Stop 1: Shanghai

Company Brief

Coach

There is high demand for Coach in China. We spoke to Fernando Guellar who was the head of Marketing and the China CEO Jon Seliger. Coach is working aggressively to expand its distribution in China. They are opening 30 new stores a year to achieve retail expansion. Coach uses a multi-channel distribution system including flagship retail, wholesaler, factory outlet, and department stores.

China is the largest market for Coach outside America. Coach entered China in 1998 and is considered a fashion statement brand underpinned with expertise in leather and quality craftsmanship. The brand has lifestyle product categories including handbags, accessories, men’s, watches, eyes are, and novelty items. The China market is driven by affluent booming population, strong economic growth, and has a rapid market development. The female buyer is young, text savvy, working, part of a rising affluent class and feels more confident to spend discretionary income, strong generational differences, regional differences.

Coach has a $4.2 billion fiscal year in revenue and is the 2nd largest brand in the category with 36% market share in North America. The company has 950 locations in 27 countries. It claims it’s keys to success are positioning (premium/luxury, accessible) and accessibility. Coach dedicates a lot of time for its people with innovative practices, management training programs, and culture driven teams. Consumers have a positive perception of Coach saying that it is affordable, fashionable, colorful, chic, assortment. During our trip to China, it was interesting that Coach was the only company to discuss its numbers and fiscal year performance. The other companies allowed their products to explain for themselves in the level of quality and success.

Cosiway

Located in the high-tech economic zone, Cosiway sell cleaning products to China’s largest hotel chains and retailers. Their mission is to build the most creative and groundbreaking team in the country. They were established in 2008 in Beijing with the goal of improving working conditions and the quality service of life. Cosiway has 8000 supplier cleaners and sell products for both individuals and business consumers.

Looking in the near future, Cosiway wants to focus on franchising initiatives. As they have branches in Beijing, Shanghai, Hangzhou, the largest cities in Beijing, sales are going up every year and they are focusing their attention to large customer relations. Cosiway is the service point of sale for its customers. It’s target consumers are hospitals, hotels, malls, and businesses and provide services, product sales, and information systems management

Onkyo

Onkyo is a Japanese company that entered the Chinese market in February 2004. Onkyo means ‘sound’ in Japanese. The core of this company is in music-oriented products. The founder was the top engineer at Panasonic. Onkyo establishes 2 types of groups: new money customer that just wants brand and the common person customer. They brought up the point that the potential market in China is huge and quickly growing. The target audience is now being closely examined. Before they didn’t care, the priority was to provide and quality product. Now they want to streamline their products and efforts. Onkyo has 3 segments: premium, power, and digital life. The Onkyo products are produced in Malaysia. After the conference we got to test out he Onkyo audio products by sitting in the theater watching a Kung Fu movie and listening to a famous Chinese Jazz player.

Taxi cabs whipped around the corner, subways rumbled down under and the over priced shopping districts were electrified with the light of the night. Home away from home Shanghai was an eastern New York City.

A $3 cab ride could take you to any spot worth seeing, like the French Concession, Yu garden, the shop at Nanjing Street (similar to Fifth Avenue), Han City (similar to Chinatown), Cao’an Road, People’s Park, or the Bund.

If you walk throughout the curvy roads and look toward the heavens, damp clothing would block your view of the sun. It’s one of the first things you notice, the skyline of clothing. Driers aren’t common in China thus natives hang washed clothing outdoors to dry in the muggy air. Long distance markets compiled with 10-by 10-foot shops with replicated items in each one. We began to learn the art and skill of bargaining here.

Starting at 60 RMB and making them go down to 10.

Some retailers arrived early and some arrived just in time for a boat tour of Shanghai. It was about 60 degrees on a Yacht not too insulated. Feeling the frigid cool air across our faces, breathing the mildly polluted air and gazing at the glimmering futuristic buildings of Pu Dong area. An hour and a half later and we were back to hailing cabs to reach our hotel. It was an early night for the Retailers, we had an appointment to meet Coach in the morning.

Slightly jet lagged and excited about luxury leather accessories (at least the girls were). The CEO John Seliger and Marketing Director Fernando Gueler gave an informative presentation on the market of luxury shopping in China and “murses” (man purses) dominating leather accessories.

