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Jul 19th, 2010 by Eric Lin

Raising the bar for China’s retail market

As a recent Apple convert, I was thrilled to hear about the new flagship Apple store in Shanghai—the first in the city and only the second in mainland China (the first opened in Beijing in 2008). Shrouded in secrecy for months, Asia’s largest Apple store is an impressive sight: a beautiful 40-foot glass tower welcomes visitors down into a 1,500 square meters store where they directly interact with an extensive selection of Macs, iPods and iPhones (though the new iPhone 4 is noticeably absent). Over 175 blue t-shirt clad Apple employees roam the vast space and answer questions at the world’s largest Genius Bar. On opening day, thousands of Apple enthusiasts and the just-plain-curious lined the plaza to await their chance to see this sight for themselves.

Just a few weeks earlier across town, iconic guitar-manufacturer Gibson had opened a flagship store of its own—its first location outside of the U.S. and only its third total. Though hundreds of its iconic Gibson guitars hang for sale on the walls, this store aims to sell an experience and serve as a creative hub as much as it intends to sell instruments. The location features a live-music stage that will showcase local guitar enthusiasts, product demos and jam sessions, as well as a bar—all designed to create an immersive, authentic Gibson experience that creates affinity for the brand.

Though the opening of an Apple or Gibson store might not be newsworthy in other markets these days, these recent Shanghai openings are an important step not just for the companies and their growth plans here, but also for the advancement of immersive, engaging brand experiences in China’s retail market. This market, which has surged in lockstep with increased consumer buying power, is too often undifferentiated and uninteresting. Product offerings seem indistinguishable from one store to the next, cookie-cutter store designs pay little attention to actual customer needs and buying behaviors, and poorly trained employees offer little reason, excitement or motivation for you to buy their products.

The hope is that brands like Apple and Gibson raise the bar for China’s retail experiences. Though retailers need not hire an architectural firm to design a towering glass entrance or turn every store into a “creative hub,” the fact is the store environment is the lifeblood for their brand and unmatched in its ability to present their brand in the way it is meant to be experienced. Both Apple and Gibson demonstrate how thoughtful physical expressions of their brand promise, differentiated product offerings and an inspired staff of brand evangelists can shape experiences that create lasting customer relationships.

Eric Lin is the general manager for the Siegel+Gale Shanghai office.

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Jun 1st, 2010 by Eric Lin

Chinese “global brands”: A process, not an end-state

One only needs to pick up a newspaper to sense the momentum propelling China’s phenomenal growth. This year, the nation surpassed Germany as the world’s leading exporter and some predict it may soon overtake Japan as the world’s #2 economy. Earlier this month, Shanghai followed Beijing’s 2008 Olympic games with its own dazzling, $47B coming out party: the 2010 Shanghai World Expo.

Yet behind the headlines lies an inconvenient truth for Chinese leaders. Despite the nation’s sheer economic might, China has been unable to create world-class brands of its own. And until it does, China will be inhibited in its dream of becoming a true global superpower. As The Washington Post notes in the recent article, “Beijing tries to push beyond ‘Made in China’ status to find name-brand innovation,” a lack of marquee brands means China is still relegated to being the world’s factory—leaving the lion’s share of profits on the table. The article cites that for every $750 Apple iPhone manufactured in its factories, China is lucky to hold onto $25. For a pair of Nike shoes, China’s take is pennies on the dollar. Economic factors aside, a dearth of leading brands also means China will continue to be dependent upon the innovations, intellectual property, patents and brand experiences created by other nations.

This fact is not lost on the Chinese government, which for several years now has called upon Chinese companies to create strong global brands. Today, the government is spending billions through tax incentives, subsidies and direct investments in Chinese companies to create brands that can compete effectively on the global stage.

However, a key tactic being pursued by Chinese companies may be too short-sighted. The path for Chinese companies “going global” has yielded foreign acquisitions, including Lenovo’s 2004 acquisition of IBM’s PC division and the more recent purchase of Volvo by the Chinese automaker Geely. Yet, a “global brand” has as much to do with building a world-class organization as it does with having an international footprint. It is a process as much as it is an end-state. That is to say that great brands are built from the inside out, and relying primarily on foreign acquisitions alone is not a sustainable tactic for creating a world-class organization. To become a world-class organization, Chinese companies will need to commit to creating a culture of innovation, increase investments in marketing and customer experiences, and inspire employees around a sense of purpose—all with the same (if not more) energy as they do with foreign acquisitions and manufacturing.

Eric Lin is the general manger for the Siegel+Gale Shanghai office.

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Apr 9th, 2010 by Eric Lin

Balancing global and local

Having recently moved from Los Angeles to Shanghai, I’ve spent the last three months taking in all of the amazing sights, sounds and tastes of my new city. Everyday rituals I had taken for granted while living in the US—grocery shopping, commuting to work, eating out—have become life adventures in their own right here in Shanghai (and if you don’t believe me, try visiting a local Chinese butcher or squeezing into a bus during rush hour). It’s been an amazing experience so far, but that’s not to say I don’t occasionally reach for some comforts of home. On most mornings, I stop by Starbucks on the way to work for a familiar cup of coffee. Unfamiliar with local furniture stores, I opted for a dresser from IKEA. And in a particular moment of weakness, I recently reconnected with an old friend: the McDonald’s Sausage McMuffin.

