CULTURAL ASPECTS INFLUENCING INTERNATIONAL BUSINESS ACTIVITIES: A CASE OF OREO IN CHINA

Chinese consumers generally have a preference for less sweet flavors compared to some Western consumers. This preference is influenced by cultural factors and traditional Chinese cuisine, which often balances flavors and emphasizes subtlety. As a result, Oreo adjusted the sweetness level of its cookies to align with the taste preferences of Chinese consumers. The reduced sweetness in Oreo cookies in China allows for a more balanced flavor profile, where the chocolate wafers and sweet creme filling are still enjoyable without being overpoweringly sweet. Besides, the company decided to introduce localized flavors to appeal to the Chinese palate. The localization strategy involved developing flavors that were familiar to Chinese consumers, such as green tea, red bean, mango, lychee and peanut butter, which are popular ingredients in Chinese desserts. These flavors have been carefully selected based on market research and consumer preferences. One of the key advantages of localization Oreos flavors was that it helped the company differentiate itself from local competitors. In a market saturated with local brands, offering unique flavors helped Oreo to stand out and capture the attention of Chinese consumers. Localizing its flavors also helped Oreo to overcome cultural barriers and build a stronger connection with Chinese consumers, who value products that cater to their tastes and preferences.

FOREIGN TRADE UNIVERSITY SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS

-*** -MIDTERM ASSIGNMENT Subject: International Business | Subject code: KDOE307

Topic: CULTURAL ASPECTS INFLUENCING INTERNATIONAL BUSINESS

ACTIVITIES: A CASE OF OREO IN CHINA

Group: Group 11 - KDOE307(GD2-HK2-2021).2 Instructor: Ph.D Nguyen Hong Hanh

TABLE OF CONTENT

CHAPTER 2: THE INFLUENCE OF CULTURAL ENVIRONMENT ON

2.1.1 Chinese culture factors that impact on Oreo’s business activities 7

2.1.2 Comparison of Chinese and Oreo’s local market culture 11

a Overview of Oreo's Local market Culture and Practices 11

b Comparison of key differences and similarities with Chinese culture 13

a Popularization of Oreo's iconic ritual: Twist, Lick and Dunk 17

d Integration of traditional Chinese cultural elements into Oreo's commercials

3.2 Evaluation of Oreo in the exploitation of Chinese culture 21

Oreo, born in 1912, is a famous cookie brand, also a go-to snack for sweet lovers.

According to Statista, 71.26 Million Americans ate Oreos in 2020 In a 2020 nationalpoll, the Oreo was ranked the 16th most popular biscuit in the UK With scrumptiousflavor and its forever debate "twist or dunk", Oreo has made an indistinguishable namefor itself on the cookie market worldwide and become an icon of 20th-century culture

Ever since its globalization, people can see Oreo in more than 100 countries (Time

magazine, 2012) Its expanding market through different sales and marketing channelsentails its many new flavors invented so as to adapt to customers’ various tastes

China, the most populous nation in the world, is conceived to be a potential market toincrease sales and revenues Also, China has its own unique cultural values that arepassed down from generations Understanding the potential of China’s market, as well asthe importance of Chinese values, Oreo has invested effort learning about Chinesecultures Learning from previous failed entries from different Western brands, Oreoadapts its products for local tastes But they didn’t stop there More than anything else,it’s been Oreo’s willingness to alter its size, shape and flavor that led to its dominance ofthe Chinese cookie market

From the case of Oreo, we see that cultural adaption is of utmost importance whenbusinesses want to expand the market to make profitable revenues and sales The report,

named “CULTURAL ASPECTS INFLUENCING INTERNATIONAL BUSINESS ACTIVITIES: A CASE OF OREO IN CHINA”, investigates Oreo’s strategies and

business activities so as to make its products appealing to Chinese people The influence

of the cultural environment on the business activities of Oreo in China and Culturaladaptation of Oreo in this market will be further explained Therefore, businesses canlearn Oreo’s strategies to make good implementation to internationalize its company

CHAPTER 1: OVERVIEW ABOUT OREO AND ITS ENTRY TO CHINA 1.1 General information of Oreo

1.1.1 History of formation and development

a History of formation

In April 12, 1898, several baking companies merged to form the National BiscuitCompany, also called Nabisco This was the beginning of the corporation that wouldcreate the Oreo cookie The company is a subsidiary of Illinois-based MondelēzInternational

In 1912, Nabisco - an American manufacturer of cookies and snacks headquartered inEast Hanover, New Jersey, had an idea for a new cookie However it wasn't exactly itsown - two chocolate disks with a creme filling in between had been done already by theSunshine Biscuits company in 1908, whose name is Hydrox

