Chinese demand for outdoor gear is enticing global brands to add local staff and open thousands of shops on the mainland. Timberland Co. of the U.S. has 110 stores in China, and President Jeffrey Swartz sees enough potential there to more than double that number in the next three years.
"The role of outdoors in Chinese culture … it screams at you," says Mr. Swartz. "They're not going to go climb a mountain. What they are going to do is hang out in the park on Saturday or Sunday and have a picnic. That's outdoors and outdoor adventure."
The competition among sports and outdoor clothing manufacturers for a share of the Chinese wallet is intense. Adidas AG of Germany recently announced plans to add 2,500 stores in the country by 2015, from 112 as of November. Wolverine World Wide, maker of Merrell boots, also sells its boots through shops in Asia. North Face, Berghaus and other international brands have also opened stores in China recently, and several big brands sponsor outdoor adventure athletes and races to increase visibility among consumers. Some have announced plans to increase online offerings through local-language websites and Web retail shops.
Mr. Swartz says one way his company can connect with Chinese consumers is by highlighting its environmental credentials. Timberland's quarterly statement notes its carbon-neutral goals and its target for total hours of community service employees should be doing by 2015 (87,784 hours). His entries on the company's blog appear under the heading, "rantings of a responsible CEO."
Still, persuading Chinese consumers to buy Timberland over the raft of other products available is going to be a tough proposition.
Excerpts from a recent interview:
WSJ: How does the Chinese consumer's approach to corporate social responsibility differ from what you've seen in other countries?
Mr. Swartz: There's a nationalism to the Chinese consumer that reads different to me than it does in other developed consumer markets. Our reforestation efforts in Haiti are well received in California, [but they] are not valuable to the Chinese consumer. Our reforestation investments in [northern China's] Horqin Desert are considered surprising in China. We actually get more credit for environmental thoughtfulness in China than we get for environmental thoughtfulness in places where we've been doing it at least as long. It will be a very interesting test as our social-media strategy starts to work in China. We're going to focus it on outdoors through the lens of Chinese experience and sustainability—through the lens of the data that we've seen.
WSJ: How do you make sense of spending on corporate social responsibility that isn't directly helping your bottom line?
Mr. Swartz: It's hard to incentivize the CEO to take risks when the system of metrics doesn't exist to allow you to say we've measured success. We can assert the metric of how many trees we've planted. If you're in the activist world, they say that's a good thing, assuming you planted the right kind, etc. We thought that the goal was to convince the activists. We've now re-imagined that conversation because the person you need to convince is the consumer.
If you didn't do the right thing, [consumers] hold that against you. The fact that you don't exploit people—they don't give you credit for. I was pig-headed about that. People asked why we don't focus on what employees do in the 40 hours of paid volunteerism per year. That's not volunteerism. Volunteerism has to be inside you.
WSJ: How do you decide which causes to support?
Mr. Swartz: We tilt it in the direction of consumer-facing stuff. Cleaning up urban environments where our consumers and employees live. We're doing a better job of focusing it.
WSJ: What kind of manager are you?
Mr. Swartz: Our industry is based on two models: the creative tyrant or the consumer packaged-goods model. There's the data-driven, everybody-wants-growth model, where you've got guys in suits with square jaws. That's a good model. Then you have the Ralph Lauren, Mickey Drexler [chief executive of J. Crew Group] merchant geniuses that sit in the back and give thumbs-up or thumbs-down. I want to be who I am. I can examine both of the dialectic poles and think, which one's me? I don't wear the suit. I don't want the role of creative tyrant. We have a mission we're pursuing of commerce and justice. That's how we get [American-born actor and singer-songwriter] Wang Leehom to hang out with us in Beijing (http://blogs.wsj.com/scene/2010/11/17/wang-leehom-rocks-carbon-neutral/).
WSJ: When you are wrong about something, do you find it difficult to realize and change direction?
Mr. Swartz: That's one of the things I am proud of. My wife says "nobody is quicker to abandon his failed point of view than you. You have your eye on the prize." But when I realize I'm wrong, 10 seconds later I am following you. I want to achieve this commerce-justice outcome so badly, if you have a better idea, I'm listening. There's a guy who used to work on trucks, named George. George is a crusty old guy. When we're on the roof of the YMCA replacing rafters, I'm the CEO and he's now the mailroom guy, but you'd be out of your mind to listen to me. George knows what he's doing. We get this vivid optic of non-position-based authority. We get a vivid optic of moral leadership. This ownership mentality isn't based on shares. There won't be solution to anything if it's based on shares. It has to be based on shared values. That's what I'd want Timberland people to say about me: He owns the place, that he's the CEO, all that other crap, but if you have a better idea, I'll follow.
WSJ: What do you tell nonprofit leaders about leadership and problem solving?
Mr. Swartz: I have at age 50 sort of invented the externality of leadership. It's a community-based model. We get in a circle and we say here's what we're willing to fight for, here's what we're willing to die for. Once we're locked on whether we're really in, let's talk about how. If you have a better idea and you don't share it, it's not an opportunity missed, it's a moral failure because you want it the same as me.
The majority of nonprofits are well-intended and poorly run. I think every CEO has an opportunity to really share a strength in that regard. Sit at the table and say, "Can I see your three-year plan?" That's a great question. You'll never make payroll if you don't have a three-year plan.
When the nonprofit CityYear (which Timberland supports) started it was all about hugs. Now it's up to a $40 million or $50 million year budget. Now they have a strategic plan, operating systems, a budget. It's sustainable, it's cool. That's impact.
WSJ: What's the utilization rate for Timberland's 40 hours of paid community service?
Mr. Swartz: Everybody volunteers but not everybody uses 40 hours. The 40-hours crowd fits in a big room.
WSJ: Were you aiming for Timberland construction boots to become a fashion icon?
Mr. Swartz: If a fireman sees our boots and says "Hey, that's interesting," you should be humble enough to ask why he is interested in that product, not ask where the guy I was looking for is. In times in our history as a brand, we've said that's not what I was looking for. What I think we needed to do and we now do a better job of being really narrow in thinking about who we seek to serve and then watching what happens. What's powerful about good ideas is they attract. When you watch who comes to the watering hole in the jungle, what do you learn from that?
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