Asian invasion?

May 24, 2006 2:17 AM

Wal-Mart fails in South Korea. As a student of business and a resident of Asia, I am fascinated by the examples of "foreign" businesses who either succeed or fail in Asian markets. Recently, Vodafone failed in Japan but in a strange twist has signed a J-V with Softbank to keep their presence in Japan. eBay failed in Japan as did Memoirs of a Geisha. I'd love to have a discussion on the successes AND failures of non-Asian businesses in Asian markets and what, if any, lessons can be taken away for those of us who are in Asian markets or wish to enter Asian markets. (Yes, I realize that "Asia" is too broad of a region but I don't want to limit the discussion to just one nation.)
posted by gen (42 comments total)

Well, even though I can't shed the desired light on this subject, Gen I think your FPP is interesting - so why don't you other guys go busy yourselves elsewhere and leave this post alone.

(maybe if you had have used the word argument instead of discussion, you'd get a better reaction)

If we focus just on Vodafone for the moment, it appears from the article that their business case was hinged on learning from the Japanese market, and taking those ideas to market in other markets - I guess the problem with that is essentially that the Japanese market is sooooo innovative in this sector and sports a lot of weird and wonderful inventions (tied closely and largely also to Japanese culture and consumption) that leaves the rest of us scratching our heads. I'm just starting to see some of the things I took for granted in Tokyo 5 years ago being featured in services and handsets entering the market now (here in Australia).

I guess SMS is a prime example - my understanding is that it hasn't really even taken off in the States as yet (can someone confirm this without derailing the thread?)
posted by strawberryviagra at 3:08 AM on May 24, 2006

Marketing in Japan has some pretty amazing stories though (dated though mine are) - I remember BAPE opening the store and not allowing anyone to buy anything, or having to show your passport in the HK store to prove you weren't Japanese in order to be able to purchase a t-shirt for 200USD - things that smaller markets can't comprehend.
posted by strawberryviagra at 3:28 AM on May 24, 2006

Yes, this is an interesting topic. (Something tells me Justinian didn't have the OP in mind.)

From the Memoirs of a Geisha link:

Chinese critics are missing the point, too. Seeing homegrown actresses eclipse Japan's should be reason to celebrate China's rising dominance not only in the area of economics, but culture. Instead, nationalist tendencies are spoiling this moment in the spotlight.

I think it's author Pesek who's missing the point. The Chinese are still very sore about Japan's atrocities in WW2. Their anger is fueled by Japan's continuing efforts to avoid taking responsibility. It's as though Germany denied that the Holocaust occurred, or had anything to do with their country. If Chinese acceptance of Japanese culture and commerce is something the Japanese want, they should pressure their government to acknowledge the truly awful things their army did in China.

I've been told that the Ikea store in the north end of Beijing has closed. It seemed very popular when I was there. Did it move, or is it gone?
posted by Kirth Gerson at 3:58 AM on May 24, 2006

Kirth Gerson: "The Chinese are still very sore about Japan's atrocities in WW2. Their anger is fueled by Japan's continuing efforts to avoid taking responsibility."

Actually, Japan has made many apologies. Trouble is that China and Korea don't think they're good enough, (and they may have a point.)

See also.
posted by zardoz at 4:41 AM on May 24, 2006

I was surprised by the apparent successes of McDonald's and Starbucks and Dennys and Gaps (altho i saw very few people carrying Gap bags anywhere--did they change their sizing to fit the market or no?) (also European brands--Zara and Miss Sixty, etc) I saw in Tokyo....what have they done right? Or are retail and food too different to use as examples?
oh, and Cold Stone Creamery ; >

IKEA failed when it first went to Japan years ago, and only now is trying again. (that article says also that IKEA's really expensive in China, as compared to in other countries)

I wonder if it's not because Japan has created their own brands and companies to make so much of what's also made elsewhere? Muji instead of Ikea, and Uniglo instead of H&M, etc... each more distinctly sized and suited to Japanese needs?

