For the exclusive use of E. Salazar, 2024. CB0293 REV: March 22, 2024 SHAMEEN PRASHANTHAM FAN WU Allbirds China: Sustainable Footprints into an Emerging Market On a cold morning in Shanghai, in January 2023, Brandy Yu, managing director of Allbirds China, was about to board a flight in Shanghai to visit the Allbirds HQs in California. Allbirds, a San Franciscobased startup whose eco-friendly shoes became staples in Hollywood and Silicon Valley wardrobes following its birth in 2015, had marked nearly 4 years since entering China in early 2019. Yu had joined Allbirds in January 2021 amid the global pandemic, albeit at a time when COVID seemed to be under control in China. In the years that followed, she had seen ups and downs as she grappled with two key challenges. First, the customer profile in China was different from America. Second, Yu, who had moved to Allbirds from Adidas China, had learnt that she could not run the local sales team the same way as in an established multinational. As a new venture entering a big new market, Allbirds China went to great lengths to deliver its “Carbon Footprint” initiative. However, with China still in the early stages of decarbonizing, how could Yu use her local expertise to fulfill Allbirds’ global aspirations? As the company grew in scale worldwide, skepticism had emerged about whether it could maintain its sustainability credentials and still be profitable. With a philosophy of “only innovating where consumer benefits and sustainability meet”, how could Allbirds engage with Chinese consumers and collaborate with industry partners to create sustainable value? A Disruptor in the Footwear Industry Origins of Allbirds: Innovating Sustainable Natural Footwear In April 2015, Allbirds was co-founded by Tim Brown, a retired professional soccer player, and Joey Zwillinger, a biotech engineer and renewables expert. Blending Brown’s intuitive desire to design simpler, natural running shoes and Zwillinger’s expertise in bio-based materials, they had created a whole new category of footwear. In a market with many established brands, the co-founders differentiated Allbirds sneakers on three pillars: comfort, simple design, and natural sustainable material (See Exhibit 1). Born in New Zealand (home of merino wool), Brown focused on product design and brand building, while Zwillinger took charge of daily operations, technological innovation, and corporate Professor Shameen Prashantham and Case Researcher Dr. Fan Wu of China Europe International Business School prepared this case. It was reviewed and approved before publication by a company designate. Funding for the development of this case was provided by China Europe International Business School and not by the company. CEIBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2024 China Europe International Business School. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. This document is authorized for use only by Edgar Salazar in 2024. For the exclusive use of E. Salazar, 2024. Allbirds China: Sustainable Footprints into an Emerging Market CB0293 finance. In March 2016, Allbirds launched its first model, the Wool Runner, (see Exhibit 2) in the U.S. and New Zealand. Challenging Industry Norms In contrast with the industry norm – developing short-lived styles each season, often using fossilfuel-based synthetic materials – Allbirds launched the world’s first wool-based shoes with the claim they were natural and sustainable. “We could grow fast if we go fast, but we turned down that growth to make sure that we could achieve a profitable model in the long run,” said Zwillinger. The Wool Runner attracted the attention of consumers and media alike, and quickly became popular with the Silicon Valley tech crowd, entrepreneurs, celebrities and politicians. Time magazine called it “the most comfortable shoe in the world”. 1 A New York Times article told readers: “to fit into Silicon Valley, wear these wool shoes”. 2 Barack Obama, Leonardo DiCarprio and Oprah Winfrey were seen wearing Allbirds shoes. 