by As economic deflation, sluggish demand, an aging population and declining birth rates take their toll on China’s luxury and fashion market, domestic companies are stepping up their efforts to go global.
The strategy means changing from relying solely on foreign trade for growth to strengthening brand building and leveraging technology and service exports to conquer larger markets. In the mainstream story of Chinese business, there is the following sentence: “If you don’t go global, you are out of the game.”
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The importance of September to China’s fashion industry is similar to the Spring Festival. During the current period, known as the golden September and silver October in the fashion industry, Chinese fashion brands are expanding strongly overseas.
First, overseas fashion weeks and clothing shows have attracted a large number of Chinese-funded brands. The One Milano fashion exhibition was in Milan, where the China National Apparel Association led a delegation of 25 companies in the Chinese exhibition group Moda China@TheOneMilano. At London Fashion Week, 11 Chinese designers participated and there was also a strong presence of Chinese brands – JD.com’s clothing division, with the theme of “Encountering Red,” teamed up with brands such as Hazzys, Ellassay, Marisfrolg and Pure Tea were featured .
Brand expansion into overseas stores is accelerating. After Heilan Home entered markets such as the Maldives and Kenya in the first half of the year, and the official launch of an independent e-commerce website 361 ° abroad, Semir recently entered Vietnam, opening its first store in the central city . of Hue within the Aeon Mall, displaying children’s, youth, men’s and women’s clothing. The store emphasizes the “Family Concept,” catering to the one-stop shopping needs of family members of various age groups. At the same time, Semir officially revealed plans to open a 5,380 square foot flagship in Hanoi, the capital of Vietnam, by the end of 2024 to accelerate its presence in the Vietnamese market.
An increasing number of Chinese-funded enterprises are participating in overseas exhibitions to learn from European experiences and understand overseas demand, which contributes to the trend of group exploration of the overseas market. In addition, more and more Chinese brands are entering new territories overseas, opening stores as they step up efforts to optimize and even reshape their brand images.
From Supply Chain Exports to Brand Exports
This world round is clearly different from any previous era. Sun Pan, consulting partner at PwC China, said in an interview with WWD China: “The continuous global approach of Chinese enterprises is at a stage of change and upgrading, with a greater focus on local operations, brand building and long-term strategic planning. .”
In China, overseas expansion in the 1980s was characterized by the export of labor from coastal cities such as Wenzhou and Fujian; In the ’90s, the main effort to go global was to launch state-owned enterprises, which focused on building infrastructure, and some technology companies tried to expand abroad.
With China’s entry into the World Trade Organization, the focus shifted to foreign trade, and total exports of textiles and garments ranked first in the world for 30 consecutive years. In recent years, the domestic and cross-border e-commerce has been at the forefront with unicorns such as Shein, Temu Pinduoduo, Alibaba’s AliExpress and TikTok Shop forming the “Four Little Dragons of Cross-Border E-commerce,” which have been fiercely competing abroad . markets in recent years.
In terms of product categories, clothing, furniture and home appliances were the three traditional items for export after China became the factory of the world. Now, with NEVs, lithium batteries and solar panels as the “three new items to export”, opening markets, technology and export services are at the heart of the new overseas expansion.
But clothes still make up a large part of the total, even as the overseas expansion of the clothing industry has shifted from a mere supply chain to a comprehensive export of brands, technology and services.
“The new brand’s teams have broader international perspectives and can better adapt to the needs of global development, achieving a diverse integration of culture, management and values,” said Sun Pan.
The new generation of brands exploring the overseas market are generally competent to improve brand visibility and appeal through story-driven communication and innovative marketing strategies, using various channels such as social media, KOL collaborations and content marketing . Moreover, they are more proactive in leveraging digital tools and platforms, allowing them to improve the effectiveness of team collaboration and decision-making that ensures flexible operation and rapid response to overseas demand.
Regarding the original design of Chinese brands, she believes, “Currently, some emerging brands have already made significant performances in terms of design and expression. In the future, more and more Chinese designer brands will appear on the international stage. Going global is not only about expanding retail channels for these brands but also about gaining extensive co-branding collaborations through international fashion week platforms, leading to a steady increase in visibility and reputation.”
From Cost-Performance Ratio to Price-Quality One
In their development, Chinese-funded clothing companies will inevitably face the challenges of branding and internationalization.
In the domestic market, they are caught in a red ocean of homogenized competition, hoping to use brands and IPs as a means to find a way out. In the international market, where Chinese-funded brands once won with a high “cost-to-performance ratio”, they are now opening up overseas markets with a high “quality-price ratio” aiming for demand in the domestic market. to encourage in return.
In recent years, Chinese clothing companies have continuously increased their investment in research and development, promoting the implementation of new technologies and processes, such as the use of sustainable materials and the development of functional fabrics, in order to add value and competitiveness. improve the market for them. products.
Taking the Chinese delegation participating in The One Milano clothing exhibition in Milan as an example, the exhibiting companies were all the “cream of the crop” in various categories of Chinese mid-to-high-end clothing products. For example, Heaven Deer, China’s leading producer of double-sided woolen coats, has been cooperating with high-end European brands for many years and has brought four types of products, including camel hair, camel hair blends and sports style coats, to the test of the market. Also, the designer brand BenZhaoRi, which mainly uses black, white and gray as its primary colors, chose Milan as its first stop to go global and found that the European market has high requirements in terms of fabrics and choice for eco-friendly materials, of course. immediately indicating a direction adjustment.
Sun Pan believes that China has a complete apparel industry pipeline that starts with raw materials and goes through production processing, logistics distribution, to terminal sales, which enables the entire process to be completed from design to finished product in a reasonable period of time. short. This enables Chinese brands to attract consumers by responding quickly to market changes and providing products with high cost-performance ratios. At the same time, upgrading through digitization and information to improve production efficiency and product quality is an important competitive advantage in the international market. Moreover, with the implementation of the Regional Comprehensive Economic Partnership (RCEP), the trade mobility and activity of Chinese textile and clothing companies in the region has increased, which will help enterprises to optimize the allocation of resources, integrate the supply chain and strengthen and improve. the value chain.
For Chinese brands, opportunities are also accompanied by challenges and obstacles. It cannot be denied that Chinese clothing companies have shortcomings in design and brand offering compared to international brands, and they face challenges in the international market such as cultural differences, legal compliance and localization.
There is a lot of uncertainty regarding trade conservatism, geopolitical risks and the unpredictability of going global, but one thing is certain: for any company, going global is an opportunity to present a new image to the brand. It could even be said that each brand can redefine itself by “localizing” in new markets, thereby positioning itself in a completely different market landscape.
Editor’s Note: China Insight is a monthly column from WWD’s joint publication WWD China that examines major trends in that key market.
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