Taking a Rest in Front of Dolce & Gabbana Flagship in Beijing

“The domain maosuit.com is about to exceed its bandwidth limit”. That’s the message I keep getting towards the end of the last few months, and this month it has come on the 20^th day – even earlier. It’s an encouraging sign and shows that traffic to Maosuit and (presumably) interest in fashion in China is steadily rising despite my not posting anything for close on three months.

Maosuit is definitely due for a facelift and interface upgrade – a task that has been sidelined until my relentless travel schedule and other projects have calmed down around April. Therefore, when I fail to properly address the aforementioned bandwidth warning the site goes down until the 1^st of the next month when the process starts all over again.

After my last post in December I didn’t intend to stop posting for so long, but glad I did, as it gave me a chance to step back and look and fashion and luxury in China from a more detached perspective. Also the time between Christmas and Chinese New Year is as quiet as China ever gets and is the best time to take a break.

For the fashion business Chinese New Year (CNY) is one for the peak sales times of the year as people venture out to spend the traditional new year money received in little red packets and also bestow gifts of luxury onto business and family connections to bring prosperity. This Year of the Snake there is bound to be an abundance of snakeskin (real and faux) inspired designs to inspire consumers.

CNY also marks the onset of spring and as such many brands will target new store openings to this period and open with S/S collections right on one of the largest spending periods of the year. However, CNY can also be a very troubling time for getting anything done with no one available for work. For millions of migrant construction workers who toil seven days a week for 11 months straight, CNY is the highlight of their year when they can go home for family time and feasting.

As fashion and luxury news within China becomes increasingly generic, the exciting stories for me will be what Chinese consumers and brands are doing internationally. As I travel the world I’m fascinated by the varying degrees of influence the Chinese are having in different countries and cities globally.

The major international cities and particularly the fashion and shopping capitals are already well trodden by Chinese tourists and on a recent flight to Paris for fashion week I shared an Air France flight with Chinese actress Zhang Ziyi, also on her way to Paris for the Dior couture show.

Driving out of Sydney Airport recently there was a massive billboard for Chinese Maotai liqour (which I’m sure Aussies abhor), followed by similarly sized billboards for Air China and Bank of China. Moreover, Melbourne’s main sports arena is sponsored by Chinese electronics brand Hisence and the week I was there two Chinese banks opened their first branches in the city.

What’s interesting to see is the diminished influence and reach of Chinese have in South America. This year CNY coincided exactly with Carnival Season in Brazil, yet Chinese tourists were few and far between in Rio de Janiero. Part of this is obviously the distance. With three days round-trip travel time at least needed between China and Brazil and only seven days holiday for most, its simply not worth the effort to go to. But I venture that its also a lifestyle and comfort issue.

Chinese are content enough to go to Paris or Sydney and shop at Galeries Lafayette or visit the Opera House, but to dress up in ridiculous costumes and drink and dance their way through the streets of Ipanema just isn’t their thing.  There was one Chinese restaurant overlooking Copacabana beach, yet we got a funny look when we asked to eat with chopsticks.

Strangely enough Peru is a quite a different story and even at Lima airport their were welcome signs in China and everywhere I went the Chinese Union Pay banking card system was promoted and accepted everywhere. Still, I didn’t see many walking, talking Chinese people.

There is more to come from Maosuit in 2013, but I’m afraid you will have to wait until April and a few more ‘site has exceeded bandwidth’ notices till its back in full effect. Hopefully the wait will be worth it.

Thanks to all readers for your continued support and Happy Year of the Snake!

Workers Taking a Rest From Building Another Chinese Luxury Mall

Commuter Taking a Rest in Beijing's Subway

Taking a Rest from Selling iproduct Paraphernalia

Taking a Rest From Cycling Tourists Around Beijing

Just Taking a Rest - AKA - Just Chillin

Miu Miu's New Beijing Flagship Store - The Biggest in China

To finish off 2012, Beijing has witnessed a flurry of new flagship fashion and luxury store openings over the last month.

The most impressive of these stores is the new Miu Miu Beijing flagship – the brand’s biggest in China, which has just opened in the Sanlitun North Village shopping complex. Miu Miu now joins a stellar line up of prestigious brands who have all built mega-stores to create one of the most impressive luxury brand environments anywhere on earth. DSquared, Comme de Garcons, Christian Louboutin, Emporio Armani, Moncler, Montblanc, Marni, Alexander McQueen and Versace, to name a few, all have their flagship stores in the complex, many of which are the biggest in the world.

Meanwhile, as the first wave of leases from tenants that entered in 2008 have began to expire, the Sanlitun South Village complex has also been upgrading their tenant mix. New brands to open include Benefit Cosmetics, Stella Luna and a massive store by Hong Kong multi-brand retailer and distributor – i.t.

The I.T. Group has become the dominant player brining Japanese brands into China and even bought a controlling stake in famous Japanese brand BAPE last year. I.T.’s  new Sanlitun store is the first Mainland China home of Japanese multi-brand store BEAMS and Journal Standard.

Operating multi-brand stores in two formats – big ‘I.T’ for high-end brands, and little ‘i.t’ for the mid-end segment, the Group’s ever growing brand stable allows I.T. great leverage with mall developers as they can bring in so many brands to fill spaces.  In Sanlitun North and South villages, I.T Group operated stores alone account for around 20% of all the retail space.

The other significant  Beijing mall story has been the opening of Park View Green. Now one of China’s top ranked green buildings – the Park View Green project contains a boutique luxury hotel, high-grade office building and mid to high-end shopping mall. Brands such as IWC, Breitling, and Dunhill (including a Dunhill restaurant), Karren Millen and Ted Baker, have all just opened large flagship stores there.

