2. Market Overview
- China Reached in 2005 a Growth of 10.2% and in 2006 an Increase to 10.7%
Became the fastest growing economy in the world
- China’s Clothing Market Today Stands as the Main Monetary Flow in the Country
It has grown to 7%
It’s now a $40 billion cost industry
- Reduction of Barriers - Changes in Governing Investment in Retailing Sector
Opportunities for medium size retailers
New generation of growth and commerce
- Global Brands are Undertaking a Multichannel Approach
Franchising, own stores and department stores
- Increasing Income in China and Government’s Encouragement to Consumption
Rise in domestic consumption
3. Market Overview
Past:
1. Low priced - Basic Apparel Sold Under Local Names
Chinese department stores, foreign hypermarkets, small family owned speciality chains
2. Luxury Brands Which Sold in Either Franchises or High End Department Stores
Today:
1. Middle Level Apparel is Developing
Quality brands (Chinese and Foreign)
Sold in deparment and speciality stores
Examples
514 stores 644 stores
- Affordable Middle Class - “Price Wise”
4. Market Overview
- Retail Market
Beijing
Shangai
Guangzhou
Mature Markets
Still main cities of influence for fashion
Highest population and GDP
7. Consumer Behaviour
- Size of the Chinese Market - 1.2 billion potential costumers
- Exceptionally Brand Conscious
- Purchasers - Growing Professional Class
Well educated
Discrete purchasing power
Aspire to a better life
- Window Shopping and Searching for the Best Product are Common Activities
- Chinese understand shopping as an education
Fashion Industry
- Enjoy Shopping Freely
- Brands in America and Europe are more Value
8. Consumer Behaviour
- Availability to Browse in Search for the Products that Satisfies their Needs
Technology advanced + Higher expectations in product quality
9. Consumer Behaviour
- Young Generation
See more than any other generation - luxury products as a status symbol - superiority
Youngsters spend on fashion more than ever before - increased 7.2% by year
Encouraging fast fashion - retailers willing to sell affordable clothes for this target
Rise in teenage fashion conscious groups - China’s one-child policy and economic
reorganization
10. Consumer Behaviour
Past:
1. Consumers would usually leave the label stickers on their suits or sunglasses.
2. Brand as a symbol representing money.
3. They used to be tricked by superficial characteristics: logo and advertising.
Today:
1. Shifting behaviour - Brand as a symbol of style, quality, colour, fitting and cut, price, image
and service.
2. Retail Market has switched from a product-orientated to a consumer-orientated
philosophy.
3. Importance given to product, costumer service and extra values.
11. Luxury
- The Economic Downturn
Impact on Chinese luxury consumption - specially Hong Kong
- The Gap Between Tier 1 and Tier 2 Luxury Markets are Being Reduced
Consumers in Tier 2 cities are becoming more mature regarding to perceptions, behaviours
and usage.
- Traditional Media Remains Essential for Chinese Luxury
Although new rapid and universal use of internet technology is changing many rules.
- Adult Consumers are Showing a Balance Between Rational and Emotional
Factors when Choosing their Most Preferred Brand.
Louis Vuitton and Cartier today remain on the top even though they are facing a competing
market.
Chanel is ranked top too - due to it’s clear image and iconic branding.
- Meawhile, Regarding Youngsters, Results are the Opposite
China Embraces Luxury Brands: http://www.youtube.com/watch?v=ZUfrSqMhni4
12. Luxury
Source: Interviews within young shoppers (17-) in Shangai, Beijing, Hong Kong and Nanjing in October and November of 2008.
