In 2008, dolls led the toys market in China with a share of over 20% and consumers preferred to buy them in department stores.
Despite these highly favourable market conditions, Mattel's 6 storey pink store dedicated to Barbie and her accessories has had to close.
Mattel say that the store has achieved its objective of building brand recognition. Yet analysts suggest that although consumers may recognise the brand, they do not necessarily identify with it and the company failed to adapt its offering to local conditions.
Analyst point to the styling of the clothes by Patricia Fields of Sex and the City, being out of step with young Chinese girls' preference for cuteness as exemplified by Hello Kitty.
The retail outlet included a beauty salon and a restaurant to allow young consumers to have Barbie-style makeovers and eat Barbie's favourite foods.
However analysts considered the store's location on the fashionable Huaihai Road, a mistake.
A Mattel spokesman said that the closure is "mainly due to a strategy change and the company continues to be committed to developing the Barbie brand in the country".
Mattel is not alone. US retailers Home Depot and Best Buy have also had to close stores. "None of the three companies - Best Buy, Home Depot or Barbie - have catered to local consumer preferences and habits enough," said Shaun Rein, managing director of China Market Research Group.
Other western brands, such as Nike, LVMH, Carrefour and Wal-Mart, have been successful in business in China and have become hugely profitable there.
Author: Lynn Shaw, Analyst
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