Selling Shoes in China

The December meeting of U.S.-China Business Connections (UCBC) began as usual with a continental breakfast and some networking opportunities before the formal portion of the meeting started.  Prior to introducing the guest speaker, Jim Smith, UCBC Director, invited the attendees to briefly introduce themselves to the group as is customary at UCBC meetings.  At the conclusion of these introductions, Smith then introduced Wes Tang, Business Development Director, Pacific Rim, Red Wing Shoes, Inc., headquartered in Red Wing, Minnesota, to make his presentation on Selling Shoes in China.

Tang began his presentation by providing some background history on Red Wing Shoes which is headquartered in Red Wing, MN.  The company was founded by Charles H. Beckman in Red Wing, MN, in 1905 and was one of over 1,000 shoe manufacturers located in the United States at that time.  Within 10 years, the company had begun producing more than 200,000 pairs of boots per year, and issued the standard footwear to soldiers fighting in World War I.  During World War II, Red Wing continued to manufacture boots for soldiers.

Red Wing Shoes also manufactures shoes under the brands Carhartt, Irish Setter Boots, Vasque, and WORX, and most recently expanded into making men's and women's lifestyle shoes. Red Wing's models range from athletic-styled sneakers to basic leather oxfords to rugged work boots. Red Wing uses facilities in China to produce its WORX, Vasque, Irish Setter, and Carhartt products, as well as the upper portions of some Red Wing–branded items.

In addition to its manufacturing facilities in Red Wing, MN, the company also has other U.S. facilities in Danville, Kentucky and Potosi, Missouri and sells in over 100 countries globally.

By the 1990s, Red Wing had applied all the innovation and know-how that helped produce such a popular line of work boots across all types of shoe lines. The company introduced such products as steel-toed athletic shoes, lighter and softer work shoes, work boots with soles resistant to acid and barnyard materials and a wide-array of shoes for women. The lines became increasingly focused, offering shoes for workers and others with very specific needs, from skyscraper beam walking and oil tanker working to motorcycle riding and hunting. All lifestyles were considered and catered to.

Red Wing boots have earned a cult status in Japan and Asia when Red Wing boots were featured in mega-hit TV series worn by superstars like Takuya Kimura and Takako Matsu.

During the unstable economy of the early 21st century, Red Wing was forced to adapt once again. In the year 2000, record profits were met with an increasing rise of competitors in the industry, forcing Red Wing to expand into new areas and price points. The popular WORX brand, created in 1998, was expanded, producing lower-priced footwear for all walks of life, from restaurant employees to hospital personnel. Red Wing also paired with Carhartt, a popular brand of work apparel to produce a line of mid-priced Carhartt footwear. A line of ‘lifestyle’ shoes offers tough, comfortable shoes for the business environment.

So how does a U.S. company with over 100 years of manufacturing experience and 1 of only a handful of companies still manufacturing shoes in the United States, approach selling shoes in China?

According to Tang, you have to understand the power of your brand and what it means to your target consumer.  The Red Wing Shoe Lifestyle brand was extensively researched by an agency retained by Red Wing Shoes that determined it is a brand that is desired by a particular group in China that appreciates certain qualities found only in the Lifestyle brand.  Furthermore the brand represents Americana and its Midwest characteristics of individuality, success, opportunity and hard working reputation.

In addition to understanding the power of the brand, it is also critical that the proper distribution/funnel approach is developed.  Influential world lifestyle cities need to be identified which in the Pacific Rim are Tokyo, Hong Kong, Beijing, Shanghai and Sydney.  Next, within these cities, the influential shopping and retailers need to be determined.  Red Wing Shoes identified retailers AREA 0264 and CPU as stores where their consumers shop.

CPU storefront
     
The next step to selling shoes in China, according to Tang, was to select a strong distribution partner.  A distributor in Hong Kong agreed to a joint venture set up in China and was selected because he understood the Red Wing Lifestyle brand and is passionate in his approach, is well connected in China and willing to invest.

As for marketing in China, Red Wing Shoes focused on local celebrities and artist sponsorships.  Ads were placed in very specific status-type magazines and in-store education and awareness was conducted with retailers who fit the brand image.
Tang goes on further to comment that although Japan exerts more influence, a strong Hong Kong distributor and its consumers can have local influence in China since Chinese consumers shop in Hong Kong for authenticity of product and price.  He also noted that it is helpful to take advantage of any “guanxi” (personal and business connections) within China to promote your brand.

In spite of the deteriorating economic conditions worldwide, China has enjoyed unprecedented emerging wealth and its people are learning to be status conscious and seeks goods that let them express themselves.  They seek authentic products and will shop for same at premium shopping malls and department stores so that they won’t be buying counterfeits.

At the conclusion of his presentation, Tang held an extensive Question and Answer session.
 

The next UCBC breakfast meeting will be Wed., Jan. 7, 2009, from 7:30-9 a.m.  The topic is “How the Chinese Customer is different than the U.S. Customer” and will be presented by Xiang Yin, Cargill.  To make a reservation, e-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call Jim Smith at 612-865-6543  The cost is US$20 per person (UCBC members and students are free).