Despite its potentially suspicious origination, the Oreo made a name for itself and quicklyoutshined its competitor Nabisco made sure to file for a trademark on the new cookiesoon after its creation on March 14, 1912

Oreos, a sandwich cookie consisting of two chocolate wafers with a sweet creme filling

in between, have brought joy all around the world for over 100 years Oreo is reported to

be found in more than 100 countries

b History of development

Oreo has become the best-selling cookie of the 20th century since its introduction in 1912(as Oreo Biscuit) with more than 491 billion Oreo cookies sold to date worldwide(Biscuit People, 2022) The United States, China, Venezuela, Canada, and Indonesia arethe top five countries in terms of sales

During its lifetime, Oreo has gone through many versions, several listed as below:

- September 23, 1976: Nabisco's Football

Oreos were introduced in the fall of 1976

They were a great way to watch the big

game

- April 23, 1987: Nabisco introduced theirfudge covered oreos, which is just an oreocovered in fudge.

- April 17, 1991: Nabisco introduced mini oreo.They are a quarter of the size of the originalcookie and come in an 8 oz resealable bag

- April 17, 1995: In the mid 1990s Nabiscoreplaced lard with trans fat in the creme fillingdue to health concerns

- April 23, 2011: Oreo Triple doubles are like theoriginal oreo except there are three crackersinstead of two and creme filling between all threecrackers

Also, the brand has gone through changes in name The Oreo Biscuit was renamed toOreo Sandwich in 1921, then to Oreo Creme' Sandwich in 1948 and finally it becameOreo Chocolate Sandwich Cookie in 1974.

- April 12, 1921: Nabisco changed the name ofOreo Cookies to Oreo Sandwiches

- April 12, 1948: Oreo changes its name again:Oreos Changed its name again to Oreo ''Creme''Sandwiches

1.1.2 International business activities of Oreo

While most consumers know Oreo sandwich cookies as two round chocolate biscuitswith a vanilla crème filling in between, we can see many versions of Oreo in differentcountries

According to Mondelez, the biggest markets of Oreo outside the United States are:Argentina, The United Kingdom, The Caribbean, Central America, Spain, Mexico,Indonesia, Canada, Venezuela and China

Just like other companies that ventured overseas, Oreo had its share of triumphs andlosses But it learned its lessons and now the company determines how far it will go tolocalize its brand It demonstrates how Oreo adapts around the world and to the differenttastes and preferences of local markets worldwide.

For examples:

● In Indian Market, they introduced the product as Cadbury Oreos

● In the Chinese Market, they came up with an Oreo with four tiers of crispy wafers.They changed the packaging as well, introducing smaller packages that cost less

1.2 Oreo's entry into China

Until the 1980s, the United States was the main market for Oreo when the brand wasowned by Kraft This was reflected in the advertising slogan of those years - "America'sBest Loved Cookie" By the 1990s, the company had focused on the international market.With China and India representing possibly the jewels in the crown of international targetmarkets due to their sheer size, Oreo was launched in China in 1996

However, the company discovered that over the last 10 years, their Oreo cookies were not

as favorable in China as in the United States The Chinese were not big cookie eaters.The market for biscuits in fiscal 2007 was just $1.3 billion, compared with $3.5 billion inthe U.S at food retailers excluding Wal-Mart Stores Inc More importantly, Chinese'spreferences for taste, flavor or packaging were much different from the Americans

To win over Chinese customers, Kraft realized that even a global corporation musttransform itself, letting local managers make decisions based on their understanding ofthe market The vision for Oreo was adjusted from the number one sandwich biscuit tothe number one sweet snack in China This paved the way for improved productinnovation that catered to local preferences

These efforts have paid off In 2006, Oreo wafer sticks became the best-selling biscuit inChina, and the new Oreos were also outselling traditional round Oreos in China From

2006 to 2008, Kraft doubled its Oreo revenue in China, and with the help of those sales,that revenue topped $1 billion world-wide for the first time last year

CHAPTER 2: THE INFLUENCE OF CULTURAL ENVIRONMENT ON

BUSINESS ACTIVITIES OF OREO IN CHINA 2.1 China's cultural environment

2.1.1 Chinese culture factors that impact on Oreo’s business activities

China has a rich cultural history that spans thousands of years and continues to influencethe lives and behaviors of its citizens today As a company, Oreo needs to understandChinese culture's influence on consumer behavior to resonate with its audience and make

a meaningful impact

a Chinese eating habits

Chinese consumers generally do not have a preference for sweet food It seems that thebiggest compliment a Chinese person can give to a cake, pudding, or dessert is that “It’snot too sweet” Even while Western style sweets are becoming much more trendy,savoury cuisines and dishes still tend to be more popular Traditional Chinese dessertsfrequently combine savory and sweet flavors

