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American Companies That Failed in China

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American Companies That Failed in China

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American Companies That Failed in China

For decades, China has been a top priority for American companies looking to expand.

This is because the country’s middle class is simply enormous, growing from 3.1% to 50.8% of the country’s total population between the years 2000 and 2018. According to Brookings, there are now at least 700 million people in China’s middle class, and this group has never had more disposable income to spend on consumer goods and services.

Despite the size and potential of the market, China is not an easy place for foreign businesses to enter. As this infographic shows, many of America’s biggest names eventually admitted defeat.

Companies by Tenure

The following table lists the tenures of every company included in the graphic.

It’s worth noting that Google’s parent company, Alphabet, still maintains a physical presence in China. Google’s services were banned by the Chinese government in 2010.

CompanyEnter DateExit DateTenure in months
eBayJuly 2003December 200641
AmazonAugust 2004July 2019178
Yahoo!September 1999November 2021266
Best BuyMay 2006March 201158
The Home DepotDecember 2006September 201269
GoogleJanuary 2006March 201050
Forever 21 (1st attempt)June 2008June 200912
Forever 21 (2nd attempt)December 2011April 201988
Forever 21 (3rd attempt)August 2021OngoingOngoing
GrouponMarch 2011June 201215
UberJuly 2014August 201625
Macy'sAugust 2015December 201840
LinkedInFebruary 2014October 202192

Dates were gathered from various media reports and sources. There may be small deviations from when a company actually entered or exited.

The reasons for why these companies withdrew are surprisingly similar, and can be broken down into two broad categories.

Retailers Fail to Adapt

Failing to adapt to the cultural differences of Chinese consumers is a common mistake. Here’s how two American retailers learned this lesson the hard way.

Best Buy

Best Buy struggled because Chinese consumers were not willing to pay a premium for brand-name electronics. Local retailers could often source similar (or counterfeit) goods for much cheaper, and undercut Best Buy’s prices.

“Why buy a Sony DVD player or Nokia phone at Best Buy when you can pay less for the exact same product at a local store?”
– Shaun Rein, China Market Research Group

Best Buy also made the mistake of bringing over its large flagship stores, which were out of reach for most consumers. Due to severe traffic congestion, locals preferred smaller shops that were closer to home.

Home Depot

The Home Depot expanded into China around the same time as Best Buy, but unfortunately it was another cultural mismatch.

Home Depot failed to acknowledge that “do it yourself” repairs are not a strong cultural match for China. Labor costs are relatively low, so rather than do the work themselves, many homeowners prefer to rather hire someone else to do it. On the other side of the equation, the American brand failed to win over contractors doing the repairs and renovations.

The Home Depot’s product offerings were also left unchanged from America, making them a poor match for local tastes. As a point of comparison, IKEA has had a presence in China since 1998, and continues to open new stores to this day.

Tech Firms Clash with Regulators

Uber’s experiences in China make a good case study on how American tech firms struggle to succeed in Asia’s biggest economy.

For starters, breaking into the Chinese market was incredibly expensive. Uber spent billions on subsidies to attract customers and drivers, and losses were quickly piling up. To make matters worse, domestic rivals like DiDi were also handing out subsidies.

On the operational side, Uber ran into several hurdles. To avoid issues with China’s data localization laws, the company needed servers on Chinese soil. Its navigation provider, Google Maps, also had limited accuracy in the country. This left Uber with no choice but to partner with Baidu, a Chinese tech company.

The final straw, however, was likely a set of impending regulations which targeted the ride-hailing industry. Under these rules, Uber risked losing control of its data, and would need both provincial and national regulatory approvals for its activities. Even further, subsidies would also no longer be allowed.

Uber realized that doing business in China was unsustainable, but its exit wasn’t exactly a failure. In 2016, Uber sold its assets to rival DiDi and took an 18.8% stake in the company. Ironically, DiDi is now embroiled in a conflict with Chinese regulators over its listing on the NYSE.

The Tech Fallout Continues

Since Uber’s departure, the Chinese government has increased their grip over the tech industry. This has driven more American firms out of the country, including Yahoo and LinkedIn, which is now owned by Microsoft.

Both firms announced their withdrawals in 2021 and were rather clear about why they made the decision. Yahoo cited its commitment to a “free and open” internet, while LinkedIn says its decision was due to a “considerably more difficult operating environment and higher regulatory requirements”.

Given the geopolitical tensions between the U.S. and China, companies that generate data (often seen as a national security concern) are likely to continue facing regulatory hurdles.

Outside of tech, China is still a massive opportunity for American businesses. By 2027, the country’s middle class is expected to reach 1.2 billion people, or one quarter of the global total.

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Visualizing the Most Valuable Brands in 12 Countries

This graphic visualizes the most valuable brands by country in 12 major economies, from tech and energy giants to automakers and banks.

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Bubble chart of the most valuable brands by country.

Visualizing the Most Valuable Brands by Country

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

At the start of 2024, Apple was found to be the world’s most valuable brand, with a value of $517 billion—a 73.6% increase over the previous year.

It wasn’t the only strong American brand. In fact, U.S. brands made up six of the top 10, and 51 of the top 100 most valuable brands.

But other countries have their own claims within the top 100 brand rankings. Here are the most valuable brands by country in 2024, looking at a dozen different countries from Brand Finance‘s annual rankings.

The Most Valuable Brands in China, India, the UK, and More

First, it’s important to note that this data is related to the value of a brand, specifically, as opposed to more general measures of value such as market cap.

Generally speaking, brand value is calculated by looking at the strength of the brand itself (through investments, equity, and performance), as well as its attributable revenues within a company. For a more detailed breakdown, visit the Brand Finance report directly.

BrandCountryValue (US$)
Apple🇺🇸 United States$517B
Samsung🇰🇷 South Korea$99B
TikTok🇨🇳 China$84B
Deutsche Telekom🇩🇪 Germany$73B
Toyota🇯🇵 Japan$53B
Shell🇬🇧 United Kingdom$50B
Aramco🇸🇦 Saudi Arabia$42B
Accenture🇮🇪 Ireland$41B
Louis Vuitton🇫🇷 France$32B
Tata Group🇮🇳 India$29B
Nestlé🇨🇭 Switzerland$21B
TD🇨🇦 Canada$19B

China may have 20 brands in the top 100, but South Korea’s Samsung trumps it for second place outside of the U.S. with a value of $99 billion.

Overall, Asian brands have attained significant value in recent years. China’s TikTok (along with its domestic counterpart, Douyin) is well known all around the world and had a value of $84 billion, while Japan’s Toyota and Saudi Arabia’s Saudi Aramco had brand values of $53 billion and $42 billion respectively.

Europe’s most valuable brand is Germany’s Deutsche Telekom at $73 billion, while French luxury fashion house Louis Vuitton had a value of $32 billion.

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