As our readers may remember, CSOFT was proud to host a localization workshop for Oxford Bright Scholars right in our own Shanghai office. Hosted by CSOFT’s Samuel Austin, scholars from all over the world gathered to learn best practices, the ins and outs of localization, and what factors to look out for when going global. CSOFT hosted a competition for the students where they could write about a business who failed in their localization efforts when entering China, what could have been avoided, and include analysis based on what they learned from the workshop. The following entry came from Oxford Bright Scholar, Andreas M. Strandgaard and was selected as a runner up in the writing competition.
Three lessons to learn – again – from Marks & Spencer’s exit from China
Just a year after its 10th store opening in China, British retail giant Marks & Spencer joined the lists of victims of the Chinese consumer market when it decided to cease its operations in the Mainland this summer. This came as a surprise, especially considering how the Chinese retail market seemed like a good opportunity for the British retailer. With a middle class of more than half a billion people, the Chinese retail market is the largest in the world, valued at $4.886 trillion in 2016. eMarketer estimates it to surpass $7 billion by 2020.
Marks & Spencer is far from the first multinational company to burn its fingers in China, but with more than 84,000 employees worldwide and operations across most continents, one would think M&S knew their trade. Unfortunately, they succumbed to several of the classic mistakes that localization experts would have warned them against.
Adapt Products to the Chinese Consumer
While Hong Kong and Malaysia are geographically close to Mainland China, that does not mean body sizes and shapes are the same. When Marks & Spencer entered China, they did not re-fit their clothing to their Chinese customers, relying instead on the same clothes they sold in other countries. Also, with product development based in the UK, they were unable to keep pace with the rapidly changing fashion demands in China.
M&S could have drawn inspiration from Danish fast-fashion retailer Bestseller that operates Jack & Jones, Vero Moda, and other brands in China. Bestseller realized the potential in China early on — not just in producing to serve the world market, but in creating a quicker route from the first conception of a design to the shops and Chinese consumer. While most articles of clothing are intended for a particular market, e.g. the European or Chinese market, those that are sold globally are sewn to fit the intended customer.
Chinese consumers want options
The Chinese consumer likes to have many options. Famed jewelry store Tiffany’s had to come to term with that fact after its small but exclusive selection failed to attract customers. With multiple floors of clothing, this should not have been a problem for Marks & Spencer. In the UK, the wide range of clothes in M&S is considered convenient because most people can cover all their needs in one shop. In China, however, the attempt to cover all market segments meant that there were fewer options for consumers to choose from.
Speak Chinese in China
Books have been written poking fun at translations from Chinese to English, but many are surprised to learn the number of mistakes foreign multinationals have made when they enter China. In the case of M&S, the company did not invest in proper translation which resulted in poor product translations in stores. Size, for example, was shown in British or European sizes instead of Chinese. In a competitive market like China’s, it is important to show consumers you care about them. Not taking the time to make sure you use their language makes it difficult to win their hearts, minds, and wallets.
The three mistakes highlighted above could have been easily avoided. Marks & Spencer are not alone in making them, and surely other well-known companies will fall into these same traps in the future. However, investing in proper market research, taking the time to find a good local partner who knows the consumer market, and not skipping any steps when it comes to translation will all pay a heavy role in the success of businesses in new markets.