Sticky cake - A Chinese balance between sweet and savory dessert

Therefore, when the business launched the American version there in 1996 with the sweetand slightly chocolaty taste, sales turned out to be lackluster The Oreo introduction inChina did not give enough attention to the local market while being too centered on theglobal market The Chinese market enjoyed the contrast between the bitter cookie and the

sweet cream filling, however, the taste was slightly too sugary and slightly too bitter fortheir liking.

First version of Oreo in China (1996)

Along with sweetness, Chinese consumers enjoy a wide range of flavors, including fruitflavors and green tea or red bean flavors These are popular in China and have been wellreceived by Chinese consumers

Besides the taste, people care much about how it looks and its texture A significantportion of the cookie industry in China consists of wafer cookies, which are highlyadored by the Chinese population

Thus if Oreo only launches vanilla and chocolate cookies, they may find it difficult toattract and retain Chinese customers since it does not fit with the local culture andpreferences

b Chinese shopping habits

Oreo wants their products to be affordable and suitable for everyone, every class in thesociety But the main target audience for Oreo is children and youth, the one who stillcould not make much money, and if they want to have Oreo snacks, they will have to askmoney from their parents Like many other Asian people, the Chinese parents are savingpeople They will not buy an expensive product that they consider not educational In

1996, one of the reasons for the failure of Oreo in China was that Chinese consumerswere value conscious and considered the Oreo packets to be expensive

c Chinese celebrity culture

The idol culture in China is highly developed and becoming increasingly popular.Famous people are seen as role models for fans to learn from and follow This culture canhave an impact on Oreo as a global brand, as it affects consumer behavior andpreferences in the country

Many idols and celebrities in China have a large fan base If a celebrity promotes orendorses Oreo, it may increase the brand's appeal and sales among their fan base.Therefore, Oreo needs to be aware of this trend and adjust their marketing strategies andproducts accordingly to meet the preferences and demands of Chinese consumers who areinfluenced by the culture of idol worship in the country.

d Social media platforms

Although Facebook, Instagram, and Twitter are all widely used social media networksaround the world, these platforms are banned in China Chinese people typically utilizealternative platforms like Weibo and Douyin Weibo is a microblogging platform similar

to Twitter, while Douyin is a short-video sharing app similar to TikTok Chinese peopleand businesses alike frequently use these platforms for social networking, informationsharing, and product marketing

Weibo - a popular social media platform in China

If Oreo enters the Chinese market and they only focus on advertising through the familiarsocial media platforms like Facebook and Instagram, they cannot reach the local

consumers and the people here cannot get much information and messages from Oreotoo

e Traditional festivals

In China, traditional events are a pivotal aspect of Chinese culture These events aredeeply rooted in history and provide an opportunity for Chinese people to connect withtheir cultural heritage By understanding the importance of traditional events in Chineseculture and incorporating them into their campaigns in a sensible way, Oreo can engagewith Chinese consumers in a more meaningful way

Chinese Dragon boat Festival

f Symbolism

In China, symbolism is important because it is deeply ingrained in Chinese culture and isseen as a way to connect with the country's rich history and traditions These symbols canhold great significance for Chinese consumers, and using them appropriately forcampaigns can help Oreo connect with Chinese consumers and build brand recognition.However, it is essential to note that the use of symbols in China is highly cultural andcontext-dependent Certain symbols may have different meanings or connotationsdepending on the region or context Therefore, Oreo must exercise caution when usingChinese symbols to avoid cultural misunderstandings or misinterpretations that couldharm its brand image

g Beliefs

As a nation with a rich heritage and strong set of beliefs, Chinese consumers place greatimportance on the spiritual aspects of the products they use Some numbers and colors inChina have the meaning of bringing happiness or peacefulness If Oreo can develop theirproducts based on these beliefs to show respect to Chinese culture, it may create theopportunity for them to access more customers in the most populous countries in theworld

These are some main cultural factors that affect Oreo in China As the world's mostpopulated country, China represents a vast consumer market with enormous potential forgrowth and profitability Oreo can benefit by tapping into the Chinese market andleveraging its global recognition and reputation to increase brand awareness and sales inChina Having a rich and complex culture with different regional dialects, customs, andtraditions, Chinese consumers tend to be more loyal to brands that understand and respect

their culture Therefore, Oreo needs to adapt their products and marketing strategies with

a keen understanding of the local cultural environment to succeed in the Chinese market

