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2018-04-20 09:37:26 Commentary

Shen Dacheng was once a largely obscure Shanghai-based brand, its reach limited to the Yangtze River Delta region. However, a new product released two years ago — a box of four bright green balls of glutinous rice stuffed with salted egg yolk and pork floss — has become a popular snack on Tomb-Sweeping Day, a traditional Chinese festival held every spring. From March 5 to April 4 this year, Shen Dacheng’s store on Tmall, one of e-commerce giant Alibaba’s online marketplaces, sold more than 30,000 boxes of the rice balls, priced at less than 30 yuan ($4.75) per box — a marked increase for such a modestly sized firm. Outside its physical stores, customers queued down the street to get their hands on the company’s creations.

Not all of China’s classic brands have been quite so fortunate. The Ministry of Commerce officially recognizes more than 1,100 “China Time-Honored Brands,” including Shen Dacheng. Colloquially, these companies are known as laozihao. Many such enterprises have histories going back several hundred years, while others sell products and services passed down through generations and are held in high esteem by Chinese society. If you have ever eaten Peking duck at Beijing’s famed Quanjude restaurant or bought traditional medicine from Tong Ren Tang, then you have experienced a laozihao.

Promotional photos of Shen Dacheng’s bright green balls of glutinous rice. From Shen Dacheng’s Tmall shop

Promotional photos of Shen Dacheng’s bright green balls of glutinous rice. From Shen Dacheng’s Tmall shop

But today, only about 20 to 30 percent of China’s time-honored brands are still growing. Many of the rest are struggling, and some reportedly exist in name only, with no products on the market.

To many Chinese people, laozihao are not just commercial entities, but also important vehicles for preserving Chinese culture. But unfortunately, many time-honored brands are poorly managed. At a forum last year, members of the Chinese People’s Political Consultative Conference — the country’s main political advisory body — stated that laozihao should be given “priority treatment” in the market, regardless of whether the public has any interest in their products. (The term “priority treatment” was never fully defined.)

‘Laozihao’ don’t need to be stuck in the past to protect their futures.

However, we can’t protect brands in the same way that we conserve other forms of endangered cultural heritage. In the end, laozihao are businesses; they exist to make money and must be market-oriented. They must speak through their high-quality products and services, instead of being locked in a glass case like dusty old museum exhibits. Put simply, if consumers don’t see them as essential, then China’s laozihao will not survive.

Classic Chinese brands need to take innovative new approaches to their products and marketing strategies. To do so, they must embrace online sales techniques to win over young consumers. For example, Pechoin, a Shanghai-based purveyor of facial creams, moisturizers, and other skincare products, was founded in 1931. It is not registered as a China Time-Honored Brand. In recent years, Pechoin — which previously traded under the English name Pehchaolin — has worked hard to rid itself of its reputation as a haven for old-fashioned, frumpy-looking women and win over young people. Last year, the company released a longform mobile advertisement that followed an animated Shanghainese woman, elegantly dressed and made up with Pechoin products, on an assassination mission. Designed to draw in curious users, the commercial became a successful marketing phenomenon.

Left: Pechoin’s products with traditional packaging are displayed at a grocery in Shanghai, March 25, 2017. Wang Yadong/VCG; Right: A promotional photo of Pechoin’s hand cream with new design. From Pechoin’s Tmall shop

Left: Pechoin’s products with traditional packaging are displayed at a grocery in Shanghai, March 25, 2017. Wang Yadong/VCG; Right: A promotional photo of Pechoin’s hand cream with new design. From Pechoin’s Tmall shop

Pechoin has also targeted specific consumer groups and updated its tired-looking products. The company collaborated with Zhong Hua, chief designer at Oriental Royal Jewelry of the Palace Museum — itself not a laozihao, but a centuries-old brand nonetheless — to design limited-edition packaging in traditional Chinese styles. The company has also created a series of products aimed at youth subgroups, building their marketing around in-vogue concepts like xiaoquexing — fleeting moments of joy found in everyday life.

Last Singles’ Day, the best-selling beauty product on Tmall wasn’t Lancôme, L'Oréal, Estée Lauder, or any other popular international brand. It was Pechoin, which pocketed 294 million yuan in sales during the shopping festival, according to Tmall’s in-house statisticians.

In January last year, 16 government departments, including the Ministry of Commerce, published guidelines on promoting the deeper reform, innovation, and development of China Time-Honored Brands. The missive exhorted classic brands to embrace internet technology and encouraged e-commerce platforms to cooperate with laozihao by developing special sections devoted to them. By September, more than 600 China Time-Honored Brands recognized by the Ministry of Commerce had joined Tmall. In January of this year, another online shopping giant, JD.com, brought 100 laozihao onto its platform.

Left: Wuyutai’s products with traditional packaging are displayed at their factory in Hangzhou, Zhejiang province, March 19, 2018. VCG; Right: A promotional photo of Wuyutai’s tea for online sales. From Wuyutai’s Tmall shop

Left: Wuyutai’s products with traditional packaging are displayed at their factory in Hangzhou, Zhejiang province, March 19, 2018. VCG; Right: A promotional photo of Wuyutai’s tea for online sales. From Wuyutai’s Tmall shop

It is no secret that time-honored brands need to bring down the average age of their customer bases. The classic Beijing-based tea brand Wuyutai, which is listed as a laozihao, is a good example of how to achieve this. The company maintains a network of traditional teahouses across the capital, selling longtime customers its signature felt-wrapped jasmine tea. Online, however, it now sells high-end, fancily packaged teas as part of an effort to expand its reach across the country. According to a report by the Qianjiang Evening News, a newspaper based in the eastern city of Hangzhou, more than 70 percent of Wuyutai’s clients are now aged 35 and under.

Classic brands must also tailor product development to the preferences of today’s young people. In recent years, Wu Fang Zhai, a classic Zhejiang province-based brand known for its zongzi — a type of stuffed glutinous rice dumpling wrapped in bamboo leaves — has sought to overhaul popular perceptions of the snack as stodgy and bland. In partnership with Disney and Marvel, Wu Fang Zhai released a series of Captain America-themed zongzi, even going so far as to fully automate one of its Hangzhou-based physical stores in an area popular with college students and young white-collar workers. In January, the company claimed that the automated store’s sales had risen 40 percent year-on-year.

Classic brands must integrate their products into modern life. These days, when Chinese young people think about traditional teahouses, they tend to think of dingy storefronts and noisy rooms populated with greasy-looking middle-aged men on rickety stools.

Against this backdrop, the 80-year-old laozihao Menghai Tea Factory, based in the southwestern province of Yunnan, has started pushing its Taetea Garden chain of teahouses. Aiming to be for local Pu’er tea what Starbucks is to coffee, the chain is trying to redefine the cultural dimensions of Chinese tea with concise, Western-inspired designs; comfortable sofas; and warmly lit, airy spaces. Menghai offers young people a place where they can order a cup of Pu’er, open their laptops, and get some work done.

This final example may seem somewhat problematic, as it involves a Chinese brand ostensibly embracing Western ideas of convenience and sophistication to preserve its traditional legacy. However, Menghai still shows that laozihao don’t need to be stuck in the past to protect their futures. Instead, they must become more internet-savvy, establish crossover branding agreements, and reinvent themselves as contemporary and fashionable. Only then will these fossilized old brands find new life.

Translator: Kilian O’Donnell; editors: Zhang Bo and Matthew Walsh.

(Header image: A Taetea Garden teahouse in Shanghai operated by Menghai Tea Factory, Jan. 15, 2018. IC )