What would you have done differently?
Could this firm been successful? How?
Food for Thought: Why Auntie Anne's Pretzels Failed in China Published : March 06, 2013 in
Growing up in Indiana and Washington, D.C., Taiwaneseborn WenSzu
Lin often felt torn between two cultures. When, as a young entrepreneur, he was presented with the opportunity to buy the Chinese franchise rights to Auntie Anne's, his unique background began to feel like an advantage: Who better than a ChineseAmerican to sell an American product to Chinese consumers? That advantage didn't carry the
Englishspeaking, Americaneducated Lin as far as he thought it would.
The China Twist: An Entrepreneur's
Cautious Tales of Franchising in China is the story of his journey.
At a time when China's global economic importance continues to grow, the book provides interesting insights into the challenges the ones you might expect as well as those you don't necessarily see coming of launching a business in a dynamic and rapidly evolving consumer landscape.
A year after graduating from Wharton with a degree in entrepreneurial management, Lin was working for a global strategy consulting firm. He enjoyed his job but had recently gotten engaged and was hoping for a position that would afford greater financial stability to his future family. As his academic focus might suggest, he wanted the opportunity to build a business of his own from the ground up. A franchise operation seemed like the perfect place to start, offering the best of both worlds: He would own the territory, but also have the advantage of a proven business model and a builtin support system. Auntie Anne's offered an enticing opportunity. Explaining the company's background and the reasons for his enthusiasm about his entrepreneurial venture, Lin writes: "'Anne' of Auntie Anne's Pretzels is Anne Beiler. In 1988, she began mixing, twisting and baking pretzels and a variety of snacks at a farmer's market in Downingtown, Pa.
One day, Anne and her husband Jonas ran out of raw ingredients to make their typical pretzels, so they used the materials they had left in their kitchen. The change in recipe caused their sales to soar. The pretzels sold so well that they decided to stop selling anything else. The recipe they discovered in 1988 is the same recipe sold today at more
than a thousand stores in more than twenty countries....
"In the U.S., the stores became extremely popular in most malls and transportation hubs, so it was proven to make money. Another plus: somehow, the brand had taken on a very nostalgic, comforting feeling. Many consumers could often recall a personal experience with Auntie Anne's. Few brands could claim this kind of emotional bond. More amazing was that Auntie Anne's had never invested in any abovetheline advertising (that is, TV, radio, print media, etc.). Their marketing plan was simple: enthusiastic employees offering samples of piping hot pretzels to anyone walking within a few feet of the stores."
Lin and his partner Joseph Sze believed this approach could potentially make pretzels a huge hit in China. So, with a few investors backing their plans, Lin and Sze acquired franchise rights to introduce Auntie Anne's Pretzels in China and embarked on their venture in 2008. What followed were four harrowing years of red tape, headaches and cultural clashes.
Welcome Home, Stranger
Particularly interesting and abundant are Lin's anecdotes of trying to navigate a culture he had assumed he would be able to reassimilate into with ease. He tried, as an adult, to rediscover a culture he had left at the age of seven. But China was not Taiwan and the mainland had changed so much that his background was not much of an advantage. Lin's Taiwanese ID card proved to be of some use "Although I am an U.S. citizen, the fact that I was born in
Taiwan allowed me to obtain a Taiwanese ID" but this…