Three Chinese brands that failed in the U.S. and What We Can Learn from Their Failure

U.S. consumers have more than grown accustomed to buying products manufactured in China, but Chinese brands are another story. Some of the largest companies in the world are Chinese, but their names are all but unheard of in the U.S. What are some of these brands that have tried to enter the U.S. market from across the Pacific and have failed (or have had lukewarm success)? What could they have done differently?

1. AnkerBox

AnkerBox seems like a brilliant idea. You rent a battery pack and charge you phone. Pretty straightforward, right? But not so fast. The boxes were launched in April 2016 and @anker_box tweeted its last tweet on June 9 of the same year (as good an is indicator as any for a business failure). How did such a seemingly decent idea fail to gain traction in Seattle? Seattleites have smartphones, right? And note that AnkerBox, and its competitors, are alive and well in their home base of Shenzhen, and the rest of China.

“When your favorite bar doesn’t have an AnkerBox.” This next to final tweet is a good insight into one of Anker’s biggest mistakes. While it is commonplace for people in Shenzhen to be on their phones while at a bar, Americans don’t tend to stay on their phone at bars. The lower the screen usage, the less need for mobile charging stations.

Takeaway: Getting insights during the prototype phase is crucial. Market research is always important to entry and in this case some simple on the ground research could have been done. Something as simple as going to bars in Seattle and asking people: “What is your battery level?” Cultural differences, such as how people spend their time in bars, are seemingly small details. But these cultural differences are enough to kill a business venture.

2. WeChat

WeChat is the undisputed champ of the Chinese app world (sorry Jack Ma), but it is little known outside of China. WeChat does have over 100 million users outside of China, but most of those have relatives or business in China. Outside of China, WeChat is downloaded because of someone’s connection to China. In the U.S. in particular, the adoption barriers seem insurmountable. The primary barrier is competition from SMS and the plethora of other messaging apps.

WeChat can thank WhatsApp and its battle with U.S. wireless carriers for scorching the earth for messaging apps. Back when WhatsApp was launched in the U.S. in 2009, SMS was expensive in most parts of the world. To combat WhatsApp, AT&T, Version, and Sprint started offering unlimited and free SMS. With a free platform that everyone already has, why download an app only some people have? European and Asian wireless providers maintained their prices for SMS and the messaging revolution began. Now, almost a decade later, messaging apps are still struggling in the U.S. market.

While WeChat has not made it in the U.S. market, many of its ideas have. Facebook and WeChat are in a love/hate relationship of copying off each other, something most of their respective users are unaware of, simply because few people frequent both platforms. This helps to prove that it was not WeChat’s feature set that ruined it for the U.S. market, but the climate in which it entered. I don’t see American advertisers accepting WeChat’s limited ad platform, but that’s another story.

Takeaway: Understand the current competitive market. Facebook Messenger is slowly taking on SMS in the U.S. because taking on SMS was never Facebook’s primary goal for consumers. Facebook is something people use for social interaction, and they are slowly adopting Messenger because everyone already has the app. WhatsApp and WeChat started out as SMS replacements, but WeChat moved into other spaces. Outside of China, WeChat is still seen as an SMS replacement, if known at all. In the U.S. where people are not looking to replace WeChat, this use case in not enough reason for someone to download the app.

3. Huawei

The largest phone brand in China has failed to make it in the U.S. I will need to grab the third rail here, because this one gets political. The NSA, CIA, and FBI have all warned against buying a Huawei phone, which prompted all U.S. carriers to drop Huawei products from their stores. The U.S. government has not banned Huawei and if you have an unlocked Huawei, it will still work on U.S. networks. Most Americans have never heard of Huawei, or if they have, they cannot pronounce the name.

Does this mean that any Chinese tech is bound to get caught up in politics? I would argue not. Lenovo is still popular in the U.S. and is even used by some government agencies. Moreover, OnePlus and Xiaomi have an avid cult following in the U.S. It’s easy to find tech publications in the U.S. dreaming of easier access to Chinese-branded smartphones. The Chinese brands often match, or beat, the tech specs of the giants Apple and Samsung, so there is definitely a demand for quality phones that don’t break the bank.

Takeaway: Positioning is key. OnePlus started out small in the U.S., with a limited offering and a feeling of exclusivity. Its strategy was to get the attention of the tech community and not the population as a whole. Its distribution network was popup stores and online sales, bypassing the wireless giants and major retailers. In this case, finding a target market was key, and not only was it able to grow comfortably, but by focusing on a defined segment, it avoided the scrutiny of politics. Huawei, on the other hand, took the “go big or go home” approach. In this case, its size hurts more than it helps.

Made in China

Let’s not beat around the bush. “Made in China” has a been a synonym for poor quality in the U.S. for decades now. But as with anything in branding, this can change, and in my opinion, it is starting to change already. “Made in Japan” had the same connotation a few decades ago. Branding and perception can always be changed. It starts with OWNING the term and running with it.

Translations

While it is obvious that any Chinese brand that wants to break into the U.S. will have translated its platform into English, most Chinese brands still run into issues. It’s not the quality of the translation that is the issue anymore, it’s the depth. Dig further into the English version of most Chinese apps and you will find Chinese. Sections on support, about, and contact details are the normal suspects. If you have the English version of WeChat, just dig a bit. While expats in China have gotten used to this, finding another language inside an app (without choosing that language) is a deal breaker when trying to land in the U.S.

It’s important to learn from the stories of failure, but more inspiring is to learn from stories of success. In my next blog, I will investigate several companies from China that are doing well in the U.S. market.

Next up: Let’s look at some Chinese companies that have made it in the U.S.