Your roadmap to China’s Fashion Industry

Part 1

In the past decade, China moved from being just the world’s

manufacturer of clothes to becoming one of the biggest markets for

fashion. Thanks to the improvement of living conditions of the middle

and upper class, Chinese consumers have become highly brand

conscious and the possession of luxury products is seen as a status

symbol.

The same way as in Western countries, Chinese culture has adopted “conspicuous consumption,” which means having the need to buy goods, not because you need it but to show off to others.

According to a study by Boston Consulting Group, mainland China is the sixth in the world for the expenses on luxury goods ranked by countries. In 2010 it was a USD$ 17.7 billion market where Louis Vuitton, Chanel, and Gucci were the most desired luxury brands.

However, in recent years the so-called fast fashion companies H&M, Zara, Uniqlo, among others, have gained favor among Chinese consumers, especially the young generation.  There is also a lucrative market in China for niche brands in premium fashion.

The economic slowdown experienced worldwide due to the COVID-19 pandemic affected the fashion market during the first two quarters of 2020. But China’s fashion industry has implemented a series of creative measures to reactivate the sector and inspire consumers to open their wallets again.

As the fastest growing market for apparel in the world, China’s consumer appetite for foreign brands cannot be ignored.

Chinese buyers are becoming increasingly sophisticated. Despite the rise of the international fast fashion market, the industry, in general, is still very fragmented in China, so there is still plenty of opportunities for new brands to meet the growing demand for trendy fast fashion.

A report by McKinsey & Company and the Business of Fashion (BoF) states that China is set to overtake the United States as the world’s largest fashion market. Joann Cheng, Chairman of Fosun Fashion Group & Lanvin, acknowledged that China’s role in the global fashion market is quickly evolving and that the reason why Chinese consumers love to wear foreign luxury brands is because they believe their quality is better.

Experts estimate that total fashion sales in China, for 2020, could reach 1.3 trillion RMB ($200 billion USD) from 398 billion RMB ($60 billion USD) in 2010.  The fact that Chinese consumers have become highly brand conscious and that the possession of luxury products is a status symbol contributes to the growth in the luxury fashion segment.

Louis Vuitton, Calvin Klein, Alexander McQueen, Tommy Hilfiger, Adidas, and Nike are a few of the most popular retailers present on Tmall, which offers good visibility for brands on its Luxury Pavilion section and gives central importance to the choice of consumers.

Those who can afford it are moving towards premium while others who can’t or do not care about fashion will go for lower-end products. Luxury brands are highly appreciated, yet premium brands are perceived as more qualitative.

Fast fashion brands are popular among younger consumers. Uniqlo is a perfect example of affordable clothing that is doing extremely well in China. The brand combines both its online and offline marketing, as well as partnering with trendy artists and designers. Accessibility, good quality work and casual clothes, with some options from designers’ clothing, are the recipe behind their success.

The new generation of Chinese increasingly appreciates designer niche brands and quality goods.

Though China fuels the world’s fashion growth, its fashion market remains hard to penetrate for international players because of the brutal local competition.

Having grown up in an era of relentless prosperity in China, the young Chinese fashionistas are spoiled by the country’s unique and hyper-efficient e-commerce system. They regularly visit sites such as Tmall, Taobao, JD, Netease’s Yanxuan, Little Red Book, or one of the countless influencer-run WeChat marketplaces, looking for good deals and immediate delivery.

A D2C (direct to consumer) brand that sells trendy clothes at an affordable price point may be lauded as “innovative” or “rule-breaking” in the West, but in China this has been a reality for years. While international brands compete for buyers’ attention, the copycat market can duplicate a generic look rapidly.

Companies that strip apparel down to its use-value are doomed to fail in China. Domestic manufacturers which make their profits from a massive quantity of orders, can easily offer better bargain prices.  

No sales pitch about a brand’s quality, price, or good look is going to impress the Chinese consumers who have grown up style-hunting on Taobao. Brands that stand out in this over-crowded marketplace are those that have gone beyond the use-value and represent a form of cultural and social currency.

A wave of eco-friendly, direct-to-consumer brands that represent international millennials in global capitals is now hitting urban China. Brands like Everlane, Allbirds and Lululemon that champion an eco-friendly and healthy lifestyle are increasingly trending among the country’s fashion early-adopters.

On a cultural level, they also embody what Chinese millennials fantasize about: a lifestyle not necessarily rich or glamorous, but wholesome and fulfilling.

Everlane, an American clothing brand known for its basic styles, pricing transparency and sustainable practices, is seen by Chinese consumers as a premium alternative to Uniqlo and Zara. On the lifestyle platform Xiaohongshu (AKA Red Book), posts about Everlane are often published by bloggers living overseas, thus making the brand somehow synonymous with an international lifestyle.

Lululemon, the millennial athleisure brand, has also become a local symbol for the buyer’s global experience. Wearing a Lululemon yoga pant, attending its offsite workshop, and posting about it on social media, is a sign of someone familiar with the modern health mindstyle.

These three brands share the same message: it is fashionable to care for the planet and one’s well-being. Chinese fashionistas not only care about the environmentally friendly, feel-good aspect of these brands, but want to appear as someone informed and aligned with the global elite’s values.

Lately, the feminine, vintage-inspired style of brands such as Reformation, Rouje, and Self-portrait, has gained favor among Chinese buyers. Referred as “goddess niche brands as seen on Instagram” among Chinese fashion hunters, they are perceived as a gateway to the international world of glam.

This group of brands fits close to China’s convention of female attractiveness. Tweed skirts, lace blouses, high-waist jeans, and lots of floral prints, are part of this style. Such classic, feminine wardrobe staples are perfect for the Chinese woman who wants to look cute but not cheap, and who wants to show her romantic personality.

The dress for success concept has also grown in popularity among Chinese urbanites. Women feel inspired to follow their own career paths and are lured to more understated elegance and urban sophistication.

To capture an audience, brands must clearly embody an identity that belongs to somewhere inspiring: be it eclectic New York, romantic Paris, winning London, or relaxed Sydney. Nevertheless, a proud Chinese identity should be naturally infused in the message. It is not a mere following of overseas styles but creating an international awareness.

Brands that manage to match their style to the fashion looks trending in popular Chinese social platforms have a good chance to succeed.

The identity promise, not necessarily the product’s attributes, is what attracts today’s fashionistas in China. They seek a brand’s contemporary values and persona. Tastes may vary in such a highly fragmented market, but modern consumers desire to wear clothes that portray the best version of themselves. In current times, buyers tend to dress for the lifestyle they aspire to.

Should you have questions about your road map to the Chinese fashion and accessories industry, complete the below inquiry form with your questions and comments. 

DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.

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