The Wu Way » Brands

China iPhone survey results are in…so is the mobile phone the new symbol of China?

Jocelyn — Mon, 05 May 2008 00:47:02 +0000

Last week, I received a fresh market report from China Polling about the growing popularity of the iPhone in China. Some of their results got me wondering.

First, the numbers:

Unsurprisingly, over 65% have heard of iPhone, and among this group, more than 85% are willing to actually buy an iPhone if itâ€™s available here in China.

While the iPhone is not yet *officially* available in China, the price sure won’t be a bargain once it hits the Apple store. This is, after all, Apple quality — you get what you pay for. A cursory search came up with one store in China selling an iPhone for 4,300 RMB (~$600 USD). Still, that price is still well above the average salary of a young person living in major cities such as Beijing or Shanghai (around 2,500 – 3,000 RMB).

There’s more:

Findings show that Battery Life, Memory Size, Style/Design are the top features when picking a phone for all consumers. The difference between iPhone lovers and the not yet converted is all about branding. The non iPhone lovers prefer Music and Camera features rather than being wooed and indoctrinated by the hip Apple brand equity.

I found it telling that the style/design was up in the top three, and also that branding plays a major role in wooing people over to the iPhone.

When I was in college and studying US culture (we read Neil Postman — classic!), our professor once asked us what the real symbol of US culture was. None of us even came close to his response: the car. It made sense because it is something so deeply a part of people’s lives, and, more importantly, it has become a way to express one’s values. Patriotic? Buy American (i.e. Ford/GM). Green? Get a Prius. Wealthy? Show it off with a luxury car (Mercedes, Porsche, etc.). The associations could go on and on, but I think you get the idea.

I have to wonder if the mobile phone is becoming the symbol of China, in the same way. While there are cars in China, not everyone can afford them. But everyone — yes, even those guys out in the fields in the countryside — has a mobile phone. And people are willing to spend thousands of RMB just have the “right phone”. Including getting the hot new iPhone in China (once it gets to China, that is).

I remember back in my office in Shanghai, when the girls in particular seemed obsessed with their phones. They hung all sorts of trinkets and pictures on them. One girl had no qualms about purchasing a mobile phone that had to be more than half of her monthly salary.

What do you think? Are mobile phones the new symbol of China? And how will the iPhone change the landscape?

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Face Shopping: the role that “mianzi consumption” plays in consumer choice in China

Jocelyn — Wed, 01 Aug 2007 00:32:43 +0000

When I walked into the wedding flower shop in Tonglu, China — my husband’s hometown — I knew exactly the kind of flowers I wanted: roses, just like the roses on my wedding dress. The shop owner, however, didn’t ask us what type of flowers we wanted. Instead, she asked us how much we were willing to spend: 380RMB, 580RMB or 800RMB.

The implication was this: money defines who you are. The more you spend, the better you are.

I came for roses, and I was holding my ground. Even if they were on the lowest (380RMB) tier of pricing.

But most Chinese consumers would probably be tempted to go for the 800RMB choice — whatever it was. Why? Because it makes them look good in the public eye…and just as the salesperson said, it’s the trendy choice.

Chinese culture has long valued face, or mianzi. And as a collective country, Chinese people tend to easily follow mainstream trends; they desire conformity. All this spills over into consumer behavior, creating what many refer to as “mianzi consumption.”

If you’ve spent any time in China, you’ve probably seen mianzi in action already. Think about gift-giving customs — the packaging is just as important, if not more so, than the actual product. (this has, not surprisingly, led to excessive packaging in China). You’ll find these elaborate, overwhelming packages, all in the name of giving the sender good face. Shanghai’s Maglev Train, supposedly one of the most hi-tech trains of its kind, was built in the name of giving the city some good mianzi. Doesn’t matter that the design (forcing riders to take the metro before switching over to it), hours (it only runs 8:30am to 5:30PM) and cost (40 RMB one way — a lot for a lot of inconvenience, considering direct buses only cost half of that) have rendered it utterly useless.

Mianzi consumption takes the concept of face into the world of shopping, allowing Chinese consumers to exchange their renminbi for services and products that will boost their face and reputation — sometimes at the risk of their own health and financial well-being.

For example, a Sohu article (Chinese) describes how college-age women will spend hundreds of RMB on name brand makeup and beauty treatments, even to the point where they haven’t enough money leftover to eat. But they’d rather “invest” the money on their face — literally — because, as far as they’re concerned, appearances count.

