their children and grandchildren tend to retain similar middle class habits like shopping atMacy's, driving Ford cars and visiting the Disney theme parks during vacations.
In China, however, the habits of the middle class are often described as anything but static. With many rags-to-riches stories doing their rounds across the mainland, many believe they, or their offspring, can also be wealthy. This optimism mirrors the conditions American Baby Boomers grew up in during the post World-War II era.

Even more complicated: Chinese want to be wealthy rather than middle class, avoiding typical middle class brands.
In CNBC Shaun Rein adds two more pitfalls.

Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

Low profit margins force BestBuy out - Paul French

Former flagship in Xujiahui, Shanghai

The decision by US electronics retailer BestBuy to close its outlets in China hardly comes as a surprise, says retail analyst Paul French in USA-Today. "They were ahead of the consumer."

Unlike the warehouse style of top Chinese electronic chains Gome and Suning, where sales personnel push particular brands to earn commission, Best Buy provided "a much nicer retail environment," said French, at prices no higher than its competitors.

But the perception of the customers was different, they still feared they were paying a price for the better store, used it for window-shopping and rushed to the competitor when they went for a purchase.
French wonders whether switching to Five Star, an electronic retailer from Nanjing, purchased by BestBuy, will help:

Paul French by Fantake via Flickr

As independent shops and plazas, not chains, still dominate electronics sales, "the pie is going to get cut very thinly," French cautioned. "Profit margins are great if you are Apple," he said. Elsewhere, "There are too many brands and not enough people buying the high-margin items."

Paul French is a speaker at the China Speakers Bureau. When you need him at your conference or meeting, do get in touch.

Related articles

• Old Shanghai A-Z - Paul French (chinaherald.net)
• Most-sought speakers in 2010 (chinaherald.net)
• Chinese roads into Africa - Howard French (chinaherald.net)
• Hardship in China, and how to survive - Helen Wang (chinaherald.net)