The blondes are leaving China. And so now we have news that Mattel is closing its only store in Shanghai, a massive six storey building. The problem for Mattel is that while everyone knows about Barbie in America, the same can't be said for the Chinese. In China, no one knows who the brand is.
But how did Mattel get the world's biggest market so wrong? It's a point taken up by Andrew Hill in the Financial Times. He says companies make the mistake of failing to use local knowledge or start small. They don't know how to be different enough to appeal to Chinese consumers and they don't know how to be humble. "Non-Chinese groups still seem prone to arrogance about the applicability of their business models that would have embarrassed 16th-century Portuguese traders,'' Hill writes.
Indeed, what a lot of these companies fail to do is follow Peter Drucker's
first rule of business: there is only one valid definition of a business purpose: to create a customer.
The other thing they fail to do, as I point out in my column here, is to understand that doing business in China means developing relationships first, building the business from there and continuing to negotiate the relationship. Relationships in China are everything. Unfortunately, businesses like Mattel just don't get it.
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