While the major store opening in Beijing for 2013 is likely to be Galleries Lafayette next September,  to keep up with new competition, the city’s top luxury malls Shin Kong Place and China World Mall will both undergo major renovations and changes to their tenant mixes over the next 18 months.

Keep an eye out through 2013 and into 2014 for more brands to open their biggest global stores in Beijing to tap into China’s still insatiable consumers. After all, Beijing is ranked the no. 1  city in China for wealthy residents, even ahead of Shanghai that only placed third.

Hong Kong's i.t Brings Japan's Beams and Journal Standard to China with a New Multi-brand Stores

Journal Standard's First Beijing Store

Stella Luna Flagship in Sanlitun South Village

Window Display in Miu Miu's New Beijing Flaghsip Store

Bags Galore in Miu Miu's New Flagship

Beijing's New Park View Green High-End Mall, Luxury Hotel and Office Building

 

New IWC Flagship Store Inside Park View Green Beijing

 

Dunhill's New Flagship and Cavernous Interior of Park View Green

 

New Breitling Flagship Store Inside Park View Green

 

New Karren Millen Flagship Store Inside Park View Green Beijing

 

Park View Green Has an Impressive Art Collection on Display Including Works From Salvador Dali

Alan Fang - CEO of Novo at Their HQ in Shanghai

It seems Alan Fang – CEO of Novo Holdings has always been ahead of the game. He launched Novo Concepts – one of China’s biggest multi-brand fashion retailers back in 2003, way before China was hot and the floodgates of global fashion brands coming to China opened. Then in 2010, he launched Novomania – China’s only independent fashion and accessories trade fair, to help fashion brands enter and explore the China market.

As a retailer, distributor and trade show operator focused on the urban youth demographic, Alan and his Novo teams are well versed in all matters of the fashion industry in China. Recently Maosuit interviewed Alan about the growth of multi-brand stores, consumers and the current state of the China fashion market.

What motivated you to start Novo Concepts and then the Novomania Trade Show?

I started Novo Concepts in 2003 by chance. A great location came up during SARS which led to the shop. In the beginning it was very tough, I went to Europe to source brands, but no one believed in us, yet slowly it all came together and evolved.

Now both our mission and store DNA is aimed inspiring the youth and creating the coolest shopping experience for our target customers. Our  stores and merchandising act as  the company’s centerpiece that offers our perspective on fashion thorough which customers can explore, experience and find ways to express themselves.

The Novomania idea was formed in 2009 and we held the first show in 2010. It was started to naturally extend our DNA of inspiring youth across the range of fashion, accessories and watches etc. Now consumers have access to everything online, but they still want to see and touch them for real. Novomania was perfect for this.

Its said that the multi-brand store sector cant grow in China until consumers are ready. Yet you cant build a consumer base without the stores, so it’s a catch-22 situation. What is your take on this?

Multi-brand stores will become the solution for niche and independent brands entering China and this chicken and egg (what comes first) scenario isn’t that clearly defined.

Fashion victims [in China] already know all about global brands even if they aren’t sold officially in China. We need to be able to educate consumers and if you believe China will self educate it will be a very slow process.

If brands [including multi-brand stores] keep waiting to enter China, the costs will just continue to rise. Now In the US and Europe times are tough, so the timing is right to sew seeds and invest in China. No matter what, you’ll still need one to two years to build up, to educate, learn how to merchandise for China and find partners etc.

One of China’s biggest issues for developing multi-brand and department store retailing is the absence of buyers in China. How to address this issue?

Actually there are lots of buyers in China, but they are tucked away in tiny side street stores that they own, operate and do their own merchandising etc.  They create the displays, own all the stock and take the merchandise risk if it doesn’t sell. They even use Taobao to move any products that can’t be sold in the store.

So it’s not true that there are no buyers, they just aren’t formalized into the fashion ecosystem or work for big companies. They are independent and so [are overlooked] and don’t get invited to the usual industry trade events.

We believe that once given the opportunity, these independent and small shops will [be willing] to take the risk and have the courage to stock international brands we bring in through Novomania.
Maosuit Note: This is absolutely true. Independent stores and buyers have existed in China for decades and they often source merchandise directly from factories or from the grey market including wholesale markets. They have long acted act middlemen who fulfill consumer’s needs for fashion products that were always made in China, but never officially available in China

How much localization do brands need to do for China?

In the beginning it’s not really necessary. If you only have a few stores then no need to alter products for China too much. Once you want to grow beyond 10 stores you need to customize sizes and merchandise for China, there is even merchandising differences between the North and South.  Also, you may need to do subtle modifications to products while still maintaining the proper brand image, while catering to Chinese tastes.  Once this is done you can increase to 40 – 60 stores across first, second and even third tier cities.

How is the market for distributors now in China?

A pure distribution model for China is becoming less and less viable because of increasing rents and decreased margins on imported products. Many brands still choose to use distributors to learn the [retailing] system, but it’s no longer their core business strategy.

[For distributors] it’s becoming more and more difficult and to stand-out you really need to find a category killer [brand]. The international fast-fashion brands have already changed the game for distributors in China because consumers now expect fashion to be cheap; meanwhile their value demands are always increasing.

As a distributor in China, you also need an agile supply chain engine that can do replenishment, open stores, manage logistics and handle designing capabilities. So it’s not so much about cost, it’s about speed!

Some brands entering China have very high expectations and want to open 200-300 stores each year with the help of distributors. Some distributors make promises just to get the distribution rights for China, but cant execute on these commitments at all.

Licensing your brand in China provides another alternative, but it’s very dangerous to your brand identity.