3 Within two years it had sold over 1 million pairs in the US, Canada, Australia and New Zealand, raising US$2.7 million in A-round funding. Its success was no accident. With the mission— “The environment is our stakeholder and sustainability has been in our DNA since day one”, Allbirds was a certified B Corp ① and Public Benefit Corporation. The company was built on a business model that balanced purpose with profit, and championed the global movement of making business a force for good. On Earth Day② 2019, Allbirds announced a Carbon Fund to go 100% carbon neutral. On Earth Day 2020, it became the world’s first footwear brand to label its products with their carbon footprint (See Exhibit 3). Born a DTC Brand Being a direct-to-consumer (DTC) brand was part of Allbirds’ DNA. As a startup experimenting with different product styles, one of the benefits of DTC was having access to first-hand feedback from the consumer market on both the products and the shopping experience. Initially, Brown and Zwillinger decided to sell Wool Runners exclusively via Allbirds online store because they believed the DTC approach “allowed Allbirds to control its brand presentation and storytelling, and there are not four middlemen taking a cut in margins”. 4 Even after offline stores started to open, Allbirds insisted on direct sales only and was slow to build more. Redefining the Footwear Landscape: A Fashion Brand that “Welcomes” Copycats Its success as a San Francisco-based unicorn attracted competitors’ attention. Within a year of the Wool Runner’s debut, knockoffs flooded the market, including Amazon. Allbirds insisted, “The quality difference between our products and knockoffs is pretty perceptible and our consumers know that we are the real deal.” Even so, in November 2019, Zwillinger wrote an open letter to Amazon CEO Jeff Bezos saying Allbirds was “flattered at the similarities but hoped the commonalities would include these environmentally friendly materials as well” urging Amazon to “Please steal our approach to sustainability.” 5 “We welcome it,” said Zillinger. “We never wanted to be the only ones doing this…our mission from the beginning has always been to use our business to move the industry to do things in a better way.” ① A Certified B Corporation, commonly known as a B Corp: According to the U.S. Small Business Administration, a B Corp is a for-profit corporation recognized by the majority of U.S. states that are driven by both mission and profit. B Corps are companies that voluntarily meet the highest standards for social and environmental performance. ② Earth Day is celebrated on April 22 in the United States and on either April 22 or the day the spring equinox occurs throughout the rest of the world. 2 This document is authorized for use only by Edgar Salazar in 2024. For the exclusive use of E. Salazar, 2024. Allbirds China: Sustainable Footprints into an Emerging Market CB0293 In a subsequent “sustainability giveaway”, over 100 other shoe brands that were interested in implementing Allbirds’ renewable materials – including its direct competitors – were given the innovative components that would make their shoes not just look like Allbirds but match its roadmap to sustainability. 6 Co-branding with Competitors Compared to Adidas and Nike, the biggest legacy brands in the global shoe market, Allbirds was still a small startup. Although its sky-high valuation was changing the way shoes were made and sold, Allbirds remained a niche player. Was it possible for the market landscape to be a win-win? “In the footwear space, you typically do not work with competitors. It is very secretive,” said Brown. But having broken this “unspoken law” by sharing its approach to sustainability with copycat brands, he wondered: “Why not take that a step further and collaborate on a shoe?” It was the beginning of an unprecedented collaboration with Adidas. In May 2020, Allbirds began to expand its running shoe collection co-branded with Adidas, the goal being to redesign the sneaker from the ground up, and, for Adidas, to produce shoes sustainably at scale. From the collaboration emerged a new performance running shoe with the lowest carbon footprint on the market. In May 2021 (See the timeline in Exhibit 3), the Adidas×Allbirds shoe was launched with a carbon footprint of 2.94kg CO2 per pair, less than that of a Big Mac. 7 Entering China’s Booming Footwear Market Allbirds obtained a business license to operate in China on September 30, 2018. The brand launched in Tmall ① in March 2019, in JD.com ② from August 2019, and opened its first offline retail store in April 2019 in a premium shopping center in downtown Shanghai. But the question remained: Could a new carbon-neutral fashion brand claiming to be “simple, comfortable, natural and sustainable” succeed in cracking the market? Would consumers in China be willing to spend nearly ¥1000③ on a pair of plainlooking shoes with eco-friendly attributes? Footwear Market