This article in the Youth Daily makes a link between the “Housing Slave” (people whose mortgages take up 50% of their monthly income) phenomenon in China and mianzi consumption. They suggest that people get into such a precarious situation — having an unmanagable mortgage — simply because they choose to buy homes they can’t afford, all to live a lifestyle they believe is theirs.

Mianzi isn’t going away anytime soon — and neither will mianzi consumption. Especially when it comes to high-end, often foreign, products, such as BMWs, Louis Vuitton Bags, and top-shelf liquors. But there is a certain manipulation involved at times, one that perhaps nudges Chinese consumers into purchases that they would rather not make. Just as Chinese consumers have a responsibility to make smart shopping decisions, companies have a responsibility to sell their products without preying on a consumer’s emotional or cultural vulnerabilities (remember the sleazy car dealers?).

Come on…give roses a chance.

Chinese weddings: the market for saying “I do” in the Middle Kingdom

Jocelyn — Tue, 29 May 2007 01:41:53 +0000

When I say Chinese weddings are a topic dear to my heart, I write these words with a certain authority. As you read this, I will be putting the final touches on a ceremony to be held in Zhejiang Province early July.

All the romance aside, let’s face it — weddings are big business. According to Rebecca Mead, it’s a $161 billion industry in the US. I don’t have the numbers on China. But if the wedding photography stands near the Metro stops in Shanghai are any indicator, there’s big bucks behind those white veils and banquets in the Middle Kingdom. People in China really do pay top dollar for their ceremonies.
That means potential for enterprising foreign companies who can fill a need.

So let’s talk weddings — the business side and the opportunities.

How much do people in China spend on weddings? This article (Chinese) claims about 10,000 RMB or about $1,200. Another article puts the tab at 100,000 RMB or $12,000. Whatever end of the spectrum you’re at, it’s still an imposing chunk of cash. Remember that average Chinese earn anywhere from 1,500 to 3,500 RMB (~$200 – $450) a month — some more, some less. Anything beyond that range is already within the realm of “upper class”.

What about the timing? We’re busy tieing the knot in the summer, while our Chinese counterparts just can’t take the heat (except in the far Northeast and cooler areas). The big wedding rush seasons are the New Year (both Western and Chinese), the Labor Day Holiday in May, and the National Day Holiday in October. If you want to book your facilities or services during either of these times, take a number and line up.
Let’s talk services…some warrant more attention than others. Perhaps the most lucrative of all is the wedding photography.

Ah, wedding photography. Chinese routinely spend upwards of 5,000 RMB (~$600), sometimes even more, for a Hollywood rendering of the happy couple. That’s right — this is all studio work, not a shred of it goes on during the actual wedding ceremony. Think GlamorShots for weddings. And many couples choose not to have professional photographers at their weddings, instead taking the studio photography work as a monument to their big day. Currently most of the companies doing this work are based in Mainland China, Taiwan or Hong Kong — but there is a growing demand for high-end ultra artistic work. The phrase “picture perfect” comes to mind because people are willing to pay top dollar. Even those couples who eschew having the whole formal wedding party still get the wedding photography done to show they’re official.

There’s another must-have in China — wedding candy. I remember finding the little twin boxes on my desk on a Monday morning, a sweet reminder that some unknown individual in the workplace tied the knot just that weekend. Wrapped in packaging evocative of traditional China, often with red and gold, wedding candy is distributed during the wedding and, as I mentioned above, afterwards to work colleagues. A number of foreign companies are already on board in this industry, including Dove.

Western bridal gowns are very de rigeur in China. Most brides, on average, wear three gowns and one most certainly is the traditional white we’ve come to know and love.

And then there are countless other products and services in demand for weddings in China, including:

Chauffeurs/rented luxury cars
Catering/banquet facilities (including lavish multiple-course dinners)
Emcees for the wedding
Videorecording of the wedding
Makeup and hairstyling on the wedding premises (since brides change their dresses)
Hotel rooms reserved for guests and the couple
Wedding rings

The popularity of Western bridal gowns may suggest room for more Western traditions in the whole ceremony. Things such as having DJs or doing the whole church ceremony (there are more Christians in China than communist party members).