Cosiway’s Jian Lee, the oversea supplier of development, and Ying Jin, the product marketing manager, gave us our first translated session. They gave the Retailers information about how they are the liaison for foreign cleaning products to enter the Chinese market for major chain hotels to single retail shoppers.

After our weekday events of business, Shanghai’s People’s Park hosted “Marriage Markets” on weekends where parents would come to promote their son or daughter for compatible partners. Resumes are exchanged with photo cards and hopeful parents leave wanting their child to marry well.

Shanghai was our first taste of China. We were ushered into the city so much like out own New York City. We could only learn more from this point.

Cultural Analysis

Wednesday, May 9th

Nearing the end of my long thirteen-hour flight, I had had my share of CSI replays, documentaries and movies, unfulfilling boxed meals, and cramped quarters on my US Airways flight to Shanghai-Pudong Airport. However, I was quite sad to leave my new flight-friend, Harry. I, the proud owner of a window seat, and he, as he so rightfully claimed the middle seat, passed the hours of the trip by enhancing my knowledge of the Chinese culture. He also offered to bring the University of Florida group on a tour through his facility, GlaxoSmithKline (GSK), a pharmaceutical company in Shanghai. Not having been to China in over four years, I had forgotten the warmth and friendliness of the people.

My meeting with Harry reminded me of two Chinese customs. The first custom was that in addition to their given Chinese name, many Chinese are presented with an English name as well. Many names are quite funny and almost unfitting. For Harry was not always known as Harry, but called Huimin Chen – a much more suiting name, I think, for the associate director of GSK. Harry shared with me his personal frustrations with his son. I was reminded of the second familiar custom in Chinese culture, that being the strict guidance from Chinese parents. Harry’s son, as he discussed with me, obstinately learned about his Chinese culture, heritage and language. When spoken to in Chinese by his parents, he responded in English. Rather than pursuing a career in business or medicine, his son joined a ROTC group in high school and hopes to join the military after college graduation. He found it quite interesting and expressed to me his admiration for my commitment to the Chinese culture and language.

Thursday, May 10th

Before I knew it, I was in China, met by a throng of natives and immigrants racing to the lines of the Shanghai-Pudong Airport Customs. Quite ironically is the concept of ‘lining up’ or as the Chinese call it, pai dui. The concept of lining up in an orderly fashion is quite obsolete. As I remember during my past trip to China, and would soon be reminded of on this one, an organized line in China in nonexistent. It may be the enormous population, but there is no doubt that the Chinese people are the least bit courteous when it comes to getting in and out of an elevator or on and off a subway.

Nevertheless, I safely made it through Customs and awaited the other members of the Retail Study Tour to arrive. I settled in by exchanging my first $200 into Chinese yuan and purchasing my first and favorite Chinese bottled green tea, lu cha. As soon as the other students arrived, we were greeted and welcomed by our tour guide, Peter, but known and recognized more so by his given name, Long Tuan Jie. We boarded a small bus and made our way to our hotel, the Shanghai Radisson New World Hotel. The bus ride gave us time to introduce ourselves to one another. We were given travel booklets and our itineraries. We were briefed on state security issues and things to be considered in China. We were given a brief introduction of Chinese business etiquette and finally cultural dos and don’ts.

On my way to the hotel, I shut off the mobile network on my Droid and activated my international phone. From that point on, I would learn to treasure every free-WIFI network in range, enabling me to access internet and my whatsapp messaging with friends.

Friday, May 11th

After breakfast we made our way to the lobby for a post-arrival meeting and then departed for our visit to Coach China, Inc. Our first meeting got me so excited for what the Retail Study Tour had planned. I began the China Retail Study Tour with absolutely no expectations and finished with a whole new perspective on the Chinese trade world, from both a business and cultural aspect.

I learned so much just in our first meeting with Coach. The meeting was led by Jonathon Seliger, President and CEO of Coach China and responsible for Coach in Mainland China since December 2010. He shared with us his responsibility for strategy formulation, implementation, enforcement, and enhancement of the Coach Brand awareness in China. Since 2011, Coach has established over 65 Chinese stores. Interestingly enough, their most popular forum for advertisement is wei bo, the equivalent version of twitter in the United States.

