What Chinese tea at Starbucks means for Western brands in China
[Originally published on BrandSource: Labbrand's Blog of Branding Insights. Please visit that site to comment.]
With last month’s announcement of Starbucks’ plan to offer tea in its hundreds of China-based stores, old questions are resurfacing about how Western brands should approach the Chinese marketplace. Chief among these questions is how to balance advantages of being perceived as a foreign brand with the increased relevance that comes from catering products to a local market.
As evidenced by mixed consumer and media reactions to Starbucks tea, there is no black and white answer to the question of whether brands should weight their product offerings more toward foreign or local attributes. Starbucks customers have been quoted as saying “How could a foreign newcomer satisfy us with our strict [tea] requirements?” while headlines like “Starbucks discovers that Chinese people like tea” suggest the company is late to the party—that it should have started selling tea closer to when it opened its first mainland store in 1999. Doubtless, many consumers will be delighted by the new option, while others will have legitimate complaints ranging from price, to concern for local teahouses, to the assumption that the American company can’t possibly make a good cup of Chinese tea.
But Starbucks is far from the first Western brand taking steps to localize its menu in China. Other local adaptations include chili garlic McNugget dipping sauce and red bean pies at McDonald’s, “Hot & Spicy Chicken Kebabs” at Pizza Hut, and “Beijing Duck” Lay’s Potato Chips. KFC, lauded as one of the most successful Western brand entries in China, even serves congee, Chinese breakfast porridge. But it’s important to note that successful product localization should not involve dramatic menu overhauls based on snap judgments about “what local people like.” Instead, localization should be approached like balancing on a beam: constant, subtle shifts in weight, all governed by a keen awareness of one’s center of gravity. When it comes to brand strategy, that center of gravity is the clear, powerful idea upon which a company has built its brand. Like a gymnast with a heightened sense of balance, companies that have invested resources into defining and understanding their core idea and their local consumers are better prepared to perform a sort of active balance—smart, measured shifts that allow them to avoid two opposing perils in localization:
- Localizing too much and diluting the core idea significantly (i.e., is McDonald’s without beef-burgers still McDonald’s?), and
- Refusing to localize enough—stubbornly grasping tightly to limited product portfolios that bear no relevance in local markets.
So while a CNNGo.com article complains that “you would’ve thought [Starbucks] would have realized before now that actually, tea is the local drink of choice here,” the company’s decision to sell tea was probably based on successful experiments conducted during Chinese holidays in past years, such as offering zongzi (glutinous rice wrapped in a reed), mooncakes, and tea-coffee hybrid drinks. After all, it took Starbucks less time to add tea to the menu than it took KFC to switch to dark meat chicken—a move that seems obvious to many onlookers familiar with typical Chinese preferences in chicken meat.
And what is Starbucks’ core idea—its center of gravity? While it’s true that Starbucks is virtually synonymous with coffee in the markets it serves, the company’s stores are also known as the “third place”—not home, not work—a comfortable environment where customers can relax and indulge. By serving Chinese tea, Starbucks has given people in China another way to indulge in their stores. It’s an experiment that may ultimately backfire, but for Western brands in China, where “active balance” is a best practice, experimentation has been known to pay off.
comment
Please Leave a Reply
TrackBack URL :
Starbucks may have some lessons to learn from HonestTEA and Seth Goldman, who I heard speak recently at EARTHShare.
http://www.honesttea.com/seth/
and:
http://www.businessweek.com/news/2010-04-23/coca-cola-to-expand-honest-tea-distribution-throughout-u-s-.html
Honest Tea recently got an unpaid endorsement when The New York Times revealed that the White House is now stocking Honest Tea — it’s Barack Obama’s “preferred beverage” – specifically, the “Black Forest Berry” and “Green Dragon” flavors. That kind of thing has global appeal.
In 2008, Honest Tea’s tenth anniversary, Coca-Cola purchased 40% enhancing their distribution worldwide — but the relationship of economics, well-being and social responsibility all work together to create the customer loyalty that makes a brand possible and sustainable.
A portion of HT sales also goes back to the workers, which they can invest in the communities, in health and education. An effective brand must satisfy an unmet need, justify a premium price, command shelf space, create customer loyalty, and present opportunities to expand consumer — and LABOR — relationships.
When you’re selling a product that’s more expensive, and foreign, there has to be value added in the customer’s mind. What do the Chinese value? HT makes it products with organic tea leaves, and no unnecessary chemicals, pesticides or fertilizers end up in the drink. And, there are no unnecessary chemicals going into the eco-system or affecting the workers picking and handling the tea leaves. China likes and needs that positive link.
Brands that capitalize on broader global trends, in this case the trend toward organic products, ecology, balance and fair trade, win. Organic foods and beverages are also a strong food trend, and a health trend. It’s one of the few areas that are growing in the entire food industry, which is generally flat.
Chinese proverb: “Those who say it cannot be done should not interrupt the people doing it.”