2.1.2 Comparison of Chinese and Oreo’s local market culture

a Overview of Oreo's Local market Culture and Practices

Iconic Ritual: Twist, Lick and Dunk

One can enjoy an Oreo in a variety of ways Before having the cookie part, some peoplesplit the chocolate wafers and use their teeth to take off the vanilla icing Some peoplefavor licking the filling off Then there are the people who bite and completely skip thedeconstruction process, as well as the people who eat quickly and consume the entirecookie Among a number of ways to enjoy these cookie pieces, Oreo has suggested onefor their consumers which is one of their iconic branding activities at the same time:

"Twist, Lick and Dunk".

The aforementioned ritual means before eating, consumers will finish the process oftwisting the two chocolate wafers, licking the cream layer inside then dunking them into

a glass of milk Understanding that milk can help the cookies dunked in it less hard anddry, Oreo's brand developers have believed consumers will experience an entirely newand delicious taste when combining the flavor and the different textures of cookie andmilk In the US, this idea has been widely absorbed and broadly approved of when a lot

of people call these two components a perfect and tasty duo This traditional practice is as

popular as Oreo has launched a mobile game Oreo: Twist, Lick and Dunk, not only to

better emphasize the slogan but also to ensure its prestige of having the best-sellingcookie in the world

Oreo: Twist, Lick and Dunk mobile game

What is more, on behalf of the brand, Justin Parnell, Global Brand Director, OREO hasshared about the meaning of this message: "OREO sees the world with childlike wonderand our iconic dunking ritual is the purest articulation of that vision,"; "When you dunk

an OREO cookie in milk, you're releasing a bit of childlike wonder from within, and it'sthose types of moments that our brand was built on." Through these messages, Oreo hasattracted a huge number of fans, especially children in the US buying, promoting andinvolving in many other related Oreo's campaigns or activities

Limited edition flavors through years

With the aim of customizing its brand and catching up with the most up-to-date trends,Oreo has also released limited edition flavors throughout the years or seasons Some ofthe most popular limited version flavors include mint, chocolate cake, peanut butter,birthday cake, strawberry frosted donut, etc

Chocolate Peanut Pie Brookie-O Oreo Strawberry Frosted Donut

Almost every limited edition released by Oreo has relied on the US customers' culturalfavorites and cuisine to cater to them in the most thoughtful way As a result, manyAmericans look forward to having these new flavors because this is an opportunity forthem to try new but familiar things at the same time and to capture the moments withthese limited editions which not everyone can possess easily In addition to keeping upwith the trends and seasons to adjust the flavors, the company has also released limitededition cookies that are only available in certain regions of the country, such as Key LimePie Oreos in Florida and Waffles & Syrup Oreos in the Northeast

Celebrity collaborations/ partnerships

Working with celebrities to promote the image of both brands

and influencers is not a new marketing strategy To compete in

the US market, Oreo has collaborated with many renowned

celebrities such as Lady Gaga, Baltimore Ravens football team

and the New York Yankees baseball team and famous brands,

for example Google ZOO These campaigns have helped Oreo

to reach the community of such celebrities' fans and created a

dynamic image for the brand as well

b Comparison of key differences and similarities with Chinese culture

There are visible similarities between American and Chinese people when it comes toconsuming Oreo products In both markets, Oreo cookies are popular sweets being used

as a kind of treat or snack In China, people also use cookies with milk And suchconsumers are also influenced by the eating habits and preferences of KOLs orcelebrities However, the cultural differences between the two markets are much moresignificant

Different taste preference: The very first difference between the US and Chinese culture

is the taste of the majority of Chinese people is that they are not into high proportions ofsugar or sweetary components in their food This habit also leads to the fact that the size

of sweet products served for Chinese consumers tend to be smaller, which means thepackaging of them will not be kept the same size as those sold in the US market

Different regional and local ingredients: The second difference to be mentioned is that

Chinese people are not familiar with ingredients widely used in the US like peanut butter.Their preferences are relatively representative of Eastern culture such as green tea andtropical fruits This point stems from the common cultural differences between Easternand Western regions

Different willingness and demand towards expensive goods: Chinese consumers, as other

Asian consumers, have a tendency not to pay a large amount of money for snacks or treatfoods In the US, the price of a pack of Oreo Raspberry Blueberry 97g is approximately

$7.00, while in China, it costs just $1.20 Chinese people can buy expensive meat andvegetables which are nutritious and good for their health As sweets like Oreos are notthat nutritious, they are not something Chinese people will invest a lot in