On the other hand, if your product/service could fill a distinctly Chinese need (such as the overembellished wedding photography), your mission is to stand out from the crowd. Take a look at the Shanghai wedding photography market, for example. Two leading photography providers have alluring foreign cities in their names: Paris Bride and Milan Wedding, suggesting that the experience of Western-style romance is attractive. What’s your twist?

Five ways to tarnish your company’s image in China

Jocelyn — Sat, 12 May 2007 19:20:02 +0000

1. Open a store at the Great Wall.

We could learn a lot from Starbucks on this front. Their store in the Forbidden City has generated enough negative PR to warrant high-level government discussions on closing it for good. Why? Because the move was perceived as an imperialistic invasion into one of China’s most sacred and beloved cultural icons. With China’s recent history of foreign marauders coming in and setting up shop there — without the blessing of average Chinese — the reaction is not surprising.

So if a Chinese official gives you the green light to open up at the Great Wall — or any other iconic cultural location in China — think twice.

2. Fudge your Chinese translations.

Chinese translation is sadly undervalued in the business world. Companies pay hundreds of thousands of dollars for branding, marketing, design and PR — but some expect to get their marketing materials and corporate identity translated on the cheap by a Chinese student. What’s the harm? A lot. Let’s say you do get a Chinese student to do your translations. If that person has little experience in the business world of your country, they may end up using the wrong terminology. Jean Jameson, a professional translator in the UK, underlines the potential risk in her article “Prevention is cheaper than cure“. Here’s an example:

A textile design company went to Shanghai for a major exhibition several months ago, and engaged a Chinese student to translate its marketing brochure. At the exhibition confused visitors pointed out that the brochure did not make sense – the Chinese student had translated ‘rug’ for ‘cushion’!

It could get even more embarrassing if it’s your tagline, company name or your actual name — these are the core of your company’s image.

Remember, your marketing materials and corporate identity are communicating for you when you’re not around, like a Chinese sales rep in print. Will yours be wearing sleek Armani or plaid polyester? The choice is yours.

3. Confuse Japan and China.

China has a love-hate relationship with Japan. They love the economic benefit of Japan’s investments and export purchases from the Mainland. But most average Chinese still hate the island nation. Some of the sweetest, most gentle Chinese people have surprised me with their poisonous diatribes on Japan. It’s not shocking when you consider that the Japanese occupation from the late 1920s to the 1940s was akin to the Holocaust for Chinese.

Yet Westerners continue to conveniently lump together all East Asian cultures. As far as some are concerned, if they look the same, the culture is the same.

This is complicated by popular culture, where Asians even take on roles outside of their respective cultures — sometimes, with volatile results. For example, the recent movie version of Memoirs of a Geisha intermingled Chinese and Japanese screen stars, and had cast mainly Chinese actresses as the leading geisha in the film. Anyone following the news also knows the film was banned in China. The primary backlash stemmed from — what else? — its portrayal of Chinese women as high-class prostitutes, a bitter reminder of the Chinese “comfort women” enslaved during the Japanese occupation.
So, take note: samurai, geisha, teppanyaki, sake, kimonos, manga. None of these are Chinese. And they may be to your conversation what the A-bomb was to Hiroshima.
4. All work and no play.

Remember the Shining and what happened to Jack? All work and no play also makes you a very dull, very undesirable partner to the Chinese.

Here in the US, we’re used to separating business from pleasure. We like to “get down to business,” so to speak. And when the meeting’s done, we shake hands and leave the office.

In China, the meeting is just the beginning. Chinese business partners invite you to elaborate teas, banquets, karaoke parties and even weekend trips to Hong Kong. You get chauffered around in the utmost luxury. All on your Chinese partners’ tabs.

After a few rounds of this, you’re just about ready to put on the breaks the next time you hear an invitation to chifan (eat dinner).

I’ve got news for you. When it comes to doing business in China, all of the above is just par for the course. Some of the most important headway between you and your prospective partner will probably happen while you’re crooning “Edelweiss” (a perennial favorite) together in a karaoke bar.

There’s another reason you shouldn’t miss the socializing. It just might suggest you’re not interested.
In China, people put a premium on the relationship. They want to know you and build trust. That kind of connection only happens beyond the office. I’ve heard from many execs that, by spending more leisure time with their Chinese partners, they experienced major breakthroughs in their business relationships.