Not only does E-commerce play such a large role in advertisement, but it also serves as a forum for consumers to engage and express themselves both positively and negatively. I would learn more about online buying engines such as TAOBAO, 360Buy, and TMALL during my future visits. They have contributed so much to the successes of many companies. Coach China maintains its status as the largest brand nationally, as well as the second largest globally.

That afternoon we had a group lunch and then visited the Textile Market on Cao’an Road where we would purchase a few items for ourselves. I was not impressed by their selection and had hoped to be able to use my bargaining skills to reduce the costs of my purchases. We attempted to navigate our way through the army of unrelenting salesmen, from one row to the next, and up and down each floor of the textile market. Upon getting off the escalator, we came to an abrupt stop. In front of us, at the bottom of the escalator, was a mother crouched down beside her son. The mother had laid a newspaper underneath her son and was assisting him as he took the opportunity to go to the bathroom. Conveniently, the young boy and his mother welcomed us as we disembarked the escalator. That site was more exciting than any bargain in that market! Not something to be seen in the International Plaza in Tampa, not even in the Oaks Mall in Gainesville.

Saturday, May 12th

After breakfast and a quick meeting in the lobby we departed for our tour around 8:00AM for a day of cultural appreciation – the Zhujiajiao Water Tower. Often touted as the Venice of Shanghai, the water tower was known as a bustling commercial center during the Song and Yuan dynasties. After our quick stop to ‘Venice’ we had a group lunch then headed back to the hotel; where we were given free time to venture off on our own.

Christine and I explored the surrounding area, finding ourselves in the middle of a weekly, matchmaking forum. For on every Sunday, mothers, fathers, and grandparents of children who are still single, gather in the park, carrying signs and pictures of their children, hoping to find them their perfect match. Parents always know best, right? How humiliating! It was an ‘E-harmony’ type of forum, only this one took place in an open city park. Parents were holding pictures of their children hoping to convince fellow passerbys to consider his/her child for a future relationship. I was hoping Christine and I weren’t getting mixed up in the line of potential suitors or even considered available to anyone. We wandered in and out of ‘marry me’ ‘date me’ signs, before grabbing coffee and heading back to the hotel.

Sunday, May 13th

With no business meetings scheduled, we wanted to take advantage of our free day to explore Shanghai. We dressed and headed out for the newly renovated metro station. We purchased our tickets, boarded the metro and headed for Huangpujia Lu, a street famous for local food street vendors. When we arrived, we walked aimlessly and explored the area while locals haggled in loud voices hoping to convince us to purchase their food as opposed to the neighboring vendor selling the identical thing to eat. We ate our way down Huangpujia Lu, sampling delicious street foods including dumplings, noodles, green tea, banana bread (a lot different than what we’re used to in the US), watermelon and some local pastries, including my favorite, and long awaited, zhimaqiu.

Each purchase was about one kuai, about 10 cents US. I couldn’t be happier. With bellies full, we sluggishly headed back towards the subway station crammed between local food vendors, clothing street vendors, and Chinese locals. We, once again, purchased a subway ticket, boarded the metro and headed towards the favorite knockoff market below the Science and Technology Building. Who would have thought? We didn’t even need to exit the metro station. As soon as we got off the metro, we had already entered the haggling, aggressively persuasive, a-designer-bag-junky’s-dream, arena of all sorts of things to be purchased – from bags and luggage to wallets, hair accessories, jewelry, and glasses. After a couple hours of honing my bargaining skills, I was the new proud owner of a $15 designer bag and an $8 pair of designer sunglasses. Good steals, right? We boarded the metro and headed for the infamous French Concession – a street lined with expensive boutiques, not-so-Chinese-restaurants, and apartments.