Landscape in China vs. US In 2019, the Asian market accounted for 54% of global footwear consumption, followed by Europe and North America with 14.8% each 8 (See Exhibit 4). Within Asia, China was the largest market and had the most momentum (See Exhibit 5) as the booming economy endowed consumers with spending power ④. In comparison, the US footwear sales kept a slow but steady growth until 2020 when sales dipped due to the global pandemic, and rebounded around 2022, registering an annual increase of 16.5% 9. In 2024, in the US footwear market was projected to generate a revenue of US$131.90bn, and with an expected CAGR of 3.13% for 2024-2028 10; while the footwear market in China was projected to generate a revenue of US$86.09bn in 2024, with a CAGR of 3.73% for 2024-2028 11. Founded in 2008, Tmall is one of China’s largest e-commerce platforms in terms of sales values. JD.com is China’s largest online retailer and biggest Internet company by revenue. ③ When Allbirds entered China in April 2019, its direct selling price was US$95, and ¥899 /¥1099 in China, for different series. (¥ = CNY = Chinese yuan renminbi; ¥1 = US$0.1492 for the month of April 2019). ④ As of October 2022, China remained the world’s largest manufacturer of shoes and slippers, accounting for over 60% of total footwear production worldwide. China’s National Bureau of Statistics revealed that the revenues of footwear enterprises manufacturing in leather, fur, or feathers amounted to ¥1,106 billion in 2021, up 8.2% year-on-year. China’s footwear market was worth 69.9 billion USD in 2021, a CAGR of 5% compared with 54.9 billion USD in 2016 and was expected to grow in the coming years. ① ② 3 This document is authorized for use only by Edgar Salazar in 2024. For the exclusive use of E. Salazar, 2024. Allbirds China: Sustainable Footprints into an Emerging Market CB0293 In Allbirds’ home market, over 50% of Americans wore sports ① or leisure shoes outside home, while less than 20% wore formal shoes 12. That gave Allbirds products a natural advantage in the US footwear market. In contrast, sports and leisure shoe segment was not as high in China, however, the demand volume had been growing rapidly. As sporting and outdoor events became increasingly popular across China, interest in personal fitness continued to rise, encouraged under the National Fitness Plan (2021-2025) ②. With the concept of leisure also gaining ground among Chinese consumers, the market for leisure shoes grew rapidly. Style and comfort were the primary selling. Purchasers of leisure shoes were typically aged 18 to 45 – students and office workers with higher expectations in terms of brand and individuality than the average shoe buyer. In 2021, the leisure footwear and clothing segment accounted for 37.8% of the overall Chinese clothing market 13. Nike (27%), Skechers (10%), Jordan (9%), Under Armour (9%), and Adidas (7%)14. In China, the top two players were Nike and Adidas, taking staggering market shares of 25.6% and 17.4% in 2020, respectively, but continued to drop in 2021 and 2022 15, losing territories to home brands such as Anta, and novel brands such as Allbirds. Allbirds and China’s Fashion Industry under the Trend to Decarbonize In North America, Australia and Europe awareness of sustainable consumption was more established than China. For example, in Allbirds’ Californian market, whether or not a fashion brand was genuinely eco-friendly could influence purchase decisions. However, in the Chinese market, ecofriendly awareness was still at the early stage. In September 2020, the Chinese President Xi Jinping announced a national plan for carbon neutrality along with policies for all types of industries to reduce their carbon footprints, but the consumer side remained uncharted territory. In the wake of Allbirds’ well-prepared debut, the young fashion brand from California caught consumer attention in China, but sales in online and offline outlets were still “experimental”, Erick Haskell③ told the audience on its first anniversary, in April 2020. What direction would it take to make its presence felt? Brandy Yu: a New Head for Allbirds China Two years later, Allbirds hired a new managing director to inject fresh energy and drive growth. Brandy Yu had been with Adidas China before being headhunted to lead Allbirds China in January 2021. She found the new venture operated very differently from the gigantic corporation she was familiar with. Not only did the brand have little in common with Adidas, but