The Importance of Product Adaptation

– Lessons from the toy shop

by Prof. Dr. Wolfgang Georg Arlt FRGS FRAS

Dear readers,

To be a child in China today is not a lot of fun. In the countryside, millions of children grow up supervised by their grandparents, while their parents work in faraway cities. The more fortunate children living in affluent households in the city are enjoying the love and attention of both grandparents and parents, but also feeling the pressure of high expectations for their school and beyond. Learning, not playing, fills their days.

It is therefore not surprising that parents of Urban China, like many other parents around the world, indulge in the purchase products of the biggest global toymaker, Lego. By the end of 2019, the Danish company will have more than 100 shops across 30 cities in China. The educational aspect of Lego is stressed across the company’s marketing, it’s no surprise this has helped Lego to achieve a market share of more than 4% in the Chinese toy market. Additionally Lego adopted to the market with the insights that: A) localisation is vital for the Lego product B) high prices will be accepted by consumers in exchange for high quality, when it comes to supporting a single child. Lego has also released China-specific Lego sets, celebrating festivals like Chinese New Year or the Dragonboat festival with the sets reaching prices close to 100 Euro each.

Many American companies have had a harder time integrating into the Chinese market. For instance, Disneyland in Hong Kong for a long time simply ignored the fact that most Mainland Chinese do not understand Cantonese, and the inclusion of Chinese elements in the more recently opened Disneyland Shanghai did not manage to convince the majority of the audience. In the field of toys, Mattel equally misread the local market in China by offering a cheaper version of Barbie dolls and keeping its story in close relevance to the version used in the USA with a focus on playfulness, fashion and the traditional female role model. Recent attempts to increase diversity in the appearance of Barbie have not helped to increase the appeal in China.

Destinations eager to participate in the boom of family travel and summer camps, which helped to increase the share of outbound travelers below the age of 18 in the Chinese outbound market age structure, can learn from the toy producers. Chinese parents are more than willing to pay premium prices for services which help their child to learn, from languages to sports, to anything such as free range eggs rather than egg factory farms. Interactive workshops focusing on the ecosystem of a coral atoll help to bring Chinese visitors back to the Maldives, a sea turtle rehabilitation center in Northern Cyprus will help to create awareness of the child to look after and care for animals.

Chinese parents, especially those who studied abroad themselves, are anxious that the Chinese educational system is not promoting creativity nor ‘out-of-the-box thinking’ to prepare their children to compete in the global creative economy of the future. Tourism service providers offering adequate activities for Chinese children will enjoy longer stays and higher margins. The one-child policy has ended, but for the next decade most families will still be single-child structures. Only the best is good enough for the child, whether it is educational construction toys like Lego, educational activities or travelling abroad.

With all best wishes for a peaceful and profitable week

Prof. Dr. Wolfgang Georg Arlt and the COTRI WEEKLY team