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Centuries-old shops get new cyberspace life
Young fans of green tea may find themselves delighted at a pop-up online forum on green tea while clicking on www.wuyutai.com.cn, the official website of Wuyutai tea shop. For the first time, Wuyutai, a time-honoured business, will hold an online green tea festival, with the clear goal of attracting more young consumers. Wuyutai is not alone in trying to blaze new trails among China's registered Old and Famous Brands, most of which were established before 1956 and won the title in 1990 with the acknowledgement of the former Ministry of Commerce. But the country's shift to a market economy has posed survival challenges for these famous brands. According to a recent survey, only 10 per cent of these 1,600 registered old brands consistently make profits. "A decline in young customers is an important reason leading to their decline," said Beijing Commercial Enterprise Management Association (BCEMA) Deputy Secretary-General Gao Yidao. "The styles are far too old-fashioned for us young people to choose," a girl in her 20s grumbled while leafing through a booklet in the Ruifuxiang Silk Shop, looking for a style that suited her. Unlike their parents, most of the young generations in China nowadays are more familiar with Pierre Cardin, chic Korean-style clothes and McDonald's instead of local centuries-old brands. For them, brands refer to good quality as well as cutting-edge design or technology. In order to grab more attention from the young people who are among the mainstream consumers, some of the older brands have begun to launch a series of reforms. "I was drawn in by the diversity of hats here," said a young woman Surnamed Wang trying on different kinds of headgear at the Shengxifu Hat Shop, an old household name for high-quality hats. A tailor surnamed Sun, who has worked in Shengxifu for 18 years, said that youngsters have gradually formed a stable portion of their mainstream customers these years. "Apart from scores of highly skilled tailors, we also boast customized service," she said. "The customers can have hats or caps changed if they are not suitable or they are not pleased with them afterwards." Zhu Jianbing, a senior tailor at Ruifuxiang said that there has been a growing trend in recent years of more and more young people flocking to Ruifuxiang, of which about 80 per cent are frequent customers. Zhangyiyuan, also a time-honoured tea brand like Wuyutai, has stayed in close step with global trends to launch a series of tea drinks as well as various beverages such as orange juices. "Even Coca-Cola has begun to develop its own tea drink products to command more of a market share," Gao said. "Zhangyiyuan and Wuyutai, with their longer history in tea sales, should have performed better in this regard." He also pointed out that besides multiplying their products, these old names should make the best use of their rich cultural and historical connotations to advertise themselves among young customers. "Most of the old brand names have gripping stories behind, but only a few of them are known to the public," Gao said. Quanjude, famous for its roasted Peking duck, is one of the few to have benefited from a popular TV drama series based on its story. Entitled "Top Restaurant" (Tianxia Diyi Lou), the drama has captured the hearts of a large number of viewers nationwide. Modern media like TV, movies and the Internet nowadays play a dominating role in guiding the consumption habits of young people, since they are more exposed to the media than the elderly. Gao said he is now talking with some publishing houses about printing a series of books concerning certain old and famous brands. However, China Chainstore and Franchise Association Vice-Secretary-General Pei Liang holds a different view in this regard. "No company can conquer all the markets," Pei said. "I agree that old brands should rejuvenate themselves, but it does not mean that they need to invest money and energy in tapping the youth market." Overseas expansion In addition to domestic market expansion, overseas development is also a controversial issue for these "old and famous brands". "It is a greater challenge for these companies, since most of them can hardly even survive in the Chinese market," Pei said. The foremost barriers lie in backward company structures and conservative management styles, according to Pei. "They have rich cultural and historical backgrounds but may fail to fully display them abroad, due to the vast cultural gap," Pei added. "I don't think it is competitive in my country. It is only attractive to the foreigners working in China or the tourists," said Stephanie from Canada, who recently discovered Ruifuxiang to be a nice place to find tailored traditional Chinese clothes. Lack of capital is also another main obstacle hindering their pace abroad. Tongrentang, a traditional pharmacy with centuries of history, is so far one of the few to achieve success in overseas expansion. Now with 14 shops and joint ventures in more than eight countries, Tongrentang has no doubt surpassed its domestic peers. "We plan to open about 100 shops overseas in the next two or three years," said Jin Yongnian, head of the public relations department of Tongrentang. Last year, its total export value reached US$16 million, ranking it first among Chinese pharmaceutical companies. Now it has two listed companies on the Growth Enterprise Market in Hong Kong and the A Stock Market in Shanghai. "We have tailored our products to meet global market demands. For example, we have developed diverse forms of traditional Chinese medicine, such as small pills and syrup that are more acceptable for foreigners," Jin added. Zhangyiyuan has also mapped out a plan to march into overseas markets. "We have conducted market surveys for four years and now we are ready to kick it off," said Zhangyiyuan's public relations director Liu Jiabo. He revealed that the company wants to open about five sales outlets in some Asian countries where Chinese tea is popular. Challenges ahead As a newcomer to the overseas market, Zhangyiyuan is also thinking of getting a push from other Old and Famous Brands. "We have reached an agreement with Tongrentang in utilizing their sales network in Thailand to boost our brand," Liu said. Both Gao and Pei agreed with Liu that introducing these older brands into the overseas market is best accomplished through teamwork. According to Pei, most of the old names appeal mostly to Chinese overseas but fail to enter mainstream shopping malls in foreign countries. He said grouping the old names together for overseas expansion, though a good idea, may become a dream hard to realize. "There are a number of practical problems that have no answers so far, such as the selection of brands, control of quality and logistics, costs and brain drain," he said. Even for individual development, the old names have also encountered a number of hurdles experienced by Chinese young brands. "A lot of countries still impose strict limits and tests on Chinese herbs. And their lack of knowledge of traditional Chinese medical science makes them too cautious about imports," Jin said. Chinese tea is confronted with a similar situation, as the European Union has begun to adopt new standards for tea imports since 2000. Surveys indicate that Chinese tea has lost its dominance in the world market while India, Kenya and Sri Lanka have gradually gained strong reputations as tea bases. The latest figure shows that the international tea market has an annual demand of 1.3 million tons, and China exports 260,000 tons of tea every year. "We still have ample space to grow," Liu said. But he continued to agree that re-establishing Zhangyiyuan in China is the main job nowadays before it can win widespread acknowledgement overseas. |
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