#120 Ganbei!
Having just returned from a trip in China, where shots of “bai jiu” (literal translation “white wine/alcohol”) were forced down my throat in great volume over lunch (mind that I usually don’t drink alcohol!), I started to dig into a stack of articles I had saved for later reading.
I vaguely remembered that a few months ago, the Financial Times reported on Chinese manufacturers wanting to make that vile liquid a global export success. And indeed, there it was: according to the March 19/20 weekend issue of the FT, Chinese consumers drink between 10 and 17 billion liters of the hard liquor made of fermented grains every year. Wondering how many of those liters were involuntarily consumed by foreigners who went through seemingly endless toasting rituals, I find this an ambitious undertaking. Apparently, Chinese manufacturers of bai jiu are hoping to replicate the global success of scotch, tequila, or Bailey’s, but I am almost certain that it won’t work. In addition to its Western-palate-challenging taste, a whopping 50-60 percent alcohol content also might be a bit of a turn-off. I seriously think that the Financial Times’ suggestion that it takes (only) 300 shots to stop disliking bai jiu is setting the bar to low. There may also be a cultural component to the high bai jiu consumption in China that will be a barrier to success abroad. Most of the time, bai jiu is consumed in a social setting – business partners around a round lunch or dinner table, regulated by invisible rules. At my recent trip, our host pointed out that there are four major insults in Chinese social settings – first, not accepting the invitation to a lunch or dinner; second, showing up, but not eating a lot; third, showing up and eating, but not talking; and forth, showing up, eating and talking, but not drinking (lots). And the drinking itself often follows a ritual that is indicative of both the paternalistic and collectivistic culture of China – the host directing his community of guests when to drink, with whom to toast, and how much to consume. It’s easy to see how through group pressure and by virtue of the host’s status, up to 17 billion liters of bai jiu are consumed each year. Based on tastes, but also because of the lack of the cultural context, I have serious doubts over the delight that bai jiu will bring to customers worldwide. Therefore, don’t expect to hear a lot of shouts of “Gan Bei” emanating from the West….
November 28, 2016 @ 11:23 am
I totally agree with the author of this article that exporting “bai jiu” to western Europa seems to be really difficult. I would like to show this difficulty by comparing China and Austria (where I come form) concerning the different rituals of alcohol consumption.
First of all I want to mention that in Austria it isn’t common used to drink a lot alcohol with your business partner as it is in China or Russia. This is due to the fact that Austrians try to stay serious in business life. Of course there are business dinners where some bottles of wine and beer are drunk but it is much easier to refuse the next toast. And this brings me to my second point.
There are two of Hofstede’s cultural dimensions that may have a connection to the different behavior of drinking alcohol in business. On the one hand there is the Power Distance that is significantly higher in China (80) than in Austria (11). This affects that in Austria it is much easier to say “no” if somebody – e.g. your boss – offers you a drink because the barrier between an employer and an employee isn’t so high than in China. On the other hand there is the Individualism that is higher in Austria (55) than in China (20). This supports that seemingly endless toasting rituals have no really acceptance in Austria because everybody wants to determine itself how much she/he drinks.
In my third point I want to point out that the spirituous beverages consumption is much higher in China than in Austria. According a survey of statista.com in 2014 is China on rank 29 and Austria on rank 69 of the worldwide spirit consumption. Furthermore it is always essential to know what kind of alcohol a country is drinking e.g. in Austria the beer consumption is significantly high. Statista.com presents that Austria is on rank 3 in the worldwide beer consumption (2014).
Summing up the export of “bai jiu” is difficult in Austria due to the drinking behavior of Austrians, the cultural dimensions and the preference of beer instead of spirituous beverages.
https://geert-hofstede.com/austria.html
https://de.statista.com/statistik/daten/studie/166412/umfrage/spirituosenkonsum-weltweit/
https://de.statista.com/statistik/daten/studie/29727/umfrage/pro-kopf-verbrauch-an-bier-in-europa/
December 27, 2016 @ 3:07 pm
As it was mentioned before, it is a hard challenge to export bai jiu to the West. Some further reasons for this are:
Firstly, bai jiu is drunk in such huge amounts because China is an extremely collectivistic country with an index of 20. The US and most European countries are rather individualistic. The United Kingdom, for instance, has an index of 89 and is really individualistic. For bai jiu this means that members of a group won’t be forced to drink the same drink as the others. They will feel free to order different drinks instead because the peer pressure doesn’t exist in this extent. Bai jiu will need to create a strong image, which will stand for individualism, difference and uniqueness.
