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Laozihao Enter Xiushui Market

Climbing the Great Wall, tasting roast duck and shopping at the famed Xiushui Market are three wonderful things that most foreign visitors want to do during their time in Beijing. And now, you can do two of those things in one location.

Quanjude Roast Duck, a Zhonghua laozihao (a Chinese time honoured brand) in the roast duck industry, has opened a new outlet in the Xiushui Market on Jianguomenwai Dajie in the capital city. The presence of five other laozihao at the market makes this famous shopping centre even more irresistible. They are: Ruifuxiang (specializing in silk), Tongrentang (traditional Chinese medicine), Qianxiangyi (silk), Neiliansheng (shoe-making) and Shengxifu (hat-making).

Xiushui Market, the so-called 20th century “Qingming shanghe tu” (a famous, long Song Dynasty horizontal scrolled painting, the “Riverside Scenes at Qingming Festival,” by Zhang Zeduan) is a window on China’s reform and opening up. The decision to bring laozihao to the famed mall seems to be a significant decision. The future of the street that was once famous for its ‘generous’ counterfeiting of foreign name brands is intriguing for local businessmen and foreigners. The New Xiushui Market has inherited the fame of its predecessor, the Old Xiushui Market, but has found itself entangled in former’s lack of management, violations of intellectual property practices and disgraced by its trademark infringements. This was the case with a lawsuit involving Xiushui and five European luxury name brands, Burberry, Chanel, Gucci, Louis Vuitton and Prada at the beginning of its opening in April 2006.

“The New Xiushui Market will heavily rely on China’s domestic custom and culture and on fashion to survive!” said Wang Zili, the general manager of the New Xiushui Market. The strategy is allowing this laozihao to reclaim its title as China’s Top Silk Street. “The market will supply more traditional goods, such as silk, china, tea and arts and crafts.”

The potential benefit of the marriage of Quanjude and Xiushui seems obvious.

“The Xiushui store is the most beneficial among all the branch stores now,” a leader of the Beijing Ruifuxiang Silk Fabric Store told the media. “It is really a surprise for Ruifuxiang. Our target consumers are Chinese, but we’ve found a new customer group in the foreign-related market.”

This is good news, because, otherwise, the business of some of China’s most-cherished laozihao is not so good. As for Ruifuxiang, the 114-year-old time honoured store is also entangled in an awkward situation. The headquarters of Ruifuxiang at Dashilan has successfully retained its original features, but half of the store has been rented to other companies. Even worse, its business is shrinking. “Maybe many young people even don’t know where the Ruifuxiang laozihao is now,” said employee Ma Xiuying, 42, who has worked for Ruifuxiang more than 20 years. She has seen the decline of Ruifuxiang during her life. “The pressures on this store are getting heavier and heavier; it is almost a money-loser. The use of air-conditioning is even being limited. This would have been hard to imagine during the flourishing times of Ruifuxiang 20 years ago.” At that time, the people were proud of wearing clothes made by Ruifuxiang.

On the contrary, the situation of Ruifuxiang store at Wangfujing is much better, where there is a larger customer stream, and most of the customers are foreigners and visitors.

A contemporary of Ma Xiuying, Ding Yongling, 43, general manager of Beijing Tongrentang International Company Limited and deputy general manager of Beijing Tongrentang Group Company Limited, seems more ambitious, “Like McDonald’s, we endeavour to make Tongrentang the world’s drugstore!” She has been responsible for Tongrentang’s overseas development for eight years. In recent years, Tongrentang has created 22 joint-venture companies and drugstores in 14 countries and regions. The company is growing at rate of more than 20 percent with annual sales of more than 4 billion yuan (US$512 million). It has more than 400 branch or chain stores located around the world. Its export values have surpassed US$20 million, and they rank at the top in China’s traditional medicine industry.

There are always a long way to go for Chinese traditional goods trying to enter the international market. Ding Yongling said frankly, “The difficulties of overseas promotion persist. It’s easier for the older Chinese to accept Chinese traditional medicine, but for young people, it will be harder; for the westerners, it will be even harder still.”

The New Xiushui Market is not just a business street; it’s like a cultural mixing pot. It is a famous brand market that has virtually no advertising costs, yet it is well known worldwide. Its fame comes from its customers’ devolution; people know its name from their family members, friends and co-workers. It appears in many travel guides concerning Beijing. During the Beijing Summit of the Forum on China-Africa Cooperation (FOCAC), the New Xiushui Market received 2,000 guests from Africa, including leaders. The “first ladies” of four countries once gathered in this little market to shop at the same time.

The old Xiushui Street market left the New Xiushui Market three vital legacies: worldwide fame and influence, excellent and shrewd businessmen who are good at dealing with foreigners and some problems that need to be resolved.

Its loss in the lawsuit brought by the international name brands in April 2006 marked a turning pointing for the market. “The problem of intellectual property protection that the New Xiushui Market is not just the market’s problem; it is a common problem that all the enterprises will face as reform and opining up continues to develop. I hope I can break a new path for the market,” a determined Wang Zili said.

The New Xiushui Market is changing by relying upon China’s laozihao and by making itself more fashionable. The market has established a special fund to ensure intellectual property protection and to encourage other laozihao to join the New Xiushui Market. Wang said the market should foster innovation in China’s domestic brands, especially original brands, and promote national brands on the world market.

Globalization has become a major feature of the world economy, and the internationalization of the brands is the mark of globalization. An enterprise only achieves the brand internationalization if it can survive, and the China laozihao are no exception. It seems that the union of China’s New Xiushui Market and these Zhonghua laozihao will generate many stories in the years to come.