Marketing mistakes of American businesses in China
You’d imagine that highly successful companies, companies that have forged an international reputation for being the best, would get it right every time. The money and expertise that goes into launching a product in a vast country like China would guarantee that no marketing mistakes would be made. You’d think that right?
If you were a major shareholder in a leading multinational that makes billions of dollars profit every year, you’d feel confident that money spent in launching a product in China would be money well-spent. It doesn’t always happen that way, as even the biggest and most respected companies in the world can testify. Some of them have failed in China because of marketing mistakes.
A well-known example of a multinational company failing in China due to marketing mistakes was Nike when they introduced a pair of trainers on the Chinese market. They made a huge error which cost untold millions, maybe billions of dollars. They did some research, but not quite enough. These trainers were specifically designed for the Chinese market and the upcoming year of the monkey in particular. They had special Chinese characters printed on both heels. The character on the right heel, fu, means wealth, the character on the left heel, fa, means good fortune. They clearly had Chinese advisors who knew their stuff. Or did they?
If they did, the Chinese advisor didn’t realize that, when characters are combined in Chinese, the meaning alters completely. Fu and fa combined, when the heels are placed side by side, translates as ‘to become fat.’ Now that isn’t what Nike intended evidently. Their Chinese advisors couldn’t make an error of that magnitude. It was noticed immediately by the Chinese public, and the joke went viral in China. Nike was telling its prospective customers ‘to become fat.’
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Nike is not the only company to fall victim to the Chinese language. You have to admit; Nike was trying so hard to create something fashionable with their good fortune on the right heel and wealth on the left. Likewise, Mercedes-Benz wanted to create something especially faddish in their attempts to ‘Chinafy’ their name. They went for the name Ben Si, which phonetically does sound quite a bit like Benz. Now, you’re going to be asking again, ‘Where were the Chinese advisors?’
When it was revealed, way too late again, that Ben Se combined means ‘rushing to die’. How about that for the image that Mercedes-Benz wanted to create in China? Not quite right. Where were the Chinese advisors? Consulted way too late, because the campaign had already begun. ‘Rushing to die,’ is rather an unfortunate translation of the message Mercedes-Benz were trying to put out there. They’re a manufacturer of fast cars after all. After their marketing mistake became public, they quickly changed the name to Ben Chi which means ‘dashing speed,’ a much better moniker for one of the most expensive cars in the world.
Home Depot is a colossal American company that specializes in providing supplies to DIY handymen. In 2006 Home Depot were keen to break into the Chinese market. DIY should be very popular in China they thought and the market, of course, is huge. China is westernizing, and DIY is huge in western countries. It’ll have to work.
Home Depot invested and set up twelve stores across China, expecting to make a fortune. But the Chinese market is a hard one to crack. If it doesn’t capture the Chinese imagination, then it’s not going to take off. Home Depot did not take off. Then Home Depot did some market research, the kind of thing a sensible company does before it invests.
They discovered three crucial factors. Firstly, they found that most people in the major cities in China live in recently constructed apartment complexes. They have virtually no use for DIY in a newly built apartment complex. Secondly, they discovered that the Chinese work long hours. The man of the house doesn’t have any time for DIY when he’s working a 60 – 70 hour week. Thirdly, and most importantly, Chinese society frowns upon doing such work yourself. If you can’t afford to pay a worker to come and fix your toilet or paint your bathroom, or build a kennel, then you’re poor, and poverty is shameful to the Chinese. DIY is a sign of poverty.
The Chinese are not so westernized, after all, Home Depot were to discover after their marketing mistake surfaced and their business venture failed. They closed all their stores and lost a lot of money. Suddenly, the price of a market entry study didn’t seem that expensive.
Groupon is a well-known e-commerce company that links local businesses with consumers through discounts. They decided to enter the Chinese market in 2011 and invested hundreds of millions of dollars in setting up a joint venture with Tencent, one of China’s internet companies. It didn’t start off well. At the Super Bowl that year Groupon seized the opportunity to advertise their newfound Asian connection. They broadcasted a commercial that featured Tibet, stating that Tibetan culture was at risk of disappearing, but at least Americans can still enjoy a discount meal at their local Tibetan restaurant courtesy of Groupon.
That doesn’t sound too clever, considering how China has responded to claims of its unjust treatment of Tibet and the Dalai Lama’s tours. Tencent was not amused. Next Groupon decided to offer employees of their competitor’s huge salaries if they would come to work at Groupon. Their competitors responded by publicly declaring that any employee leaving them and working at Groupon would never work at any other firm in China again. Groupon became very unpopular in China as a result of these two marketing mistakes and their business venture failed.
As the examples of Nike, Mercedes-Benz, Home Depot and Groupon show, having a huge budget does not guarantee success in China. The Chinese are very Chinese that marketing mistakes are easy to make, and success in China is very much a hit and miss affair. And Nike, Mercedes-Benz, Home Depot and Groupon missed.