5. Ignore superstition.

Superstition in China runs stronger than the Yangzi River. Even Chairman Mao’s Cultural Revolution, his almost deranged assault on traditional Chinese culture and history, couldn’t stamp out superstition…though it tried.

Examples of it abound in modern Chinese culture.

Consider the upcoming Beijing Olympics in 2008. Now, the number eight is one of the most treasured numbers in China because it sounds similar to the character for making money. China already got lucky hosting the event in ’08. So guess when the Olympics will begin? August — the eighth month of the year — on the eighth day of the month at exactly 8pm.

After the seven-day Labor Day and National Day holidays, work always resumes on the eighth of the month.

The Chinese national flag is in red and gold, the two most traditionally auspicious colors in Chinese culture.

But the question remains — how could superstition derail your business?
Picture this: your prospective Chinese partner invites you to his daughter’s wedding. It’s a great opportunity to get to know him better through social interaction following the advice above. You’ve heard that giving money is pretty standard, so you take out the nicest white envelope from your suitcase and put in the equivalent of $50 — 400 RMB.

Congratulations, you’ve just communicated your death wish for the new couple. White envelopes are only reserved for funerals, and the number four sounds a lot like the character for “death”.

Of course, this is an extreme example. Not all superstition snafus will hurt your reputation. For example, it’s unlikely that Chinese will turn the other way just because you didn’t use auspicious colors or characters in your corporate identity. But just imagine if you did. Chances are your counterparts in China will be impressed that you knew enough to go the extra mile.

Why fight superstition? Go with the flow — and watch your business reap the benefits.

The Wu Way

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The appeal and illusion of foreign brands in China

Jocelyn — Wed, 09 May 2007 18:06:15 +0000

Photo: Wal-Mart in China

In China, Wal-Mart is synonymous with good quality and a pleasant shopping environment. It’s a far cry from the low quality – low price image prevalent among US consumers.

And Wal-Mart isn’t the only one.

Holiday Inn in China is often located in brilliantly decorated downtown high rises, instead of being just off the highway. Their clients aren’t budget travelers, but rather international businessmen or rich bosses from China.

Fast foods restaurants such as McDonalds, KFC, Pizza Hut and Subway in China are renowned for their quality. These places are always packed with customers, especially young people. To them, it’s in fashion to eat there.

McDonalds, KFC, Holiday Inn, Pizza Hut, Subway, Wal-Mart and other companies are getting a high-class makeover in the Middle Kingdom, where these modest establishments suddenly transport Chinese consumers into a world of privilege, abundance and luxury.

Why are US brands often perceived so differently in China? Quite simply, US brands say quality, just as this article in Brandweek titled Emerging markets still like US brands will attest to:

“Branded international products are a mark of quality,” said Mike Sherman, executive director of customer insights for Synovate Asia, Hong Kong. “Even low-income consumers will pay a premium for a well-made, branded product.”

…

China, the premier emerging market, has a taste for not only Bud, but also Coke and Kentucky Fried Chicken. Safeguard soap is also very popular, as are Sony TVs. “China was closed down for so long, that they have more of a nostalgic pull for all things American,” said Gerald Celente, director of the Trends Research Institute in Rhinebeck, N.Y. “They have an affinity for America as it used to be so they are flocking to brands that are more past than present.” Adidas, Armani, Chivas Regal, Lipton, Maybelline, Shell and 7-Eleven are among the brands with more Western appeal to appear among the Chinese most-preferred brands.

For Chinese, service from a foreign business seems to give people a sense of importance or superiority. They are apt to think all American products are good just as they tend to believe all Americans are rich. To be sure, these products/businesses do tend to look nicer in China. But much of this is just an illusion. In fact, when Chinese come to the US, they will be surprised to find that Wal-Mart looks less appealing, McDonald’s is just an average fast food restaurant — not a chic hangout — and Subway has restaurants in gas stations. Nevertheless it’s a profitable illusion for these well-branded companies who enter China.

So what about middle-market companies — or newer companies? Just being from a major Western country still has a lot of cache for the average Chinese consumer or Chinese businessperson. I spoke to a Chinese supplier for one of my clients, and he gushed about how trustworthy my client, an American, was. That’s not the first time I’ve heard Chinese consider Americans trustworthy. The very fact that one is an American in China brings along an entirely positive stereotype with it.

