As luxury retailers gear up for a record-breaking Golden Week, Drapers asks experts how UK brands can break into the vast Chinese market
Tmall: tapping into 434 million annual active Chinese shoppers
China has long been labelled as the land of plenty for UK fashion retailers, lauded for its huge population (1.35 billion and counting) and rapidly expanding middle class. Although a slowdown in the economy got 2016 off to a shaky start, high street giants such as New Look and House of Fraser still have China firmly in their sights. There are plenty of opportunities for UK fashion retailers who nail their approach to this vast but challenging market.
With more than 434 million annual active shoppers and a 72.6% share of the China’s online market for fashion, Alibaba’s online marketplace, Tmall is a dominant force. Drapers spoke to the general manager of Tmall apparel, Jianmei Lu, about the growing potential for fashion retailers in China
Why is China an important market for fashion brands?
China is now one of the world’s largest retail markets with a consumer base that is increasingly hungry for foreign brands and products. In 2015 alone, the total retail sales of consumer goods in the country reached 30.1 trillion yuan (£3.39 trillion). Foreign fashion brands are highly desired by the average Chinese consumer, who are being exposed to them more than ever before, partly because local fashion brands in the country simply do not offer the kind of cutting-edge fashion that western brands do.
What are the biggest challenges when entering the Chinese market?
The main challenges is choosing products that appeal to Chinese consumers and then understanding how best to reach them. It is crucial that foreign businesses know the most effective communication channels are in order to raise awareness of their brand, which requires access to Chinese social media tools and in-depth data and analytics. Another major challenge is adapting to customers’ personalised needs. Customers in China expect almost immediate feedback to questions and prefer online conversations to email, a time-consuming but necessary requirement.
How can brands and retailers best engage with Chinese consumers?
Brands seeking to expand into China should be aware that launching a standalone website is only one step in a successful ecommerce strategy. Many shoppers in China look to online marketplaces to make their purchases and learn more about products from overseas. Other useful tactics include opening accounts on Chinese social media sites such a Weibo, launching a Chinese-language version of their home-country sites and getting on shopping recommendation sites that specialize in promoting foreign brands.
What are some of the differences between the fashion market in the UK and the China?
The most notable difference between the fashion markets in the UK and China is that Chinese consumers go to online marketplaces to do the bulk of their shopping. Second, mobile is the main method of shopping in China for the average consumer, as fewer and fewer consumers shop online using a standard desktop computer. Mobile and smartphone density in China is more advanced than in the west, as mobile technology became accessible and affordable to consumers before landline and cable broadband technology did. Finally, while the fashion industry dictates trends in the UK, it is the opposite in China: it is the consumers that do the dictating. The foreign fashion brands that excel in China are those who respond and adapt to consumer trends.
Do western brands overlook the opportunities in China?
In increasingly competitive global markets, foreign brands can be initially put off by the prospect of making strides into the world’s most populous country. The perceived workload needed to get things off the ground can cause western brands to overlook the opportunities in China, but the process isn’t as time sensitive or tricky as many think if you choose the right partners and understand the Chinese consumer.
Top tips for breaking into the Chinese market
Emma Rowland, UK sales director in Asia for Kerry Logistics, shares her tips on cracking China
1 Do your homework
There are a lot of regulations to deal with in the Chinese market and they change frequently. Digital shopping is booming, but in April the Government released new policies to help regulate cross border retail and mitigate theft and fraud. The rules mean tax rates have been adjusted and changes made to custom regulations. It’s early days for the rules and we don’t yet know how they will be interpreted, but they could mean more cost for etailers.
2 Understand the consumer
Chinese shoppers are historically frugal and they like a bargain. There are vast regional differences across the country and its consumers are different sizes and shapes to western buyers, as well as having different spending patterns. Understanding demand is key.
3 Nail delivery proposition
The Chinese market comes with its challenges. Chinese customers will demand a high level of service and speed when it comes to shipping. UK retailers will need to nail their delivery proposition. Consumers expect delivery to be free or to pay minimal charges for next or same-day delivery.
4 Concentrate on logistics
It is important to build a slick supply chain that can cope with distance and costs, as well as building a reliable returns process. If you cannot provide this infrastructure yourself, choose a partner that understands the market and can navigate the complex compliance landscape.
How to build a successful fashion business in China
Eve Group is one of China’s most successful retailers. Here its founder explains how to build a fashion business in China.
Xia Hua, founder of Eve Group
“China is the largest consumer market in the world, so finding the right partner in the market is pivotal. Retailers have to establish a good starting point. China being such a huge market is an advantage on one hand, but it presents challenges. With such a large market, the challenge is to find a route to market that is accurate for the clientele your brand wants to have access to. Without finding the right route to market, breaking into China takes a long time and a lot of money.
Designers like Tory Burch and Alexander McQueen are doing well in China, but other brands, particularly newer, younger brands are struggling. Young designers have limited resources for promotion, marketing or even for a bricks-and-mortar presence in shopping malls. The key is to use the established network already in China, to partner with them and take advantage of their existing network.
The younger generation in China, aged 20 to 30, have good spending power and are hungry for fashion brands. But if western brands come to China and simply use the story they’ve used elsewhere in the world, Chinese consumers will not engage. You need to find your connection with the Chinese market. Understand the culture and engage with it.
Four UK retailers dipping their toes in the Chinese market
Boden 16wwin ww103 dbl w0177 1 copy
Young womenswear brand Little Mistress is seeking to roll out franchise stores in China in 2017.