Fashion retail opportunities in china - Your independent and authoritative guide

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Fashion retail opportunities in china - Your independent and authoritative guide
Fashion retail
opportunities
in china
Your independent and authoritative guide
Fashion retail opportunities in china - Your independent and authoritative guide
Pure Shanghai: bringing                                                                                              Contents
     international fashion
     brands to China
02   Fashion is one of the fastest moving and dynamic           provide an invaluable overview of the market and          Welcome from Louise Young � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 01                      03
     sectors of retailing around the world. Combine             the many opportunities that it offers.                    Perspective on the Opportunity � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 04
     that with a retail market that offers enormous
                                                                                                                          Opportunities in China � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 06
     growth potential, a rapidly expanding modern               The special features underline the extent to which
                                                                                                                          The Chinese Market - Trends & Recommendations � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 08
     retail sector and millions of new consumers and            new retailers are emerging within China and looking to
     you then have something exciting. And that is              serve an increasingly sophisticated and globally aware    Modern Retailing takes place in China � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 10
     China. To support the launch of Pure Shanghai,             consumer. It is therefore important to understand         What Chinese Retailers look for: Q&A � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 11
     an important new opportunity for international             more about the demands of Chinese consumers but           Words of Advice from International Retailers� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 12
     womenswear brands, i2i Events Group has                    also the retail distribution network in what is already   Protecting your Brand� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 13
     commissioned this special report: Fashion Retail           the second biggest retail market in the world.            What Pure Shanghai (PHP) will do for exhibitors� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 14
     Opportunities in China.
                                                                There has probably never been such a new market
     With contributions from leading companies and              opportunity of this magnitude in generations. We
     retailers actively involved in the Chinese retail and      hope that this report helps you to consider your
     fashion sectors, this report is intended to help           next steps for your brands in the Chinese market.                                                                                                                                                                                                                                                    City classification
                                                                                                                                           china AT A Glance                                                                                                                                                                                                          in China

                                                                                                                                                                                                                                                                                                                                                       Tier 1
                                                                                                                                                                                                                                                                                                                                                Municipality
                                                                                                                                           Population                                                                                                                                                                                    Beijing, Shanghai,

                                                                                                                                           1.36billion
                                                                                                                                                                                                                                                                                                                                       Guangzhou, Shenzhen

                                                                                                                                                                                                                                                                                                                                                       Tier 2

                      Welcome from Louise Young, Managing
                                                                                                                                                                                                                                                                                                                              Provincial Capitals (34 Cities)

                                                                                                                                                                                                                                                                                                     el
                                                                                                                                                                                                                                                                                                                      e.g Tianjin, chongqing, changchun,

                                                                                                                                                                                                                                                                                                  lev
                                                                                                                                                                                                                                                                                                                     Harbin, Wuhan, Xining, Xi’an, Chengdu

                                                                                                                                                                                                                                                                                               ic
                                                                                                                                           Gross Domestic Product
                      Director Retail, i2i Events Group

                                                                                                                                                                                                                                                                                           om
                                                                                                                                           $9.35trillion

                                                                                                                                                                                                                                                                                       on
                                                                                                                                                                                                                                                                                                                                                       Tier 3

                                                                                                                                                                                                                                                                                    ec
                                                                                                                                                                                                                                                                                                                               Prefecture Cities (249 Cities)

                                                                                                                                                                                                                                                                                nd
                                                                                                                                                                                                                                                                                                 e.g Shijiazhuang, Handan, Hengshui, Xingtai, Guilin, Qinzhou,

                                                                                                                                                                                                                                                                            ea
                                                                                                                                                                                                                                                                                                 Nanning, Fangchenggang, Wuzhou, Haikou, Yichang, Turpan

                                                                                                                                                                                                                                                                         tiv
                                                                                                                                                                                                                                                                      tra
     i2i Events Group is excited to present Pure Shanghai,      The ‘Pure’ name, in conjunction with those of our

                                                                                                                                                                                                                                                                  nis
                                                                                                                                                                                                                                                                                                                                                       Tier 4

                                                                                                                                                                                                                                                               mi
                                                                                                                                                                                                                                                                                                                                  County Cities (368 Cities)
     created to support Western womenswear fashion              Chinese partners, gives brands a trusted vehicle

                                                                                                                                                                                                                                                           Ad
                                                                                                                                           Total consumer spending 2013                                                                                                         e.g Xiejiaji, Dangtu, Huashan, Fengtai, Xiangshan, Suixi, Feixi, Baohe, Juchao,
     brands in entering the Chinese market and offering         in which to access this multi-billion pound sector

