When multinational companies think of China, unfortunately they often think of counterfeiting. And how couldn’t they? From pirated DVDs to knock-off designer bags, counterfeit goods are a huge industry all by themselves. According to ABC News, Chinese counterfeiting now costs foreign firms an estimated $20 billion a year in lost profits. Some items, like pirated software and music, can provide buyers with almost the same quality they would get if they purchased the product legally. For other products, however, counterfeit goods can provide shoddy quality that greatly reduces the value one gets from the cheaper price. Batteries can wear out with minimal use in just two days. Light bulbs can burn out as quickly as batteries go dead. But $20 billion in lost profits only tells part of the story – what is not baked into the numbers is the lost sales and depreciated brand reputation that also results from a thriving counterfeit trade – and not just overseas, but in China itself.
Topic: global markets
The Story of the Green Hat: Avoiding Cultural Pitfalls in China
Marketing textbooks are littered with examples of American companies rolling out their products in foreign markets with little regard for seemingly “basic” cultural norms and language. Who, after all, hasn’t read about the Chevy Nova in Mexico? While this urban legend has since been debunked, it holds as an apt metaphor. A widely selling car in the US in the 1960s and 70s, a myth grew that consumers in Spanish-speaking countries wouldn’t buy the Nova because “no va” in Spanish means “it doesn’t go”. With regards to China, I like to call this The Story of the Green Hat.