A war between Chinese and Hollywood movies

In 2015, Hollywood experienced a slow growth of 1%. America’s filmmakers reacted by targeting China as a potential market for higher growth. However, a shift Chinese consumer taste toward domestic fantasy movies and the manipulation of Chinese government on promoting local films brought many difficulties for Hollywood producers.

According to Shanghai daily, the fantasy action adventure genre has become popular in China. Most of the movies are built on online novels that have a large and loyal fan base. The typical example is “Mojin: The lost legend” movie based on the online novel Ghost Blows Out the Light that is regard to the journey of a tomb explorer and his fiancé in an ancient tomb of Mongolian princess. With a production cost of $37 million, the movie generated over $200 million on its first release day, December 18, 2015 and soon became one of China’s top box office hits. Mojin also outperformed Hollywood movies to deliver a growth of 11 times of “Avengers: Age of Ultron”.

Mojin: The lost legend

In January 2017, first release of TV series Eternal Love or Three Lives Three Worlds, Ten Miles of Peach Blossoms is based on a same title novel. The movie is about a love story between a goddess and a prince in three different lives. The movie brought 20 billion online views and ranked number one for several months because of the fantasy content and aesthetic background. Every new episode brought over 1 billion views. The production value was $42 million.

Three lives three worlds
Three lives three worlds novel

As a result, Chinese movies compete with Hollywood in both content and number of movies. An average of 15 new movie theaters are built in cities with population less than 1 million. To catch up with America with 40,000 movie screens, China has developed over 30,000 movie screens and will surpass America soon. In 2015, there are only three Hollywood movies – “Jurassic World”, “Avengers: Age of Ultron” and “Fast and Furious 7” out of 10 highest-grossing movies in China.

Chinese government imposes strict regulations on censorship. Any contents about disrupting order in the society, opposing world peace, favoring democracy and against Chinese citizens, pornography…are cut or banned. The Chinese state is highly involved in the film production, promotion and post production censorship. In 1996, the movie Kundun financed by Disney was warned by Chinese government because of depicting brutal communism. Disney chairman had to fly to China to smooth the situation because of losing expansion opportunity to China in future (Su, 2016). In order for Hollywood to be more successful in the Chinese market, they must adapt to the shift in Chinese consumer behavior and abide to Chinese government regulations.

References:

http://www.shanghaidaily.com/feature/art-and-culture/Domestic-fantasy-movies-outperform-Hollywood/shdaily.shtml

https://books.google.com/books?id=5bbxCwAAQBAJ&pg=PT97&lpg=PT97&dq=hollywood+struggle+in+china&source=bl&ots=Z_FmeEo3qg&sig=DwEL6U3f2kB9iMZWq5fF6Ybgq8M&hl=en&sa=X&ved=0ahUKEwjV8ezagd3TAhVXzmMKHR3nDoYQ6AEIVTAJ#v=onepage&q=hollywood%20struggle%20in%20china&f=false

Why are Korean cosmetics so successful?

Similar to other women in the world, American want their skin to be fresh, healthy and young looking. They seek natural skincare products to prevent the signs of aging and avoid harmful ingredients. They also use cleanse, toner, and mask for better results. However, it is not effective to just use skincare without knowing how and when to apply the products on skin. Therefore, South Korean skincare routines come in the way and blow the world.

Different from American, South Korean place heavy emphasis on skincare rather than makeup and use natural and herbal ingredients such as tea, ginseng… for better absorption. Therefore, Korean women take pride in skincare routine in order to have beautiful and healthy skin, and spend lots of money on skincare lines. They believe that healthy skin comes with a price, which is daily effort. When you rush, you fail. The skincare routines are extensive, which vary from 8 to 10 steps:

Day time:

  • Face wash with only water
  • Toner helps balance pH levels
  • Ampoule/serum contains active ingredients for wrinkes, dark spots…
  • Eye cream helps smooth and hydrated
  • Moisturizer helps all-day hydration
  • Sunscreen (not using for night time).

