The Great Chinese Social Media Challenge

An interesting post on the "year ahead" (yes, like me you are probably getting sick of year-end wrap up/year-ahead prediction pieces) in social media on Marketing Profs. One of the predictions posits the possibility that one of China's top social networking sites, such as QZone, will make a play for U.S. audiences.

5. The year of the Chinese social network

We talk about Facebook’s China strategy, but what about QZone’s American strategy? The Chinese social network QZone is by some counts (though the data is a mess) larger than Facebook. They are more innovative about monetizing traffic. It is not far-fetched to imagine QZone launching a play in the U.S. And you can bet you’d be reading a flood of articles and blog posts imploring you to open your QZone accounts. There are 112 million Chinese who manage an active social profile, vs. under 60 million Americans. At some point, we may well be taking our social networking cues from Shanghai, not Silicon Valley.

While this is a nice idea, I really don't see this happening for a very long time (if ever). Here are some reasons:

1. The user experience and expectations of a Chinese audience is VASTLY different from what we expect in the U.S. For a test, try for yourself. Play with Yahoo China and Yahoo Taiwan for a little while. Then go back home and look at Yahoo U.S. Notice the differences? The Chinese sites are rambunctious, and let's say "noisy" to say the least. Chinese consumers are used to being stalked by advertisers and inundated with commercial noise. This doesn't play with a U.S. audience.

2. Do you have any friends on Facebook based in Greater China? Take a look at their status updates, what they are "fans" of, the pics they post and the games they are playing. There's a lot of astrology, fortune-telling, love story and posing with food. Chinese users (especially those in Taiwan) have taken to Facebook in HUGE numbers very recently. Why? Chinese developers created apps and games that appeal STRICTLY to the local audience. Spend enough time exploring this and you'll see that these users have created basically a parallel world or ghetto within Facebook proper. There's not a lot of Mafia Wars and joining causes in this universe, it's more "tending to your aquarium."

3. Has there EVER been a non-product-related Chinese brand success in the U.S.? There have been few Chinese brands that have even "made it" on these shores, perhaps Haier (Chinese white goods),  HTC (Taiwan mobile phone OEM), and Acer/Asus (Taiwan netbooks). Content or "soft" products and services? OK, "Crouching Tiger, Hidden Dragon" was a success. How about a China-created user experience/online company? Can you name any? Why would this be? It will most likely be a LONG time before Chinese content/service companies are in an economy that is mature enough to support the development of leading global brands. And, as the MANY missteps by Google, Myspace, Yahoo, et al, in Asia show, it is VERY HARD to build a global platform that can catch on like wildfire regardless of cultural roadblocks/preferences.

We live in an open society and have created some unique online/social experiences that with a lot of work can make some waves overseas. The restrictions on content/access, etc. in China are a huge burden for companies doing business there; conversely, a Chinese company doing business in the U.S. will come from that mindset, presenting challenges.

If a Chinese company, such as QZone, want to make headway in the U.S., they will be smart to take a few lessons from the pages of Facebook and A. Open their platform to U.S. developers; B. Open local development/sales offices; C. Encourage the "foreigners" here in the U.S. to create organic "societies" much like the Chinese ghettos on Facebook, and; D. Don't even think of trying to restrict content.

Thanks for reading.
-Jonathan

Fauxscaling and the Risks of Repositioning Brands in Asia

Pirate handbags sold on the street aren't the only "brand fakes" around these days. There's a whole sector of the global economy dependent on taking a downmarket to middling brand and -- given the breath of a fresh start -- repositioning in new, developing markets. Often, these strategies rely on something we call "fauxscaling," creating a fake brand story/legacy and using tactics to create an image inconsistent with the brand's more downmarket image in its home market.

One could spend all day making a list of the American or European brands that have:

1. Repositioned themselves from downmarket (or middle-market at best) to "upscale" overseas and/or in doing so have

2. Created some dubious back-story and other propaganda for the brand (read: lying).

I have personally seen a GREAT deal of fauxscaling in Asia. With newly emerging, rapidly growing economies there, Western companies have rushed in to make as much money as fast as possible, creating a brand-land-rush to make a market and establish a brand (no matter how crappy the brand is perceived back home) before the competition.