the Chinese market was also very different from the US where Allbirds was headquartered. Managing a New Venture: Very different from a Multinational Before joining Allbirds as managing director in China, Yu had been in the Digital Transformation office leading the DTC ecosystem activation for Adidas China. She described the contrast: “Adidas is more like a spacecraft, and Allbirds a speedboat. When I was with Adidas, at first, I liked thinking about local practices and experiments, but it was very challenging to drive intra-entrepreneurship in a corporate ① ② ③ Sports shoes are classified as general sports shoes, professional training shoes and professional sports shoes. Case author translated from:《全民健身计划（2021-2025）》 Erick Haskell was then VP for Allbirds International. 4 This document is authorized for use only by Edgar Salazar in 2024. For the exclusive use of E. Salazar, 2024. Allbirds China: Sustainable Footprints into an Emerging Market CB0293 environment where legacy from earlier success had become its baggage in the digitalization era. It is a big machine with legacies built over the years.” Allbirds rate of growth in only six years and its lean organization gave Yu more leeway in making localized decisions in China. An Uncharted Market for a US Startup Unlike its US base, in China Allbirds needed to play the role of educator to guide and cultivate consumer interest in sustainable products. The strategy was to highlight its high quality and comfort features. As Yu experienced herself, “Allbirds’ faster acceleration in the US is riding on a huge social phenomenon where IT gurus and Hollywood stars are wearing our products. They are rich people with established social status. They like low profile and appreciate premium validation without expressive design. That is the majority of the customer profile in the US.” When Allbirds entered China, early adopters (who remained its core customers later) had been welleducated upper-middle-class citizens living in mega cities. They often had study/work experience overseas, had heard about Allbirds abroad, and upheld the “sustainability, simple design and comfort” principles it advocated. This was a very small group compared with China’s massive footwear consumers. Yu and the team realized that to succeed in China they had to expand their audience and catch the attention of younger consumers. To win in China, “you have to create some kind of desirability of the brand in order to appeal to younger people”, she observed. But with the globally consistent Allbirds product, how could it win over younger generations who had grown up wearing fancy Adidas and Nike shoes with short-lived styles each season? Revisiting Localization in China As Yu got to grips with her role, she turned her attention to localizing for the Chinese market within the context of operating as a new venture. Consumer Profiling: Who is “China Charlie”? When Yu joined Allbirds China, the US company had “American style” operations in China in every way, including its consumer profiling. In the US, customers typically were from Silicon Valley and Hollywood’s middle-class. However, once Yu and her team had done their homework, they felt Allbirds was unlikely to expand its consumer base in China if it continued that “American style”. But what exactly did “China Charlie” look like? After two years of operating, they had more local insight for expanding the consumer pool. The target “China Charlie” was aged between 25 and 44, males accounted for 55% and females 45%, mainly from tier-one cities like Beijing, Shanghai, Guangzhou, and Shenzhen. “China Charlie” was likely to work in internet technology, finance, culture & art/sports/entertainment, or real estate; 77% had a driver’s license, 88% had a college degree or above, and most could be described as premium life seekers and cultivated socializers. Why not give “China Charlie” an opportunity to “pay for a brand that matches my values and products that fit my style”? Since Allbirds had been articulating a consistent brand narrative in China and was perceived as “innovative, premium and eco-friendly”, it fit right into China Charlie’s identity. The question was where to find them and how to win them over. 5 This document is authorized for use only by Edgar Salazar in 2024. For the exclusive use of E. Salazar, 2024. Allbirds China: Sustainable Footprints into an Emerging Market CB0293 Go-to-Market Strategy: Would DTC Work in China too? Allbirds was a DTC brand from day one. In