What are Chinese consumers doing these days?

Chinese consumers are still not that sophisticated.  While, fashion originality – driven by different philosophies comes out of cities like Paris and New York, for Chinese, their tastes aren’t so profound and fashion habits don’t go that deep.

Chinese don’t have a way of thinking or philosophy behind what they are wearing. They don’t ask asking themselves “why am I wearing this that way”.  In terms of what they wear and what is available – its all here already and all available on Taobao.

In China people sway and have little loyalty to brands. Partly this is because the brands don’t lead with identity; they just go with what sells each season. But if you don’t have a clear philosophy your brand won’t be clearly understood

We try to provide an alternative [cultural] education and this is where our group philosophy and brand feeds into everything we do. We are offering a different perspective to young people and let them have an opinion which will cause the industry to grow organically.

Chinese are slowly embracing creative industries and design schools are becoming more buoyant. We like to think we play a part in encouraging the ecosystem and are now running a university program for young designers.  We promote an alternate career path in fashion etc. and bring in speakers to give a different perspective.

Some predict that China will be the world’s biggest market for e-commerce by 2015. Do you agree?

I agree in the direction of E-commerce in China, but it may take longer than three years. Will China be the biggest market in the world? Yes!

China doesn’t have a legacy of stores like other countries [that affect shopper’s behavior]. Therefore there’s no existing [brick and mortar] stores [infrastructure] to prevent brands wanting to do e-commerce but worried about damaging their store’s reputation or affecting in-store sales etc.

In the future, 30-40% of brand’s sales in China could come from e-commerce. Having your own brand website is important for image, but it will probably only achieve low sales. Brands need to work with other e-commerce portals like TMall and Taobao that have massive traffic and really convert this into sales.

Everyone also has problems with warehousing and logistics, so they need to find partners and solutions for these too.

You just secured a $30 million investment from KKR – a leading global investment firm. What does this mean for Novo?

The market is tough right now and some brands are only growing at single digits and hurting with inventory and decreasing margins. There is a general slow down in store openings [leaving excess inventory] and developers are not rushing ahead with new malls as they were the last few years.

Overall, brands are becoming more conservative and distributors are buying less. For many, 2013 looks bleak and even into Q1 and Q2 for 2014 many will act cautiously.

For us to receive this investment now shows the confidence KKR has in Novo as a company, our management and our systems. With this investment and everything (retail locations) now discounted we are looking for opportunities to expand and open more stores.

What does 2013 have in stall for Novo?

We plan to open 30 new stores with sizes from 2000- 3000 sqm. across China and are investing a lot into our systems so they all merge. We will continue to do our own buying and also take some merchandise on consignment and concession models.

We will continue to target the 15-35 year old demographic and its our customer’s needs that are driving our decisions (more than the brands). We want to offer variety and platform to choose from. We plan to promote our concept of inspiring youth as opposed to just promoting brands.

For Novomania, in the beginning it was an idea and so just tried to do it and see how it went to make some noise. Now its taking form and we want it to become the trendy show for all Asia. To be the one trade show for all Asia you have to have a massive market to tap into and only China has it.  We want to invite the best buyers from around the globe to see the worlds best brands. We want Novomania to be a festive event incorporating youth – not just a trade show.

Thanks to Alan for speaking with Maosuit

New Chinese Brand CH'IN Retailing at Novo Concepts Store in Shanghai

Vans' Concession Inside Novo's Shanghai Store

Novo Promotes Chinese Artists With Display Spaces Inside the Stores

Novomania is the Largest Independent Fashion Trade Fair for International Brands in China

Keeping a Festive Atmosphere at Novomania

Vans Keeps it Real With a Skate Ramp and Booth at Novomania

Novomania Attracts Intenrational Brands Such as DKNY Jeans

What is the Best Gift for Guests attending Luxury Brand Events?

Today’s post is from Guest Contributor Nat King – the Founder of Hong Kong Hustle,   an exemplary  blog about fashion, music, nightlife, and local culture in Hong Kong. 

Could the small gift that a brand hands out at the end of an event actually sabotage their image? At a recent launch in Hong Kong, a luxury brand concluded their successful event with an avoidable mistake.

Typically as guests are exiting at the end of fashion events, they are presented with a goodie-bag that contains a small token gift from the brand. Depending on the label and budget, it’s usually something minor that has a logo emblazoned on it, or is related to the brand’s collection or heritage.

While certain designers treat this item as an after-thought, it can be an excellent opportunity to build brand loyalty and value.

A well-thought-out gift can amplify a guest’s positive impression of the brand, and provide lasting exposure. An item as meager as a well-designed key chain can result in exponential visibility, as people post it on their social networks, show it off to their friends, or even better, integrate it into their daily life.

Likewise, on the flip side, a poorly thought-out gift can actually detract from a guest’s perceived value of a brand.

At a recent event in Hong Kong, a luxury brand gave out an iPhone 4S case with their logo on it. This was a poor choice for numerous reasons.

Perhaps more so than in any other city in the world, Hong Kong people are early adopters of consumer technology and often have the latest model of mobile phones. Guests at these type of events (even more so than the general population,)  are actually courted by the network service providers to have the most recent phone models. (They even get preferential treatment to facilitate upgrades.)

When considering the Chinese luxury consumer, mobile phones are often tied to “face” and having the most up-to-date model of phone is the same as having an impressive watch, handbag, or car.

If not already out of date, (the iPhone 5 is already common in Hong Kong,) an iPhone 4/4S case will be un-useful very soon to this segment of clientele. The case therefore becomes a throw-away item, which lowers the perceived value of the brand.

