Starting at the top

Updated: 2012-08-17 08:45

By Wang Chao (China Daily)

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Localization mantra

Starting at the top

Although being European or American is often welcomed and respected by most Chinese consumers, it does not necessarily mean that the brand is in a safe harbor. Whether intentionally or forced to upgrade in China, these brands face a common task: to localize, so that they can keep in line with Chinese culture that won't easily change.

Bastin admits that some brands are not successful in China because they are too reticent to change.

For instance, he says, Oreo cookies were considered too sweet in China when they were launched in 1996, and consequently saw flagging sales. But fortunately, the company is developing local flavors like lemon that are being welcomed by Chinese customers.

"Some European home appliances brands have also not been too successful, as they are not delivering the quality and service that they are supposed to. Most of these brands cannot compete with Chinese brands on the pricing front, and often beat a hasty retreat."

Although 95 percent of the products in Ikea are from global purchase, Yin says the brand is trying to expand its influence by customizing homes across different regions in China. It has set up a research team to study and understand the nuances of the Chinese market.

In Beijing where the property prices are high, the prototype rooms in Ikea are small - usually 30 square meters to 50 sq m. However, in Chengdu where the average living space is much bigger, Ikea has the largest prototype rooms among all its stores in China. Other adjustments include adding a balcony outside the kitchen in the prototypes for Tianjin.

While appreciating the localization efforts, Gong at Beijing Vogue Clamour says foreign brands also have to find a subtle balance between localization and originality.

"For example, suits are from the West, so we have to maintain their Western look. However, suit brands have to be redesigned to fit Chinese customers' figure. Many clothing brands are not doing well in this segment and that's why you also see most of them selling only belts and bags in China."

Some of the brands that have a higher positioning in China fail because they do not do the necessary market research.

"For instance, the clothing brand Gap prints skull patterns on children's clothing, which goes against the traditional Chinese culture of peace and love."

Preston says the adjustments really vary across the brands. "If I'm doing supermarkets, it is easy to localize; but if I'm doing Ralph Lauren, I cannot be too local as it is more of an inspirational product. For some brands, retaining their originality is very important and changing that too often becomes counter-productive."

However, there are some components that are necessary to add more leverage to the brand, he says. "Some elements can be simple, maybe just the way you design the stores, and the way you serve people, which can help you to localize without changing the brand too much."

But he admits that besides proper branding, there are many factors that can affect brand performance in China, such as management skills, and the proper connections with partners and other allied services.

"There might be a lot of reasons for the failures," he says.