China, even before Yu joined, this was the strategy. She made it even more localized. One of Allbirds’ most important divisions was Customer Experience. In the US, consumers primarily made product inquiries over the phone. Allbirds China stationed a dedicated team in Shanghai to respond to consumer feedback and product inquiries. Meanwhile, sales teams in stores in the US, Europe and Asia were getting feedback through daily interactions with consumers. All feedback collected from different markets was fed into the corporate pipeline of product development, supply chain management, and marketing strategy. Yu realized there were more opportunities to use innovation to engage with consumers in China. Since Allbirds HQ had a lot of people contacting the customer-experience team in Shanghai mainly via online chat, she thought it would be interesting to connect consumers and store staff in real time. Yu and her team used various technologies, including some from Alibaba ①, so when consumers asked questions such as “What do I wear Allbirds shoes with?”—it would prompt the customer service team to ask if they’d like to speak to someone in the store through video chat. Notwithstanding the differences in market landscape, Allbirds kept the same innovation philosophy in China, to “only innovate at the intersection of when consumer benefits and sustainability meet”. Besides its offline POS, Allbirds chose to work with e-commerce platforms like Tmall and JD.com as its online DTC portals in China, where it could directly access younger consumers. Upgrading the E-commerce Operational Capability in China The fact that Allbirds started as a digital native company—e-commerce was still the overwhelming part of its business globally—allowed the team to continue to operate during lockdown. Yu’s team decided to upgrade the e-commerce operation capability, moving away from operating in-house to using a TP (third-party) agency (Tmall, JD. com platform operation service partners). Though most of Allbirds’ physical stores around the world were closed during COVID, consumers were familiar with buying Allbirds online, so that allowed Yu and her team to maintain fairly normal operations. They switched from in-house marketing to TP service in August 2021, eight months after she took over Allbirds’ business operation in China. However, in 2022, trends suggested that the online ecosystem was getting more fragmented, with platforms like Tmall losing customer traffic to Douyin (TikTok) and livestreaming business. By the end of the year the global economy had picked up, but the fashion industry was still struggling due to disruption in global supply chains. The Greater China market, which had been the growth engine of international fashion brands, had reached a turning point in the 2021 fiscal year. On March 9, 2022, Adidas’s 2021 financial report indicated that business was back to normal worldwide but its 15% year-on-year increase in annual revenues was no longer being driven by the Greater China market, where total revenues in 2021 had increased by a mere 3% ②. Would China remain a honey pot for international sports fashion brands? Alibaba is one of China’s biggest internet companies, founded by Jack Ma in 1999. In Adidas 2021 fiscal year: the domestic market in Europe had a total revenue of 7.76 billion euros, a growth rate of 24%; North America had a total revenue of 5.1 billion euros, a growth rate of 16.6%. ① ② 6 This document is authorized for use only by Edgar Salazar in 2024. For the exclusive use of E. Salazar, 2024. Allbirds China: Sustainable Footprints into an Emerging Market CB0293 Strengthening an Offline Presence in China While the US strategy emphasized online sales, Yu recognized the importance of having an offline presence in China. Even before she joined, a flagship store had been opened in Beijing. Since arriving in January 2021, her team had sought to make prudent choices, only opening stores that could be financially viable with a proven route to profitability. This was especially important when global retail business was suffering from lockdowns and softer demand. Three stores were opened by Yu and her team in Hangzhou, Shenzhen and Beijing during 2022. Hiring and Managing the Right Talent Yu had learned another lesson from her two years with Allbirds management. When it came to hiring the right talent for Allbirds China, she realized that being a successful employee/manager in a multinational did not necessarily ensure success in an entrepreneurial