A second problem is that the product was not related in any way to the label. It wasn’t made out of a material that they are known for, nor did it feature any special tie-in to the new collection.

Another issue is that an iPhone case doesn’t work for other brands of phones, so it’s not certain to be a useful item among all of the guests. At that point it also risks becoming a throw-away item which is a psychological negative.  An additional problem is that it’s not unique. A phone cover is not original  – even mainstream businesses create iPhone cases, so it doesn’t stand out, especially not for a luxury brand.

A final flaw is that it comes across as a cheap gift. iPhone cases are made en masse in China, which means that it has a lower perceived value. Home to the world’s manufacturing, China’s consumers want foreign luxury brands to provide feelings they equate with craftsmanship and exclusivity, not plastic and mass production.

Maosuit Comment: 

This is definitely bad form on behalf of the brand and from personal experience the departing experience at any event can leave a lasting impression. iPhone covers are available for 10 RMB everywhere in China, so this is definitely a low-class gift for any brand claiming to be luxury or even high-end.

Yet who is to blame? Presumably, the brand employed a PR/marketing company for the event who may have suggested the iphone case as the gift, or perhaps the initiative came from the brand itself. Whichever the situation, the brand should really consider how it is positioning itself in the market and not repeat such a similar mistake.

White Collar's Collection Closes China Fashion Week S/S 2013 In Beijing

China’s new leaders have now been confirmed following last week’s National Congress – a once in a decade event held to facilitate a change in power. Nels Frye from Stylites has a great article on Chinese leaders’ fashions here.

Held adjacent to Tiananmen Square in Beijing, the Congress has brought stark reminders to all that China is still a heavily controlled and regulated country with ‘security’ measures beefed up and affecting the entire nation.

Internet access to many sites including Google and Gmail was drastically hampered, retailers were put on extra alert in case of riots and fires, and it was also forbidden to open taxi windows.

For those of us who have grown accustomed to relatively trouble free existences in China these this all seems a bit over the top and farcical. However, for China’s leaders, the risk of any trouble at all, let alone mass dissent easily warrants turning Google off for a few weeks. With internet access slowly improving its time to get back to the business of blogging.

The National Congress took precedence and forced the postponement of major events including the Beijing Marathon and Dior’s upcoming exhibition at China’s National Museum. It’s a wonder then, that China Fashion Week SS 2013 (also held close to Tiananmen Square) was concluded without a hitch. With fashion so fleeting, it seems old news to report on the collections that are now three weeks old, yet its still relevant to note the progress that CFW is making great leaps forward season on season.

Fashion Week in China is essentially a Government run event managed by the China Fashion Association which has reporting lines to both Ministries of Commerce and Culture. This partly explains why in previous years CFW has felt a bit stoic and stuffy with no after parties or pomp anywhere to be seen.

I first attended China Fashion Week in 2007 and was disappointed at the quality of designers, show production and general event organization. Even trying to get a smidgen of information on the Week was infuriating as there was no official website, or information available on line at all.

Since then, and especially over the last few seasons CFW has made astounding progress and is now a respectable international fashion event. Although things can still get a little quirky and the collections don’t yet attract international media and buyer’s attention, the China Fashion Association deserves applause for the progress they have made.

With Mercedes Benz now the title sponsor CFW is slowly getting more commercial and has a growing degree of glitz. Harpers Bazaar are also major sponsors and with their daily magazine dedicated to the event and covering all the news, collections and street shots outside the shows etc.  For non-natives, there is now a fully bilingual website for China Fashion Week.

On the catwalk this season bags and clutches were more visible than before showing that the designers are grasping the importance of having an entire collection that includes accessories to go along with the clothes.

The designers themselves are also coming up fast and stand outs including Simon Gao, Gioia Pan and Zeng Fengfei who won the 2012 Designer of the Year Award.

The media is latching onto the buzz around fashion and designers are mobbed after the shows by young reporters so eager for soundbites and you would think they are paid only on commission.

Although a spot late, here are some of the images taken during the latest China Fashion Week.

Mercedes-Benz's Title Sponsor Reception Lounge at China Fahsion Week

Touch Screen Display's With Fashion Week and Designers etc Information

Harper's Bazaar Daily Newspaper Covers the China Fashion Week in Detail

Chinese Designer's Are Catching on Quickly and Accessorizing their Collections

Some Designers are Embracing Chinese Aesthetics and Doing Well

China Fashion Award Best Designer 2012 Winner of Zeng Fengfei

Jeff Staple Takes a Photo With Aspiring Chinese Streetwear Designers

A few week back on his second trip to China this year, Maosuit caught up with Jeff Staple – a global purveyor of cool and Founder of New York’s Staple Design and Reed Space to speak about the street wear scene in China and collaborations.

Below are excerpts from both Maosuit’s interview with Jeff and his Q&A during the Young Bloods Relay Fashion Talk.

What is the perception of China in the American brand community?

Right now, China feels like a minestrone soup of Western culture – it’s all mixed up and a bit mad.

Most Americans know that China isn’t a backwards country anymore; in fact many see China as the jackpot for making money. But Americans might not know how cool some bits of China have become. Even I was surprised at the cool things I saw while walking around the 798 Art Zone and Nanluoguxiang Alley.

Around the world Japanese brands are already very established, Korea is also on the rise with brands like Samsung, LG and KIA becoming household names. But China is still just known as the manufacturer and copier of everything.

When Japanese ‘copy’ or duplicate something the do so with a reverence which pays homage to the original brand or product.  They maintain respect for the original and even take it to the next level. In China they don’t do that at all.

Why have you chosen this year to visit China?

