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China Law Blog China Law for Business

Who To Copy In China, Part I. Starbucks.

Posted in China Business, Recommended Reading

Lawyers copy.  Let me expound on that.  Lawyers proudly copy.  If I am writing a joint venture agreement on a coal mine in Western China, the first thing I will do is send out an email to everyone in my office asking for our most recent China joint venture agreements, preferably involving a mining operation, even better if it involves coal mining.  I will also go online to various specialized law sites and run a google search seeking out China joint venture agreements involving coal mines.  And hey, believe me, if I see some good provisions in any of those, I will co-opt them (and seek to improve them) for the joint venture agreement I am doing. This is what lawyers do.

And this is what I have done in running my law business.  I do not have an MBA and I do not have time to read MBA type books to get the equivalent of one on the cheap.  So I borrow from what I read/hear and like.  I read once about how Ford Motor Company emphasized standardization because it saves time and money in that it allows for familiarity and swapping out.  All of the desks in our firm are the same.  All of the desk chairs are the same.  All of the guest chairs are the same.  Everyone has either a MacBook Air or a MacPro Desktop or both and an iPhone.  This means if someone forgets a cord or a cord breaks or whatever, we are covered.

I have a tendency to do the same with China.  I see who is succeeding and figure that they are to be emulated.  Despite its recent blip, I still border-line worship what KFC has done in China. I marvel at its ability to provide decent and safe and cheap food at a profit throughout China. That is no small feat and I assume KFC is doing a lot of things right. And if I were to start a fast food company in China, I would read as much as I could about how KFC did and does it, rather than try to re-invent the wheel.

I used to write a lot about individual companies in China, back when newspapers and magazines contained a lot more than they do now in the way of articles setting forth what various companies had done to succeed in China.  I loved those posts because I always have figured that one can learn more (and better copy) from specific examples than from bromides on how to do things.  I am labelling this post “Part 1″ because I am planning on this being the first in a long running and irregular series of posts highlighting China success stories/who to copy in China.

So I was delighted to see on my Facebook today that my friend, Ben Shobert, just came out with a two part interview series with with Marie Han Silloway, Starbucks China’s chief of marketing. Starbucks is succeeding in China in many ways.  They are profitable and they are constantly growing. Their stores feel very much like a Starbucks anywhere, and yet they also have Chinese characteristics.  Amazing to me is that their service is so good and pretty much matches the service of Starbucks in more service-oriented countries like Japan and the United States.  In other words, if you doing business in China or thinking of doing business in China, Starbucks would be a good company to copy.  And for that, I recommend you read Will China be Starbucks’ Cup of Tea and Will China be Starbucks’ Cup of Tea, Part 2.

Read ‘em and learn.

What do you think?

  • http://www.facebook.com/impactim8 Tyler Nash

    This is a good thing to learn from successful people and their companies. In this way you will get aware about the problems or issues which they faced.

  • spmiller

    I think much of KFC’s success in China has to do that it was really the first on the block. When I arrived in China in 1988 there was only one KFC in China, that in
    the old Dong Feng hotel on the Bund. As there were very few, if any, western
    restaurants in Shanghai in those days, KFC was the place to go. The locals especially enjoyed it because I think they regarded it as exotic, chi-chi and also as a symbol of Reform and Opening. It was always packed to the rafters. And then building on that success KFC opened an outlet near Renmin Park and then in Xu Jia Hui and now some 25 years later there are thousands of KFCs across China. McDonalds, if I remember correctly, arrived in China in 1992 ( I was there) but locals always preferred KFC. Still McDonalds was also very early in China and I think that is part of its success there as well.

    I think in many ways Starbucks mirrored KFC and McDonalds. They were really the
    first major Western coffee chain to open in China, in 1999, at a time when China
    was just starting to drink coffee and the internet in China was in its infancy. I lived in China at that time as well and it was the begninning of the internet cafe boom. So Starbucks arrived in China at a time when many young people were discovering the pleasure and embracing the idea of sitting around a cafe all day. Starbucks was there at a very propitious time. I would add that Starbucks located some of those early stores near hotels or in places that the locals regarded as upsacle – like the Portman in Shanghai – so immediately there was an association made in peoples minds with the brand and the image that using that brand projected.

    You can dissect these success stories to see what companies like KFC and
    Starbucks did right and I am sure both KFC and Starbucks had very savvy
    planning when they went into China. However, I really believe that much of their success was just getting there first. For this reason I am not so sure that the success of KFC or Starbucks in China is easy to repeat.

    • http://www.facebook.com/kenny.miller.754 Kenny Miller

      Many chains try to come to China and fail because they ignore Chinese culture and try to force the chain on the Chinese people in its American form. Part of KFC’s huge success is they customized the chain to fit in to the different regions of China. They formed local partnerships, bought food locally, hired locals, developed localized menus and management practices that fit the local culture. So, you can go into a kfc in guangzhou and it may have a very different menu than if you go into one in another area of China.

      • http://twitter.com/theeastasiaco East Asia Co.

        Kenny: I completely agree with you that companies need to look at the local markets and tailor their products and services to those markets. Only when companies do this can they be successful in China. A good analogy is the football coach who can read defenses. If the coach can read the defense then he can move the ball. If he cannot read the defense then he loses. KFC and McDonalds have been adept at reading Chinese consumer attitudes over the years.
        However, when KFC first opened in China, they had basically the same menu as they had in the US, the exception being that there was no cole slaw – because the Chinese are not in the habit of eating uncooked vegetables and would not do so. KFC’s early success in China, I believe, was for no other reason than they were a novelty and there was simply no competition in those days. The same with McDonalds. When McDonalds went into China in 1992 they had their arsenal of big macs and cheeseburgers even though cheese in those days was an absolutely foreign taste to the Chinese. And many Chinese did not like cheese. But they got used to it and probably came to like it for no other reason than it was McDonalds and a fashionable novelty.