business where Allbirds needed its people not just to “do their job right but have the innovative eagerness and hunger to drive the business forward. They should be agile, resilient, and respond to changes all the time”. This meant building and training her sales team in China in a different way. Yu needed a local team who would be innovative and responsive to work in a small “speedboat”, compared with following protocols in a big “spacecraft”. Carbon Footprint Labelling: Ensuring Consistency in China While Yu found many aspects of the global strategy needed to be localized, she recognized the importance of keeping global consistency on some elements. Allbirds announced a “Flight Plan” in July 2021 (See the timeline in Exhibit 3), outlining its 2025 and 2030 sustainability targets concerning regenerative agriculture, renewable materials, responsible energy, as well as fair labor practices (See Exhibit 6). The groundwork had already been laid in 2020, the year Allbirds had unveiled its carbon footprint labeling scheme, when its average product carbon footprint was 9.97 kg CO2e. In 2021, the figure came down to 8.76 kg CO2e, a 12% reduction. In 2025, it committed to get this down to 5.50 kg CO2e. Its efforts to engage different stakeholders in sustainable consumption were driven by the “Flight Plan” into China – the term it used for the global strategy – with one simple thing—carbon footprint labelling. The sustainability approach was modified to transferring knowledge of product lifecycle carbon emissions to local industry. Ultimately, these were reflected and validated by a simple label that was readable by all, especially consumers. Co-branding with Nio Auto Having understood who the “China Charlies” were, Yu sought to build credibility with that market segment by building relevant partnerships in the innovation/sustainability space, and introducing Allbirds products to a highly engaged, passionate community. For example, in April 2021, Yu decided to build a partnership with China’s leading electric vehicle (EV) brand Nio Auto, which had a 22% market share in China’s premium EV segment (in the US$50k100k price range), second only to Tesla, with 43,728 vehicles sold in 2020. Similar to Allbirds, Nio was a disruptor – not only in auto products and technology, but how people could use and experience EVs to lead a more sustainable future. 7 This document is authorized for use only by Edgar Salazar in 2024. For the exclusive use of E. Salazar, 2024. Allbirds China: Sustainable Footprints into an Emerging Market CB0293 The partnership was announced during the 2021 Shanghai Auto Show, with the official launch of the Allbirds×Nio product in September 2021. The partners co-developed shoes that used remaining materials from the car manufacturing process, targeting core groups in China such as the business elite, entrepreneurs and professionals who pursued a “healthy and low-carbon lifestyle”. The co-branded Wool Runner would be available on Nio Life Digital Community App (1.5 million users, with 50% DAU ①). Other offline POS such as Nio House, exhibitions, and Allbirds stores were open for discussion. Building a Local Partner Ecosystem More generally, in line with trends in China’s fashion industry towards carbon-neutrality, Allbirds worked with its value chain partners in China – such as farms and yarn producers – to feed innovations to global headquarters. Additionally, cooperation with local authorities on setting industry standards and sharing methodology was another priority. “We hope to serve as a driving force for total industry to lower carbon emission leveraging our experience in this area,” said Yu. Since it all came down to consumer choice and had a big impact on upstream industry chain, Allbirds joined forces with media and brands sharing a similar vision and launched online and offline campaigns and products to influence the consumer mindset. She insisted: “Sustainability is NOT a global competition. Rather it’s a cross-border collaboration. On one hand, the sustainability concept is starting comparatively late with low awareness, and that’s why we put more effort in rooting through local communities compared to elsewhere. On the other, China’s super execution ability and efficiency from scale are to soon catch up with Chinese characteristics.” Social Responsibility during COVID In 2020, when COVID in China was at its peak, Allbirds China began to donate batches of its comfortable eco-friendly shoes to frontline medical