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Reinventing brands for China

Scott Tong Aug 4, 2008

Reinventing brands for China

Scott Tong Aug 4, 2008


Kai Ryssdal: When the Olympics start this Friday, all the attention’s going to be on the athletes, but the economic competition’s been going on for months now.

The games are an advertising bonanza, a chance for sponsors to reach billions of potential customers worldwide and that’s only the television audience. Since this year’s Olympics are in China, there’s a whole ‘nother billion potential shoppers to think about.

And the key, as any marketing person worth his salt will tell you, is to localize your product.

From Shanghai, Marketplace’s Scott Tong explains.

Scott Tong: Quick lesson in Chinese breakfast food: China’s version of the donut is called “you tiao.” It’s a deep-fried puffy strip of dough and then “zhou” is rice porridge.

It’s comfort food that shows up in a couple places in China: street stalls and… you guessed it, KFC. Welcome to fast food with Chinese characteristics, where your chicken sandwich comes drizzled in either barbecue sauce or peking duck sauce.

Here’s Shanghai college student An Xiang.

An Xiang: KFC is more culturally Chinese than McDonald’s. McDonalds seem like it’s been copying the strategy lately, but they’re already behind KFC.

In China, KFC is not the colonel, it’s the king. It has 2,000 stores, double the number of McDonald’s. And KFC adds one new restaurant every single day in the country.

China Market Research founder Shaun Rein credits going native.

Shaun Rein: What China affords a lot of companies is the ability to reinvent itself. Brands can really tweak and localize and do very well.

And doing well matters now for multinationals struggling with a weak U.S. economy. Nike, Toyota and Starbucks all see most of their expansions overseas, in places like China.

Rein: There’s an emerging 250 million strong middle class. These are people who love to consume. So what’s happening now is China’s becoming a market to sell into, not just a market to produce and then export.

So which Western products are selling well here? A quick trip to the local supermarket suggests a lot of Chinese buy green tea flavored Crest toothpaste and Dannon’s cucumber and kiwi yogurt.

John Chan of the consultancy China Street Smart hangs out in the junk food aisle, ticking off the flavors of Lays potato chips.

John Chan: You know, there’s like Sichuan, hot pot and all these other things that local people understand. I have to look hard to find plain because there’s another six or seven different flavors that I’ve got to try and dig through.

Western companies try to appeal not just to locals’ taste buds, but also their hearts. This Olympic season, that means cheering for the home team. One poll found three out of four Chinese consumers prefer a product linked to the Olympics.

Which may be why this Pepsi ad screams, “Go China!” Rival Coca-Cola has a spot with national basketball hero Yao Ming — he’s leading the torch relay — and Adidas portrays the Chinese volleyball team perched on the shoulders of the Chinese masses.

For the sports industry, the Olympics are an obvious time to make a China push. More and more consumers are moving from watching sports to playing sports. Just remember, China’s different.

Spalding basketball’s Robert Zucker notes there are no cul-de-sac here.

Robert Zucker: We are just entering the backboard market here. Of course, there’s not a lot of residential use, but every factory you go to here in China has a backboard system and backboard for their employees.

And as China evolves, Western companies will keep catering to local lifestyles and preferences. That’ll mean more things like papaya-flavored gum.

Cringe if you’re a traditionalist, but think of how mortified the Italians must have felt when pizza came to America and morphed into a triple cheese, thai chicken disaster.

Works for us.

In Shanghai, I’m Scott Tong for Marketplace.

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