Navigating Pitfalls: Auntie Anne's Missteps in the Chinese Market

Auntie Anne's Pretzel Company

The founder of Auntie Anne's is Anne Belier. She started this well-known pretzel place at farmer's market located in Pennsylvania. Her bakery company was made to help her husband be able to give back to community by offering free counselling service to the community. This business stand that took place at the farmer's market became one of the largest softest pretzel franchise.

Wen-Szu Lin and his partner Joseph Sze, both had MBA's and they also have strong background in business.

They both were excited about introducing Auntie Anne's to the Chinese market.

This was a new adventure that was predicted to be a great success. The partners had hope that this new business venture was an opportunity of a lifetime, but unfortunately it was not. Several unexpected issues went wrong in many ways. The secret recipe that were in those pretzels were against health laws of China. They had to dispose nearly 1300 pounds of caramel due to the high preservice acid.

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Due to a friend knowing a friend the second sample of the batch pass the inspection. Still other short comings persisted, and allowed the company to fail. I can only imagine how that felt! I am quite sure they did not expect these challenges to come.

Lin and Szu seem to be very business minded. I believe if they would have properly plan and would have done more research into the company they possibly would have succeeded. Most importantly after research, they should have developed a relationship with the country's government, before starting a new idea into the Chinese market. Due to the health laws and tight regulations, I personally would not have recommended doing a restaurant franchise in this market. I believe some type of technology business venture would have brought them more success. The Chinese market may have looked great for this opportunity, but huge amounts of time and money has been frittered away. Just because the market looks good does not mean it will have a great outcome!

The partners did have a globalization strategy, which they chose international franchising. Auntie Anne's Pretzel is a franchise that was founded in the United States, but due the company being new to the market in China, Szu and Lin saw it as a great opportunity. The partners probably would have done better with international strategic alliance. This strategy allows the entrepreneurs to develop a relationship and share the risks as they entered the new market.

Lin and his Partner had a great idea, and they had the Chinese market to their advantage. Lin also had the advantage of being fluent in Chinese language to go along with his MBA in business. The fact they had the right business mind, they would need a little guidance and a recommendation. My recommendation is that these partners properly research, plan and it is very important that they develop a relationship with the government. They need to also research the government's policies. I think they should also look into trade missions, when trying to start an international company.

China is part of BRIC, but they have to make sure they have the greatest commercial potential and to be able to differentiate their products.

Not only, is China part of BRIC, but China has an emerging economy with a huge population. They are known for a great amount of manufacturers and they are not as costly. China also has a great growth strategy which for small businesses who would like to expand their markets there. Lin and Sze may had experienced many challenges, but their main challenge was getting their ingredients approved by their government without having a relationship that they terribly needed prior to Auntie Ann's Pretzel. They must understand that there is some political risk. U.S. companies must also realize that this is a different culture, and there are language barriers. In result of this, starting an international business will not be an easy project to do. U.S. companies should also look at the World's Banks's Ease of Doing Business Index, which informs entrepreneurs which direction to go starting a business overseas.

They could have used a resource from Euromoney magazine's Country's Risk Ratings which would have alert the partners of some of the challenges that they would have faced ahead of time. They would have known how to plan and make decisions accordingly.

In conclusion if Sze and Lin would have done more research about the culture, rules and regulations and also taking the time to be informed about China's government, they would have succeeded. They had the right idea and the perfect market, but did not have much support.