Though note to the Chinese…we’re not all trustworthy, so caveat emptor!

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The muddled and perplexing state of Japanese brands in China

Jocelyn — Sun, 15 Apr 2007 01:42:19 +0000

With the recent visit by Wen Jiabao to Japan, the press is in a frenzy about Sino-Japanese relations. After all, it’s been seven years since any top-level Chinese officials set foot in the land of the rising sun, and anti-Japanese sentiment looms large as China has historically considered Japan a rival. It was only two years ago that young Chinese in Shanghai and Shenzhen protested all things Japanese, violently smashing up Japanese cars and restaurants without impunity.

Yet in the world of retail and business, it’s another tale.

Japan’s Shiseido gets prime real estate on the cosmetics floor of nearly every single department store. Popular clothing retailers such as Baleno now offer a line of Japan-inspired women’s fashions. In the basement of Raffles City in the heart of Shanghai, a blindingly pink, flowery photo-shoot shop blaring Ayumi Hamasaki music videos sits right next to the Japanese Ajisen Ramen shop, where long lines are the norm. Did I mention that Japan is China’s number one trading partner?

This odd juxtaposition of politics in the face of retail outposts and business realities begs the question: what is the place of Japanese brands and styles in China?

Understandably, it’s a rocky marriage to say the least.

Take for example an anecdote in this Business Week article titled China Real Estate: The Japanese Touch:

Japan’s difficult history with its giant neighbor has haunted the WFC. What caused the most fuss was a circular hole at the top of the building that was supposed to represent “heaven” and serve as a way to reduce wind load on the building. But China linked it to Japan’s imperial symbol of a rising sun. In mid-October 2005, Mori caved, and “heaven” was changed to a rectangular opening.

Japan seems to be on the losing end of the car market — or so says this article titled Investing in China’s Booming Automotive Sector: Japanese Cars a No Go:

When we interviewed drivers in Shanghai, they overwhelmingly told us not to buy a Japanese car because the â€œJapanese are evil.â€ Investors should not underestimate the level of hatred most people in Asia have for Japanese. I used to live in the Philippines and Korea and the hatred is as palpable there as in China because Japan does not acknowledge its horrendous actions. Regardless of what political regime runs an Asian country, Japan is uniformly hated in Asia.

But while tensions explode over cars and real estate, softer goods such as cosmetics get a completely different reception. This article titled Japanese cosmetics players creep up on global rivals notes that China has driven the success of two cosmetics brands, Shiseido and Kao:

Japanese cosmetics player Kao became a top ten ranked company for the first time last year, knocking German based Henkel out of tenth place, after driving up its global market share to nearly three per cent.

…

Despite Kao being only one of two Japanese company in the global top ten ranking – the other being Shiseido – both firms are thought to have strong growth prospects and are pushing into overseas markets to capitalise on booming markets, particularly China, to continue to consolidate their leads at the top of the industry.

When it comes to brands, China and Japan make for odd bedfellows. Being associated with Japan may be more of a liability than an asset for your brand in China. In this case, your parents had it right: do your homework (i.e. research) first!

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Interview with Gary Wells of Dix & Eaton about international communications

Jocelyn — Thu, 22 Mar 2007 02:16:15 +0000

Jocelyn: Good morning, this is Jocelyn, weâ€™re at the Wu Way, this is January 29, and Iâ€™m here at the BP Building and I have the pleasure of meeting with Gary Wells, who is the Senior Managing Director for Media Relations and Global Communications for Dix & Eaton. I might add that Gary is a very well-traveled man. He continues to help broaden Dix and Eatonâ€™s capabilities and has helped establish media affiliations in 65 markets, right?

Wells: A little more than 65, around 75.

Jocelyn: Okay. And including in the China market, such as Beijing and Shanghai. Iâ€™d like to talk to him today about international communications. Gary and I were just discussing Starbucks and an interesting point aboutâ€¦that you have to be careful about the kind of message to a country when youâ€™re trying to move your brand into that market. Right?

Wells: Good morning, Jocelyn. I think itâ€™s critical for any company moving into a global market, an emerging market, is to keep in mind cultural sensitivities. Okay? Of all US companies, Starbucks is generally the most alert and sensitive to such cultural issuesâ€¦but lost sight of that with their decision to accept an opportunity to put the franchise inside of the Forbidden City. Itâ€™s one thing to install a Starbucks or any other American fast food restaurant in a shopping plaza, in a business center where thereâ€™s high traffic. Itâ€™s another to install what could be considered a foreign invasion in one of the most hallowed sites in all of China, the Forbidden City.