Secondly, according to reports, bai jiu tastes like cleaning agent, smells like vomit and burns like fire when swallowing. I guess that people from the West won’t really enjoy drinking bai jiu. According to the Financial Times it takes around 300 shots to start liking the drink. Therefore it will be necessary to adapt the taste of bai jiu. In my opinion, the company would overcome a great obstacle, if the smell of vomit could be eliminated or replaced by a smell, which is more appealing. I also think that the taste of bai jiu doesn’t represent a huge problem because other successful alcoholic drinks such as Tequila, Jägermeister or Absinthe aren’t sold because of their overwhelming taste. Their main task is to get the consumer drunk very fast and this is what bai jiu can do for sure; however, I must confess that I have never drunk bai jiu before and neither know how it tastes nor which effects it has. Therefore, this is just an assumption.
Thirdly, the drinking habits in the West are different to those in the East. As in China it is usual to drink alcohol (shots) while having lunch or dinner, people in the West mostly drink alcohol in clubs. A Chinese person could never imagine drinking bai jiu in a club. As a result, the company should rather focus on selling the drink to clubs than to restaurants. It must be clear for the producers that bai jiu won’t be longer seen as a traditional drink but as a party drink.
Finally, the company must also be aware of the fact that women also drink alcohol in western countries and that this is not as taboo as it is in China. Therefore, the advertisement should also focus on women, as they should also be seen as potential costumers.
On balance, it will be a stony way for the bai jiu producers to introduce the drink to the western market. But if they keep the aspects mentioned above in mind and are able to create a western adapted marketing concept, they might even have success.
https://munchies.vice.com/de/articles/der-bestverkaufte-schnaps-der-welt-riecht-nicht-gerade-angenehm
https://geert-hofstede.com/china.html
March 5, 2017 @ 4:26 pm
I have been able to observe the same behavior in a couple of so called „business dinners“ in China, where (feelingly) endless waves of toasts are expressed and one after the other shot of “Bai Jiu” has to be swallowed in order to not upset ones host. There is nothing to discuss, that this liquor is not made for the taste of Westerners, or better, Westerners are not used to this kind of taste (so far).
I do fully agree with the comments of Vivica and Michael, that the fact of a collectivistic country plays a major role of the success, as regarding alcohol there is not much individual choice possible in traditional drinks. Besides beer, which was brought to China by a German brewer in the 19th century founding a brewery in the city of Qingdao, Bai Jiu is the alcohol with the longest tradition in mainland China. This will be a barrier when trying to enter other markets with an individualistic landscape and a broad variety of competitive products.
When coming to the fact that this drink is commonly used after having lunch, this partly complies with the Austrian culture of having a so called “Schnaps” afterwards as well. Although this is nothing unusual in Austria, more than two could be seen as too much for traditional use. In comparison with Tequila in Mexico, where it is used during and after having food, this is a barely low amount.
Coming to another difference I would like to add to this post, the way of using alcohol in business and why it is done is something completely different between Western societies and the Chinese one. As mentioned before, business meetings and dinners in Western countries tend to be more serious without extensive use of Alcohol, especially when talking about liquors. This might differ a bit in some countries, but in average this is true for every country. BUT, in almost every Western country relations are built up during doing business together in one or multiple projects, whereas it is the basis for Chinese business men to build up the relation BEFORE one is doing business with another, the so called “guanxi”. We would call it network, but guanxi is way more important in Chinese culture, be it on a private level or in a business context. Therefore, getting drunk together is also a way to figure out how the potential business partner behaves when losing its inhibition due to the effect of alcohol, according the saying “children and drunken people tell the truth”.
Therefore, this way of having (too much) drinks together is also a way of building up, and maintaining, relations. However, when coming to the fact that there might be plans to go in export to the international market as well as competing with international products, I do agree with Vivica that the taste of Bai Jiu has to be adapted to the international flavor, especially changing the smell. But is it still Bai Jiu than?
https://yesterdaysshadow.wordpress.com/qingdao-germanys-chinese-colony/
https://chinaculturecorner.com/2015/01/12/drink-baijiu-and-do-business-in-china/
June 14, 2017 @ 12:20 pm
In general alcohol is a controversial issue all over the world due to the different laws and traditions concerning the consumption. I therefore agree with you that a global export of such a hard drink can be quite difficult and may not work as expected.
