Why Barbie Flopped in Shanghai

May 11, 2011 at 7:00 am

Mattel (MAT) opened its first free-standing Barbie store in China in March 2009—a giant, 36,000-square-foot edifice in a six story building on Shanghai’s Huaihai Road, one of the most expensive shopping streets in the country. It was the second such store on the planet, after the successful launch of a pioneering, 7,000-sq.-ft. outlet in Buenos Aires in 2008. Barbie’s Shanghai adventure didn’t work out so well, though. Mattel shut its doors on Mar. 7 this year.

It’s easy to dismiss this failure as a stark illustration of ignoring the well-worn dictum: “When in Rome, do as the Romans do.” In our view, such an explanation is far too simplistic. You can never outdo the Romans at the fine art of acting like a Roman. Creating the right blend of localization and globalization is a much harder task than achieving either complete localization or zero localization. To succeed in dynamic markets such as China and India, managers need to learn rapidly what and how to localize—while avoiding the risk of catastrophic failure from inevitable mistakes.

Consider the differences between Mattel’s experience in Argentina and China. The Argentine market was already Barbie-crazy; a Broadway-style Barbie musical had even been highly successful on the Buenos Aires stage. In contrast, Barbie was a relatively new concept to China. Mattel faced many more unknowns in China than it did in Argentina. Yet the company chose to start out with a store more than five times as large.  Read more.

A. Gupta, H. Wang, Bloomberg Business, April 21, 2011

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Entry filed under: China.

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