Jocelyn: Right.

Wells: The larger point here is for the global company building into an emerging market. Itâ€™s not enough to have a proprietary service that is in demand, you have to understand the cultural sensitivities. For China, for India, for other countries as well, these are countries that have for decades, for centuries were ruled and subjugated by foreign powers. They have long institutional memories. While they may not go looking for slights, perceived or real, they are very aware of slights as they see them. So the decision to install a Starbucks inside of Forbidden City couldnâ€™t be taken any other way than something as an insult and somewhat as a slap in the face. I think Starbucks has handled the situation quite well, to their business savvy, some companies perhaps would not. I doubt they would make that mistake again either in China or in someplace else.

Jocelyn: Yeah, itâ€™s interesting. I think itâ€™s a great example of what can go wrong when you donâ€™t think about how the media or how the public can perceive the message, maybe covert or overt, that your move in an international market may imply. And maybe, I was wondering if you could tell me some other examples of the challenges that a company might face when theyâ€™re trying to establish themselves in another country, some examples that youâ€™ve seen from your own work.

Wells: I think if youâ€™re a global company and youâ€™re looking to establish operations, if you see a market for your product or service in central market countries Brazil, Russia, India, Chinaâ€¦you have to understand the market forces, but also the culture sensitivities. Also political issues as well. Most companies will look at China and India as probably the two most important markets or two of the most important markets. Very different, very differently organized in terms of their politics. One of course is the Peopleâ€™s Republic of China is a Communist government. More of a market economy than ever beforeâ€¦but still run by the Communist party.

Jocelyn: Right. They call it â€“ what is it — Capitalism withâ€¦no itâ€™sâ€¦Socialism with Chinese characteristics, I believe.

Wells: And I think that China, to its credit, learned a lot by watching the mistakes that Russia made. Look at India, India is normally the worldâ€™s largest democracy. Itâ€™s a very messy democracy. Even though thatâ€™s a dichotomy when you talk about democracy as messy, it shouldnâ€™t be. However, in India, there was such difficulty pulling the country together some sixty years ago when the British left, that I think a lot of the princedoms, fiefdoms, empires if you will throughout India were given considerable autonomy but the states inside India have considerable autonomy instilled. If youâ€™re Microsoft, and this is a real example, if youâ€™re Microsoft and you look to expand operations throughout India, at the same time you do understand the importance of helping the country and its people in a land where poverty is ripeâ€¦.For example, the Gates Foundation, the Bill and Melinda Gates Foundation sends money for helping a variety of schools there. But in one state, the governorâ€¦thought that Microsoft was too much of a monopoly, and instructed the schools not to use Microsoft Office. Despite the fact that the company had products that were much in demand, had through its foundation, contributed a considerable amount of money to easing poverty and improving the schools, [that still was the governorâ€™s decision]. Microsoft, to its credit, also reacted specially by making sure there was even more in the way of free software and free education to this particular state as well, and the governor relented. But thatâ€™s the sort of issue that a local company faces there and Iâ€™m afraid that not many â€“ outside of a Starbucks or Microsoft â€“ are as alert to these issues as they should.

Jocelyn: Sure. You know, that makes me think about how, you know, you talk about autonomous regions in India, you know, of course China has quite a few of its own. Like Xinjiang is an example of an autonomous region. Of course, countries such as India and China, they have thousands of years of history of these regions operating as just separate states. And each has its own culture, its distinctive identity. A lot of times, we come into a market, we assume that that market is just, you know, itâ€™s all one homogenous being, you know, itâ€™s all what we see in Shanghai or Beijing or in the case of India, New Delhi.

Wells: Particularly in a market as gargantuous as China — so many regions, so many cultures, languages or dialects â€“ it is absolutely incumbent on any companyâ€¦consumer products, business products â€“ to understand the cultures where they establish operations.

Jocelyn: Right.

