The China fashion retail market, servicing a population of 1.4 billion people, with GDP growth of 6% in 2017. It is not difficult to see why the rush to gain market share has never been so great. Understanding the fashion retail market in China is not without its difficulties. Let’s put the big pound signs to one side and let’s get back to basics. Let’s create more boom than bust in a market that holds so much opportunity for businesses willing to put the work in, for the long-term benefits.
This week Onwards and Up caught up with Jack Porteous, Assistant Director, UK Retail Sector Lead, at the China Britain Business Council. A members-based organisation, with a focus to advise and assist British companies to successfully export to China.
Jack is a great font of knowledge when it comes to the China fashion retail market. He lived in China for 3 years and can speak fluent Mandarin.
He is definitely one to keep in your back pocket if you want to get ahead and grow your business in China.
Having worked with Jack on several projects recently and also being colleagues in a previous lifetime, Onwards and Up thought it only fair that Jack put together a no-nonsense top business advice on building your business in China. Great tips and information for you to follow up with, so I hope you are sitting comfortably.
First up, Happy New Year to everyone reading this blog, but should you wish people the best for the year by saying gong xi fa cai or gung hei fat choi?
If you are going to try to ‘get’ into the China market, a fairly basic starting point is understanding that China is not one place, one people, but many sitting under one overarching culture.
To friends from Mainland China, say the Mandarin – gong xi fa ca – and for any Cantonese speaking Hong Kongers it’s gung hei fat choi.
Exporting to China
In the UK we’re curiously unexposed to China and Chinese culture, considering that it’s such a major part of the past, present, and future of the globe.
Knowing a little can go a long way. Nobody likes to be treated ignorantly or confused with another culture, be spoken to in the wrong language, or have assumptions made about them.
With that in mind, for any fashion brands aspiring to sell to China, I think it’s important to first have a bit of understanding of the following.
What Are The Chinese Consumers Like?
It’s hard to summarise such a broad range of consumers in a few words. It is useful to know a couple of overarching consumption trends which define the ‘average Chinese consumer’, who of course doesn’t really exist!
The Chinese consumer is tech-savvy and socially active online. They spend several hours on social media per day to do everything from sourcing services and chatting with friends, to shopping online and following their favourite internet celebrities.
Confusingly both increasingly brand loyal and increasingly open to lesser-known brands. Chinese consumers value brand and quality, as well as value for money.
If you have a brick and mortar presence in the UK or sell through your own e-commerce site, you may already have Chinese customers.
Try to find out about what this group looks like, why they value your brand, and what exactly they are buying from you.
How to Sell to China Fashion Retail Market Offline
The most common, and usually straightforward, route to market is to sell to a fashion store in China. There is an increasing number of high-quality multi-brand stores like Anchoret in Beijing, Alter Shanghai, the chain of florists turned lifestyle boutiques The Beast Shop, the painfully cool Triple Major (Beijing and Shanghai), the beautifully curated The Ooak jewellery store in Shanghai. Attos is a China-wide luxury outlet and there are countless others.
There are also several established foreign department stores in the major shopping centres in China, such as Lane Crawford, Isetan, Galeries Lafayette. Nearly all the department stores offer online sales as well, as you would expect.
Direct wholesale business makes up a tiny part of their business and mainly focused on key categories. These are mother and baby, beauty, personal care, some accessories. Alternatively, global brands are otherwise known as ‘banker brand’ that can fly off the shelf with minimal effort.
Where Do You Meet Chinese Fashion Buyers?
Many Chinese fashion buyers visit overseas fashion trade shows. Paris Fashion Week and New York Fashion Week. In addition, they also visit Pitti Uomo for menswear in Florence Italy. The buyers will likely attend China/Hong Kong shows relevant to their interests.
How to Sell to China Fashion Retail Market Online
The Chinese e-commerce boom has been buzzing for years now and you’ve probably heard of some of the bigger players, such as Alibaba (TMall and Taobao), and JD.com.
These platforms are like department stores and will only buy known brands and mainly rent online space to brands or multi-brands, have vast consumer bases and impressive GMV stats. But are they a good partner for you?
Generally speaking, if you are going to be selling less than £1m/year on TMall it’s hard to make money going directly. However, partners (boutiques, distributors etc) might sell through their TMall or JD stores at no extra cost to you.
Other platforms like VIP.com, which is China’s third-largest platform who is this year (2018), sponsoring London Fashion Week.
Kaola an e-tailer known for selling foreign goods, whilst Secoo is a cross-border luxury platform, and more niche vertical marketplaces can offer an easier route to market and considerable user bases.
Top Tips For Selling Successfully In China Fashion Retail Market
Intellectual Property Rights
Protect your brands trademarks. This is the equivalent of your prenup with China. Own your brand, enhance its value, and don’t let anyone take it from you.
China has a sometimes-justified reputation for counterfeiting and for trademark squatting (although the situation is improving year on year). Prevention is so much easier, cheaper and less painful than cure. If brands like New Balance and Apple can’t win legal cases against people using their trademarks, you can’t either.
Register upfront and save the pain! See CBBC’s member directory for details of Intellectual Property lawyers specialising in China.
Who is Your Competition?
Know the competition! Competition from domestic rivals in China is greater than ever before, especially in all fashion sub-sectors. The shop floor in Lane Crawford is wildly different to ten years ago. It’s not uncommon for the stock to be 50% plus from Chinese fashion designers. This means you really have to stand out and fit in with the current trends and zeitgeist. Check out Culture Trip Article.
Getting Paid In China
Get paid! Like with any potential new wholesale customer anywhere in the world, how do you know the company is trustworthy? How do you know that they will pay their bills, or even follow through on the order? Check in with CBBC if you want to know if we have heard of the store or buying group.
Agree on terms in advance of dispatching the order. It’s almost impossible to chase payment from the UK once shipped. For new customers, be clear on terms and how much you ask for upfront.
How To Maintain Contact With China Fashion Buyers?
Stay in contact! Not getting any response to emails. Use WeChat. WeChat is the social media app meets necessary life aid, meets the online ecosystem. If you don’t know much, I would recommend downloading the app.
Be sure to add Chinese buyers you meet and make sure you label them in the app so you know who they are. Having 17 contacts with names in Mandarin and profile pictures of cute animals is not going to help you know who people are in 3 weeks’ time.
What Are The Chinese Labelling Requirements For Fashion Businesses?
Have you done your labelling? If you are selling directly into the China market, do you know the regulations around your products? Will it get into the market or is testing required, for example, beauty, childrenswear and tableware.
Have you got the right labels in Mandarin on your products? Are you responsible for this or is the buyer taking this on for you? If they are not doing it can they help you out?
There is nothing more frustrating for you and for the buyer than stuff getting thrown away in Shenzhen because the paperwork wasn’t right.
Get Support And Help To Grow Your Business In China
Talk to people with experience. This could be an adviser from CBBC like Jack Porteous, Onwards and Up who has experience of exporting to China, your trade association, someone who you know separately who has worked with China in the past, or all of the above.
At CBBC we do our best to offer advice, support, and contacts to businesses across all sectors. Although we are a membership organisation, we do our best to support British business as much as we can more generally, and work closely with the Department for International Trade in the UK and in China.
Our 100 plus staff in China across 13 locations mean we are plugged into business and trade activity and offer a variety of services depending on where you are
Keep Your China Market Knowledge Up To Date
Keep learning! Confucius famously asked, ‘Isn’t it a pleasure to study and practice what you have learned?’, and he definitely knew a thing or two.
The CBBC run a range of events, like our upcoming Conference, smaller classes on IP and contracting culture training, or specific seminars on retail issues.