                                                                                                                                                   3.3trillion
                                                                                                                                                                                                                                                                               Bowang, Guzhen, Panji, Wuwei, Wuhe, Da’an, Tongyu, Fuyu, Tumen, Erdaojiang

     them an opportunity to build strategic relationships       as they look to open up wholesale, licensing,
     with local buyers, shopping malls, department stores,
     agents, distributors, franchisers and e-tailers.
                                                                franchising and distribution opportunities.                                $                                                                                                                                                                                                           Tier 5
                                                                                                                                                                                                                                                                                                                                                    Counties
                                                                                                                                                                                                                                                       e.g Haiyang, Muping, Zhaoyuang, Tai’erzhuang, Zhoucun, Fushan, Rongcheng, Longkou, Qixia, Shanting,
                                                                                                                                                                Source: Planet Retail
                                                                                                                                                                                                                                                       Yicheng, Anqiu, Changle, Wendeng, Fangzi, Gaomi, Lingqing, Fei, Yinan, Dong’e, Chiping, Guan, Sishui
                                                                Our partners at UKTI, WGSN, CBBC and CCPIT                                                                                                                                                                                                       Source: Deloitte and National Bureau of Statistics of China

     The Chinese fashion market is currently worth a huge       TEX, together with the experienced Pure London
     £98billion, and by being accountable for 30% of            team, bring a whole wealth of industry and regional
     the global fashion markets growth over the next five       knowledge. This will allow us to fully support
     years, it is the world’s fastest growing fashion market.   selected brands as they open the door to what is an
                                                                extremely exciting and potentially lucrative market.                              The Chinese fashion market is currently worth a huge
     With a complex way of working compared to the
     UK and other European countries, the Chinese retail        The strength of these organisations coming together
                                                                                                                                                  £98billion, and is accountable for 30% of the global
     structure can be a challenge and this report highlights    for one event will create the region’s major fashion                              fashion markets growth over the next five years
     the routes to market, advice to ensure a successful        trading hub in Shanghai.
     launch and what retailers are looking for from an                                                                                            Louise young MD Retail, i2i Events Group
     international brand.
Fashion retail opportunities in china - Your independent and authoritative guide
An unrepeatable Retail                                                                                                                              Predicted economic performance, 2012-2018

     opportunity                                                                                                                                         Total consumer spending                                                                                           $6.3
                                                                                                                                                                                                                                                                           trillIon

                                                                                                                                                                                                                                                             $5.5           ($4,488
                                                                                                                                                                                                                                                                           per capita)

                                                                                                                                                                                                                                            $4.8            trillIon
                                                                                                                                                                                                                                                             ($3,976
                                                                                                                                                                                                                          $4.3              trillIon
                                                                                                                                                                                                                                             ($3,520
                                                                                                                                                                                                                                                            per capita)

                                                                                                                                                                                                         $3.8            trillIon           per capita)
                                                                                                                                                                                                                            ($3,116
04                    Frank Wei, Managing Director for Consumer, Industrials and                                                                                                      $3.3              trillIon          per capita)                                                           05

                                                                                                                               Total consumer spending
                      Services at investment firm Warburg Pincus China gives his personal                                                                         $2.8
                                                                                                                                                                 trillIon
                                                                                                                                                                                      trillIon
                                                                                                                                                                                       ($2,449
                                                                                                                                                                                                         ($2,758
                                                                                                                                                                                                        per capita)
                      perspective on the opportunities for international fashion brands in                                                                         ($2,134
                                                                                                                                                                                      per capita)
                                                                                                                                                                  per capita)
                      one of the most exciting retail markets in the world.

     It is a very exciting time for retailing in China. The    China is already the second biggest ecommerce
     landscape is going through an incredible transition       market in the world behind America. This is because
     with forecasts for 3,000 new shopping malls opening       of the sheer size of the Chinese market, but the
     in the next 2 to 3 years. This is unprecedented and       penetration of ecommerce as a percentage of total
     we have never seen any country in the world open          retail sales is still in single digits. But this will quickly
     such a volume of commercial space.                        move above 10% and make China the biggest
                                                               ecommerce market in the world.                                                                        2012               2013                 2014             2015            2016               2017        2018
     This will mean that international brands looking at
     China will never again see such an opportunity to         The key challenge for international brands looking
     deliver rapid expansion, whether through their own        to open in China is in how to set up the appropriate
     stores or with domestic fashion retailers stocking        distribution strategy. Multi-brand domestic fashion                                       Consumer Spend in 2013
     multiple brands. Driving this expansion of retail         retailers are beginning to develop but department                                                                                                               Online Spend in 2013
     space is the Government’s focus on accelerating           stores remain very important. Primarily they operate                                      Clothing, Footwear & Jewellery                                        Clothing & Footwear

