The other day I met with the management committee of one of the world's largest footwear brands. The executives told me that while China was poised to eclipse Europe as their second largest market in the world, growth was below expectations and was in fact starting to slow.
When the global marketing head of that company told me his China plan, it became obvious why their sales were missing targets – the company was not pursuing a “China First” strategy.
Their product design was totally done at their headquarters keeping in mind Western consumers without taking into account the habits and wants of Chinese consumers. Popular Western brands are simply being brought into China without adjusting for local tastes.
The designers at that footwear company did not factor in that Chinese women like to emphasize they have small feet or that men rarely polish their shoes with wax. As a 33-year-old woman in Chengdu told my firm, “The shoes look great on western women with long legs and big feet, but I need something not as clunky.”
Even worse, the head of marketing refused to let his colleagues based in China alter advertising developed for the home market in any way, even forbidding the use of Chinese language in all ad copy. Posters and brochures in China were identical to campaigns run in Africa, Europe and America. Consumers told us later in interviews they were confused by ads with English taglines and product descriptions. Most had “no idea” what the writing meant which “often drove them to buy other brands.”
When I asked the marketing head why he did not want to “localize” he gave me the line which many brand managers surprisingly still use, “We are a global brand and global brands have to ensure standardization across all markets.”
Being a global brand in today’s world no longer means using the same standard advertising copy, product lines, and brand positioning in all markets. Truly global brands must localize product development and advertising campaigns for key markets. No longer does simply transporting what worked in the Western world to markets like China work.
Take the China experiences of Ralph Laurenand Fossil Watches. Ralph Lauren has underperformed in a market smitten with luxury products. Lagging sales is largely due to the fact that they have not become an aspirational brand that the Chinese can emotionally connect to. Advertising campaigns portray preppy, blond hair, blue-eyed models summering in the Hamptons. As a woman in Beijing said, “The clothes are beautiful on that model, but I won’t buy their clothing because I have smaller hips and bust and worry they won’t fit my body type.”
Another brand that does not get it, is watchmaker Fossil. Even though sales at rivals like Swatch are soaring, Fossil has made little headway, in large part because they have not changed their image of a nostalgic 1950s America. Chinese tend to be more forward thinking, rather than nostalgic for the old days, because the old days were dark times for just about everyone.
Contrast Ralph Lauren and Fossil with Nikewhose sales have soared because they have shown how Chinese can succeed in sports and in life using their products. They use Chinese sports celebrities like hurdler Liu Xiang and tennis star Li Na for sports performance products.
Five years ago consumers lacked sophistication, few brands made enough money in China to justify localization costs, and consumers had little choice in product selection. It was fairly easy to bring in products and generate sales.
Those days of easy money are gone as savvy multinationals and rapidly improving Chinese brands adopt a “China First” strategy. If brand managers do not factor in Chinese consumer tastes in marketing campaigns and product development, they will lose what soon will become the world’s largest consumer market.
Shaun Rein is the founder and managing director of the China Market Research Group (www.cmrconsulting.com.cn) a strategic market intelligence firm, and is based in Shanghai.
He is the author ofthe upcoming book “The End of Cheap China: Economic and Cultural Trends that will Disrupt the World”published by John Wiley & Sons in the U.S. He does not own shares in any company mentioned. Follow him on Twitter at @shaunrein.