Barbie in Shanghai

2/1/2010 - When Gene Murtha was chosen for opening Mattel's flagship Barbie store in Shanghai, he found the perfect blend of creativity and fashion in the market.  His experience with Mattel led to his success in his work with the manufacturing of GUND's Plush line of toys.



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TCBN: Greetings everyone. I’m Michael McCune, and this is The China Business Network.

Gene Murtha has been doing business with China from the early days of the Canton Trade Fair and onward. Originally a buyer of products from China, he later had the opportunity to establish a consumer facing presence through the creation of the Barbie Flagship store in Shanghai. He now serves as president of GUND, a division of Enesco that focuses on plush toys such as the infamous Elmo. We spoke with Gene about his perspective on the China market's evolution, the effort that went into setting up the Barbie store, and his current business dealings with Northwest China and the plush toy industry.

Gene, there’s a lot to discuss across your career; particularly around Barbie, and now that you’re running GUND. I want to step back for a moment and try to capture a brief synopsis about how China has been involved with your career over time and how you’ve seen the evolution of the importance of that market.

MURTHA: Well my first involvement with China was probably like a lot of people’s, in having the Chinese markets in the south, the production markets supply our needs in terms of making products and using the labor markets. It became a center of Hong Kong, really, being the focal of that point. I got back to China when it was difficult to go over to anything other than the manufacturing areas in the south of China. Hong Kong, being the business center for everybody to congregate, look at different production opportunities there in the south. And then more recently, being the being involved in the identification of the market as a consumable market, a place where we can take our products and have them bought, in addition to just being manufactured.

TCBN: Let’s get into your most significant case studies prior to taking the helm at GUND. When you were with Mattel you were selected to set up the flagship store – I believe the first one ever – for Barbie, that iconic brand and figure. What were the origins of the flagship store concept at Mattel?

MURTHA: The origins were that Mattel was running a very successful business with “experience stores” with the American Girl brand. Three large flagship stores in New York, Chicago, and Los Angeles, all doing extremely well from a P&L point of view, from a PR point of view, from a brand building point of view. How can you take the key learnings from American Girl large size flagship and export that around the world? And with Barbie as a revered international brand, it seemed like an opportunity experience store together with Barbie. That’s where I was at, to explore that. We looked everywhere around the world, studied key fashion markets, Barbie being a fashion brand, and determined the best place to try the first store was in Shanghai.

TCBN: Clearly, when looking at quality outcomes, the build is really important. But there’s a soft side to the Barbie experience. You’re obviously going to be dependent on staff full of local hires and individuals that need to understand where the brand’s coming from. How did you go about looking at instilling quality of delivery across staff new concept?

MURTHA: That was really one of the challenges. We ended up hiring on Day 1 when we opened the store. We were staffed with 150 people. The labor pool there at the high end of people that really have higher end or even middle level management experience is very strained, very competitive. Hard to find those people, and then for us, hard to find the right fit of people. In our case, since we were starting a concept store from scratch, the original people that I hired in this were looking at drawings of what maybe we’re going to be someday.

So the attraction of the senior staff was the key thing, and finding people that had the vision to share where we wanted to be. The entrepreneurial spirit to be willing to throw into something really early, and they tended not to be local Chinese. Those people tended to be Hong Kong people that had moved up to Shanghai, Taiwanese people, and some Japanese assistants there as well who knew the quality experience that we were looking for in the delivery. They were then able to bring in the next level of 612 each below them, ultimately down to the retail staff.

Delivering the quality of personal – the customer care part of it – continues to be a demanding exercise there. For us, what was really important was from Day 1 exceeded what the Chinese consumer expected, but for us we really wanted to have world class. I still don’t thing Mattel is quite there, although people don’t speak about that because they’re overwhelmed by other things that are there. The need to get China up to true world class levels in customer care exists, and we’re ways away from that. Learning all the time, eager to learn, eager to embrace, but still a ways to go.

TCBN: You’ve woven a certain theme about delivering quality for new concepts where you kind of had partners both in build and service delivery, in terms of looking at who you wound up with - your leadership and staff levels that helped interpret what you were doing, since it wasn’t a fully formed concept. I also know that the Barbie store is delivering innovative services that aren’t delivered anywhere by Mattel – or weren’t before. In terms of realizing new concepts that were going to exceed expectations of customers from Day 1, how did you work with local talent at that level to try to understand what would be new or unique, and of course fit with the iconic brand that Barbie is?

MURTHA: That was always the challenge. We identified at the front end, as the owners of the brand and the people that were the most intimate with exactly what brand represents. We identified what were the kinds of experiential things that naturally fell out of the brand. We did extensive upfront research with consumers in the Shanghai area, after we selected Shanghai. We actually did it at the front end as we went around selecting areas, the other cities that were perspective candidates for the first store. We looked at what kinds of brand experiences worked best with each of the cultures. What we found in China was that the Chinese saw in Barbie and what they expected out of this retail environment was exactly true to what the brand was, which is why we said easiest place to interpret it. That was about creativity and fashion.

So the key that came out from the Chinese consumer for us there in research as we tested these experiences was basically: Barbie is beautiful inside and out. She has values that I want to teach my little girl, that you can be anything you want, whether it’s a teacher or lawyer, a doctor, a businessperson, a mom, an athlete, but she’s also beautiful on the outside. She’s always relevant, she’s always on trend, she’s aware of what she looks like; and as we heard the Chinese saying that for this brand, we said that’s exactly what we think of the brand. To piece those two things together and to say let’s weave together creativity and fashion as the theme throughout store was, once you defined that platform, it became far less challenging to figure out how to deliver it.

TCBN: I’m sure we could talk for a long time, but I wanted to get to one element of your current position at the helm of GUND. Reflecting on some of the experiences that you’ve had, just in general, creating such a fantastic innovative consumer experience, even if it was in Shanghai and for Chinese. What carries over from that type of experience? It was a multi-year endeavor for you, and now, here you are, running a business that also provides intimate experience on a 1-to-1 level, almost, between the product and the child. What do you see carrying over from that experience in China that helps you do things better or differently at GUND?

MURTHA: Well what I’m back to is something of the same circle but stretching it out into an upward ascending spiral. Then I’m back to China as a manufacturing base for the GUND product line. The manufacturing we use on Plush is up in the north of China, which is sort of the Plush center of China. What we’re looking for there is very high end quality that we know they can produce. They do it easier and are more willing to embrace it than maybe they were 20 years ago, 25 years ago when I started going to China.

I can’t help but to continue to look at the market as consumer opportunity for our products, with their willingness to embrace foreign brands and for the respect they have for quality. And then ultimately the respect that they have for the brand vs. the generic product they’re capable knocking off themselves. People used to look at the Chinese market, that the consumer was far more interested in knockoff generic brand than in the original brand. That’s far less true in the emerging middle class of China than it used to be. That’s what sticks with me after my Shanghai experiences, how wildly that concept has been embraced by Chinese. At the right point in this I’m going to raise my hand and say let me show you something different to think about in the biggest market in the world.

TCBN: Gene that’s certainly opportunity for us to touch base again in the future and see how your involvement with China continues. We appreciate you having time to speak with us from your offices. Thank you very much.

MURTHA: My pleasure Michael, thank you.