workers in the hardest hit areas of Wuhan. As the pandemic spread around the world, Allbirds HQ was inspired by the China team to launch a largescale charity donation program in the US and Europe to support frontline healthcare workers. Allbirds China expanded the charity move to a “Buy-one-give-one” program whereby customers could donate shoes to people on the frontline. When they bought a pair of shoes, Allbirds would automatically donate another pair to medical workers in the consumer’s name. Or, if consumers were willing to donate directly, Allbirds (which never discounted) would give discounts to empower customers to help frontline medical workers. By April 2020, the Allbirds community had helped the company more than double the initial contribution, leading to a donation of over $1 million worth of shoes to healthcare workers globally. When Shanghai was hit by COVID and went through a two-month city lockdown in 2022, Allbirds China made headlines by practicing local corporate social responsibility. On April 1, 2022, at the very beginning of the lockdown, Yu dispatched 500 pairs of comfortable shoes to doctors and nurses in Pudong ② cabin hospital (See Exhibit 7). Through Allbirds’ end-to-end supply chain, it became the only fashion brand during lockdown that could still dispatch shoes from its tier-1 supplier in Shenzhen and Guangzhou. Besides social ① ② DAU, Daily Active User. Pudong is one of the main urban districts in Shanghai, China. 8 This document is authorized for use only by Edgar Salazar in 2024. For the exclusive use of E. Salazar, 2024. Allbirds China: Sustainable Footprints into an Emerging Market CB0293 responsibility, Yu and her team also managed to deliver 60% of business through online sales during lockdown in Shanghai. Looking Ahead: Moving Forward in China “China's potential success is interdependent with Allbirds' global success. In the new age of globalization, there is opportunity for the China market to act as a center of excellence and drive best practice in a lot of arenas like digitalization and retail operation, and transfer that knowledge back to headquarters and help influence and shape our go-to-market strategy... China is he global biggest textile industry and has a lot of upstream material innovation capabilities, so if we can deepen collaboration with industry value chain partners, that will allow us to tap into innovation resources and translate resources to capabilities that are from local and for local.” —Brandy Yu In December 2022, China rolled back its zero-COVID policy. Like every city in China looking forward to rapid recovery, Yu and her team were in a position to move forward with their expansion plans, although many businesses (including Allbirds) were unprepared and uncertain about the future. Just that month, the grand opening of Allbirds flagship store in Beijing, the capital city of the country, had attracted many young customers. Just as China was eager to embrace a post-COVID consumer market that would reflect pre-COVID times, Yu and her team were thinking how to increase their offline market share. With China being Allbirds’ strategic international market in its global store expansion roadmap, Yu said her team would “move from heavily online skewed to a more balanced 50:50 online/offline business in five years”. Looking ahead to 2023 (the Year of the Rabbit), Yu had plans to make Allbirds shoes more appealing to younger customers in China. She engaged global product designer and sourced different US-based Chinese artists so they could create products that would appeal to younger audiences and local Chines cultural tastes. A young Chinese fashion designer named Zipeng Zhu designed a vibrantly colored shoe with multi-faced outsole for Allbirds China – to be named “Tree Flyer 2-Zipeng” (See Exhibit 8). This initiative echoed Yu’s observation of managing a new venture internationally: it was about being “agile, resilient, and responding to changes all the time”. The new look of Allbirds product tailored to Chinese young consumers was visibly distinct from the original “simple design”. But while localized design might appeal to younger customers in the immediate future, she understood there was a long way to go before the consumer base truly embraced sustainability. As she boarded the plane in January 2023 to finally visit Allbirds HQs in person, she already knew how she would feel in San Francisco. “Although most of us haven’t even met each other in person, and despite the time difference, we feel so familiar like close friends already.” But there were still many questions she needed to ask, the foremost being how to balance Allbirds’ globally consistent heritage and local realities. 