Barbie’s expansion problem

The Barbie ‘concept store’ in Shanghai has closed down after just two years. It serves to illustrate how hard it can be to transfer brands and business models internationally.

The business blog covered the opening of the store back in 2009, when Mattel, the manufacturer, was hoping to offset falling sales in traditional markets hit by the financial crisis. According to the BBC sales failed to meet expectations and the firm was forced to cut its targets within the first eight months of the store’s existence.

“Barbie in the US has a very long history, people grow up with the brand, their parents grow up with the brand, so brand recognition is very high. In China, though, nobody really knew what Barbie stood for,” said an analyst with China Market Research.

International firms have been using Shanghai as a test market for their expansion into China and Mattel is not the only retailer to have had difficulty in adjusting to the Shanghai marketplace. In February, electronics retailer Best Buy closed all of its brand name stores in Shanghai and will instead focus on its local group of stores.

“What it definitely says is that it is a challenging market… for foreign retailers, it is a very hard market to get correct. They either don’t change quickly enough or they are not patient enough to be successful here,” said China Market Research.