Wells: If youâ€™re in the north, youâ€™re in the south, itâ€™s a much different operation. Youâ€™ve got to be aware of which dynasty ruled going back centuries, youâ€™ve got to be very alert to not just the current issues but the past issues as well. It has an impact on how youâ€™re perceived in the community, it has an impact on your ability to recruit employees for a region in China as well. Itâ€™s a huge issue for companies moving into China or India. The war for talent is acute. If you want to attract the best and the brightest, to borrow a phrase, then those people have to look at you as a tremendous opportunity. And not just to join your organization, but to stay with your organization. They have to see that thereâ€™s opportunity for them to grow. You also have to be well-regarded, well-respected in the community because they have to save face in the community as well.

Jocelyn: Sure.

Wells: If you donâ€™t have a good reputation in the community, if youâ€™re not seen as contributing to the community, you may have a difficult time even further attracting, much less retaining, employees.

Jocelyn: That reminds me of last year when you spoke at the [Going Global] panel and that was something that you had emphasized, was the internal communications in a company, correct? And thatâ€™s something that a lot of companies who go global, they often overlook this small piece of the puzzle that can be so important in perhaps, as you said, retaining employees and reminding people of the value they get from the company.

Wells: Itâ€™s actually reminiscent of the story over centuries about workmen in France. One of whom is asked what heâ€™s doing, says heâ€™s cutting stone. Another is asked what heâ€™s doing, says heâ€™s mixing concrete. Another is asked what heâ€™s doing and he says â€œIâ€™m building a cathedral.â€ Heâ€™s got a much larger vision and heâ€™s part of a larger team. And if youâ€™re establishing operations in China, or in India or elsewhere around the world, itâ€™s not an isolated facility. Those arenâ€™t people who work in isolation. Those are people who are part of a larger team. They will feel much more engaged if they understand they are part of a team which means introducing them â€“ perhaps electronically, perhaps personally â€“ to others on the same team, either in the same country or elsewhere around the world as well. Itâ€™s hugely important and I think too many companies miss out on that too.

(To hear more about Gary Wells’ views on international communications and China, listen to our full podcast. Total time: 18:32….WARNING – this is not NPR quality on the recording side, but it’s a great conversation.)

Cultural icons as a brand: Starbucks in the Forbidden City revisited

Jocelyn — Wed, 14 Mar 2007 18:10:32 +0000

Back in January, I wrote about Starbucks’ unwelcome presence in the Forbidden City. Just yesterday, NPR’s Morning Edition did an interview with the man who gave the cause an extra jolt of caffeine – CCTV TV anchor Rui Chenggang. Steve Inskeep interviews Rui about the “invasion”. Rui explains:

People do need a place to buy souvenirs, people do need a place to rest. But, you know, if you are in the Forbidden City, you see people walking around with all these white cups with the big Starbucks logo on it, it’s obscene to me.

Inskeep asks what it is about this brand that makes it offensive and here’s his response:

First of all, we’re not singling Starbucks out. I think Forbidden City is a single brand. We should keep the integrity of that brand. I don’t think a Chinese teahouse brand…that would be equally unacceptable to me.

Note Rui’s remark that the “Forbidden City is a single brand”. In the business/marketing world, it’s easy to forget that branding goes beyond corporate identity. Cultural icons and historical sites have their own story/associations/ideas, just as a corporate brand does. Except, they’ve been around a lot longer — and mean that much more to the Chinese people.

Now Starbucks will have to bear another brand – imperialistic invader.

Apparently, Starbucks upper management is taking notice of this, among other things, as NPR also reports on how Starbucks’ CEO Howard Schultz believes the company is losing its soul.

Coffee anyone?

What do you get when you add Starbucks to the Forbidden City in China? The answer is no joke.

Jocelyn — Fri, 19 Jan 2007 03:05:14 +0000

Well, China’s given us that rare opportunity to use “Starbucks coffeehouse” and “Forbidden City” in the same sentence. And now it’s making headlines once again, almost six years after opening in one of the country’s most iconic tourist destinations.

In case you missed the news back in late 2000/early 2001, here’s a quick review courtesy of CNN in December 2000:

The opening of a Starbucks in Beijing’s Forbidden City is brewing a storm in China, with outraged local media reporting that 70 percent of people would rather not sip the American chain’s frappuccinos in the footsteps of the Son of Heaven.

“This is no different from slapping China’s 1.2 billion people and 5,000-year traditional culture in the face,” said the China Consumer Journal. “Some people’s anger is no different from their feelings when our embassy was bombed.”

