In China Image is Everything
By Philip Leung
There were no signs of the economy slowing down at the China International Clothing and Accessories Fair (CHIC) at the end of March. Exhibitors did not hold back in staging elaborate booths that occupied 100,000 square meters collectively. The China market right now is booming, and the vibrant ambience of CHIC was a clear indication of just how well it is doing. It was as if the recession never made it to China and brands from all over the world wanted a piece of the action. However, the hard part for such companies is to sustain their level of growth. And for companies to survive in the long run, they must remain as flashy as the show.
In a sea of new domestic fashion brands, each company was jockeying for position to become the most memorable. Over 800 brands alone exhibited at CHIC and it was not just limited to Chinese companies. “All together, we have 21 countries participating,” said Gao Yuan, Vice Secretary of the China Clothing Association, “Many companies are looking to penetrate the burgeoning Chinese market.” Consumer confidence in China is still riding at an all time high, and the 4 trillion yuan (US$565 billion) stimulus package is beginning to trickle down to the already cash rich citizens.
With so many brands trying to take centre stage in China, the battle now lies in the hands of marketing. Dan Ahn, Creative Director of consulting group, Brand 36.5 Degrees, has noticed an influx of international companies requesting their services to break into the local market. “There was no need for branding in the past,” said Mr. Ahn. Now, he believes it is more important than ever to separate yourself from the pack.
Understanding a Complex Market
The key is segmentation. China, a country that possesses the fourth largest landmass in the world, is as diverse in terms of garment preferences as their culture. Even neighboring cities can vary in taste and income. An International Affairs representative of the Dalian International Brand Agency Center (IBAC) was on hand to explain the differences between Dalian, a Northeast city, and the rest of China. “In Dalian, they have four ‘clear’ seasons. The winter is especially cold and the summers are especially warm, therefore the variety of clothing is greater than other cities.” Every location in China is different, and its consumers are becoming savvy enough to understand the association that goes with each brand.
Overseas companies are no longer making the mistake of viewing China as one large market. International brands are quickly pairing with local distributors, because they understand it is the Chinese companies who know their own consumers best. Companies like Cache-Cache and Ajlan & Bros were aggressively seeking local partners at CHIC. “The Chinese market is too vast. We need to find a partner with the right profile, which can help overseas companies like us to enter the market,” says Said El Kharrouai, Head Manager of International Sales at Ajlan & Bros.
Credibility Crunch
Asian brands have the daunting task of convincing their domestic market that their quality is as high as any European label. Asian brands may have the same level of production facilities, designers and materials as other established labels, but Chinese consumers still shy away from brands that are not global. This was exactly the case for Bonia, and has frustrated managing director, Albert Chiang, “For the time being, the perception of Asian brands is not up to expectations.”
According to Mr. Ahn, establishing a brand takes months, even years. But for companies who cannot afford to build from the bottom up, they are taking the short cut by buying credibility. With the increase in domestic sales, Chinese brands have the capital needed to hire international talent from overseas. IBAC has recently set up two promotional offices in Milan and Barcelona – two of the trendiest fashion cities – which helped boost the company image.
Licensing Provides a Short Cut
Companies with enough capital can also differentiate themselves by licensing international brands. Booths at CHIC showing licensed Harry Potter and Mickey Mouse merchandise were constantly flooded with visitors. Long Wise is pushing to sell their Vincent Van Gogh brand into China, because even for an artist that passed away over 100 year ago, his name, according to Priscilla Wong, Managing Director of Long Wise, “Still symbolizes luxury and fashion.”
Companies are aware that big cities set the standard for a brand. Consumers have always looked to icon brand flagships in the major fashion capitals like London, Paris and New York to identify which labels where the trendiest, best quality and most fashionable. In a similar way, Chinese consumers are now looking to Shanghai and Beijing as the new benchmark to access the value their own local brands. Companies like Bonia, Louisa M and Shanshan are closely associating themselves with such cities and have had success positioning them as high-end by doing so.
Beyond Beijing
For fashion brands across the board, it is a race to reach untapped markets in second and third tier cities like Yantai, Shaoxing and Wuxi. These densely populated cities have immense potential, as they are growing in spending power and are only beginning to make up their mind in selecting brands. Charming Pop, a high-end bag company, has created a new lower line under a new brand name to cater to such markets. Bosideng, the largest down apparel company in China, has done the same. “We are currently pursuing the middle market,” explains Xu Cheng, Administration Director of Bosideng, “We are targeting consumers who are price conscious, but also demand functionality.”
There is no doubt Asia has the potential to produce another Vivienne Tam or Jimmy Choo because they have the intellectual resources. Courses on textile and design are growing rapidly in Chinese universities. The barrier to start a brand is much lower today, given the accessibility of the domestic market. To highlight some of the local talent, CHIC partnered with an art exhibition at the show. “If you look at all the big brands, they have their own artistic culture,” said Charlotte Yan, a representative of CAE Media. It is only a matter of time before another Asian brand goes international.