China a ‘Minefield’ for Western Brands

According to a recent article from Jing Daily, there’s a whole helluva lot that can go wrong for western brands that are trying to break in to the Chinese market.

Citing two recent examples of partnerships that went south — the case of Wu Xiaohui, the Chinese tycoon who oversaw the purchase of New York’s famed Waldorf Astoria Hotel, and then forfeited the property to the Chinese Government after being arrested for massive fraud; and Blues To, the fashion icon who lost the role of Managing Editor at GQ China after photos of him appeared on social media wearing a ribbon with a politically incendiary slogan – the story breaks down the perilous path one must travel to catch the Moby Dick of international luxury markets.

“Choosing the right Chinese owners, partners, and employees is essential,” the story says, and the selection of the proper “investor, employee, co-owner, manufacturer or distributor… can make or break a brand.”

Because the market is relatively unknown to outsiders, the potential for bust is high. Therefore “it’s important for partnerships to be maintained properly, and to meet in person on a regular basis to maintain these relationships, keeping a close eye on what’s going on.”

And since “what’s going on” could be a number of not-so-great things, one expert recommends that prospective luxury brands get Chinese non-disclosure-agreements in order to avoid “one-sided” partnerships (something that China’s lax copyright laws presumably don’t help).

Also, apparently a “yes” “doesn’t necessarily mean a deal will follow through in China,” the story said, noting that “verbal agreements have less commitment value than they do in the west.”

Hopeful brands need worry about the experience of potential parters, too. “Often I’ve heard Chinese distributors saying they’re capable of taking on marketing for a luxury brand, and the same distributor is using a Hotmail email account,” one expert said. “That value of brand just isn’t their top priority.”

Nor is an intuitive email experience, it would seem.

You can read more about it at Jing Daily.

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