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JEFF HOROWITZ: OK, here's what not to do.

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Late last year, Oregon-based Nike played this ad, called Chamber of Fear, on Chinese television. Nike hoped to cash in on basketball fever in China, featuring NBA star Lebron James running a gauntlet of animated opponents. To most American eyes, the ad is pure fun, a visual feast. To some Chinese, it was a parade of insults.

JAMAL AL-KHATIB: In fact, within China, it has generated a lot of commotion.

JEFF HOROWITZ: Jamal Al-Khatib is a professor of international marketing at the University of Saint Thomas, in Saint Paul. He sees the Nike ad as a great cautionary tale for his field. It starts with James bouncing a basketball off the face of a Kung Fu master. Later, he takes on two dragons, spewing ghostly ballplayers from their nostrils.

JAMAL AL-KHATIB: I mean, the dragon is a very sacred element of the Chinese culture, and you are attacking it. You are defeating that symbol. Another issue I found interesting when I saw the ad is Lebron James defeating two females, which is culturally inappropriate.

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JEFF HOROWITZ: The Chinese government banned the ad in December, for not, quote, "upholding national dignity and respecting the motherland's culture." Nike apologized, saying it intended to inspire rather than insult. Al-Khatib says the ad has damaged more than just Nike, by encouraging the government to more closely monitor ads before they go on the air.

Al-Khatib says in 2005, companies' logistical ability to make products and distribute them globally may be advanced, but in an era when US-based ad agencies still account for around half the world's ad spending, the ability to communicate in other cultures isn't always keeping up.

JAMAL AL-KHATIB: You go manufacture in China, it's not as complicated as dealing with social norms, with cultural values, with history, with religion.

JEFF HOROWITZ: Al-Khatib says successful marketing also means adapting your product line to suit local needs and wants. On that count, one Minnesota company has been hitting many of the right notes in its first leap into a foreign market. Aveda is a household name in the US. 18 months ago, the hair and skincare company set out to replicate that success in Japan.

At the Aveda factory and headquarters in Blaine, bottles of a product called Damage Remedy roll off the line. This is one of a half dozen Aveda products newly developed or significantly modified for the Japanese market. Spokeswoman Vicky Melen is giving the tour.

VICKY MELEN: Majority of Asian women feel that their hair is damaged. So they needed a treatment product. And we created something for Japan.

JEFF HOROWITZ: You can find Aveda in a number of other countries. But Japan has been Aveda's first coordinated, deliberate attempt to gain a foothold in a major foreign market. Aveda president Dominique Conseil says the huge consumer market is tempting, and its Western veneer might seem easy to crack. The truth is that Japan's extremely particular consumers have sent many of Aveda's competitors packing.

DOMINIQUE CONSEIL: We knew it would be very difficult. Most foreign companies have a hard time, very often do not make it. If they make it, they lose money for quite some time.

JEFF HOROWITZ: The launch of Aveda in Japan followed more than three years of research and preparation. Peter Matravers is Aveda's head of research and development.

PETER MATRAVERS: For Japan market, you cannot make an error. Everything needs to be beyond perfect. You need to give them more than you've promised.

JEFF HOROWITZ: Aveda has some things already going for it. Some Japanese had discovered Aveda during trips abroad, and the products sold well with Japanese tourists in Hawaii. What's more, Aveda's reputation for using natural ingredients has a certain instinctive appeal in Japan. Conseil says Aveda's greenness fits well in a part of the world where herbal health remedies are common.

DOMINIQUE CONSEIL: These ideas which are now cool in the West, they are obvious to Japanese people. We don't have to explain that to them. They know it better than we do. So these are things in Aveda that work for us.

JEFF HOROWITZ: But greenness, it turned out, could also be a liability. Roxana Daver, Aveda's top official in Tokyo, says the company learned something troubling over many hours of Japanese focus groups.

ROXANA DAVER: We found that the perception of products made with natural ingredients was that they were very nice to use and made you feel good, but they didn't really have results.

JEFF HOROWITZ: This is an information problem. Rather than use a major ad campaign to explain how and why its products work, Aveda went a different route. The company carefully cultivated a relationship with the press in Japan, which gave the company credibility with stories about its research and product line. To hear Conseil tell it, the Japanese media have been one of Aveda's best assets.

DOMINIQUE CONSEIL: The brand is made by the press in Japan. We can do a salon. We can set up a good distribution system. But the brand will be made by the press.

JEFF HOROWITZ: At the same time, Aveda focus groups revealed yet another challenge, one that strikes at the heart of the company's identity. R&D head Peter Matravers says many Japanese wrinkled their noses at the powerful, unfamiliar waft of eucalyptus, coriander, and other ingredients that are unmistakably Aveda.

PETER MATRAVERS: Most of them perceive not only the aroma to be different, but they also perceive the aroma to be too strong.

JEFF HOROWITZ: The Japanese as a whole, it turns out, simply do not like strong scents. But Aveda couldn't just drop one of the distinctive qualities of the brand.

PETER MATRAVERS: Certainly, we would not necessarily want to change the type of aroma or change the science of Aveda's aroma. But we need to adjust the intensity to make them feel more comfortable.

JEFF HOROWITZ: R&D was also at work making other changes for Japan. Aveda's entire product line was developed with Caucasian hair in mind. But Asian hair is both thicker in diameter and more dense. Aveda conditioners weren't powerful enough. At the same time, Japanese and focus groups disliked the feeling of anything weighing on their hair after use. The company had to reconcile these somewhat divergent goals into a single product line. Another product for Japan took Aveda into completely new territory. To compete as a skincare line, Aveda would need some sort of skin whitening product. Matravers says Japanese women put a lot of energy and money into making their skin lighter than it naturally is.

PETER MATRAVERS: Japanese looked at whitening as part of their ritual. It's perceived to be elegant to be more pale. I think it also speaks to how they see beauty.

JEFF HOROWITZ: Because skin whiteners actually affect the pigment found in skin cells, the Japanese government regulates them as a drug. Aveda eventually found an effective formula that was both all-natural and met regulatory approval. Aveda has decided to sell products in Japan only through hand-picked professional salons. The idea there is to reinforce the reputation for quality. Though there may be some immediate price in terms of name recognition.

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A spot check of a recent flight headed from Minneapolis to Tokyo found young Japanese women puzzled when presented with a small shampoo bottle and asked if they recognized the brand, which in Japan is pronounced Aveda.

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Basically, this woman says she's really sorry, but she's never heard of it. Aveda president Dominique Conseil says he intends for Aveda to achieve the same name recognition in Japan it now enjoys here. Along the way, he hopes Aveda's success will introduce a new word into the lexicon of international business, glocal-sim.

DOMINIQUE CONSEIL: In my mind, the global company is the big international monster that almost exports everything from a home market, one-size-fits-all type of approach. The glocal company is the smart, flexible company that listens so that the company can become intelligently international.

JEFF HOROWITZ: It may be some time before business people around the world are using Conseil's word, glocal. They may, however, be using Aveda. I'm Jeff Horowitz, Minnesota Public Radio.