Cracking the China market is still possible - Shaun Rein

Shaun Rein

Many business people have become anxious about the China market. No reason, argues business analyst Shaun Rein in the Australian Financial Review. Income is still going up, but you need a strong stomach to crack the China market.

 Australian Financial Review:

The enormous opportunities for Australian food companies in China were laid out in compelling presentation by Shaun Rein, managing director of China Market Research Group. 

Rein meticulously dissected the major drivers of consumer demand in China ranging from the impact of pollution on shopping habits to the shift in luxury purchasing habits from Louis Vuitton bags to international travel. 

He provided several embarrassing examples of international firms that had attempted to crack the Chinese market with ill-thought through advertising campaigns that showed a total misunderstanding for local consumer culture. 

Rein says CMR research showed that Polo Ralph Lauren totally missed the mark with its ads featuring blonde American models. These turned off Chinese buyers who thought the clothes would not fit. 

GAP made the same mistake by using a male model with tattoos, which are normally associated with Triad gangsters. 

He says one high-profile global manufacturer of fast moving consumer goods had made a grievous error by lowering its production standards in its Chinese factories with the inclusion of carcinogens banned in the United States... 

Shaun Rein, founder and managing director of the China Market Research Group, said Australian firms needed to overcome their "fear" about on-the-ground investment in China. "They need to understand, that especially on the consumer side, this is a real economy," he said. "Wages are still going up ... there is still a lot of consumer optimism."   

Mr Rein, who has been living in China for 20 years and set up his market research firm in 2005, said Australia was better positioned than any other country except for New Zealand to benefit from consumers' rising demand for clean, green products. "People trust you," he said, adding that pollution problems across China were changing the way consumers spend, with a premium on overseas travel, healthy food and supplements.

More in the Australian Financial Review. (and here)

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more expert on luxury goods at the China Speakers Bureau? Do check out this list.  

What is going wrong in localization? - Ben Cavender Hangout

Ben Cavender

Localization is the mantra for foreign companies entering China, but many fail. Ben Cavender, senior analyst at the China Market Research Group (CMR) will address some famous cases during a Google+ Hangout on Thursday.

Cases will include, but are not limited to IKEA, The GAP, Dunkin Donuts, and B&Q. You have other cases you want to discuss? Or you want to chip in with our own experiences? Do drop us a note here in the comments or here. A limited number of invitees is possible during the hangout, which will take place at 4PM Beijing Time, 10am CEST, interviewed by Fons Tuinstra of the China Speakers Bureau.


Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Gap's failed effort to localize - Bill Dodson

Bill Dodsonn

Localizing your products is the mantra for all consumer products entering the China market. China veteran Bill Dodson discovered the local retail store of Gap uses that mantra, but has no clue what it might mean, he writes on his weblog.

 Bill Dodson meets a Gap buyer:

She acceded, “We see Uniqglo as our competition. They are doing extremely well in China. Interestingly, in New York, Americans claim their clothing is too little,” she laughed. Of course, we both agreed, Americans tend to feel constrained by East Asian sizes for clothing. “We admire the variety of colors Uniqglo has, for instance, for polo shirts. The Chinese will buy theirs, but don’t consider buying ours – even though ours are cheaper!” Still, I asserted, GAP had work to do to localize their products. 

“You know,” I said slyly, “1969 was a bad year in China.” 1969 is the latest ad campaign for GAP jeans and shirts. The idea is to elicit the idea of the fun and freedom of the era in AMERICA. Some of the clothing even brandishes a 1969 logo next to the GAP trademark. In China, the Cultural Revolution was in full swing in 1969 and no one but Mao Zedong and the most righteous of the Red Guard were having fun. 

She hesitated, rolled her eyes. “I know,” she said. “But GAP’s plan is to rationalize it’s offerings around the world so that a store in New York City will have the same as the store in San Francisco and in Shanghai.” 

Though its children’s lines are a hit in China, it looks as though GAP will have to go full circle on the localization issue before they’ve figured out this latest historical mis-step.

More on Bill Dodson's weblog

Bill Dodson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.  

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Why Gap is failing in China - Shaun Rein

Fashion retailer Gap did not gain much traction in its first year in China, writes business analyst Shaun Rein in CNBC. To survive, it needs to adjust its brand image. China defines 'middle class' different from the US.