I want to see if the current gold rush (for brands) in China is real. Five years ago I was here and considered opening something with Nike in the 798 Art Zone just before the Olympics. In the end I’m glad I didn’t open back then because the timing wasn’t right and the area didn’t develop in the right way (for what I was doing).

What are the essential elements for collaborations between brands and designers? And how do they happen?

Sometimes two companies do collaboration just for financial reasons but this isn’t the best way.  The most important thing is equal respect between the brand and the artist. If the collaboration is born out of mutual respect than it will lead to money naturally.

Collaborations always happen organically and usually people come to us first. We have lunch or dinner and if we like each other we proceed to do something, although sometimes it takes a lot of lunches and getting to know each other before we actually do the collaboration.

Then you need to decide what each side wants form the collaboration. If you don’t define a clear goal and mission at the beginning it will become confused at the end.

It’s also best to find something each side has in common to talk about. For our collaboration with Oakley they were celebrating their 35^th anniversary and I was also turning 35 years old so that worked well and became our mutual story.

What are the best ways a designer can promote his/her own brand?

Over the last 15 years I did many different things to promote the brand. In beginning I used postcards, magazines and flyers. Today I use twitter and Instagram etc. In 10 years it will be something new again.

The most important thing isn’t the way of promoting the brand, its what the brand means. Some brands spend millions on PR and marketing but the brand isn’t so great. If you have a great brand you don’t even need to advertise.

Do you do the production and promoting for collaborations or only the design?

As an artist and creator you need to think about everything. How it’s sold, marketed and packaged etc. The one thing you don’t think about will be the one thing that pisses you off later. So before you even make it, you should know the A to Z of how everything will happen and where it will be sold etc.

Do you have any advice for young Chinese designers?

For collaborations, sometime the other side aren’t honest about what they want and just hope to make money. This is why I do lots of dinners with them before even starting. In a 30 minute meeting people can easily bullshit you, but across a three hour dinner that’s much harder.

It seems that right now Chinese youth are scarred to try something new. 15 to 20 years ago in New York no one was doing street wear so it was scary for me too. But when everybody is scared to try something it also means there will be no competition.

So if you’re brave enough to try, maybe you will stand out and be noticed.

Concentrate of the brand and don’t worry about marketing. My first10 years were all about quality and building the brand, not marketing.

Another trouble for young creative people is that they want to do everything themselves, but you need help with accounting, marketing and running a business. We creatives don’t usually trust others to help us so want to do everything ourselves, but its impossible because you only have 7 days in a week and 24 hours in a day. Therefore the challenge is to trust others and build a team that is vital to growing a brand.

Jeff Staple on the Big Screen at Young Bloods Fashion Festival

Staple Design's Infamous Pigeon Dunk that Caused a Mini-Riot Upon Release in New York

IT Store Display: Which Direction Will Niche Brands Grow in China?

Chinese are rapidly catching onto the idea of fashion, brands and shopping as a part of their lifestyle and over recent years consumers have been drawn to the big international brands operating in either the luxury or lower-end (including fast fashion and sportswear) segment of the market.

As the mid-end ( also called premium,  contemporary, niche,  etc.)  sector is still building momentum it creates an opportunity for smaller, independent  brands to stake out a space. For any new entrant, a large amount of time and money will have to be invested in order to grow a brand in China. The trick then, is to determine exactly when the timing is right.

To get the best deals on retail space and have time to build your brand up and perfect operations before the market explodes, its important to be an early mover. However, risks of entering too early also exist and no retailer wants to be stuck with unsold inventory due to lackluster demand.

This leaves China’s mid-end fashion segment stuck in a catch-22 situation. Brands need the market to mature further and show returns on investment before their fears of entering will be alleviated. Yet, without a critical mass of brands, the sector will not build enough momentum. Luckily your everyday fashion consumer doesn’t think like this.

Chinese consumers are starting to enter the mid-end space and demand chic, independent, yet well-designed and high quality fashion products whether they are readily available or not. When they cant find these products available in China they go online to Taobao  or turn to the growing cache of hip Chinese brands emerging in Beijing and Shanghai such as those stocked in stores like Brand New China.

Those consumers who have spent several years residing in the low priced, fast fashion and sportswear end of the market are trading up and can now afford more expensive and premium goods. Meanwhile in the luxury spectrum, many shoppers have already proven their ability to lead lavish logo-driven lifestyles. These people are increasingly interested in showing their own unique personality and sophisticated fashion sense through chic designer brands.

By nature, the scale of independent designer labels prohibits them from opening networks of their own stores. In other countries this leaves department and multi-brand stores as the prime stockers of independent brands, but in China the choices are far more limited.  Department don’t do their own retailing, merchandising, or buying at all – they just act as landlords and just rent out space. This leaves multi-brand stores as the only option for small brands in China.

Several of the large multi-brand stores from Hong Kong including IT, Joyce Boutique, Lane Crawford and Novo have been making forays into China for years.  They already have well-established brand equity and a loyal customer base and are now extending their presence beyond Beijing and Shanghai into the fashion ripe second tier cities such as Chengdu, Shenyang and Tianjin. International multi-brand stores have generally been slow to enter China, but that will change in a big way in 2013 when Galleries Lafayette opens a 10,000 square metre site in Beijing.

Consulting companies McKinsey and the Boston Consulting Group both report that in 2015 China will become the biggest world market for luxury goods and e-commerce respectively.  With mid-end brands already registering a strong pulse in Beijing and Shanghai and second tier cities now also on the map, perhaps the tides have already turned. While not at a full boil just yet, it certainly feels as though the  sector is starting to simmer and 2015 could well be the year mid-end and premium brands explode onto the China scene.

