Next to New Balance, Nike accounts for the largest market share in men and women's sport shoes and, over the last few years, has enjoyed the fastest growth in consumer awareness in footwear and accessories for the Chinese market. Nike shoes are sold at Nike locations, other retailers, and through online channels.
Taobao brings imported products at a premium price to young, independent, Chinese consumers and is responsible for the recent rise of young entrepreneurism of China's "after 80s and after 90s" generations.
An e-commerce sneaker store on the Taobao platform in existence for 2-3 years will be able to sell an estimated 10,000 pairs of sneakers per month. A shop with a history of 5-6 years can distribute up to 200,000 pairs per month. Depending on the model, a typical Nike sneaker will sell for between 500-1000 RMB. LeBrons and Air Jordans will sell between 1500-2000 RMB. Each standard sneaker costs Nike 50 USD, the equivalent of 300 RMB, to manufacture and ship.
Chinese tariffs on imported goods are extremely high and Chinese consumers often pay more than American consumers at large retailers. For example, the Nike Flyknit Air Max is sold for 225 USD but 1799 RMB, making it 33% more expensive in China, not accounting for the lower relative wages of the Chinese consumer. Chinese consumers who are able to travel abroad learn that there is a "Chinese price" and a "U. S. Price". Highly desirable commodities, such as newer styles and limited edition models, are also never made available in China.
Nike will only open an account with a retailer if the retailer has a physical store location within the United States. Nike also requires updated photos of how their merchandise is displayed in order to control the display of their product. Furthermore, Nike limits the number of sneakers to each retailer based on their reach, store size, and display. Small, local businesses are able to set up accounts with Nike but are limited in the quantity of product they can order.
A U.S. based LLC named Sold in China would have access to Nikes through local, independent shoe stores with accounts with Nike at a price only slightly higher than wholesale. Sold in China would organize relations with a network of smaller retailers in the U.S. for products to be sold to small, e-commerce based companies in China, giving the U.S. based retailers access to a Chinese market and Chinese e-commerce companies access to their desired product.
Sold in China will specialize primarily in communication between small Chinese retailers and small U.S. retailers, taking a 5-10% per shoe charge for facilitating this exchange. Products in store at small U.S. based retailers are represented directly on Chinese e-commerce shops. As Chinese consumers are willing to wait for products they know to be authentic at a lower price than the official retail price, orders and payment can be taken prior to the e-commerce shops buying the product, including shipping, from the American retailers, facilitated by Sold in China. Therefore, all profits overseen by Sold by China are low risk and the company itself runs a low overhead, mostly for temporary storage, while the earning potential is only limited by the Chinese market.
Nike is essentially a marketing company buying products from factories in Asia. Nike does not own the factories in which their shoes are manufactured, according to director Todd McKean in 2001. Sold in China would essentially take over a portion of Nike's marketing and distribution at the local level as a copycat or "shanzhai" marketing company and increase the brand's awareness through alternative distribution routes.
This business model is not limited to Nike shoes but can be applied easily to organic or natural beauty products such as Burts Bees, non-toxic milk formula, and nutritional vitamins. Products this model is not applicable for include perishables and media commodities.
Chinese brands, such as Nokir, Sinsung, and Blockberry, typically start as a shanzhai phenomenon. Shanzhai companies pirate advertising to start their entrepeneurism at a lower cost. Frequently, these companies already have a manufacturing strategy in place and already manufacture products without a prior branding strategy. Shanzhai is a model of branding on a local level that borrows the language of the global. Shanzhai reaches a rural, aspiring demographic that larger ad campaigns have not yet considered but, as income levels rise, will need to begin to chart.
Shanzhai companies, growing steadily more capital, are shifting from playing the "off brand" of preexisting brands to self branding and developing new consumer bases. Shanzhai companies play a key role in constructing and implementing Chinese brands that reach a national level.
Global brands advertise not only in China but also across Asia and the West. Only brands that have legitimized themselves nationally can afford to appear globally. This conflation of cosmopolitanism and access to the West is as old as Shanghai itself. However, the cosmopolitan West of China's perception is not the real West as it lives but West as a set of characteristics contrasting, creating, and ready to be adopted into the authentic Chinese identity. Aspirational Chinese brands strive to promote quality and global reach as characteristics of a successful, stable company to gain trust from Chinese consumers and solidify their reach of the Chinese market.
Chinese products have competed on a global scale (i.e. "Made in China") for decades through price. This practice has limited Chinese businesses in markets that tend to produce goods of higher quality at a higher price point. "Made in China" has become equated with a cheap price point and cheap quality.
