An American Icon In China Zippo lights the way for selling U.S.-made products in the People's Republic.
(Business 2.0) – Elbow your way through the crowds at Sogo, one of the fanciest department stores in Beijing, and you can't miss the display of China's gotta-have-it handhelds: Zippo lighters. Pick up one of the lighters--maybe one engraved with an image of a Peking opera mask or an ideogram--and check the bottom. You'll find "Bradford, PA" etched there.
That's right, Zippo is exporting its lighters to China--a country that makes just that kind of product for export here. Though its $3.5 million in sales is hardly going to put a dent in the $125 billion U.S. trade deficit with China, Zippo's approach offers some lessons on cracking that tantalizingly giant consumer market.
The family-owned company has spent the past five decades scouting out new markets. It had no choice. Its durable lighters were standard issue for the American GI, who carried Zippos around the globe in World War II, then during the Korean and Vietnam wars. But just as smoking began to decline sharply in the United States during the 1970s, smokers also started buying cheaper, disposable butane lighters.
Zippo's new strategy: It began engraving images of American flags and eagles on lighters and exporting them to Japan, where American culture was especially fascinating. Slapping Playboy or Harley Davidson logos on Zippos allowed the company to command a premium price. As exports rose, sales climbed from $70 million in 1986 to more than $100 million a decade later.
Today, 60 percent of Zippo's $140 million in annual sales comes from overseas. CEO Greg Booth thinks China, with its 320 million smokers, could easily add $10 million to that total by 2010.
At more than $30 apiece--a third of a month's salary for the average Chinese--Zippos aren't an easy sell. Good thing the company had plenty of local know-how: Back in the early '90s, it teamed David Seymour, who led Zippo's export drive into Japan, with Brian Lui, a former importer of Harleys in Hong Kong, to get the lighters into China's ritziest stores. The key was a deal Lui struck in 1993 with China National Arts and Crafts, a well-connected state-owned enterprise. That got Zippos into major department stores, but more important, China National secured rare TV airtime for 20-minute infomercials that explained the product and its history. Its war role was mentioned, but the emphasis was on how Hollywood has always loved the photogenic little Zippo, which has been featured in more than 1,400 movies.
Zippo dealers instructed the status-conscious shopper to look for the marks of an authentic Zippo, such as each lighter's serial number, and to buy them in reputable stores. That helped neutralize the ubiquitous made-in-China knockoffs. "Those who can't afford to buy a Zippo will buy a knockoff," Seymour says. "Then they'll save up so they can trade up to the real thing."
Lui and his now-450-strong group of Chinese outlets dream up new art to feature on the lighters themselves. Workers in Pennsylvania, making as much as $17 an hour, decorate Zippos with Chinese zodiac symbols, ideograms, and vintage pinup art from the pre-Communist era.
These days Zippo's 750-employee factory in Bradford hums, even as many plants in nearby Appalachian towns are shuttered. The company is using Chinese labor in Wenzhou to build long-stemmed multipurpose lighters for the United States, but Zippo is not about to move production of the classic lighter out of Bradford. After all, there are still places in the world where "Made in America" is worth a premium. -- BRIAN CAULFIELD AND TING SHI