Visiting Starbucks, IKEA and McDonald’s has also provided an interesting look at how global brands operate and thrive in local markets. These brands, and several others like them, have something in common. Each has a clear and compelling value proposition they extend globally while adapting elements of their brand experience to be more relevant locally. Some cases of brand experience “localization” are a bit subtle, while others are far more pronounced (e.g. the escargot appetizer at Pizza Hut in China). But the imperative for success in China and other emerging markets is clear: Brands must balance a carefully defined, global brand strategy with thoughtful, local adaptation. Here’s a closer look at my three examples:

McDonald’s

The core value proposition of McDonald’s globally is the promise of “simple, easy enjoyment,” and its advertising campaigns here in China closely align with the strategy, messaging and personality of the “I’m lovin’ it” campaign around the world. For McDonald’s, establishing local relevance in China requires adapting its menu to reflect local tastes. Today, the menu features fewer burger options than in the US, chicken wings, regional desserts like red bean pies and different seasonings and sauces.

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Mar 25th, 2010 by Eric Lin

GoDaddy.com pulling out of China – the Google ripple effect?


In a surprising turn, GoDaddy.com, the world’s largest seller of Internet domains, today announced it would no longer be registered names in China due to the “chilling” new requirements imposed by Chinese authorities.

Among the new regulations: requiring domain registrars like GoDaddy to turn over to the government a color image of ID documents, photo headshots, a business license and a signed physical contract for each registered domain. Citing concerns for the privacy and security of individual customers, GoDaddy has decided to cease registering “.cn” domains and in effect, scaling back its business significantly.

All of this comes on the heels of Google’s highly publicized move to shutter its Google.cn search engine citing its unwillingness to self-censor its search results in accordance with Chinese regulations.

Together, it’s a stunning series of events. Two of the world’s largest Internet companies are essentially walking away from the world’s largest online population (over 400 million users in China and growing) and the long-term opportunities that it promised.

There are two arguments to be made here. The first argument, one being made by the Chinese government, is that companies must respect the sovereignty of the nations in which they do business, which includes adhering to national laws and regulations. Yet the argument being made by Google and now GoDaddy is that as leading global organizations, they have a responsibility not only for their own bottom lines but for the societal impact they have on the world. In this case, censorship and privacy (for Google and GoDaddy, respectively) were ethical and social values that each company was no longer willing to compromise.

There is a broader trend in play. The recent backroom dealings of Wall Street institutions notwithstanding, we are living in an era of tremendous corporate transparency. Aided by the democratization of information on the Internet, brand stakeholders today — not just consumers but also media, employees, investors, and activists — have unprecedented access to the actions, behaviors and performance of any given public company at any given time.

In turn, brands today are under greater pressure to stay true to their core values and the standards demanded of them by their constituents, as every action is quickly identified, analyzed and discussed. Brands are no longer simply evaluated by their financial impact but by their social and ethical impact as well, and every high-profile action a brand takes must take into consideration all three.

Google and GoDaddy looked at the China market and ultimately decided they could no longer effectively address all three factors (finance, social, ethical) while staying true to their brands and stakeholders, and so here we are today.

This is far from over. The actions of Google and GoDaddy will now cast a light on the hundreds of other leading global brands doing business in China who are in all likelihood struggling with similar issues, as here censorship, privacy concerns, and loose IP laws are often everyday business realities.

Which organizations will continue to do business in China at a potential risk to the perceptions of their brand and corporate values? Will other organizations be as bold as to withdraw from such a fast-growing and promising market? And how does China, a nation so eager to prove to the world that it is ready to take its place among the developed elite, react in the face of a direct challenge from such an esteemed global brand?

Eric Lin is the general manager for the Siegel+Gale Shanghai office.

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Jun 9th, 2009 by Eric Lin

Think Before You Tweet

Is our brand on Twitter?

If you haven’t been asked that question by your company’s CEO yet, here’s betting that you soon will. For those unfamiliar, Twitter is a popular “micro-blogging” service that has captured the excitement of everyone from Oprah and Richard Branson to your next door neighbor. On the surface, Twitter is a seemingly less sophisticated version of other social networks like Facebook or MySpace. Users post short messages (up to 140 characters in length) and track updates from their list of contacts all in a single-page interface. Yet while Facebook is a closed, permission-based platform that requires you to personally know the people you add to your contact list, Twitter is deliberately open. The degree of access enabled by this freeform environment, coupled with the transparency and immediacy of a short “tweet,” ushers in a fascinating new chapter in the story of how social media is changing the way people connect to one another. The result is a rapidly growing phenomenon where everyday people are adding, following and interacting with authors, activists, celebrities, business leaders, and increasingly,
companies and brands.

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