Examples of fauscaling Western brands abound in Asia:

Buick in China is positioned as upscale.

Haagen-Dazs has created upscale-ish shops in Asia and engages in fauxscale tactics like the "legacy myth" in many markets. In Taiwan, nearly all locals believe the faux-story publicized at Haagen-Dazs shops: that the brand is some kind of vaunted European company with an accompanying false creation story. No one I spoke with in Taiwan is aware that Haagen-Dazs (a phony name, to boot) was started by a couple in Brooklyn and the company is part of the General Mills conglomerate.

Pierre Cardin is STILL considered an upscale brand in some parts of Asia, though the last time it was consider such in the U.S. was probably 30 years ago.

Starbucks is growing its reputation as "upscale" in developing markets, such as China and Thailand.

In Taiwan, TGI Friday's is considered an "upscale" date night option for young adults in the major cities (just TRY impressing your date here in the U.S. by taking them there!).

Mary Kay has fauxscaled its way to its current "upscale" position in Asia. The New York Times recently had a story about this in China. When I worked with a marketing/communications consultancy in Asia, my colleagues in Korea were working on the first wave of this, helping to create the fauxscale myth for Mary Kay there.

So, how hard is it to fauxscale a Western brand in Asia? It's REALLY not that difficult, just follow some steps like these:

1. Hire a multinational marketing/communications consultancy. They will be your fauxscale "bridge," bringing together local market sensibilities and a connection to "main office" U.S. brand leadership.

2. Create a lot of fake creation story buzz and endorsements. This is usually accompanied with the promotion of the brand's tenuous connections with "celebrities" back in the U.S. or other home markets. Even better if you can bring the celebrity to the local market to promote. A great example of this is the Lux brand (VERY downmarket) in Asia. They used Liv Tyler as the spokeswoman/endorser in their ads. I don't think the C-lister would sell much product here in the U.S.

3. Bring your fauxscaling brand to the local market to create a new category. Starbucks is a great example of this. They have had no problem convincing the local market (most of whom have never lived overseas) that they are "upscale" as they open "posh" looking coffee bars and introduce coffee culture to markets where this never existed before ("You don't know what upscale American culture is? Well, look here, THIS is what we are telling you it is.")

4. Focus some of your fauxscaling on markets where: A. There is a built in obsession with anything foreign and/or "upscale: (in China ANYTHING with a brand name/logo is worshipped); and, B. The media is corrupt (or at the least, not very ethical or skeptical) and will collude with you in promoting brands.

BUT, with any fauxscaling strategy, there is the danger of SERIOUS missteps.

A couple of years back, there was a HUGE wave of media sensation throughout greater China regarding a Haagen-Dazs scandal. The tabloid press had a field day showing video of bumbling Chinese workers storing ice cream cakes in filthy bathrooms in an illegal factory, etc. (read the story here)

Gawker has a post on the most recent trouble for fauxscaling Haagen-Dazs in India (item here). The brand's new India branch overreaching in trying to market itself as upscale. In doing so, they've been accused of racism, elitism, and just general cultural insensitivity.

These gaffes have certainly hurt the brand but they are by no means the only risks that may come with fauxscaling.

Along with the risk of global brand confusion and inconsistency that is inherent with these strategies, there is the real possibility that these fauxscaling efforts could backfire and negatively impact the brand back in the home market. What if, for example, 20 years from now China is REALLY dominant. Let's say immigration policies have changed, lots of wealthy (not just poor immigrants) Chinese move to the U.S. They will carry with them the idea that Buick is an "upscale" brand. Well, this is inconsistent with the brand's positioning here in the U.S.

What if all those folks who believe Haagen Dazs to be this upscale European brand with lots of history find out that that is COMPLETELY untrue? Wouldn't there be some backlash against the brand and erosion of brand "trust" and value?

You should multiply all the risks by 1000 due to the tremendous growth of social media and its ability to destroy a brand overnight (Dominos, anyone?).

It is clear that fauxscaling will no doubt continue unabated, but so will the pitfalls experienced as brands try for a second life overseas. The smart companies out there will be successful and stay out of trouble if they have the right counsel and teams in place as they embark on these global ventures.

Thanks for reading.
-Jonathan