And every country i've ever visited has created their own fast food chains that are derivative of ours, or their own coffee chains , etc. It's only relatively recently that we in the US have seen successful European chains coming here--H&M, Zara, Ikea, ... We had our own chains, just as most Asian countries do, i guess.
posted by amberglow at 5:31 AM on May 24, 2006

Taco Bell failed in Korea. I have a theory about THAT. The Korean word for diarrhea is very close to "salsa."
posted by bigmike at 6:10 AM on May 24, 2006

In a lot of these cases, the American brand succeeds in America because they have market domination, usually due to starting first. eBay really isn't that great at anything, but it was the first popular auction site, and it has the auctions, so huge companies like Yahoo and Amazon can't even knock it down. Then they go to another country, and they aren't first, and they lose to someone else.

It's not even that surprising.
posted by smackfu at 6:29 AM on May 24, 2006

A film featuring Chinese actresses as Japanese characters speaking in stilted English failed in Japan? Horrors!
posted by Artw at 7:19 AM on May 24, 2006 [1 favorite]

amberglow - Japan has Muji, which is like IKEA only more Japanese and also selling clothes and stationary. They had a couple of stores in London selling some of the smaller stuff and it was great - very plain and well designed. Now I've moved to the US it's one of the stores I really miss.

(Weirdly I actually go to the local Ikea and feel "at home". Even more perversely the same can said about Starbucks, despite the fact that I've moved TO Seattle from the UK)
posted by Artw at 7:25 AM on May 24, 2006

(Weirdly I actually go to the local Ikea and feel "at home". Even more perversely the same can said about Starbucks, despite the fact that I've moved TO Seattle from the UK)

That's 'cause those stores are setup to look like homes!
posted by delmoi at 7:32 AM on May 24, 2006

My 2 cents:

IKEA can't hold a candle to Muji (which is ridiculously overpriced here in NYC)

Burger King is another interesting failure in Japan - although McDs is also having trouble, I think, they seem to be everywhere.
posted by bashos_frog at 7:33 AM on May 24, 2006

I went to the Costco in Yeongdeungpo-gu Seoul. It was packed.

I got some Tillamook pepper-jack cheese, very exciting indeed.
posted by Joseph Gurl at 7:37 AM on May 24, 2006

I did not read all of the "Japanese apologies" on the Wikipedia page, but the ones I did read were pretty much all in the "we're sorry that you suffered" vein. Nothing like "We did terrible things to your people, and we're deeply sorry." Coupled with the recurring issuance of schoolbooks that won't acknowledge invasions, let alone mass murder, enslavement, and rape, is it any wonder that many Chinese hold a grudge? Make no mistake, a lot of them do.

Davy, the Japanese atrocities are directly related to the unpopularity of the Geisha movie in China. I guess you didn't read the linked article. Do you really think the Shanghai massacre was the only atrocity visited on China by the Japanese? Maybe you're just being a tad simplistic, eh?
posted by Kirth Gerson at 8:10 AM on May 24, 2006

"If Chinese acceptance of Japanese culture and commerce is something the Japanese want, they should pressure their government to acknowledge the truly awful things their army did in China."

The Chinese are huge consumers of Japanese entertainment products including video games, electronics, cars, and especially cartoons. Polls show that 60% of Chinese enjoy Japanese animation an amount equal to the number who despise the Japanese apparently according to this recent comment on boing boing:
http://www.boingboing.net/2006/05/22/japanese_tv_doc_on_a.html

The following are some possible other factors for Walmart and Carre Four both failing:

As for Walmart failing, when I lived in South Korea many Koreans didn't feel that Walmart's produce was "fresh". This is odd, becuase Walmart has operations all over Asia and hence should be aware that many Asian cultures want produce picked, delivered, and disposed of as fast as possible, but many Taiwanese here in Taipei also tell me that 7-11's goods aren't "fresh" either despite the fact that I can't see any difference between the delivery and disposal times between the local and international marts. I'd venture to say that Carre Four in Taiwan has better looking produce than most local markets here, although nothing can beat the local producers that sell their wares via trucks and street markets all over Asia. You might want to also keep in mind that while Japan has become progressively more open to international companies and residents (they're down to normalized immigration with naturalization for working residents) South Korea has changing laws regarding foreign visas and companies literally every week. Laws are slipped in to restrict or deregulate competition constantly. While they're setting up "free trade zones" similar to the ones that made Shanghai and Beijing major areas of commerce, foreign businesses still labors under restrictions and possibly worse uncertianity when it comes to tax time.

