Can Mattel Make A Comeback In China?

After Mattel’s embarrassing closure of its flagship store, the House of Barbie, in Shanghai two years ago, the American toy maker seems to have learned a thing or two about the Chinese market.

Its newly launched “Violin Soloist” Barbie aims to target Chinese parents who want their daughters to be “geniuses,”  just like any self-respecting tiger mom would. The doll has a traditional Barbie look – blonde, blue eyes and dressed in glamorous hot pink. In addition to her five-inch high heels, she even has a violin!

At first glance, it’s hard to imagine that a Barbie like this would appeal to Chinese girls. Don’t they want dolls that would look more like them – black hair, brown eyes and round face? Continue reading

The Wall Street Journal Interview: The Barbie Story in China

Recently, I was interviewed by The Wall Street Journal about how American toy-maker Mattel misread feminism in China. As the result, it had to close its flagship store, the House of Barbie, in Shanghai, and threw away over $30 million investment.

Since then, Mattel seemed to have learn a thing or two about the Chinese market. The Wall Street Journal article indicates that the company is making new efforts in China.

The Chinese toy and games market has been growing at 14% in the last five years. The demand will continue to be strong as growing Chinese middle class families want to give their children the best. And, they have the disposable incomes to do that.

There are still opportunities for Mattel to get it right in China. I will soon have an article on to comment on Mattel’s newly launched Barbie “Violin Soloist.” Stay tuned!

China’s Middle Class: New Global Travelers

Recently, I was interviewed by Travel Weekly, a national newspaper of travel industry, on increasing Chinese travelers and how they affect the travel industry in the U. S. Below is an excerpt of my conversation with Diane Merlino, editor in chief of Travel Weekly PLUS:

Merlino: How do you define the Chinese middle class?
Wang: Chinese middle class households earn between $10,000 and $60,000 a year, but those figures can be misleading because the cost of living in China is very different from what it is the West. In the U.S. you can’t even get by on $10,000, but in China $10,000 is the beginning of having a lot of purchasing power in certain areas, especially in smaller cities. In Shanghai, the cost of living is quite high; that’s why there is that range in income.

So, the rule of thumb I use is a family is considered middle class in China if the household has a third of its income available for discretionary spending.

Merlino: Give us an idea of the size of the Chinese middle class and the growth rate of that demographic.
Wang: Five years ago, when my book first came out, the Chinese middle class was estimated at 250 million to 300 million people. Today, the middle class has reached an estimated 450 million people, and we’re projected to reach 800 million middle-class Chinese by 2025.


Merlino: How important is travel to the Chinese middle class?
A lot of Chinese have a desire to travel because China was closed 30 or 40 years ago. Very few people traveled during that time, but now that China is opening travel, to go see the world is a life goal for a lot of people. The younger generation, those in their 20s and 30s, are traveling a lot. If they have less money, they travel within China, but now when I travel around the world I see so many younger Chinese. It’s amazing. Continue reading

Why Some Brands Succeed While Others Struggle in China

I was invited to be on CCTV-America, the America bureau for China Central Television, to discuss China’s middle class and what it means to Western brands. Here is a clip:

Apparently, CCTV-America was launched last February in the United States. It broadcasts a daily program from its Washington DC production center.


What You Can Learn from Burger King’s Missteps

Eight years after Burger King first entered the China market in 2005, the world’s second largest burger chain restaurant has only 63 restaurants in the country, falling far short of its own plan of opening 250 to 300 restaurants by 2012.

Many analysts pointed to Burger King’s uphill battle with its competitors. Both Yum! Brands and McDonald’s entered China much earlier and both have established significant presence in the country. Yum! China has more than 4,000 KFCs and 750 Pizza Huts, in addition to its China-based units East Dawning and Little Sheep. McDonald’s China division has more than 1,500 locations.

However, there is plenty of demand for more than two big American restaurant chains in China’s $29 billion fast food market, thanks to a growing Chinese middle class. Here are a few things Burger King can do to catch up:

Myth that Chinese Don’t Eat Beef

Burger King has failed to play up the advantages of its traditional beef dishes. Instead, it added chicken burgers, believing Chinese prefer chicken to beef. The reason many Chinese consume more pork and chicken is because they are more affordable and readily available. Chinese farmers typically raise pigs and chickens to sell in the market, while cows are used mainly for farming.

The truth is that Chinese consumers consider beef a quality meat because it has less fat. Continue reading

Five New Trends of Chinese Consumers

As 2012 comes to an end, pundits and analysts alike are making predictions for 2013. Many things could happen in 2013, but one thing is almost certain: China will be the largest e-commerce market in the world. Already, the country has the largest population of online shoppers. In June 2012, people who shopped online in China reached 210 million, compared 179 million in the United States.

Chinese consumers have always been a mystery to many Western companies. Little is known about their spending behavior and buying habits. As they come of age, certain characteristics are starting to emerge. Here are five new trends of Chinese consumers:

Value Seekers

A quintessential trait of Chinese consumers is that they are value seekers. They will search hard for the best deals, to make sure they get good value for their money. That means they will spend a lot of time researching products and comparing prices. They tend to resist impulse buying (despite some conspicuous spending), and are more likely to get cues from their friends as to which products to buy.

This trait actually applies to both high- and low-income groups, although it is more apparent in consumers with lower incomes. I know this intuitively, and from first-hand experience. Having lived in the West for over 20 years, I am still “good at saving money” (as my husband put it) when it comes to a purchase. For example, I eyed a giclee painting from ZGallerie for several months before I bought it on sale. I searched on the Internet for comparable paintings, and was willing to wait for holiday sales to make the purchase.