U.S.-bashing has been in vogue since American warplanes bombed the Chinese Embassy in Belgrade during NATO’s bombardment of Yugoslavia during the 1999 Kosovo crisis, triggering an outpouring of fury in Beijing.

But the media backlash against Starbucks took officials at the 600-year-old Forbidden City by surprise. Now they are considering revoking the coffee chain’s one-year license after just two months in business.

“The pressure from the media was far greater than we expected,” said Chen Junqi, an official of the Palace Museum, as the former residence of the Ming and Qing dynasty emperors is now known. “There are only two ways to solve this: to wait until the contract expires or to prematurely revoke it.”

Well, I guess Starbucks and Chen Junqi thought it was a good idea.

Thing is, people thought it was a funny idea. And not just foreigners — Chinese people too. But they weren’t thinking funny “ha ha” so much. The Chinese public felt insulted and embarrassed by the slight. That includes Rui Chenggang, a CCTV anchorman who visited it with his foreign friends and watched them enjoy a few good laughs at the situation. Rui wanted to cringe.

But he didn’t push the matter back then. No, it wasn’t until he discovered that government officials — perhaps Chen Junqi among them — invited Starbucks to open there that he began speaking out. Here’s the McClatchy newspapers report on it:

Rui said he first spotted the Starbucks in the red-walled complex five years ago.

“I was showing some friends around the Forbidden City, and I saw the Starbucks logo. I thought, `Wow! Where did this come from?’” he recalled. “It’s totally out of place. I see it as a pollution of the integrity of the Forbidden City, which is the epitome of Chinese culture.”

He said he was stirred to action after a recent exchange of correspondence with Starbucks chief executive Jim Donald, who told him that Starbucks was invited to open an outlet there six years ago and did so with “great sensitivity” to the surroundings.

I think this is an interesting case here for marketers to explore.

It’s no secret that much of the Chinese public is enamored with all things foreign. Starbucks’ success in China — a country that has sworn by tea for centuries — is symbolic of this trend.

But at the same time, you have this rich cultural heritage in China. Arguably a 5,000-year heritage…and perhaps the greatest source of pride for the Chinese people.

China’s modern and traditional culture often works quite nicely together. Perhaps that’s what Starbucks had hoped. Except they forgot one small thing — never make a mockery out of China’s historical/cultural sites.

This is, after all, a country that has endured humiliating invasions over from the 1840s. People are still traumatized and horrified by what Japan did to China (if you have no inkling of this, I suggest you read this recent Bloomburg article). The Chinese public probably couldn’t stomach the imperial undertones of Starbucks’ move.

So much for the “great sensitivity” on Starbucks part.

If you’re offered some real estate in a one of China’s cultural meccas, take a step back first. Do your homework (i.e. market research). Heck, talk to the media if you have to. But know what you’re getting into. Your reputation depends on it…and that’s no joke.

Christmas becomes the third biggest consumer spending holiday in China

Jocelyn — Sun, 31 Dec 2006 19:19:30 +0000

Christmas may not be an indigenous holiday to China — but retailers had a VERY merry one this year. Merry enough to merit dubbing Christmas the third largest consumer shopping season in China.

Here’s the story published in Sohu (partially translated by yours truly):

Christmas Day is not an official holiday in China. Yet this didn’t dampen the enthusiasm for consumer spending in the least. According to online surveys conducted in Shanghai, among young people aged 14 to 30, 70 percent will choose to dine and enjoy themselves lavishly on Christmas, and 88 percent of lovers will choose to go to a Western-style restaurant to eat out.

Smart business owners, from hotels to small Western-style restaurants, cannot give up this grand opportunity. They should use any means possible to create a Christmas atmosphere and come up with a menu or program that encapsulates the season.

The Four Seasons Hotel, located in the center of Shanghai on Huaihai Road, held a special Christmas buffet where each person paid 1,700 RMB [Jocelyn: a little over $200], an increase of 15 percent over the previous year. That price is seven to eight times higher than what one would normally pay on a regular evening. The hotel employees said that the evening’s dinner was booked almost completely full, showing the draw and value of such a big Christmas dinner in Shanghai.

The note about 88 percent of young lovers in Shanghai preferring Western-style food once again reminds us how much of an opportunity this is for restauranteurs — and others in the hospitality industry — marketing their concepts in China. If you can design a beautiful, romantic evening, they WILL come.

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