2. All of this aside, many companies do succeed in Asia regardless, although from experience Koreans prefer to have a small amount of choice amongst high quality products. Go to Yongsan and witness the amazing panopoly of LG and Samsung laptops.

3.
Lotte Mart is huge in Korea and fairly well liked. It also has the additional appeal of being started by a Korean although it's a company based in Japan. E-Mart was mostly tech products when I lived there.
posted by aljones15 at 8:13 AM on May 24, 2006

7-11 is ubiquitous in Japan. Ubiquitous and delicious.
posted by dead_ at 8:18 AM on May 24, 2006

Actually Mr. Gerson, no, I don't think the Shanghai Massacre was the only atrocity visited on China by the Japanese, any more than I think Deir Yassin was the only atrocity visited on the indigenous peoples of "The Holy Land" and/or "Greater Syria" by Israelis, Jews, Zionists and/or practicioners of Judaism; I was using an ancient technique called synecdoche in what I thought was a rather transparent way, to make what I thought was a rather transparent point.

I do find it curious though that we're discussing a comment I made that was deleted before I started typing this 'defense' of it; I'm not the one who brought up "HOW THEY [WERE] MURDERING BABIES", y'know. Maybe somebody with deletionary powers is "being uptight," n'est-ce pas?
posted by davy at 8:25 AM on May 24, 2006

davy: There's a reason that lots of Chinese hold a grudge against the Japanese. Apparently, you think the reason is not a good one. I suggest that you carry your message to China, and see if you can sway those terribly antiNipponic Chinese bigots away from their misguided thinking, and onto the Tao of Davy. Good luck.
posted by Kirth Gerson at 8:37 AM on May 24, 2006

Again: Keith, I said NOTHING about the grudge that lots of Chinese hold against the Japanese, especially not about whether or not it's justified. I was making a rhetorical point about framing things as "issues" rather than any events themselves -- that I won't try to explain further now (and that maybe somebody "who speaks Keith Gerson's language" might explain to him instead).
posted by davy at 8:44 AM on May 24, 2006

Davy, it looks like you've already had one comment deleted. Perhaps not being a condescending douchebag would help your chances for keeping a second in the thread.

From the other side of this equation, I think that it's interesting that the Lotus Thai chain from Bangkok is expanding into America, but doing so in kinda a weird way. In Thailand, they're, like, these huge opulent restaurants in Bangkok. Here, they're in strip malls in the middle of nowhere, though the interiors are still gorgeous and the food is still good.
posted by klangklangston at 8:48 AM on May 24, 2006

I would like to concur that Muji beats Ikea any day. I have a lot of Muji clothes and kitchenware. Great stuff.

I wonder how well the Gap is doing in Korea. It seems to be doing well in Japan even with home-grown competitors like Uniqlo (another store I love dearly). It looks like the Gap is offering the same clothes in Japan as they do in the US. Any clue as to why they do so well without changing much? The same goes for Starbucks. From what I can remember the menus were very similar between the US and Japan. Maybe they seem exotic and cool, but Taco Bell and Wal-Mart don't carry the same glamour.
posted by Alison at 9:08 AM on May 24, 2006

It's weird that western stores in seem to actually do better in China than they do in Japan. When I was living there in a mid size city we had several Carrefours, an Auchan some german walmart like store and they were planning on building a new walmart. When my american friends visited from japan they were jealous because I could get more western food than they could find in Japan. The Ikea in Shanghai seemed to be doing really well. It's prices are pretty good for the quality of furniture you get.

Sorry to continue the derail, but just because the Chinese (and the rest of asia) have some legitimate complaints about Japan's refusal to face its past, this does not justify the extreme anti-japanese prejudice that one finds in China. Just last year there were mobs in the street throwing bricks through sushi restaurant windows, burning japanese cars and even beating up any japanese person who they could find. That kind of behavior and the mindset behind it, is not justified by what modern Japan has done.
posted by afu at 9:13 AM on May 24, 2006 [1 favorite]

I remember a New Zealander telling me (with pride) that McDonalds had failed there the first time they opened a franchise.