All independent brands will have to assess their own positions and clearly define what they want to achieve in China. Rushing in is definitely not the way to go. For fashion companies and brands with China on their radar, its now time to map out your entry strategy and look to execute it in the next one to two years. Beyond that it may be too late, for once things gain momentum in China they move exceptionally fast and the market wont wait for anyone.

Front Row at a Fashion Show: Young Hip Chinese Without a Logo in Sight

Desinger Yang Du Available in China via Anywearstyle.com

Whiloe Demand for Top Brands Remains Strong, Confident Consumers are Exploring Other Options

Consumers are Trading Up From Fast Fashion to More Niche Brands

IT Market x Comme des Garcons Flaghsip Store in Beijing

Brand New China Designer's Store in Beijing

'Nobrand' Display at Novomania Trade Show Shanghai 2012

Glittering Lights at Vogue's 120 Year part in Beijing

These days China’s fashion and luxury market plus Chinese consumers and their growing propensity to spend are hot topics around the world.  As English language media tends to only focus on foreign fashion brand activity, most observers are unaware of the massive divide between the domestic and international fashion industry in China.  After attending a variety of events this week in Beijing, it was apparent how pronounced this divide is. Its almost as if there are two completely separate fashion industries operating in China.

To celebrate the opening of a host of new stores including Lane Crawford, Roger Vivier, Jitrois and Celine, the Beijing Yintai Centre held special Monday night event for selected fashion industry guests and customers. While not a massive event, the Yintai Fashion Night encouraged high-end consumers to visit the new stores and mix and mingle over champagne and DJ music.

With a similar tone, yet much larger scale, Tuesday night saw the Beijing’s Park Hyatt Hotal host the 120^th anniversary of Vogue magazine worldwide and the 7^th anniversary of Vogue China. Attending the black tie event were hundreds of global fashion industry executives, brand CEOs, high profile designers including Christopher Bailey and Jason Wu, photographer Mario Testino plus Chinese celebrities and other people integral to Vogue’s success globally and in China.

Meanwhile, just a few miles away at the Beijing Hotel and the D-Park Creative Zone, hundreds of Chinese domestic fashion industry leaders, VIPs and Chinese celebrities had been gathering every day and night this week for China Fashion Week shows and surrounding events.

With so many fashion related activities on this week in Beijing, one would assume some cross over and that at least some people in the industry would be involved in all Yintai, Vogue and CFW events. However, this wasn’t the case at all and it was astounding how little cross-pollination there was and only a handful of people in Beijing would have been aware of, let alone attended all these major fashion events.

So why is China’s fashion industry so divided? It has to do with the way the market has evolved.

Although some brands such as Louis Vuitton and Zegna have been in China for 20 years, the majority of international brands and media have all come in the in the last 10 years and experienced rapid growth only in the last five. When these brands started to come in, China’s fashion market, media, malls and infrastructure were underdeveloped, forcing international fashion companies to forge their own paths and start to create their own micro industry.

With their retailing, branding and marketing expertise, it didn’t take long for the foreign brands to stand out and attract consumer’s attention.  As more foreign brands spilled into China their momentum increased and the divide between them and Chinese domestic brands and industry became bigger and bigger.  To ride the wave, new mall operators in China began to tout big international brands to their malls and so now almost all new malls in China offer the best locations to international brands.

While international retailers are definitely better at branding and getting attention in China, its doesn’t necessarily mean they are more successful. Its all a matter of perspective. This week I was asked if Metersbonwe – China’s most prolific fast fashion brand could compete with the likes of Zara and H&M who are ranked in the worlds top 100 brands.  While Metersbonwe doesn’t have that global brand recognition, in China they already have 4000 stores compared to less than 100 for H&M, or only one store for Forever 21.  Therefore, in terms of China retailing power, Metersbonwe is way ahead of all the competition.

Although China as a country is a top priority for retailers, China Fashion Week (CFW) itself doesn’t garner much attention from the rest of the world. Unlike the major fashion weeks in New York and Paris etc. that influence global fashion, CFW is concentrates on domestic designers, media, shopping mall operators and VIP customers. Moreover, as there are no Buyers in China, fashion shows are not a fundamental aspect in the marketing or merchandising of collections in China.

CFW is run by the China Fashion Association (CFA). To the CFA’s credit they are aware that CFW still has room to develop. They are working hard to strengthen the entire fashion industry and create a viable ecosystem of fashion education and training etc., not just trying to get international attention as the primary indicator of success.

As Chinese designers continue to improve and start appearing on the world stage they will attract more attention. Within a few years CFW could well become the platform for China’s famous designers to-be to get their start.

While the industry divide seems odd, it makes sense once you understand the different market forces and what domestic and international fashion companies are trying to achieve. One side is not better than the other and perhaps in the future as China’s market becomes increasingly sophisticated the two sides will converge.

Beijing Yintai Centre's Welcomes Lane Crawford with a Flashy New Facade

Vogue's Exhibition to Celebrate 7 Years in China

Chinese Vogue Icons

China Fashion Week at The Beijing Hotel

China Fashion Week Viscap Show

Some of China's Top Designers at China Fashion Week

Promoting 'Shai' (Showing Off) at a High-End Mall in China

The Daoist Book of Virtue – known as The Dao De Jing in Mandarin is a seminal work in the philosophy, religion and culture of China. Written by the Daoist sage Laozi in the 6^th century BC, the book contains wisdom and guidance on how mankind should exist, be spiritual, and find a ‘path/way’ to live in harmony with society and the universe.

