Flame fame set to engulf China
Updated: 2012-03-16 07:30
By Zhong Nan (China Daily)
Lighter maker has designs it hopes will soon turn the country into its biggest market
An American icon of the outdoor lifestyle is looking to become China's latest fashion darling.
Zippo Manufacturing Co, known for its windproof metal lighters and which has only one showcase store in the United States, has ambitious plans to open five flagship stores in China by the end of the year.
But these stores will not primarily sell lighters - they will introduce a new line of men's apparel that includes American-style clothing as well as men's watches, colognes, pens, belts, bags and outdoor equipment.
The business strategy is the latest evolution for the family-owned company, which began engraving American flags and eagles on lighters nearly a decade ago and exporting them to Asia. In 1986, sales revenue reached $70 million. A decade later it was $100 million. Now, US and overseas sales are about $200 million.
"We look forward to opening our first Chinese flagship store in Beijing in September this year," says George Duke, owner and chairman of Zippo. "Our intention is to have another four flagship stores open by the end of 2012 in Shanghai and Beijing."
The Chinese market is Zippo's largest outside the US. Total sales in China rose 50 percent in 2011 and represent 10 percent of its global sales revenue. The company experienced its best year in China last year, surpassing its $10 million sales projections made in 2010. It expects another 10 percent sales growth this year.
And in another sign of its ambitions, the company plans to open 50 stores in China's first- and second-tier cities by the end of 2015.
The company's other major overseas markets are Japan, the United Kingdom, Germany, France and Italy. India and Indonesia are emerging markets for Zippo, whose global sales grew 19 percent last year.
The only Zippo brick-and-mortar presence at the moment is an outlet that displays its lighters at the company's headquarters in Bradford, Pennsylvania.
"What we will be doing in our new flagship stores in China is to have a brand new line of products that we have diversified into, which is apparel," Duke says.
He believes that apparel is a logical direction for Zippo based on the strength of its brand in China. In a sneak peek to China Daily, the new line of clothing appears to be a hybrid of Abercrombie & Fitch and Eddie Bauer. Zippo stores will be selling casual suits, button-down shirts, jeans, jackets, sweaters and winter coats.
"If I look at the entire Chinese market, some of the opportunities I see, is that the middle class is expanding rapidly, which puts more money in the hands of people to purchase more products," Duke says.
Duke is also venturing into colognes. Zippo selected a European, family-owned company Mavive in Venice, to make the men's cologne. The new fragrance is already being sold in Italy, with the cologne sold in a large container shaped like the iconic Zippo lighter. It will be available in China this year.
Still, lighters are a key focus for the company. Duke says that the company has created designs that will impress the Chinese buyer, with a number of lighters that are decorated with symbols of the zodiac and Chinese literary classics such as Journey to the West. The company has staff of 20 in its US headquarters to design various themes, series and limited editions for its lighters.
"In the Chinese market we rely on the feedback from our dealers to tell us what sort of designs we should be making that will be appealing to Chinese consumers," Duke says.
Zippo collects feedback and market trends from its importer in Hong Kong, which handles the China market and also coordinates with more than 150 dealers in 32 Chinese provinces and autonomous regions.
"If we use Western designs and try to appeal to Chinese consumers, it won't work and that would not be designable. So, we try to make our products more relevant with the preference of Chinese consumers by implementing localization strategies," Duke says.
Traditionally, the company has product catalogues that are specific for the US, Europe and Asia. This year the company will debut a specific catalogue for the China market and hopes these products can be appealing to men around 21 to 35 years old.
Zippo has also set up an account on China's popular Weibo (micro blog) site to promote its business and target more young Chinese consumers, similar to its strategy in the US.
Brent Tyler, Zippo's event, marketing and promotion manager, says: "Something we have done in the US that has been very successful is associating Zippo brand with music and we have done it in the past for outdoor concerts, sponsoring bands that come play at certain events. It has worked very well in the US since we have been doing this. This is a practical marketing platform we are using in China."
Tyler says Zippo will launch the third Zippo Encore program in partnership with the Midi Modern Music Festival this year, which will give young bands in Shanghai and Beijing the opportunity to play in front of a large audience.
"It has been very successful in dozens of countries and here in China as well. Zippo uses music in its marketing program as the way to reach young audiences and stay relevant as a brand. A total of 115 bands want to participate in Midi this year in both cities," he says.
Duke says China may become Zippo's biggest market in five or six years. Zippo China hired its first full-time, China-based local employee last year. Duke aims to grow Zippo China significantly by the end of the year.
"In addition to our 80 years being in business, we are going to produce the 500 millionth lighter in Pennsylvania this year. We expect the lighter is going to be made between the middle of May or the middle of June based on our production schedule," Duke says.
The company's current annual production capacity is about 12 million windproof lighters a year and 60,000 a day.
(China Daily 03/16/2012 page17)