As economic deflation, sluggish demand, an aging population and declining birth rates impact the Chinese luxury and fashion market, domestic companies are stepping up their efforts to go global.
The strategy means transforming from merely relying on foreign trade for growth to strengthening brand building and leveraging technology and service exports to conquer larger markets. In the mainstream narrative of Chinese business, there is a saying: “If you don’t go global, you’re out of the game.”
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The significance of September for China’s fashion industry is akin to that of the Spring Festival. During the current period, known in the fashion industry as the golden September and silver October, Chinese fashion brands have been aggressively expanding overseas.
First, overseas fashion weeks and apparel exhibitions have attracted a large number of Chinese-funded brands. There was The One Milano apparel exhibition in Milan, where the China National Garment Association led a delegation of 25 companies in the Moda China@TheOneMilano Chinese exhibition group. At London Fashion Week, 11 Chinese designers participated and there also was a strong presence of Chinese brands — JD.com’s apparel division, with the theme “Encountering Red,” joined forces with brands such as Hazzys, Ellassay, Marisfrolg and Pure Tea to appear.
There is the acceleration of brand expansion into overseas stores. Following Heilan Home’s entry into markets like the Maldives and Kenya in the first half of the year, and the official launch of 361°’s independent overseas e-commerce website, Semir has recently ventured into Vietnam, opening its first store in the central city of Hue within the Aeon Mall, showcasing childrenswear, youth, men’s and women’s clothing. The store emphasizes the “Family Concept,” meeting the one-stop shopping needs of family members of different 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 taking part in overseas exhibitions to learn from European experiences and understand overseas demand, which further fuels the trend of group exploration of overseas market. Additionally, more and more Chinese brands are entering new territories abroad, opening stores while intensifying efforts to optimize and even reshape their brand images.
From Supply Chain Exports to Exports of Brands
It is clear that this round of going global is different from any previous era. Sun Pan, advisory partner at PwC China, stated in an interview with WWD China: “The going global approaches of Chinese enterprises are at a stage of transformation and upgrading, with a greater focus on localized operations, brand building and long-term strategic planning.”
In China, the overseas expansion of the 1980s was characterized by the export of labor from coastal cities such as Wenzhou and Fujian; in the ’90s, the main effort of going global was the dispatch of state-owned enterprises, which focused on infrastructure construction, and some technology companies attempted overseas expansion.
With China’s entry into the World Trade Organization, the focus shifted to foreign trade, with the total export volume of textiles and garments ranking first in the world for 30 consecutive years. In recent years, domestic and cross-border e-commerce took the lead with unicorns like Shein, Pinduoduo’s Temu, Alibaba’s AliExpress and TikTok Shop forming the “Four Little Dragons of Cross-border E-commerce,” which have been fiercely competing in overseas 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 world’s factory. Now, with the NEVs, lithium batteries and solar panels as the “three new items for export,” opening up markets, exporting technology and services have become the core of the new overseas expansion.
But apparel still accounts for a high proportion of the total, even as the overseas expansion of the clothing industry has transitioned from mere supply chain to a comprehensive export of brands, technology and services.
“The teams of the new generation of brands have broader international perspectives and can better adapt to the needs of global development, achieving multi-faceted integration of culture, management, and values,” Sun Pan said.
The new generation of brands exploring overseas market is generally adept at enhancing brand visibility and appeal through story-driven communication and innovative marketing strategies, utilizing various channels such as social media, KOL collaborations and content marketing. Moreover, they are more proactive in leveraging digital tools and platforms, which allows them to improve team collaboration efficiency and decision-making that ensures flexible operation and rapid response to overseas demand.
Regarding the original design of Chinese brands, she believes, “At present, some emerging brands have already demonstrated impressive performances in 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 widespread co-branding collaborations through international fashion week platforms, leading to a steady increase in visibility and reputation.”
From Cost-performance Ratio to a Quality-price 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 moat to find a way out. In the international market, where Chinese-funded brands once won with high “cost-performance ratio,” they are now opening up overseas markets with a high “quality-price ratio” which aims to stimulate demand in the domestic market in return.
In recent years, Chinese clothing companies have continuously increased their investment in research and development, promoting the application of new technologies and processes, such as the use of sustainable materials and the development of functional fabrics, to enhance the added value and market competitiveness of their products.
Taking the Chinese delegation participating in The One Milano apparel exhibition in Milan as an example, the companies exhibiting were all “cream of the crop” in various categories of China’s mid-to-high-end apparel products. For instance, Heaven Deer, a leading producer of Chinese double-sided woolen overcoats, has been cooperating with high-end European brands for many years and brought four types of products, including camel hair, camel hair blends and sports-style overcoats, to test the market. Also, the designer brand BenZhaoRi, which mainly uses black, white and gray as its primary colors, chose Milan as its first stop for going global and found that the European market has high requirements for fabrics and a preference for eco-friendly materials, thus 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, enabling the completion of the entire process from design to finished product in a relatively short time. This enables Chinese brands to attract consumers by quickly responding to market changes and providing products with high cost-performance ratios. At the same time, upgrading through digitalization and intelligence 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 Agreement (RCEP), the trade mobility and activity of Chinese textile and apparel companies in the region have been elevated, which will help enterprises optimize resource allocation, integrate and strengthen the supply chain and enhance the value chain.
For Chinese brands, opportunities also are accompanied with challenges and bottlenecks. It is undeniable that Chinese clothing companies have shortcomings in design and brand proposition compared to international brands, and they also face challenges in the international market such as cultural differences, legal compliance and localization.
There is much uncertainty in trade protectionism, geopolitical risks and the unpredictability of going global, but one thing is certain: for any company, going global is an opportunity to bestow a new image on the brand. It could even be said that every brand can redefine itself through “localization” in new markets, thereby positioning themselves in a completely different market landscape.
Editor’s Note: China Insight is a monthly column from WWD’s sister publication WWD China examining major trends in that key market.
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