Why Businesses Fail: Lessons from China’s Yue-Sai Kan

| August 31, 2010 | 2 Replies

Yue Sai Kan

[tweetmeme]Why do businesses fail? Businesses fail for a number of reasons, foremost of which is the failure of execution.

Yue-Sai Kan, the Chinese-American often described as the most famous woman in China, launched a lifestyle concept retail store called House of Yue-Sai in December 2007. It was envisioned to be China’s first home decor brand. Using her own money to fund the business, the store offered a wide range of home decor products such as bath and bedding, tabletop and decorative accessories.

China’s equivalent of Oprah and Martha Stewart combined; Yue-sai enjoys massive personal fame in China first brought about by her television shows. She grew up in Hong Kong, but moved to the United States for her college education and eventually became a US citizen. While living in New York, she started her career in television and hosted an Emmy award-winning series on PBS about China and the world. That stint got the attention of the Chinese government. She was then asked by the state-run television channel in 1986 to host a series of programs in China about the rest of the world. With the state channel enjoying a monopoly in China, Yue-Sei became familiar to most Chinese viewers.

She parlayed her fame in China to business success. In 1996, she launched a hugely popular makeup line called Yue Sai Cosmetics. She followed it up with a bestselling book “Etiquette for the Modern Chinese.” She even made a Chinese Barbie version made from her own likeness called Yue Sai Wawa dolls. In 2004, she sold her cosmetics line to L’Oreal.

She thought that she would be able to replicate her success in the cosmetics business to home decor. But she failed.

She shared her thoughts on why her House of Yue-Sai failed in the book “What I Know Now About Success: Letters from Extraordinary Women to Their Younger Selves.” The book is a collection of letters from top business women to their younger selves – at the time of their worst personal struggles, when they are facing a turning point in their lives, among others. Yue-Sai’s letter in the book was addressed to herself at the time she was facing the reality that her business failed.

According to Yue-Sai, while her idea was brilliant, she made two big mistakes in the execution of the home décor business. This is how she explained why the business failed:

1. Choosing Partners Poorly.

“You know your weaknesses, and one of them is managing. You hate managing people. But you’re not picking a really good partner who can complement your skills. It’s like a marriage, and no less important for your success. You will go through three CEOs in eighteen months, each worse than the one before.

2. Starting the Business Too Big

“The concept of branding the home décor market is smart, and it’s so similar to what you did in cosmetics that you’re overlooking some important differences. In cosmetics you can make a variety of products in one factory. But in home decoration you will have more than 150 vendors from ten countries making 3,000 products. The operations are simply more complex than anything you’ve done before. It would be better to start small and grow.

As Yue-Sai herself said, “Failing is sometimes the way to move forward. It’s progress.”


Category: Business Strategy

About the Author ()

Isabel Isidro is a small business owner who writes about her experiences in starting and running a business. She is the co-founder of PowerHomeBiz.com and also runs WomenHomeBusiness.com

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  1. Boy'S Shoes Accessories says:

    The Small Business Administration reports that 97% of business loan applications fail.

  2. student scholarships says:

    Great information! I’ve been looking for something like this for a while now. Thanks!

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