9 This document is authorized for use only by Edgar Salazar in 2024. For the exclusive use of E. Salazar, 2024. Allbirds China: Sustainable Footprints into an Emerging Market CB0293 Exhibit 1: Allbirds’ Innovation in Natural Sustainable Material Source: Allbirds company documents. Exhibit 2: The Wool Runner—Simple Design, Comfort, and Made from Nature Source: Allbirds company documents. Exhibit 3: Allbirds’ Sustainability Footprint 2016-2021 Source: Allbirds company documents. 10 This document is authorized for use only by Edgar Salazar in 2024. For the exclusive use of E. Salazar, 2024. Allbirds China: Sustainable Footprints into an Emerging Market CB0293 Exhibit 4: Global Footwear Market on Supply and Demand Sides in 2019 (unit: %) Source: Case author drafted with data from Asian Footwear Association, July 15, 2021, accessed December 1, 2022, https://bg.qianzhan.com/report/detail/300/210715-53aa9d72.html. Exhibit 5: China’s Footwear Market Size, 2016-2026 (unit: US$100million) market size (100million USD) 1200 1000 800 600 585 549 625 670 636 2019 2020 699 753 809 866 920 975 400 200 0 2016 2017 2018 2021 2022 2023E 2024E 2025E 2026E year Notes: “E” is estimated volume. Source: Case author drafted based on Askci Consulting, “2022 China Footwear Market Size and Growth Forecast”, July 2, 2022, accessed February 5, 2023, https://www.askci.com/news/chanye/20220702/1442161911297.shtml. 11 This document is authorized for use only by Edgar Salazar in 2024. For the exclusive use of E. Salazar, 2024. Allbirds China: Sustainable Footprints into an Emerging Market CB0293 Exhibit 6: Allbirds “Flight Plan” Expanding to China Source: Allbirds company documents. Exhibit 7: Allbirds China Giving Comfort to Medical Staff during Shanghai Lockdown in 2022 Source: Allbirds company documents. 12 This document is authorized for use only by Edgar Salazar in 2024. For the exclusive use of E. Salazar, 2024. Allbirds China: Sustainable Footprints into an Emerging Market CB0293 Exhibit 8: Allbirds Collaborating with Chinese Fashion Artist in Shoe Design Source: Allbirds company documents. Endnotes Matt Vella, “The World’s Most Comfortable Shoes Are Made of Super-Soft Wool”, Time, March 1, 2016, accessed February 1, 2023, https://time.com/4243338/allbirds-wool-runners/. 2 Nellie Bowles, “To Fit into Silicon Valley, Wear These Wool Shoes”, New York Times, August 11, 2017, accessed February 1, 2023, https://www.nytimes.com/2017/08/11/technology/allbird-shoes-silicon-valley.html. 3 Katia Moskvitch, “How Eco Startup Allbirds Took on Adidas and Nike’s Big Shoe Duopoly”, Wired UK, March 5, 2019, accessed February 1, 2023, https://www.wired.co.uk/article/allbirds-shoes-on-trainers. 4 Tom Shearsmith, “The Interview: Hana Kajimura, Sustainability Allbirds”, The Industry. Fashion, February 20, 2020, accessed February 9, 2023, https://www.theindustry.fashion/the-interview-hana-kajimura-sustainability-manager-allbird s/. 5 Joey Zwillinger, “Dear Mr. Bezos”, Medium, November 25, 2019, accessed February 21, 2023, https://joeyzwillinger. medium.com/dear-mr-bezos-e691f6d6d705. 6 Ibid. 7 Grace Warn, “Adidas & Allbirds Futurecraft. Footprint: Footprint Calculations That Stand for Much More than Carbon”, Concept, 2021, accessed February 1, 2023, https://www.forbes.com/sites/sanfordstein/2021/06/08/allbirds-partners-withadidas-on-a-carbon-neutrality-mission. 8 Asian Footwear Association, “Analysis of the Global Footwear Industry Market Supply and Demand, Regional Landscape, and Development Trends in 2021 – Significant Differentiation in the Footwear Consumer Market”, July 15, 2021, accessed December 1, 2022, https://bg.qianzhan.com/report/detail/300/210715-53aa9d72.html. 9 Newsijie, “Sales Revenue in the U.S. Footwear Market Continues to Grow After the Pandemic, with Intense Brand Competition”, March 22, 2023, accessed January 20, 2024, http://www.newsijie.cn/TZD/TouZiDiMenuInfo/15709/234 /234/TZHJ. 10 Statista, “Footwear-Americas”, August 2023, accessed February 1, 2024, https://www.statista.com/outlook/cmo/foot wear/china. 11 Statista, “Footwear-China”, August 2023, accessed February 1, 2024, https://www.statista.com/outlook/cmo/footwear /americas. 12 AMZ123, “Over 50% of Americans Wear Casual Athletic Shoes When Going Out! 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