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Many Western fashion brands have made valiant attempts at entering China’s marketplace, only to slink away with their tail between their legs. In fact, it’s been estimated that 48% of foreign brands entering China will fail within 2 years. This statistic is a good illustration of how difficult this market is for outsiders to penetrate.
Marks and Spencer have now admitted defeat. After scaling down its ambitions to focus on purely online retail, it has now withdrawn entirely from China. ASOS also decided to throw in the towel.
Other brands have had their fingers burnt – Burberry suffered from its over-exposure in the Asian market and both Hermès and Louis Vuitton have closed stores.
When China’s economy was steaming ahead, companies could afford to get things wrong. But now that growth has contracted somewhat, and with consumers becoming more discerning as they become more experienced, it’s important to have the right strategy.
Competition is also now intense, and that competition comes from within the market as well as from other foreign brands.
China’s hourglass
One theory of China’s consumer marketplace is described as the ‘hourglass’ shopping model. It describes the predilection that Chinese consumers exhibit for shopping at both the top and absolute bottom end of the market.
A desire to consume conspicuously to maintain social standing means Chinese shoppers may buy a luxury wallet or coat, but their aggressive approach to bargain hunting means that they are ferocious about seeking excellent value for private consumption. This means they’ll buy the cheapest slippers for home use, and the most expensive lipstick to wear outside the home.
This isn’t good news for the mid-market, and that could explain Marks and Spencer’s undoing. The brand simply wasn’t good enough value for China’s bargain-hunters.
The British brand offered clothes that weren’t cheap by Chinese standards, and cheaper apparel was available from local competitors. But neither were they expensive or glamorous to really dazzle anyone.
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ASOS seems to have had a similar experience trying to sell fast fashion to China’s young adult audience – an audience accustomed to paying rock-bottom prices for their clothing.
Although ASOS is a well-known brand in Western markets, it struggled to make its mark with Chinese consumers against local competitors Alibaba and JD.com who dominate the market.
It’s also worth saying that both brands seemed to have failed to adapt their offering properly into the local market. Both ASOS and Marks & Spencer sold clothing in sizes and cuts that didn’t suit the local body type.
ASOS was also criticised for not stocking a wide enough range. Many other brands have struggled with their supply chains in China. In a tough market, these mistakes aren’t really acceptable.
Fashion brands have generally made some or all of four key mistakes in China. They don’t listen; they don’t localise; they underestimated the extent of local competition and they don’t understand the importance of mobile.
To a greater or lesser extent, these have been the rocks that many a fashion brand has sailed onto.
Luxury fashion gets it wrong
Asia is a key market for luxury fashion, and the luxury industry has responded by expanding its activities geared towards the Asian consumer. Sometimes those efforts have been laughably gauche, and they’ve rightly been pilloried in local media.
Chinese consumers have reacted against attempts to localise luxury products to their culture. Often the products being offered to them are careless, cynical and culturally tone-deaf. Burberry faced a backlash when it tried to add a Chinese character for ‘fortune’ on one of its trademark pattern scarves; a careless way to localise.
Photoshoots have been criticised for depicting clichéd scenes of “Ye Olde China” rather than the modern China consumers recognise. Localising products for China’s luxury consumers needs to be about more than just working dragons into your existing product lines or changing an existing product red.
There’s some evidence that Chinese consumers are tiring of traditional red and gold themed products. Some brands are having greater success with more obscure symbols that are more authentic and have the added cachet of being less common.
Chinese consumers are also highly wary of counterfeiting and will avoid products that give any hint of looking cheap or fake whether they’re real or not.
Nike made the mistake of creating a shoe for China’s market that was criticised for its crude design and considered by local consumers to look like a fake. Burberry’s scarves with Chinese characters on them were also felt to look like counterfeit products by discerning shoppers.
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Chinese consumers are proud of their culture and are annoyed at cynical attempts to sell their own culture back to them.
They live in cities that are modern and don’t recognise the ‘rice-fields and bicycles’ portrayal of it that Western brands often convey to the Chinese market. And they’re willing to express themselves vocally on social media if they feel brands are patronising them.
The fact is, it’s incredibly hard for Western brands to really understand China’s consumers. Fast growth and rapid social change mean tastes are changing quickly. It’s hard to keep up. China is, to some extent, a closed ecosystem – it has its own social media, writing system and language. It’s a hard place for outsiders to penetrate and truly understand.
Perhaps that’s why fashion brands have such varied fortunes – fashion is one of the industries that is most sensitive to sudden mood swings and changing tastes. In this industry, more than any other, it’s vital to have your finger on the pulse to truly understand what’s making consumers tick right this very moment.