Speaking of companies trying their luck overseas, Daiso now has a store in suburban Seattle (Alderwood Mall). There's one in Vancouver as well that is a lot bigger.
posted by dw at 9:17 AM on May 24, 2006

Why is this thread about "Asia"? If an American business is going to fail in Japan, it's probably a matter of poor demographic research and being unable to position their product against several strong competing domestic products. If an American business is going to fail in China, it's probably because of the horrid state of IPR protection and the miniscule income per capita there.
posted by alidarbac at 9:22 AM on May 24, 2006

"Just last year there were mobs in the street throwing bricks through sushi restaurant windows, burning japanese cars and even beating up any japanese person who they could find. That kind of behavior and the mindset behind it, is not justified by what modern Japan has done."

Welcome to Detroit in the '80s. Perhaps it will take the local equivalent of Michael Keaton and Gedde Watanabi to heal the rift.

Davy— I await the completion of your impending flameout.
posted by klangklangston at 9:23 AM on May 24, 2006

This would still be pissing me off if I were Chinese.

Particularly that Unit 731 activities were still causing deaths in China in 2003: In particular, in August 2003, 29 people were hospitalized after a construction crew in Heilongjiang inadvertently dug up chemical shells that had been buried deep in the soil more than fifty years ago.
posted by birdie birdington at 9:36 AM on May 24, 2006

It seems like there is little recognition here that the Chinese government is whipping up public resentment of Japan for past crimes, for reasons not at all to do with history. Complete coincidence that this all started coming to a head when Japan began making its bid for a permanent Security Council seat I'm sure.

dw, I remember thinking the same thing – with pride – about the McDonalds in Amsterdam.
posted by dreamsign at 9:42 AM on May 24, 2006

Oh by the way, now I can't find my original now-deleted comment or reconstruct enough of it from memory to ponder why it was so "offensive". Could somebody email it to me please?
posted by davy at 9:45 AM on May 24, 2006

It's interesting that this article is so concerned about Asia, even though the same forces work and exist in the european market.

Taco Bell, which failed in Korea, has failed in many european countries. Burger King and Dunkin' Donuts have pulled out of Poland, while Subway (which had 200 stores planned by 2008) has 3 of them. eBay, big in Germany, the USA and the UK has absolutely crashed and burned in Poland. There aren't many German or Polish livejournals, but it's huge in Russia. And so on...
posted by jedrek at 12:03 PM on May 24, 2006

7-11 is popular in Japan because the company is a Japanese company.

When I lived in Yokohama, I saw:
* McDonalds
* KFC
* Denny's
* Tony Romas
* United Colors of Benneton
... etc. Even from that short list, you can see that foreign companies have a better time in the Japanese food market than in retail.
posted by drstein at 12:19 PM on May 24, 2006

Two ideas:

Wal-Mart is very dependent on cheap real estate: large stores in the midst of vast parking lots serviced by even vaster distribution centers. Easy to see how Wal-Mart could expand easily to places with cheap real estate (like Latin America) but have a hard time expanding to places where real estate is expensive (like South Korea).

Wal-Mart is very dependent on scale: big buying power, a high ratio of stores to distribution centers, a huge amount of aggregated customer data from which to make merchandizing decisions. Hence, it's very easy for Wal-Mart to put up sub-par numbers in a market in which it lacks scale, and relatively easy for management to decide that it's unlikely for it ever to achieve the critical mass it needs.

Part of what's attractive to me about the real estate and scale analysis is that it also explains why Starbucks can do quite well in South Korea. Starbucks is a veteran performer in expensive real estate markets, and has a minimal reliance upon scale.
posted by MattD at 1:20 PM on May 24, 2006 [1 favorite]

Good thoughts, MattD.
posted by sonofsamiam at 1:22 PM on May 24, 2006

Another hot issue fueling Chinese contempt for Japan that hasn't been mentioned already is Prime Minister Koizumi's continued visits to the Yasakuni Shrine, a war memorial that honors, among others, numerous convicted war criminals.
posted by swank6 at 2:52 PM on May 24, 2006

Fuck it, it's all branding nowadays, right? It has to be the star symbol in the Wal-Mart brand that South-Koreans associate with communist North Korea.
posted by disgruntled at 3:44 PM on May 24, 2006

Those are excellent points, MattD.