In Chapter 3 of the Dao De Jing, Laozi comments on greed and eludes to the social dangers that arise from ‘treasuring goods’ or what we may describe as ‘consumerism’ in modern day speak.

Do not glorify the achievers
So the people will not squabble
Do not treasure goods that are hard to obtain
So the people will not become thieves
Do not show the desired things
So their hearts will not be confused

Thus the governance of the sage:
Empties their hearts
Fills their bellies
Weakens their ambitions
Strengthens their bones

Let the people have no cunning and no greed
So those who scheme will not dare to meddle

Act without contrivance
And nothing will be beyond control

Whatever ‘goods’ Laozi had in mind 2500 years ago, throughout the ages and across civilizations, people have always coveted the luxurious things that are rare, expensive, and beautiful. Its amusing that humanity is has been grappling with the same issues for millennia and despite modern science and our technological advancements we are no more enlightened today than in Laozi’s time.

In China, decades of communism and the tumultuous Cultural Revolution tried to vaporize all remnants of dynastic rule and the hierarchical based society that was the foundation of their civilization.  Yet, thousands of years of behavior isn’t so easily eliminated and gaining ‘status’ is still a fundamental goal of Chinese society and a driver of luxury consumption.

Everyone covets products that symbolise status and success whether they are watches, electronics or sports cars.  Luxury brands know this all too well and conduct their ‘lifestyle’ marketing accordingly. The Chinese lap it up.

Although principles of Buddhism, Daoism and Confucianism (which isn’t a religion) are deeply embedded in the culture, modern China is relatively devoid of religious spirituality. The ‘God’ of the moment is money and it’s the mission of all devotees to make as much of it as possible, and then, for many to get out of China.

As Laozi intuited centuries ago, such consumerism only leads to mass confusion. Recent conversations with Chinese friends, colleagues or taxi drivers etc., have unearthed a collective discontent about the lack of purpose to present-day life in China. The Country has followed the rest of the ‘developed’ world and life has just become a game of Keeping Up With the Wangs.

Many believe that as long as most Chinese find themselves (economically) better off year on year, then there shouldn’t be any cause for social unrest.  Yet, while the middle-class continues to be better off, a time will come when happiness wont simply be measured by bank deposits. A time will come when Chinese will embrace and value spirituality and clean air etc. above the status provided through the pursuit of wealth and material goods.

Meanwhile the public are already using social media to voice their dissatisfaction over the unequal spread of wealth, its affects on society and the inappropriate spending of public officials.

When the China was still vastly poor, having a purpose in life mattered far less than just simply surviving. Basic needs like food and shelter took precedence over lifestyle and self-enlightenment. Now after decades of economic boom, Chinese have worked their way up Maslow’s Hierarchy of Needs and are asking themselves: “what’s the purpose of life?” and  “why am I here?” For many people, the answers: “To make money, sit in traffic, inhale pollution and consume” just don’t seem to cut in anymore.

By no means is this scenario unique to China and all nations must deal with the quest for life’s deeper meanings during their development and according to their history, philosophy and culture. Only in utopian lands such as the mythical Shangri-La do societies exist without the need for money and status.

As in the tales of Scrooge McDuck’s journey to Tralla-La and the movie – The Gods Must Be Crazy suggest, if a utopian land was discovered today, it probably wouldn’t be long before it succumbed to the consumerist ways of the world.

Perhaps the closest thing to utopia we can hope for is the example being set by Bhutan who is more concerned with their levels of Gross National Happiness rather than GDP.

With its increasing clout and impact on global economics and politics, the gross national happiness of China’s population is a significant issue for the whole world and one that needs diligent attention.

In early November China will usher in a new National Government to be led by incoming President Xi Jinping. Along with Xi, many of the new leaders will represent the first generation of politicians that were born after the founding of The People’s Republic of China in 1949. They have not known civil war nor had to repel foreign invaders. For half of their lives, all they have known is rapid economic growth and the ascendance of China as a modern super power. Their China is a completely different nation compared to the one Chairman Mao founded and presided over until his death in 1976.

Now this new generation of leaders must manage the Country through its metamorphosis into a modern superpower. Yet how they will do this is a mystery. In China there are no Presidential debates and no campaign trails where candidates outline their policies and beliefs. Everyone will just have to wait and see.

Perhaps the new leaders will heed the advice Laozi and fill bellies, strengthen bones and shy people away form cunning and greed.

Image of Tom Ford Being Used to Promote Luxury Condominiums in Beijing

Lavishly Decorated Villas Under Construction in Downtown Beijing

Statues Await Installation at a Private Villa in Beijing

Construction Workers Take a Break at a New Luxury Mall in China

Stretched Hummer Parked Outside a Future Subway Station in Beijing

I Fight For China Do Something Big With Us

Enlightenment is'nt About What You Add, its About What You Remove

Recent Social Propaganda Campaign in Beijing

A Monk Checks his Phone On Top of Sacred Daoist Mountain Taishan

Chinese Customs Officer Inspects Proucts Entering China. Image: Huangpu Customs

The topic of logistics is definitely not the sexiest side of the fashion and luxury  industry. Yet understanding logistics in China is vital for retailers, as even a big brand name and network of fancy stores wont do you any good if  you cant get products into the country to sell.

The  operational challenges of  logistics in China include importing regulations, labelling, warehousing and on-the-ground couriers.  Moreover, managing country-wide network of stores, outlets and the ever burgeoning e-commerce sales can prove a headache for any retailer.

To get a better idea of the most pressing issues and what retailers need to know in China, Maosuit spoke with Andre Suguiura – CEO of Lifestyle Logistics – a China based logistics company that serves some of the biggest names in the fashion business including Dior, Dolce & Gabbana and Zara etc.