We had dinner at a Thai restaurant that night called Coconut Paradise – absolutely delicious! What I found so interesting is the amount of employees in almost every restaurant and/or store in China. Obviously, with such a large population in China, it must be almost impossible for an establishment to only have a few employees. However it’s ridiculous how many different salespersons there are for every customer. At Coconut Paradise we had one person to pour our drinks, one employee to light the candles on our table, one to take our appetizer orders, one to deliver our appetizers, one for entrée orders, one to deliver our food, one to check up on us, one to bring white rice (can never be without) to the table, one to bring our check, and one show us out of the restaurant, followed by maybe five or so employees at the door wishing us well and escorting us out of the restaurant. Before heading back to the hotel for the night, we stopped into a local gelato creamery to indulge in, what was probably the best gelato I had ever had, hazelnut. Am I in China? This place always seems to amaze me. Tummies full – we were back to the hotel in no time, in bed, and asleep within seconds.

Monday, May 14th

I do feel as though I need to add a disclaimer – as much food as it seems that I am consuming, I am, also, working out in the hotels. Almost every morning, still jetlagged, keep in mind, I’m up by 5:00AM and ready to hit the hotel gym with other jetlagged, can’t-sleep-past-dawn, hotel guests. Monday morning, I was in the gym, showered, and dressed by eight. Christine and I headed downstairs for our most favorite and elaborate hotel breakfasts.

Around nine we boarded the bus and were headed to our company visit to Cosiway. Cosiway is a Chinese company which sells cleaning products, striving to improve the quality of working and living conditions. Although most of our meetings were conducted in English, our two meetings for Monday were conducted in Chinese and then translated. I was, however, able to understand the majority of the Chinese version of the meeting. My years of Chinese had definitely paid off. My parents would be glad to know. After our meeting with Cosiway we met with Pamela Giss. Pamela Giss heads the China office for Armstrong Teasdale, a law firmed based in St. Louis, Missouri.

It wasn’t long before the company decided to expand its offices into China and she was selected to manage that office in Shanghai. She described the Chinese legal system as very developed with sophisticated laws, yet lacking the necessary enforcement to enact and maintain such laws. She captivated our attention with her personal experience, anecdotes, and challenges to living in Shanghai. I found the information presented to be so resourceful and helpful. After lunch we were onto our second visit to Onkyo, a Japanese consumer electronics manufacturer. After lunch we returned to the hotel around 5:00PM and I was in bed and asleep around eight. My last night in Shanghai well spent.

Tuesday, May 15th

After enjoying our last hotel breakfast in Shanghai, Christine and I checked out of our hotel room and loaded our luggage onto the bus, along with everyone else. We headed to our first company visit for the day, Mark Fairwhale, a famous fashion brand in China. Mr. Mark Cheung, one of the most talented fashion designers in modern China, established Mark Fairwhale in 2001. The brand has developed and expanded internationally. Three-hundred staff members are employed at the Shanghai headquarters with an average age of the employees being twenty-eight. With over 900 stores, the business earned sales of more than $220 million in 2009. Of the 1200 Mark Fairwhale stores, 805 are franchise establishments.

The brand has expanded into three sub-brands with their own logos: Vogue Men’s Ware, Fairwhale JEANS for Men, and Fairwhale Creative Urban Wear. In 2004 they created a separate line for ladies. It wasn’t long before they went online. We learned so much about their goals for success, their focus, advertisement strategies, objective in sales, and their ultimate vision and mission. After our meeting with Chai Kim Fatt, the General Manager of the International Business Department, we quickly boarded the bus and headed for another group lunch. We ate and then headed for the airport. We were scheduled to leave Shanghai and fly to Shenzhen at 3:30PM. Although our flight was scheduled to depart around 3:55PM, we didn’t actually leave Shanghai until five.

Instead, we sat on a, not-so-air-conditioned plane for an hour. As miserable as it may sound, we all enjoyed one another’s company, obviously making our presence well known on flight MU5329. We arrived to Shenzhen, met by the suffocating, smoke-filled air. As soon as we arrived at our hotel, the Shenzhen Shangri-La Hotel, the contrast of the outside air met with the dense perfume of the hotel was hard to get used to. We had learned so much at our meeting with Cosiway the day before and it was interesting to see their product displayed. The scent of their perfumes were easily recognized throughout the lobby of the Shangri-La Hotel. That night we had dinner on our own and were asleep, thanks to jetlag, at an early hour.

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