Anybody know if the bootleg Starbucks are still around in Bangkok? I went to one a couple years back (nearly five now), a coffeeshop that was called Starbucks but didn't bother to, you know, get the logos or anything like that right. I'd imagine that as legitimate Starbucks move in, they'll probably stomp things like that out, even if it was part of the bribeconomy there (it was a cafe/OTB).
posted by klangklangston at 4:00 PM on May 24, 2006

Burger King is another interesting failure in Japan

Burger King suffered from shitty management. The first BK I went to in Tokyo, in Ikebukuro, had these god-awful chairs and tables that were cheap-cheap-cheap.

I don't see IKEA succeeding in Japan without modifying its operations. It's a royal PITA maneuvering those boxes from the shelves to the register. Plus the scale of the furniture is just all wrong.

Muji is indeed cool.

As for Yasukuni, it's (literally) a Japanese Thing that you really can't understand without some serious grounding. Eg. knowledge of what "ABCD" means in Japanese history, not to mention understanding the peculiar admixture of Shinto/Buddhist shrinery going on there.
posted by Heywood Mogroot at 7:46 PM on May 24, 2006

[disclaimer self link]

This is an article recently written on global brands like Kelloggs, Pizza Hut and McDonald's entering India and discussing some of the reasons for success or failure.

This is an area of particular interest to me, since I used to manage HP's advertising for India about ten years ago (everything but the printers) and faced the issues that come from implementing locally what is often created for a mythic, monolothic global market.

Walmart hasn't had much luck entering India either, the govt is standing fast in attempting to protect the retail sector, over 90% of which is still 'unorganized' i.e. mom and pop corner stores.

Wrt to Korea, however, what you may find interesting is that of the US, Japanese, UK etc global brands that entered the indian market about 10 years ago, it's the Korean brands that have made the maximum headway. There's an extensive analysis in the Newsweek of sept 06.

Oh I wish I'd seen this post earlier :) could have pontificated to my heart's content.
posted by infini at 8:38 PM on May 24, 2006

I have been waiting for IKEA for quite a while and I am glad that it is finally here, but then being swedish I only go there to buy the swedish food.

I am not convinced that it will succeed. There seems to be some difference in shopping style.

When I go out to buy something, especially something medium to big (either in size, or in cost), I want it Right Then. Take it home now.

That is generally not how shopping works in Japan, here you pick what you want, pay, then sort out the date it will be delivered to you. Sometimes this is next day, but generally not.

Ikea (elsewhere) tends to be about buying decent things, at a relatively low price - "economy" if you will, and take it home. Of course they have delivery system, but you have to buy it and take it there yourself. I think the Japanese would expect to just buy, and give address and it will be sorted out.

Secondly, here, it isn't cheap. It seems to be in the wrong price-range. In London, go in to buy a bed, or sofa, and it is well below a month's salary. Here, beds and sofa are closer to a month salary, or more. So if you want economy, Don Quixote is probably your shop. If you want expensive, a brand shop...

Finally, they don't have the big play area for kids here. Or rather, it is "leave your kids here for supervised play" (no parents allowed). I find this odd. Finding a Japanese parent who uses baby-sitters...? Not easy.

But, there is no reason they couldn't succeed. There are enough people, and shoppers in this country to go around.
posted by lundman at 11:09 PM on May 24, 2006

I left my comments at Gen's site before this thread appeared. Probably not worth clicking through for, though. The gist : the NYTimes is talking out it's ass.
posted by stavrosthewonderchicken at 12:01 AM on May 25, 2006

Google, Nokia and the Apple iPod are all failing badly (or have given up) in the South Korean market. I actually had a FPP planned about this, so I'll save the links in case I ever compose it.
posted by Busy Old Fool at 6:12 AM on May 25, 2006

Prime Minister Koizumi's continued visits to the Yasakuni Shrine

Which any Shintoist would do -- the belief being that once a body is enshrined, the soul cannot be separated from that location. But, you know, I'm sure he's just going there to aggravate the Chinese for fun and risk reprisals in unimportant things like trade and political opposition in the UN SC.
posted by dreamsign at 7:54 AM on May 25, 2006

Not judging it... just saying the Chinese don't like it very much. :)
posted by swank6 at 1:18 AM on May 26, 2006

Check. Apologies for the overzealous response, swank6.
posted by dreamsign at 7:03 PM on May 29, 2006