What are the essential things to know with importing fashion and luxury products into China?

Firstly you must understand the quality and materials tests conducted by China Inspections and Quarantine (CIQ) that can be very strict and have different standards to most other countries.

For every shipment of products into China CIQ will randomly select some of the items for tests including PH levels, formaldehyde levels and color fasting etc. Tests can take from 15 – 20 days and once products pass the tests they can be shipped straight to stores.

If the product fails these tests then CIQ will usually choose to destroy the products and not allow you to re-export.

After the initial border tests by CIQ, from time to time there are also random in-store product tests. Basically an Administrations of Industry and Commerce (AIC) agent will turn up to the store and purchase a product, they will then conduct their own tests similar to the CIQ tests.

If a product fails these in-store AIC tests then a massive fine will be imposed on the retailer and the entire batch of that product in China will have to be destroyed.  Some fashion brands have paid fines up to one million RMB for these breeches. So its fundamental to understand how CIQ do their tests.

Secondly, everything sold in China must include labels written in Mandarin and conforming to Chinese standards. One advantage we have at Lifestyle Logistics is that we can receive goods in China without labels and then offer a labeling service that meets customs and retail requirements and we were the first company in China to have this special authorization from China CIQ.

Are there any special import categories?

Rare or endangered animal materials or furs etc (CITES). are subjected to even more rigorous procedures. This is a critical issue for high fashion brands importing products made from specialty materials. These items can be imported but need extra special care in labeling and proof of origin.

All CITES goods can be imported but you need to prepare things well in advance of when the collections are due in stores, so timing very important and extra documentation is needed. Two months might be required in some cases.

Importing Gold into China is also highly restricted and you must use an authorized gold importer.

After the scandal involving a furniture maker that was selling Chinese made products, yet claiming they were imported, furniture is now also highly scrutinized.  There must be proof of manufacturing location, even down the name and address of the factory where it was produced.

Electronic products are quite straightforward.

Editors note:  The smuggling of  luxury and electronic products into China for resale without paying import  taxes is becoming an increasingly large issue for Chinese Customs.  Those caught can face harsh prison sentences.  See here, and here for more.

What is the situation for products made in China?

For products made in China it depends on what licences the manufacturer holds.

Some manufacturers are only permitted to produce for ‘export’. For these products we do what is called a U-Turn. We ship the products into a free trade zone in Shanghai or Shenzhen that acts as ‘international waters’, we them import back into China. This is completely legal and a way of getting Chinese made goods for export back into China.

The issue with these goods is that, just as with 100% imported goods, these are also subjected to all the CIQ tests mentioned above.

For Chinese made goods that can be sold directly in China they can go straight from the factory to the store, however, like all other products they are still subject the AIC in-store tests.

Its widely believed that you need good connections inside Chinese Customs to get your stuff in.  Is that true?

Having a ‘friend’ in Customs can help get products through, but this still doesn’t avoid the problem of the AIC in-store tests, and the massive fines can come back to bite you.  Also, customs can request backdated proof of all imported products tests, so even if your friend helps you get something through, a few years later he may be gone and the new people might come looking for you.

There are legitimate customs brokers who act as middlemen and can help companies navigate the CIQ regulations in legal and proper ways. This is also something we do. We strongly recommend importers to abide by all Chinese customs regulations and not try to use back doors to get products in.

International e-commerce orders are growing fast in China.  What issues  exist for e-tailers shipping into China?

China is beginning to clamp down on products bought online and sent to China because they aren’t being subjected to the CIQ tests that all other imported goods usually face. So technically ordering something off a site like ASOS in UK for delivery into China is not legal depending on the value of these items .

Obviously there is so many packages coming into China that not all can be checked so a lot of orders still get through, but we are discovering more and more orders cant even be shipped from international e-tailors because they cant guarantee the package will safely pass through Chinese customs.

Is there a way around this?

The way that makes most sense is for retailers to just land all their products in China first and pass the CIQ tests and then conduct e-commerce within China.

The other thing that makes a lot of sense is to set up omni-channel retail systems, so then the retailer can just merchandise for their China stores, and dispatch online orders to the customer directly from the stores.

Editors note:  Landing e-commerce goods directly into China is only viable for companies with existing operations in China. This may explain why international retailers including Neiman Marcus, Net a Porter and Macy’s etc. have made investments into their own China based e-commerce operations in the last year.

What other issues come up regarding e-commerce deliveries?

Chinese sizing regulations actually help with e-commerce because garments for the upper body state a height and chest size giving two measurement for customers to judge by, rather than just a small medium or large. Similar for pants sizes.

Its becoming more common for Chinese online shoppers to buy three sizes, find the right size and then return two unwanted ones. Returns in China of ready-to-wear are around 25% compared with around 25%-30% in Europe.

Some express companies today offer a service whereby the delivery man will wait 10 minutes while you try on the goods.  If it doesn’t fit you can send it back immediately.

The ‘final mile’ to-door delivery is a big challenge for all logistics companies in China. No one company can cover the entire country so everyone uses 3^rd party logistics companies, especially for second, third tier cities and beyond.  In these cases its very hard to ensure the type of person actually delivering the products to the door.

Editors note: The ‘final mile’ delivery presents big problems for  brands that don’t want to risk the possibility of an unprofessional (think: unshaven, unshowered, uneducated and teeth sometimes missing),  courier turning up on a bicycle to deliver expensive luxury products.

Thanks to Andre Suguiura for Speaking with Maosuit

Example of Chinese Labelling System for Fashion Garments. Image: Lifestyle Logistics

Containers at one of China's Massive Sea Ports. Image: Google