Competing with Giants: Survival Strategies for Local Companies in Emerging Markets
12/7/1999
A Chinese cosmetics company thrives in the face of multinational competition by developing mass-market brands that take advantage of its familiarity with local tastes and standards. It's a survival strategy - one of four identified by by Niraj Dawar and Tony Frost, and it's highlighted here in this excerpt from their article "Competing with Giants: Survival Strategies for Local Companies in Emerging Markets" in the Harvard Business Review.
by Niraj Dawar and Tony Frost
Defenders need to resist the temptation to try to reach all customers or to imitate the multinationals. They'll do better by focusing on consumers who appreciate the local touch and ignoring those who favor global brands.
Shanghai Jahwa, China's oldest cosmetics company, has thrived by astutely exploiting its local orientation—especially its familiarity with the distinct tastes of Chinese consumers. Because standards of beauty vary so much across cultures, the pressure to globalize the cosmetics industry is weak. Nevertheless, as in other such industries, a sizable market segment is attracted to global brands. Young people in China, for example, are currently fascinated by all things Western. Instead of trying to fight for this segment, Jahwa concentrates on the large group of consumers who remain loyal to traditional products. The company has developed low-cost, mass-market brands positioned around beliefs about traditional ingredients.
Many Chinese consumers, for instance, believe that human organs such as the heart and liver are internal spirits that determine the health of the body. Liushen, or "six spirits," is the name of a traditional remedy for prickly heat and other summer ailmen ...