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Why white wine, clothes dryers and car seats all flopped in China | South China Morning Post

This is an article that I wrote for the South China Morning Post about the cultural factors that have caused some products and companies that are very popular in the West to fail in China.

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This is an article that I wrote for the South China Morning Post about the cultural factors that have caused some products and companies that are very popular in the West to fail in China.

China has long been seen as the final frontier of new customers for Western companies, a place where the commercial wells are deep – 1.35 billion people deep, to be precise.

Tapping this incredibly huge market has been an obsession for foreign companies since long before China’s reforms from the late ’70s to the early ’80s. Today, this hasn’t changed at all. As China continues to evolve into a consumer-oriented economy with an ever-growing number of middle-class and upper-class consumers hungry for trendy new products, the drive by foreign companies to get their wares into this market is intense.

Profiting from this massive consumer base has always been a tricky endeavour for Western companies. It has long been a mistake to assume that the Chinese will need or want a product just because it is popular in the West, and items that are standard purchases in the US and Europe often do not sell in China. This has led to many foreign companies receiving very rude awakenings in a market that turns out to be far more traditional and arcane than they believed.

While many large foreign companies have successfully established themselves in China and reaped huge profits, many others have failed epically.

Source: Why white wine, clothes dryers and car seats all flopped in China | South China Morning Post

This article was cut down in the editing process rather dramatically, so if anyone is interested here are a few additional examples:

Hoping to capitalize on the housing boom and the tens of millions of new apartments without interior fit-out, Home Depot jumped into the Chinese market by acquiring 12 stores from Home Way, a domestic home improvement chain, in 2006. Though just six years later the world’s largest home improvement chain failed epically and closed all of its big-box stores. The reason, which the company readily admitted, was that they just didn’t understand the way things are done in China.

In China, Home Depot tried to install the same business model that served them well in the USA. They attempted to cut out the middlemen and buy merchandise directly from factories only to find that most factories were not licensed to sell their products domestically. There were also classic cultural misunderstandings with local vendor’s selling rights in their stores, a strategic flop where they did not properly display their products in complete showrooms (like in Ikea), and an oversight of not marketing directly to women, the main decision maker in interior home design in China.

Though Home Depot’s biggest mistake was thinking that the recently ascended middle and upper classes would want to do-it-themselves. The DIY ethic just isn’t fashionable for people who only a generation ago were farmers and manual laborers. No, China is currently a do-it-for-me culture, and working class contractors and handymen are readily available to do whatever needs to be done for cheap without the aid of a pricey foreign home improvement chain.

And as for those millions of unfinished apartments that Home Depot banked on supplying the home improvement punch for? Well, most of these apartments turned out to have been purchased as investments, not as places to fix up and live in — so, again, there was no need for Home Depot.

“The companies that succeed here localize in a way that adds great value to their customers,” said Blake Stone-Banks. “They don’t expect the local market to come to them. Instead, these companies adapt to meet the tastes and needs of customers in China.”

Though one of the worst incidences of a foreign company misinterpreting Chinese culture and missing the mark with a product launch was Apple with its iPhone 5c. “Culturally, Chinese people like “mianzi,” or dignity or prestige, a lot. In order to get a lot of respect from other people, Chinese . . . people love to buy luxury items even they can’t afford them financially,” said financial analyst Harry Wu. So when Apple launched the iPhone 5c at the same time as the more expensive iPhone 5s in 2013 they essentially created a social class dichotomy that few people wanted to be on the lower end of. As iPhones are seen as luxury goods in China and something which can give a user a feeling of prestige and the appearance of wealth, offering a lower cost model worked in direct opposition to this. Harry Wu explained that, “if a guy buys an iPhone 5c that means that he is poor and pretends to be rich, because he’s only able to afford to buy an iPhone 5c, not the more expensive 5s.” This meant that sales of the 5c greatly lagged behind those of the 5s and the standard iPhone 5, making it one of the biggest flops that Apple has yet experienced in China.


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Filed under: China

About the Author:

I am the founder and editor of Vagabond Journey. I’ve been traveling the world since 1999, through 91 countries. I am the author of the book, Ghost Cities of China and have written for The Guardian, Forbes, Bloomberg, The Diplomat, the South China Morning Post, and other publications. has written 3720 posts on Vagabond Journey. Contact the author.

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