Night time:

  • Face wash with oil-based cleanser to remove oil makeup
  • Exfoliate twice a week helps remove dead skin cells
  • Toner
  • Essence/Ampoule/Serum
  • Sheet mask helps deliver deeply hydrating and anti-ageing treatment
  • Eye cream
  • Moisturizer
  • Healthy food and good sleep are as important as using skincare products.

Korean beauty products are pretty cheap because of mass production. According to Fast Company, high-quality moisturizers only cost $10 to $20 in Korean while they are $50-$200 in America due to import taxes. Moreover, the cosmetics industry in Korea is already ahead of US. In 2008, while American beauty products figured out how to put parabens to prevent bacteria growth in products, Korean already experimented, tested, and succeeded with products that contained parabens compound. As a result, Korean government supports cosmetics industry because of its strong export.

One of the most popular Korean beauty products that export to US is BB cream, which is used for decades in Korea. BB cream is considered an innovation in Korea that contains both moisturizer and foundation. Moreover, the cream benefits the skin through anti-aging, suncreen, and anti-acne, which are very necessary in selfie culture.  In 2011, Sephora first introduced Korean BB cream that other US brands started to launch their own BB cream.  In 2014, the BB cream alone was worth $164 million in US market.

Reference

  • https://www.fastcompany.com/3038283/why-korean-skincare-is-booming

Gillette and Nike in Islamic culture

As a part of Islamic religion, Iran men consider beard as a natural beauty that shows respect and power. Moreover, it is used to differentiate between men and women, “Indeed the benefits of the beard being specifically associated to the male and not the female points to the fact that, respect, male beauty and esteem are required by the male more than the female”(Allamah, “The Islamic Perspective of The Beard”). Furthermore, men with beard are Allah’s believers that differentiate with non-believers who have no beard. Therefore, shaving beard is an unlawful act, “altering the creation of Allah” or “The shaving of the beard is indeed considered an unjust action, may the curse of Allah befall those who are unjust”(Allamah, “The Islamic Perspective of The Beard”) .

Because of this, it seems impossible for Gillette to promote its razors in Iran. However, Gillette promoted its products in a unique way. The company persuaded a newspaper advertising manager and his clergyman with an argument, “shaving is not just for your face…if you have a car accident and someone has to shave your head, Gillette Blue II is the best” (Mueller, 130).

In 1997, Nike expanded its business in Islamic countries but failed to promote its brand. The company used a logo on a line of basketball shoes. Islamic leaders were offended because the logo resembled to the word “Allah”, which is highly inappropriate. Nike had to withdraw 38,000 pairs of shoes and promised to donate a $50,000 playground for an Islamic elementary school in US.

Works Cited:

Allamah, Dino. The Islamic Perspective of The Beard. Al-Islam, n.d., www.al-islam.org/articles/islamic-perspective-of-the-beard. Accessed 4 April 2017.

 

Mueller, Barbara. Dynamics of International Advertising: Theoretical and Practical Perspectives. Peter Lang, 2011. 

Home Depot’s international expansion in Mexico

In 1979, Bernie Marcus and Arthur Blank opened first Home Depot (HD) store in Atlanta, Georgia. The company is unique in selling a wide of product assortment, equipment, tools… With the idea of “Do-it-yourself” (DIY), the company’s consumers are homeowners who need tools and resources to install by themselves, professional customers who are contractors, interior designers…, and finally do-it-for me customers who pay for third parties to do installation services. The company grew quickly, went public in 1981, and opened its 100th store in 1989. In 2015, the company delivered a strong financial performance with an increase of 6.4 % in net sales in US, Canada, and Mexico.

Mexico is one of Home Depot’s successful story. To enter Mexican market, Home Depot acquired Total Home in 2001 and Del Norte in 2002 to become the second largest home improvement retailer. 

