Reinvented in China: new hope for old brands

This “moment” provides a cautionary tale for incumbents in every industry on how the threat from disruptors and new market entrants is both ever-present and potentially fatal.
However, Nokia is now offering another business lesson – about reinvention – using China as a base. HMD Global, a Finnish firm which recently acquired the licensing rights to produce Nokia-branded handsets, announced this month at CES, the US’s largest consumer-electronics trade show, that it would be launching its first Android device, the Nokia 6, exclusively in China.
The handset has been designed specifically for the Chinese smartphone user, of which there are more than 550 million. HMD knows it is entering a highly competitive market where local companies are producing better quality devices at the expense of global brands, such as the iPhone.
What makes this story particularly interesting is how it shows China can offer new hope to a former leading global brand that lost its way. China is attractive because of the size and diversity of its consumers, who are demanding better quality and more original, innovative products. 
HMD Global is seeking to satisfy the needs of sophisticated Chinese consumers by producing a product made for them, rather than one designed with Western consumers in mind. In so doing, it is following other foreign companies who have learned – many of them the hard way – that competing effectively in China typically requires making significant changes to existing business models and strategies.
Many analysts saw Apple’s release of a gold iPhone as a tactic specifically aimed at the Chinese market, where the colour is especially auspicious. It was a smart move, but it appears local consumers want more, as evidenced in the sharp drop in iPhone revenue there last year. Conversely, Nike has shown its ability to tap the growing health and fitness sector in China by focusing strongly on local interests, such as the country’s love of basketball, which is played by some 300 million people.
Starbucks is another successful example. Having entered China in 1999 it now has almost 2,000 cafes in about 100 cities. The brand is showing no signs of losing momentum. 
Starbucks realised the importance of social status in China – its stores and products offer the growing middle classes a chance to show they are both affluent and sophisticated. 
Time will tell how HMD and its revived Nokia brand will fare in China. Regardless, the venture is a good example of refocusing corporate strategy to the needs of a new market. 
If successful, Chinese consumers may be the ones redefining for the world what a “Nokia moment” means.