For example, if you compare Austria and China they are truly different. We, in Austria, indeed follow other rituals when it comes to business meetings. Austrians prefer it more formal and like to held shorter meetings than Chinese people would do. In addition, we want to come straight to the point and have a clear mind that´s why a lunch followed by some shots of “bai jiu” wouldn´t be very beneficial and chosen. Of course we like a good glass of wine to a good dish but the alcoholic content is a lot lower. Moreover, expecting to be as good as the “traditional” hard alcoholic drinks like tequila or scotch is a real challenge because everyone is used to use them in cocktails or other drinks and they are well-known all over the world.
So from my point of view, if you are planning to export alcoholic drinks you need to do good market research and different analysis. This includes analysis of the cage
psychic distance, having a look at Hofstede’s cultural dimensions and thinking about the differences in laws. With doing the mentioned things above the Chinese manufacturers get an overview of the market potential and better prospects for a global export and good marketing to avoid a possible failure.
July 19, 2017 @ 4:31 am
I recently returned from China just a few weeks ago and I was amazed by the conversations around baijiu, as I didn’t realize the popularity of this drink. According to Grub Street, “it’s the best-selling liquor in the world” (1). I had an opportunity to sample the drink, but it was not of my liking. However, it’s impressive that “Chinese manufactures of baijiu are hoping to replicate the global success of scotch, tequila, or Bailey’s…” (2). Interestingly, tequila was band in China, yet “President Xi Jinping lifted the restriction as part of a 2013 trade deal with the Mexican president…recently launched a marketing campaign called ‘Tequila, Mexico’s Gift for China,’ with a logo featuring a Chinese dragon and a Mexican Quetzalcóatl…brands like Patrón and Don Julio have been popping up at fashionable bars in Shanghai, Beijing, and Hong Kong” (3). In this case, Mexico won the Chinese government’s trust, which was the leading force to help open the doors to the tequila market within China.
In essence, prior to attempting to expand baijiu in the global market, it’s important to analyze the product’s PEST analysis within the Chinese market to determine the reason the product has been successful and perhaps determine if it may be applied to the market of interest. From my perspective, baijiu was successful based on the following analysis:
• Political Factors: Government regulations – “…Many people claim that the political force is the most unsettled force. Over the past few years, the government focused on the development of e-commerce” (3), which means it has helped the product’s growth. Legal issues – “…There aren’t any regulations supporting the privacy, recognition of digital signatures, consumer rights and validation of electronic contract yet” (3). This could be the reason for the lack competition, as similar products may be hesitant to enter the Chinese market due to the lack of contract validation.
• Economic Factors: “sigh rate savings, abundant and skilled labor…potential urban growth” (3). The middle class community has grown, along with the GDP within the last 30 years which could have supported the purchasing power.
• Social Factors: “China is a collectivistic culture, based on Geert Hofstede’s value dimensions” (3). This factor seems to be the most powerful factor as baijiu is part of the culture/tradition.
• Technological Factors: The product’s availability and production has expanded due to the increasing technology.
References:
(1) http://www.grubstreet.com/2015/10/lumos-baijiu-bar-new-york-city.html
(2) https://www.deadlysins.info/120-ganbei/
(3) http://pestleanalysis.com/pest-analysis-of-china/
(4) http://fortune.com/tequilas-global-ambitions/
February 11, 2018 @ 9:18 am
In article 105, “Barbie, eBay, Google,” you mention the struggle of businesses to resist a market as large and tempting as China, overlooking (or perhaps simply disregarding) immense market differences as they pursue standardization. Similarly, Chinese firms need to consider the differences that set them apart from other regions in the world. I have not tried baijiu, but it sounds like a unique beverage with a very distinct taste, which heightens the challenge of making it a global success.
Manufacturers with high corporate readiness need to critically assess the product to determine if it is truly ready for the international marketplace. If manufacturers are trying to internationalize by standardization, they are bound face numerous adaptation pressures in foreign markets due to diverse cultural norms and palate preferences. However, I came across another article that mentioned China’s 7,000 registered distilleries (and nearly as many unregistered ones) produce different types of baijiu that possess a broad range of flavors. If these manufacturers are in pursuit of global success, they may attempt different methods of distillation to make the flavor more familiar and enticing for the Western palate. Launching the product without considering such adaptations will likely lead to failure, just as many Western products have failed to satisfy the Chinese market.