Lost in Shanghai

CHINA: Two years ago, the world's largest Barbie superstore opened in Shanghai. With Barbie-brand clothing, a day spa and even cocktails for the ladies, the store offered a Barbie lifestyle. "This is not just a store for children," Laura Lai, general manager of Barbie Shanghai, said at the time. "Girls of all ages will love it."

This spring, the superstore closed. What went wrong? Was US toymaker Mattelmistaken  in thinking that blonde, blue-eyed, sexy, smart Barbie would be popular everywhere on the planet?

Mattel opened the superstore in Shanghai following the huge success of a similar venture in Argentina, where girls and women love the Barbie look. In China, to appeal to local tastes, Mattel added Asian features to its line of Shanghai Barbie and Shanghai Ling dolls. This may not have been enough, however.

Mattel made the mistake of assuming that the Chinese, like the Argentinians, would snap up Western products, writes Haiyan Wang, managing partner of the China Institute, in BusinessWeek. The toy company also went for a huge flagship store, rather than dividing its market between children and adults.

Mattel added Asian features to its Shanghai Barbie and Shanghai Ling dolls.

Mattel has had more success in India, says Anil K. Gupta at INSEAD business school in France. The Indian Barbie looks like a popular Bollywood actress, Katrina Kaif. Mattel has opened small, modest locations in India, which allow trial and error in product lines and marketing.

The Shanghai experience could serve as a valuable lesson for Western companies seeking to develop new markets. But Gupta warns that, as emerging economies continue to grow, Western companies must be ready to change their products, too.