Shaun Rein:

Gap’s first problem in China is its brand image. It is not positioned as a luxury brand, hence could not demand its share of the $13.6 billion worth of luxury goods sold in 2010. Nor is it seen as a value for money brand by the majority of China’s price sensitive shoppers.

In other words, Gap has fallen into the middle class image trap like many foreign retailers including Marks and Spencer. These retailers tried to target China’s 350 million strong and rising middle class but have surprisingly attempted to evoke the same images and aspirations of America’s middle class. China’s definition of middle class is very different from America’s.

Unlike in America, no one in China views themselves as truly middle class, where they and their offsprings will work in their blue-collar jobs and watch their salaries only marginally beat inflation rates and visit Disneyworld every few years. Instead, everyone believes they or their children are destined to go from rags to riches. After all, just about everyone knows someone or even has a relative who was a farmer 10 years ago and now owns multiple villas and drives a Mercedes. There is a “can do” attitude that is electrifying the country, similar to conditions that gave rise to the baby boomers in post World War II America...

And on the optimistic side:

Gap is by no means facing the trouble that Mattel’s [MAT  27.99   0.50  (+1.82%)  ] Barbie store did (it eventually shut) or American Apparel, [APP  0.91   0.02 (+2.25%)   ] which is having serious problems for creating fashion lines that were far too sexy for the local market in China. Younger Chinese women like cutesy: think Hello Kitty or Snoopy. But in order for Gap to capture what is becoming the must-win market for retailers, it is going to have to consider changing its sales channel strategy and either crafting a new image or introducing brand lines to the marketplace.

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.

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Is there hope for Gap in China? - Janet Carmosky

Janet Carmosky via Flickr

Janet Carmosky kicks off another debate on US companies entering the China market: is US mall stalwart Gap having a chance in fashionable China, she wonders in the China Business Network.

Despite having lived in the USA for 8 years now, on any given day I am likely to be wearing something purchased on my last trip to Shanghai or Beijing. Quite frankly, the clothes in America are Really Really Boring. If I, as an American, find Gap clothes boring, what will the consumers who have grown up in a place like Shanghai think? Where’s the bling, the prints and colors, the fabrics that move, and patterns that pop?
Gap, here’s hoping your people on the ground see the markets in Shanghai and Beijing as a challenge to Gap’s design, branding, operations, and most of all, HR and organizational mettle. Because “cornerstone” sounds altogether too corporate a term to describe what will need to be an all out war for share in the world’s toughest fashion retail market.

More on Gap's hope and fear in China at the China Business Network.

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Janet Carmosky is a speaker at the China Speakers Bureau. When you need her at your meeting or conference, do get in touch.

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Foreign brands struggle as Chinese retailers rise - Paul French

Image via Wikipedia

Depending on how you look at the figures, retail grew up to 20 percent in China, retail analyst Paul French tells Forbes and compares the fate of foreign retailers like Gap force domestic competition from the Trinity Group and China Lilang.
Paul French in Forbes:

Take a look at people like Trinity Group (controlled by Hong Kong’s Fung brothers) who recently acquired Kent and Curwen and Gieves and Hawkes. They’re positioning well to catch the next wave of wealthy Chinese men – i.e. the one’s who will probably not just be content with Dunhill! Also take a look at China Lilang, recently IPOed and who are typical of the new Chinese apparel retail entrepreneurs in that the company is designing, sourcing, manufacturing and retailing casual apparel very successfully. Trinity and Lilang represent the two major strategies – acquisition vs manufacturer-turned-retailer. In reality both work.

Paul French is not sure whether recent plans to enter China are that smart:

I’m not sure where The Gap will fit. As a brand struggling internationally and in its home market, it’s perhaps a little late to hope China will save them. It is still true that the trends that sweep China emerge from Europe, and to a lesser extent America and Asia (really only Japan and Korea) and Chinese retailers imitate them. Right now the apparel market is moving from a five-year love affair with sportswear — and a massively crowded market of foreigners and locals — towards fast fashion. Currently all the running really is being made by foreigners in this sector: Zara and Mango — the global phenomena of Inditex, C&A, H&M, Vero Moda, and others. Gap would have been far smarter to come to Shanghai with their Banana Republic brand right now if they wanted to catch a profitable wave.

More in Forbes.

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Paul French is a speaker at the China Speakers Bureau. Do you need him at your meetin

Paul French by Fantake via Flickr

g or conference? Do get in touch.

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