Note: These data reflects 627 responses
13. Major Local Companies
GUO PEI
-Turned down Milan Fashion Week in order to show domestically
-She created designs for Kunqu Opera Two Belles in Love
-China’s premier fashion designer
-Haute Couture in the China fashion sector
HE YAN
-Shanghainese designer
-Worked for large Shanghai fashion companies
-2003 went solo, 2007 launched her first shop
-Compared to Raf Simons (Belgian fashion designer)
MA KE
- Creative director of Exception
- Created Wuyong label and showed it in Paris
- Considered most important young fashion designer in China
- Sold to 60 stores across 30 cities in China
14. Major Local Companies
METERSBONWE
-China’s leading casual apparel company
-Opened their first store in 1995 in Wenzhou
-1800 stores in China
-In 2006 the Group’s retail sales exceeded RMB 4 billion
QIU HAO
-Graduate of Central Saint Martins
-Winner of Woolmark Prize
-Experiments with concepts, shapes and fabrics in his
avant garde women's apparel
-Inspired in chinese opera
15. Major Global Companies
LU KUN
-Chinese fashion designer
-Selected best Young Designer of 2004 by Shanghai Fashion
Federation
-Nickname of “China’s own Galliano”
-Aroused interest of distributors and retailers in Europe and US
-His designs are worn by Hollywood stars such as Paris Hilton
VERA WANG ALEXANDER WANG
-Chinese heritage -Chinese heritage
-Known for wedding gowns -Distributes worldwide
(designed them for many -Won $200,000 prize
celebrities) as the CDFA/Vogue
-Worked as senior fashion editor Magazine Fashion
for Vogue US
Award
-Stores worldwide
16. Major Global Companies
SHANGHAI TANG
-First luxury brand emerging from China
-39 boutiques, including Shanghai, New York, Paris, London,
Tokyo and Madrid - present throughout the world
- Opened boutiques in Macau, Dubai, Madrid, Frankfurt and Las
Vegas, relocated its New York flagship store on Madison Avenue.
GIORDANO
-Popular fashion brand from Hong Kong
-Established in 1981 in the former British colony
-Created market shares in over 30 countries in Asia, Australia and
the Middle East.
-Plans to open 2000 stores worldwide by 2010 in countries like
India, Eastern and Western europe as well as north America
17. Fashion Events
Intertextile Pavilion Shenzhen 2010 (May)
Exhibits a wide range of fabrics, finishes and textile related technology.
Organized by One of Europe’s oldest and largest trade fair organizers.
2010 China (Qingdao) Garments, accessories, Home textiles & fabrics exports fair
Takes place in Qingdao China, where all different textiles an garments are displayed for all
different classes and garment ranges. It has an international attraction and is sponsored by
the China Council for the Promotion of International Trade.
Beijing Fashion Week Shanghai Fashion Week (Shanghai Festival)
18. Fashion Events
Shanghai International Textile Expo
“The international rendez-vous for the textile industry. Nothing can match the value of
meeting with your customers and prospects in person, and Fashion Shanghai show will
deliver thousands of decision-makers to you” Mode Shanghai.
The asian version of Premier Vision as part of shanghai International Fashion Cultural
Festival organized by Shanghai Municipal City Government.
19. Fashion Events
Fendi 2008
In 2008, Karl Lagerfeld decided to have a “majestic” fashion show for
Fendi at the Great Wall in China. Estimated to have cost $10 million.
Chanel
In 2006 Chanel had a Spring Summer fashion show in an airplane
of China Airlines followed by a fashion show in Shanghai in
December 2009.
Coco Chanel was known for having a passion for Asian antiques and
an interest in Chinese culture, which is what inspired
Karl Lagerfeld to create a collection called “Terracotta Army”,
“the urban romanticism of Chinese cinema, the glittering
decadent-chic of 1930s Shanghai and the opulence of the
imperial court.”
20. Fashion Events
Versace
Versace showed its Spring/Summer 2009 collection (which had previously debuted in Milan) in
Beijing.
Donatella Versace and Chief Executive Giancarlo Di Risio revealed some interesting thoughts on their
perception of the Chinese market. “Versace expects to make Asia its second biggest market in terms
of turnover after Europe by the end of next year. China is a strategic country for the company, Chinese
women love fashion” Versace invested $56.09 million to strengthen its presence in Asia.
21. Market Business Opportunities
+ 400 million Chinese are aged in between 20 and 39 against 110 million in Europe
+ Young adults are extremely motivated, educated and open minded
* High - End fashion is dominated by big overseas firms while low-end market is
dominated by national firms
+ Young designers can set up national High-end
+ Overseas low-end fashion can invest/import
+ Population of 1.3 billion
Predictions for 2020
22. Market Business Opportunities
+ China’s increasing interested in independent designers creates opportunities
domestically
+ China slowly moving from their logo obsession giving space for local and young
designers.