Western marketing strategies and companies remain difficult to access for Chinese businesses due to language and cultural differences. Lenovo, for example, purchased IBM's PC department in 2005 in an attempt to control both cheaper, Chinese manufacturing in an emerging economy and higher U.S. based prices in a mature market. Lenovo was ultimately unable to control the contradictions inherent in these psychologies within one company through management, lost most of its foreign market shares in 2008, and has focused on emerging markets since.
Established companies from the west, such as KFC and Pizza Hut, have been able to penetrate emerging economies by constructing dual identities in different regions. These brands stand for price efficiency in the U.S. while, in China, they represent affiliation with global cultural trends and the rise of the urban, middle class.
Shanzhai companies are in a unique position to present themselves as a more price efficient alternative to larger, established brands but need a cross cultural marketing firm to represent the brand. The new company, Shanzhai Shanghai, could orchestrate a dual approach to mature and emerging markets by using the distribution of the product in each market as marketing for the other. Western consumers are sold the product as the bargain they have become accustomed to associating with "Made in China" while Chinese consumers are sold the same product as one with a global reach.
This approach is outfitted for adoption those interested in the sale of small electronics, software for individual use, and small kitchen appliances. This approach would not be effective for products such as software for corporate use and heavy machinery.
In the present, the Chinese consumer, represents a large demographic that businesses, big and small, desire to construct adequate advertising strategies for.
The Chinese consumer relies on social media services accessible in China, such as WeChat or Weibo, to communicate with family members and friends. Chinese consumers will frequently rely on social media rather than traditional advertising to research how good a product prior to purchase. While advertisements are seen as suspicious, irrelevant, and able to claim anything, social media product placement puts the product within the same social ecosystem the Chinese consumer uses to evaluate him/herself. Thus, the advertising of a western brand to the Chinese consumer is mostly invisible, uncontrollable, and incomprehensible to the company behind the brand.
Social media services familiar to the West such as Facebook and Twitter have no currency in the eyes of Chinese consumers because the immense popularity of homegrown services, such as WeChat and Weibo, render them largely unused.
Chinese social media services are difficult for a western company to use as a way to influence consumers as the forms of latent communication intrinsic to each social platform remain alien to those not already fluent in it. Even if the service is operable in English, the majority of its users use Chinese, circulate Chinese memes, and represent themselves in a way distinctive to Chinese social media that remains inpenetrable to a westerner.
A marketing firm, Meme Me!, specializing in bringing western brands into relevancy within Chinese social media would recruit Chinese netizens with large followings on social media to promote western brands. Meme Me! would first be in communication with the western companies about targeted demographics and image goals before recruiting Chinese social media gurus with followings from those demographics and work alongside them to ensure that brand awareness goals are met.
Young, Chinese netizens already promote their personal brand in tandem with western brands. This marketing firm would intensify this existing relationship by establishing netizens as "global brand ambassadors". This relationship would give western brands greater reach in China as a supplementary tactic to traditional, big media advertising methods.
Meme Me! charges the U.S. based companies according to every hit or search of their brand and, in doing so, offers a low risk service for U.S. clientele. Its own overhead is relatively low as social media is seen as a leisure activity and netizens can be motivated by social currency and product sampling as gifts.
In the early 2000's, Chinese art enjoyed an economic boom, and since then both foreign run and domestic galleries have opened in Beijing and Shanghai. China now plays a key role in the global art and cultural world and Chinese artists are increasingly sensitive to their positions as Chinese cultural producers in a global framework.
Chinese artists rely on their experience to justify prices for the sale of artworks. Like any brand, Chinese artist able to present him/herself as having a global reach would have access to price points higher that of a strictly domestic artist.
The primary language used in institutions and galleries with a global reach is English, putting Chinese artists at a disadvantage for presenting their work and understanding global trends.
The publications submitted by western institutions and galleries are also in English and are infrequently translated into Chinese. This increases the opacity of the global art system to Chinese artists and consumers and develops it as a symbol, able to be used and unable to be taken apart.
A tourism company, Contemporary China, directed towards artists could take advantage of the opacity of the west in Chinese eyes and the value of western credentials in the Chinese art world. Contemporary China would book traveling tickets and accommodations as well as provide services, such as tours of the gallery landscape in western cultural capitals. As part of the service package, Contemporary China rents small, artist-run spaces in gentrifying neighborhoods at a low cost for single night openings to show Chinese work from its clientele.
Travel packages to western countries as a product to project a certain status are already well established in China. The product of a vacation that includes a gallery show in a major, global art capital would be extremely desirable to a Chinese artist seeking to project an image of having a global reach and wanting access to price points a global reach would justify.
The modeling for Contemporary China would follow that of traditional tourism businesses. Revenue in the form of commission from retail businesses visited, however, can mostly be replaced by a higher initial charge fully justifiable by the increased desirability of Contemporary China's product to the demographic at hand.