China looks like a few years fashion puts eyes. Fulfilled, parties, large events and tributes in the most exclusive sites. Western fashion brands are aware of the potential of that country, for only you can reach exceed the sales generated on other continents. The Millionaire love has their reasons, This time it is not necessary for the heart to understand, business is business.
1,300 million customers
In 2013 Europe had more than 742 million, United States over 355 million and in 2010 China alone already had with 1.370 million inhabitants, According to data from the Census of the people’s Republic of China. On the paper there to throw too many accounts. The potential audience is huge, even with large economic differences between them, there are customers for a multiple variety of brands.
Gateway to Asia
The China market is gigantic, but is also one of the most complex for businesses. Political system changes, and management is a difficult exit maze. The problems of doing business in China are known, but even so multinationals them compensates for integrate with the fabric in the best possible way. At the same time they have to adapt to the Chinese customer, with needs and different to Western tastes. Achieve it successfully China can be your gateway to Asia, accessing different markets with lower population but that together are a golden opportunity to grow, as for example by Southeast Asian (Malaysia, Indonesia, Singapore and Viet Nam…).
Grows the purchasing power of women
Fashion is in a market where the profile of the consumer continues to transform. The woman is gaining strength and at this time is half of the luxury market, According to Bloomberg, while in 1995, 90% of customers were men. Chinese society changes gradually and thus women who become more independent and come to the profile of the global consumer of the luxury market, where are those that spend more.
Nevertheless, the Chinese economy is weaker at this time and that is noticing in sales and the purchasing power of these clients. Luxury spending has declined in recent months.
T-Mall, a giant online
To access a market so big, not only in population, but in extension (China has 9.5 million km2), needed extra help that will normalize the situation the most. This Trojan horse is online and is called Tmall. Its operation is the closest thing to a Chinese Amazon, property of the Alibaba group, whose President is Jack Ma, one of the richest men in China.
This online Megastore is a perfect way of making contact with the country, a chance to reach the customer with lower investment and risk, and achieve a hollow for the brand among the more than 100,000 that exist on the web.
The first luxury market
Asia has been located as first the luxury market for groups such as LVMH, with 24% of its profit coming from the continent, which in addition to Japan, where obtained 6% of the total, according to their year of 2014. Europe and the United States with 27% are the second of the list.
This both per cent increases in Kering. Asia represented 26% of its benefits, along with 10% of Japan in 2014. Meanwhile, Western Europe was 31% and United States 21%. In 2015 the accounts of luxury in China will not be so positive after seeing the declines in sales of Chanel, Louis Vuitton or Prada.
The domestic market of luxury in China is shrinking, according to Bain & Company, who recommended brands adapt to the new reality and the expectations of consumers. One of these realities is the buying and selling of luxury goods from other countries to then import them to China, taking advantage of cheaper prices outside, especially in tourist travel. The own Jean-Jacques Guiony, Chief Financial Officer of LVMH, alerted of this situation and that could be competing against themselves.
Low cost wants its piece of the pie
H & M
A big market offers opportunities for everyone, so the low-cost He also has his big chance. So we’re seeing it in efforts that they are making groups such as Inditex, H & M, Mango and Primark.
Asia still not has been located as its first market, but long ago that it outperformed the American (13.9%) in the case of Inditex, where it was 21.1% of sales in 2014 – this figure also includes the rest of the world beyond Europe and America-behind the 46% that represents Europe (to which we must add 19% provided by Spain). The expansion of Inditex for China is still green in comparison to its position in Europe, so that in the next years this percentage will vary.
On the other hand, for H & M Asia is still in third place of importance, behind Europe and United States. H & M in Asia-Pacific sales reached 16,878 million kronor (1819,03 million euros) in the year of 2014.
The new competition is china
The Westernization of the country favors the big international brands, but in recent years a change is being and a small national brands within their own market boom -We still need to make Rihanna look them to know them, as happened with Guo Pei.
There are designers like Zeng Fengfei and Ji Wenbo that you have already participated in the Milan fashion week, brands such as Zuczug, owned by Wang Yiyang, who have experienced a remarkable growth or JNBY, Li Lin, who has been active since the 90’s and was a pioneer in search for new challenges in other countries. International designers have Chinese counterparts as Barney Cheng, Masha Ma, Huishan Zhang or Ma Ke or Xander Zhou, among many others, willing to compete for the same audience.
In the coming years, we see how a so powerful market ends up overcome the economic situation which is right now, while the international companies make efforts to continue adapting to its idiosyncrasies, entering at the time that native brands rise and claim your website with the same quality.