Infographic: 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

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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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Technology

iPhone Now Makes Up the Majority of U.S. Smartphones

Apple’s flagship device has captured a modest 16% of the global market, and Android dominates globally. Why do so many Americans keep buying iPhones?

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iPhone Now Makes Up the Majority of U.S. Smartphones

One of the most iconic tech moments of the 21st century is Steve Jobs, in his signature black turtleneck, holding up a small device: the iPhone. Since that introduction at the 2007 Macworld conference in San Francisco, iPhone has gone on to become a global phenomenon, with over 1.2 billion units now sold around the world.

Today, the smartphone market is a fiercely competitive space.

On a global scale, iPhone has carved out a respectable 16% of the smartphone market. In the U.S., however, the iPhone has managed to win the hearts and minds of more consumers. New data from Counterpoint Research via FT notes that iPhones now make up 50% of the overall installed user base* in the United States.

With a plethora of smartphone brands available to American consumers—and many at lower price points—what is it that makes this brand so popular?

ℹ️ “Installed user base” is a particularly interesting statistic because it doesn’t just track devices that are sold over a given period, it looks at all the devices that are still in use.

 

iPhone: The Apple of America’s Eye

Experts point to a number of reasons why Apple’s flagship device outperforms in the U.S. compared to other markets.

  • Apple has the highest brand loyalty of any major smartphone maker. 9 in 10 U.S. iPhone users plan to purchase an iPhone as their next device.
  • iPhones appear to depreciate at a slower rate than other devices
  • Broadly speaking, consumers in the U.S. have less price sensitivity than consumers in many other countries.
  • Apple has been vocal in their messaging about protecting user privacy and data, and that message appears to be resonating with consumers.

This last point is worth digging into in more detail.

Winning the Privacy War

Personal data protection and cybersecurity have become mainstream concerns in recent years, and Apple has made security a priority.

Of course, security breaches can and do occur, regardless of what device is being used. That said, a recent survey by Beyond Identity indicates that iPhone users were less likely to be victims of security breaches, and were more likely to recover data in the event of a breach.

Infographic showing survey data on security breaches and severity

The survey also points out that iPhone users were less likely to have sensitive data, such as images and videos, credit card information, passwords, and personal data compromised when breaches occurred.

These findings aside, Apple has also been bullish on branding its devices as safe and secure. The “Privacy. That’s iPhone.” campaign launched in 2019, and most recently, Apple has put the data broker industry in its crosshairs through a new series of ad spots.

Simply put: whether or not iPhone is more secure than other devices, Apple has used its marketing muscle to sway public opinion at a time when Americans are focused on privacy. And based on these latest installed user base numbers, that strategy appears to be paying off.

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Misc

The Most Searched Consumer Brands in 2022

From Netflix to IKEA, this map of the world highlights the most searched for consumer brands around the world.

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The Most Searched Consumer Brands in 2022

View the high resolution of this infographic by clicking here.

In today’s fast-paced world, a strong brand is a powerful asset that helps a business stand out in a sea of competition.

What are some of the most popular brands around the world? One way to gauge this is by looking at Google searches to see what consumers are searching for online (and therefore, what brands they’re paying the most attention to).

This graphic by BusinessFinancing.co.uk uses data from Google Keyword Planner to show the world’s most searched consumer brands in the twelve months leading up to March 2022.

Methodology

To source this wide of a dataset, the team at BusinessFinancing.co.uk first compiled a list of well-known brands, using a number of reputable sources including Forbes, the Financial Times, BrandDirectory, and more.

From there, the team created a shortlist of popular consumer brands. This year, they focused on businesses that sell products and services, so some of the big tech companies like Google and Meta were excluded from the 2022 ranking.

Next, the team used Google Ads API to extract search volume data for the shortlisted brands. They looked at a couple of things:

  • The monthly average of searches over the last 12 months for the brand name alone (e.g. “Nike”)
  • Brand name with the corresponding sector added to the keyword (“Nike clothing”), which helped offset the skew in search volume for generic terms like “Apple” or “Amazon”

They did this for every country in the world with data available. Here’s what they found.

The Top 5 Most Searched Brands

While Netflix is the most frequently searched brand in the highest number of countries (92), Amazon takes the top spot when it comes to total search volume.

Here’s a look at the top five most search brands by average global monthly searches:

BrandAverage global monthly searches (March 2022)# Countries Most-Searched In
Amazon335,400,00042
Netflix140,200,00092
eBay80,600,0006
Walmart76,100,0002
IKEA55,300,00014

But a brand’s search popularity doesn’t necessarily reflect that the business is thriving. For instance, in April 2022, Netflix announced it had lost around 200,000 subscribers throughout Q1.

The week of the announcement, Netflix’s stock price dipped below $200—the lowest it had been since 2017.

Smartphones

Apple and its iPhone take the top spot when it comes to smartphone searches, which may be unsurprisingly considering the top five best-selling smartphones in 2021 were all iPhones.

Most Searched Smartphones 2022
View the high resolution of this infographic by clicking here.

It’s worth noting that the top five best-selling smartphones only capture a fraction of the overall smartphone market, and while iPhones are undeniably popular, they only make up 16.7% of worldwide smartphone sales.

Gaming

Epic Games, the creator and platform of Fortnite, maintains its status as the most searched-for gaming brand worldwide, with an average of 14.9 million global monthly searches.

Most Searched Gaming Brands 2022
View the high resolution of this infographic by clicking here.

No other gaming company came close to Epic Game’s search volume. For instance, Nintendo, which came in second place, only averaged 3.2 million searches a month.

However, Nintendo still managed to generate more than $16 billion in revenue throughout 2021, triple the gross revenue that Epic Games made the same year.

Fast Food

KFC was the most searched fast-food company in more than 83 countries, making it the most popular worldwide.

most popular brands by search volume fast food
View the high resolution of this infographic by clicking here.

However, it’s worth noting that, while McDonald’s ranked first in fewer countries, it had a higher global monthly search average than its fried chicken competitor.

In 2021, KFC generated approximately $2.79 billion in global revenue, while McDonald’s brought in $23.2 billion.

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