I am not the most frugal person you can find in the world, but like most Chinese, I am naturally good at finding good deals. Continue reading

The Chinese Middle Class Approaches Half a Billion

And how American companies can seize the opportunities…

The Chinese middle class is expanding rapidly, reaching 474 million this year, according to my latest calculation.

Many people may challenge this number. But it’s just arithmetic. In a recent report “Consuming China,” McKinsey indicates that 83 % of households in China’s mega cities (cities with population of over 10 million: Beijing, Chongqing, Guangzhou, Shanghai, Shenzhen, and Tianjin) and 66 % in the rest of the cities are middle class families.

By the end of 2011, China’s urban population reached 691 million. Do the simple math, and you will get the same number I got: the population of the Chinese middle class was 474 million, with 88 million living in mega cities, and 386 million in smaller cities.

This means the Chinese middle class accounts for 68 percent of urban population, which is believable to me. Assuming two percent are super rich, still about 30 percent of the people in urban areas are poor.

Some would argue that there are different criteria to measure the size of the Chinese middle class. A simple and important rule of thumb, as stated in my book The Chinese Dream, is that of a household with a third of its income for discretionary spending. These people have passed the threshold of survival and have disposable income to spend on leisure items. As I travel around China, it’s very clear to me that the majority of people in urban areas have reached this stage.

Chinese Consumers Love “Made in USA” Products

The rising Chinese middle class is the biggest story of our time. However, many US companies are missing the opportunity. US exports to China account for only 6 percent of China’s total imports. The major categories of US exports to are in industrial sectors such as power generation equipment, aircraft, and medical equipment.

The biggest opportunity, however, is in the consumer sector. On November 11, China’s “Single Day” shopping festival, online retailers Tmall (B2C) and Taobao Marketplace (C2C) generated a record revenue of $3.1 billion, more than the total sales in the U. S. on Black Friday and Cyber Monday combined. Before long, China will become the world’s largest consumer market, and its consumption could reach $13 to $16 trillion by 2020.

Better yet, Chinese consumers love American goods and are willing to pay more for them. Continue reading

What Went Wrong with the House of Barbie

Last March, American toy maker Mattel closed its first flagship Barbie store – the House of Barbie – in Shanghai after two years struggling since opening in 2009. Mattel invested over $30 million in the House of Barbie in celebration of the American iconic doll’s 50thanniversary.

The concept was that Barbie is not just a fashion forward doll, she would also be a lifestyle symbol and cultural icon for girls and young women. The six-story building had the world’s largest collection of Barbie dolls and affiliated products such as children’s bedroom furniture and young women’s clothes. It also features a fashion runway, a design studio, a stunning spiral staircase decorated with 800 Barbie dolls, and a café on the top floor.

Many analysts pointed to the fact that Barbie is a Western doll and is “too sexy” for Chinese girls. The reality is, however, that Chinese girls actually like the blond Barbie better than the localized Chinese Barbie called “Ling.” Before the House of Barbie was launched, Barbie dolls had been sold in China and were relatively well received by Chinese girls. When I first bought a Barbie doll for my niece about ten years ago, I was surprised to find out that she already had a couple of them.

So, what are the real reasons that the House of Barbie failed to live up to its expectation? Recently, I spoke to the general manager of Barbie Shanghai, Gar Crispell, about what went wrong with the House of Barbie and what lessons can be drawn from that experience. Continue reading

Chinese Consumers Spend Twice as Much

Luxury retailer Shanghai Tang CEO Raphael le Masne de Chermont told the Wall Street Journal that its Chinese customers spend an average of 500-600 euro per year, which is about twice as much as their counterparts in New York and London.

Chermont also said that Chinese consumers are getting more sophisticated, meaning they are now less about big brand names to show off their status, but more about consuming the luxury.

However, Chinese consumers still want to be re-assured that Shanghai Tang is not just a Chinese brand, but a brand with stores in Paris and New York.

As Chermont pointed out, even though Chinese economy may slow down a little in the coming years, there are still a lot of potentials for growths.

“Must Succeed Customer”: Pizza Hut’s Rebranding in China

Pizza Hut and Kentucky Fried Chicken (KFC), the U.S. fast food restaurant chains under Yum! Brands, have enjoyed phenomenal success in China. In the past five years, Yum! China has on average opened more than one new restaurant a day. Now, it has over 3,700 KFCs and more than 760 Pizza Huts across China.

According to analysts, Yum! China’s business, driven by a rapidly growing middle class, will be twice as large as its U.S. business within five years. Already, China accounts for more than 40 percent of Yum! Brands’ global revenue.  As Yum! Brands CEO David Novak said, China is the best restaurant growth opportunity of the 21st century.

How did the Kentucky-based restaurant conglomerate succeed in a country that has thousands of years of its own culinary history? One word that summarizes Yum! China’s success is: rebranding.


When they first entered China in the late 1980s, Yum! China management made a conscious decision that it did not want to be seen as a foreign presence in China, but as part of the fabric of the local community. As Sam Su, CEO of Yum! Brands China Division, pointed out, they wanted to take the best ideas from the U.S. fast-food model and adapt them to serve the needs of Chinese consumers.

They re-branded fast food in China as “delicious and safe, high quality and fast, nutritious and balanced, healthy living, and rooted in China.”

For example, Pizza Hut’s Chinese name, “Bi Sheng Ke,” means “Must Succeed Customer” in Chinese. It gives no hint that the restaurant is about pizza. The name resonates well with Chinese, as it implies success and good fortune.

Pizza Hut is positioned totally differently in China than in the U.S. Continue reading