  1. Mexicans are very loyal customers and willing to cut back their spendings if they have low disposable incomes. Therefore, HD did not rush to introduce lots of foreign brands but offered brands that Mexicans were used to in order to get to know customers first, gain consumers’ confidence and introduced other brands later.
  2. Since 2008, Mexican consumers were hit by the downturn that made them seek for less expensive brands. HD offered a wide of products at affordable price. Moreover, HD ran their advertisements that promoted its idea of DIY as a way for consumers to cut their spendings.
  3. Number of Mexicans shopping online is increasing. HD also expands to E-commerce in which the company gives consumers online shopping experiences and pick up their orders at stores.

Sources:

https://www.ft.com/content/35cb218e-c4c2-11da-b7c1-0000779e2340

http://www.homedepotar.com/highlights.html

http://bear.warrington.ufl.edu/oh/IRET/Cases/Home_Depot_China_Revised.pdf

Walmart’s failure in Japan

As Walmart tried to bring the most convenient experiences to the Japanese in 2002, the giant company still failed to attract Japanese consumers with a loss of $117 million in 2004 (Bloomberg.com). The main reason is the lack of understanding of customer behavior.

Walmart and American consumer behavior

According to Mckinsey, even though the American economy has been improving after the global recession, only 20% of Americans feel optimistic. Especially American millennial moms, who are trying to save as much as they can. They are very sensitive to price and try to reduce prices through “comparing prices, using coupons or loyalty cards more often, seeking out sales and promotions, shopping at several stores to find better deals, and buying more products in bulk.” (citation) This is a reason why Walmart is so successful in America due to its strategy of low cost pricing and big warehouse-like design with a large selection of products. Moreover, Walmart’s all-in-one stores are convenient and creates a shopping experience for Americans to shop around, look at various products and brands, and buy in bulk.

Walmart and Japanese consumer behavior

Different from Americans, the Japanese are extremely demanding. This is a result of lack of time and space. Firstly, Japanese culture is collective that Japanese want to belong and be loyal to their firms. Therefore, overtime work or study is the way for Japanese to show their good spirit and self-sacrifice. According to Yahoo! Finance, 22% of Japanese employees “work 50 hours or more each week on average, well above 11% in the U.S., and 6% in Spain.”

 

 

Antenna shop

 

 

 

Japanese rely mainly on railways such as bullet train and subway because the system of the high speed rail network in Japan has high punctuality with average delay of 20 seconds. With their busy schedule, Japanese find public transportation very convenient to take a quick nap on the way to the workplace or back home. Therefore, the Japanese prefer to shop in small specialty shops (antenna shops) that are close to transport stations or near home. These antenna shops offer specialty products and dining areas with local cuisine, which are very convenient and time consuming. Because of lack of space at home, Japanese love to eat fresh rather than pre-packaged, and consume within a day. Therefore, they often go to local retail chains to buy live seafood that fits with Japanese taste and preference. They do not buy in bulk but in small quantity. Secondly, Japanese culture treats a customer as a guest with high respect and courtesy. This raises expectation of quality in Japan that Japanese demands high quality products and services. According to Wiley, competitors in Japanese market lean toward “product focus, not price focus.”Therefore, Japanese consumers interpret price cut (Walmart) as a low quality or trouble selling.

Sources:

http://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/meet-todays-american-consumer

http://onlinelibrary.wiley.com/doi/10.1111/1468-5884.00181/pdf

https://globalmarketingtoday.wordpress.com/the-real-world/case-study-1/

http://www.gotokyo.org/en/tourists/topics_event/topics/110829/topics.html

http://www.japanpolicyforum.jp/archives/discussions/pt20100930163209.html

https://www.bloomberg.com/news/articles/2005-02-27/japan-isnt-buying-the-wal-mart-idea

http://finance.yahoo.com/news/working-towards-death-in-japan-140758364.html