+ China is a consumerism society so attractive for all high end fashion brands
+ China’s luxury sales up 12% while down 8% globally (2008)
+ Chinese are incredibly ambitious and want to increase fashion export of domestic
brands
Young Fashion Designers Make Their Mark in Beijing: http://www.youtube.com/watch?v=KyNd7nORqe0
23. Market Business Opportunities
+ Continuous movement of production provinces attracts more investment
+ Increase in GDP + Rise in domestic consumption attracts investors.
+ In 2008 China’s number of wealthy households reached 1.6 million which is interesting
for foreign investment.
+ Shanghai World Expo 2010 is expected to have more than 70-100 million visitors.
+ Increase distribution of goods, this is very weak at the moment.
24. Industry Future - Challenges
- Overcapacity, poor investment efficiency, low national income per capita, flagging
domestic consumption, expanding gap in personal incomes.
- A big problem is their dependency on overseas markets
China’s economy is based on: Export and Investment
Meaning that they are very sensitive to the global economy.
- The Chinese decreasing care for brands challenges overseas High end brands
- Chinese new independent designers have to create and maintain a brand image in
order to be strong in the competitive market
- A change in regional product life cycles.
- Manufacturers are starting to create their own-label brands and offering their designs
to brands producing in China. These companies have a lot of industry know how and
capability threatening the big companies.
- Increasing cost of production due to keeping up with technology
25. Industry Future - Challenges
- Factories closing due to drop in export demand creating unemployment.
. Foreign investment has dropped because of global downfall in profits, rise in
unemployment, global decrease in consumption and corporate operational
difficulties.
- Company profits decreasing due to rise in production cost.
- India, Bangladesh and Eastern Europe are becoming strong manufacturer countries.
- Water Shortage, Drought and floods affecting people and destroying buildings.
26. Industry Future - Challenges
Air Pollution is a serious issue in China
- 16 of the 20 most polluted cities in the world are in China.
- The air quality in Beijing is 16 times worse than NYC
- Only 1% of the 560 million Chinese people living in cities breath air that is considered
safe by EU standards.
Why is this a problem?
1. Increase in illness of employees = decrease in production efficiency
2. Alternative energy used in other countries may attract companies to move for a better
future perspective.
3. China could decide or be forced to cut production of certain materials/products
causing production to stop -> A threat to companies that rely heavily on China
4. Increase interest of ethics and clean work space.
27. Industry Future
What does China need to become an important fashion country?
1. An increase in domestic fashion companies, especially in the high-end market.
2. Cleaner production processes and an increased use of alternative energy and
sustainable resources.
3. Make investment process faster and safer through an improved legal system and
decrease in corruption, counterfeiting and fraud.
4. Increase export of Chinese fashion companies, not solely being an exporter for low
end and an importer for high-end.
5. Help its young generation with their ambitious goals of putting China on the fashion
map regarding design.
28. SWOT
Strengths
-Large young adult population
-Cheap labour
-Good fashion schools and domestically known designers with the ambition to grow
-Motivated young generation
-Continuous foreign investment
-World’s biggest exporter of textile and man-made fibres
-Technology
Weaknesses
- Depend on overseas brands for high end luxury market
- Economy depends on foreign investment and export
- No added value to fabrics produced in China
- Out-dated man-made fibre manufacturing units
- Distribution is a problem for retailers, There is no nationals freight carrier, instead of the 5
million truck operated by hundred of thousands of businesses.
29. SWOT
Opportunities
-Big population can attract many foreign investors for all different fashion level brands
-Shanghai World Expo 2010
-Foreign Companies - joint ventures
-Large amount of fashion events to be promoted globally to attract foreigners
-Piracy: China could create 2.6 million new jobs in information technology if reduced, giving
an opportunity for website programmers
-Young population’s interest in fashion
-Create stability by investing in emerging Chinese designers
Threats
- Air pollution getting worse
- If global economy becomes weaker china’s economy will collapse
- Water shortage affecting population / as well as drought and floods.
- Fraud and Counterfeiting problems.
- Corruption
- Legal System
- Dropping dependence on labels by Chinese is a threat to brand-logo related brands.
30. Conclusion
If China ensures a stable fashion market with a rise in
domestic designers and fashion events, it could not only be
known for manufacturing but also for its own design. This
would create a more economically resistant market and create
new opportunities for export of Chinese design as well as a
more constant income of money.
