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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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Introduction

This literature review will build upon the theory of localization and a critical study of brand localization in China in this globalized world. Societies divided by geographies are increasingly connected economically, politically, culturally due to the process of globalization. Globalization has attracted considerable interest over the last couple of decades (Levitt, 1983). Theodore Levitt differentiates between multinational corporations and global corporations. According to him multinationals adjust their product and practices depending on the country whereas global corporations consider the market a single entity and sell the same product across all markets. He further explains that due to cross cultural communications and interactions the wants of the consumers have become homogenized. Not all academics believe that the world is homogenized. As the world becomes more global, people become more protective of local differences.

Brand leaders cannot ignore the importance of local differences despite the high interconnectedness. Brands engaging in international business activities must take account of the specific cultural norms and values of different markets (Light, 2016). Localization is a process of adapting a product or service from one specific market to meet the requirements of another specific market. While localizing brands need to consider the cultural value, some countries might resonate with one thing while the other may not. Brand success will be determined by how well organizations manage at the intersection of the forces of globalization and localization.

There is study on how international firms could better adapt and localize their business in China, adjusting to the Chinese culture in areas such as advertising, strategy, communication, services, direct selling, retailing and B2B activities (Yen & Abosag, 2016). China has been rapidly growing as a consumer marketplace. China's enormous market size and related market growth potential are key factors in its attractiveness. According to Holmes (2018), China is a compelling market today mainly because of two reasons 1) promising demographics, and 2) financial reform.  While market growth is gradually cooling, the Chinese economy is still among the top 10 fastest growing economies worldwide. Over the last five years, China's real GDP grew at an average annual rate of 7.2 percent (Knoema, 2018). Many international firms still struggle to succeed or sustain their business presence in the Chinese market due to their lack of awareness or understanding of the specific cultural context (Yen & Abosag, 2016).

Literature Review

Understanding Glocalization

Nowadays, global brands face various challenges when they enter a new market. These brands build marketing strategies to maximize standardization, homogenization and integration of marketing activities across markets throughout the world (Kotler, 2009).

On a strategic level the theory of standardization might work but it is required of brands to understand the details of richness of every market on an operative and tactical level. Adaptation to local market conditions and circumstances will lead to brands building a successful business strategy. Marketing managers need to understand the customer needs and the kind of marketing tactics work in each country of operation (Kotler, 2009). Glocalization should not be regarded as a replacement of globalization, but as a process that gives unique, innovative and new insights that should be incorporated in the global marketing strategy.

Opposing to the concept of globalization, glocalization is a balance of cultural homogenization and heterogenization, standardization and adjustment, universalism and particularism, it mixes local elements into global themes, products and services (Grigorescu & Zaif, 2017). The process of glocalization is a strategic synergy between the global markets and the local particularities and preferences. Branding is an essential part of glocalisation as global corporations focus on building a strong brand image rather than creating a focus on the product itself.

Foglio and Stanevicius (Foglio, Stanevicius, 2007) defines these five items as glocalization -

• a way to supplement globalization and localization strategically

• a system to manage the approach to the glocal market (global/local market);

• the capacity to remain rooted strongly in the local reality, also facing the global market;

• the chance of articulating in global and local (glocal) key the chain of the value

• a method which allows the local or global enterprise to arrive in optimum way respectively to the global or the local market.

Consumer Culture in China

The typical Western approach to foreign expansion is to try to sell core products or services pretty much as they've always been sold in Europe or the United States, with headquarters watching closely to make sure the model is exported correctly. This often starts with selling imported goods to the expat community or opening one or two stores for a trial run. Once such an approach is entrenched, companies are reluctant to rethink the model (Bell & Shelman, 2011).

James Townsend argues that the history of modern China 'is one in which nationalism replaces culturalism as the dominant Chinese view of their identity and place in the world'. Throughout the twentieth century, consumers and entrepreneurs were the backbone of the National Products movements. The well-known Chinese writer, Zhu Ziqing (1898-1948), was highly praised as a national hero at that time for refusing to eat American flour, which was cheaper and better quality than Chinese flour.4Chinese entrepreneurs, believing 'business enterprises rescue the nation'--a popular political idea of the day--also vigorously promoted new national industries. Karl Gerth believes that Chinese nationalism--which was largely promoted by patriotic entrepreneurs--had a significant impact on consumer culture in modern China.

Glocal Marketing Strategies

1. Product-based glocal strategies – Starbucks,

2. Price-based glocal strategies

3. Glocal Promoting

Coca-Cola was introduced to China in the early twentieth century. Beginning in 1927. At first the Coca-Cola Company was optimistic about the Chinese market, but sales were initially very disappointing. For decades, Americans remained the major Coca-Cola consumers in China, as most Chinese thought the fizzy drink tasted strange because its sour flavour and dark brown colour reminded them a kind of fever syrup (sha yao shui[...]), an unsavoury Chinese medicine commonly used for treating summer heat.15Increasing competition in the soft drinks industry in Republican China in the early twentieth century further put Coca-Cola's business in jeopardy.

It's of course normal for companies to attempt to capitalise on local customs and traditions such as this. In fact, in 2014, WeChat introduced a “virtual red envelope” feature, allowing people to send money via its mobile payment platform. Since its introduction it has exploded in popularity. In 2016, 32 billion virtual red envelopes were sent and received over the 6-day Chinese Spring Festival; forecasters predicted this number would reach 100 billion in 2017 (Cheng, 2017).

In the case of Starbucks in China, glocalization is all the more important since it is a coffee chain operating in a traditionally tea-drinking market. According to Kevin Lin, vice-president of the chain's Shanghai joint-venture, “Store layout, artwork and food options make Starbucks friendlier to Chinese eyes”. However, too much localization can turn out to be a detrimental strategy for international brands, as this can cause the brand to loose their foreign or international appeal.There are two main conditions for international companies to localize successfully. First, they have to understand the local market they are trying to cater to. Second, they must find a good balance between their global and local brand dimensions. It seems that Starbucks has been able to do both of these thus far (Labbrand, 2009).

KFC China's executives believed that the company's U.S. model, although good enough to do moderately well in the largest Chinese cities, wouldn't lead to the level of success the company sought. They understood that in China, as in many other developing countries, food is at the very heart of society, inextricable from national and regional cultures, and that an abundance of flavors and an inviting ambience would be necessary to win over consumers in great numbers. The company's managers sought to stretch the brand so that consumers would see KFC as part of the local community—not as a fast-food chain selling inexpensive Western-style items but as restaurants offering the variety of foods and the traditional dishes that appeal to Chinese customers. (Bell & Shelman, 2011).

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