              Consumers are already becoming more sophisticated                                                                                          $228billion                                                           $19.7billion
              and international in their outlook and experience as                                                                                       Total                                                                 Total
              huge numbers of people travel overseas for holidays                                                                                        $3.3trillion                                                          $96.6 billion
     domestic consumption in order to reduce the               a concession model and there is no doubt that
     reliance on manufacturing exports. This is a high-        the interest in international brands is growing. But
     level strategic policy that will take years for its       retailers will want to know that new brands can
     effect to be fully felt, but it is critically important   be established quickly and help capture shopper                                           2013 online spend by device                                  Predicted clothing, footwear
     to the development of a consumer economy in
     China. Consumers are already becoming more
                                                               interest and traffic.                                                                                                     12%
                                                                                                                                                                                      Smartphone
                                                                                                                                                                                                                      & jewellery spend
                                                                                                                                                                                                                                                                                   €302
                                                                                                                                                                                                                                                                                   BillIon
     sophisticated and international in their outlook          The challenge for brands is therefore in how to build
     and experience as huge numbers of people travel           this presence and a following on marketing budgets                                                                                   9%
     overseas for holidays now.                                that are far smaller than luxury houses. This can be                                                                                 Tablet
                                                               very difficult in a country the size of China, but this
     We are also seeing younger consumers embracing            is where online and mobile provide a powerful route                                                                                                    €160
                                                                                                                                                                                                                      BillIon
     new fashion brands particularly in tier 1 and 2           to consumers.
     cities. They are going beyond luxury brands and                                                                                                                        79%
                                                                                                                                                                                 PC
     want to stand out from the crowd by finding and           Looking further ahead, we see the prospects for
     wearing new labels which very often they find by          consumer spending in China as being very positive
     searching online. Ecommerce in China should               despite some commentators predicting a slow-
     not be overlooked or underestimated by anyone             down. Recent numbers have been better than
                                                                                                                                                         Online sales in 2013 +36% (f)
     looking at the market. Growth has been explosive.         predicted and overall the conditions remain good.                                                                                                       2012          2013     2014        2015      2016    2017         2018
                                                                                                                                                         Source: Planet Retail
Fashion retail opportunities in china - Your independent and authoritative guide
changing consumer and                                                                                                        Local retailers have also become professional in
     retail environment in China                                                                                                  their operations, and are increasingly sought after by
                                                                                                                                  international retailers as partners.
     Lim Beng Chee, CEO, CapitaMalls Asia Limited

06                 China’s shopping mall industry has come a long way in the twelve                                     As a shopping mall developer, owner and manager
                                                                                                                                                                                    Integrated development in Luwan, Shanghai                 07
                   years since the country joined the World Trade Organization in                                       with 103 malls in 52 cities in China, Singapore,
                                                                                                                        Malaysia, Japan and India, we opened our first
                   December 2001. An industry that was comprised of mainly state-                                       mall in China in 2003 – Raffles City Shanghai. In
                   run department stores, independent shops and street markets                                          the ensuing years, we worked together with our
                   up to the mid-1990s has developed to encompass 3,000 modern                                          tenants to educate consumers about the shopping
                                                                                                                        mall format as well as build awareness of the retail
     shopping malls in 2012, with a total gross floor area of 200 million square metres.                                brands, as we progressively opened more malls in
                                                                                                                        the country.

       CapitaMall Taiyanggong, Beijing
                                                                                                                        Today, the situation is vastly different as shopping
                                                                                                                        malls have been widely welcomed as part of the
                                                                                                                        retail landscape. The increasing numbers of Chinese
                                                                                                                        travelling overseas has led to greater awareness
                                                                                                                        of international fashion brands. With 568 million
                                                                                                                        Internet users in China, retailers are also recognising
                                                                                                                        the importance of having an online presence as
                                                                                                                        part of their marketing, to target younger shoppers.
                                                                                                                        Local retailers have also become professional in
                                                                                                                                                                                  We have since grown our presence in China to 61
                                                                                                                        their operations, and are increasingly sought after by
                                                                                                                                                                                  malls in 36 cities. The majority of our malls in China
                                                                                                                        international retailers as partners.
                                                                                                                                                                                  are located near strong population catchments
                                                                                                                                                                                  and subway stations, and these factors provide a
                                                                                                                        As a group, we have been operating in China for
                                                                                                                                                                                  steady stream of shopper traffic. As one of the few
                                                                                                                        about 20 years. We have a strong understanding of
                                                                                                                                                                                  developers in Asia that are focused only on shopping
                                                                                                                        how to do business in the country as well as local
                                                                                                                                                                                  mall management, we also proactively work with our
                                                                                                                        shoppers’ preferences, enabling us to add value to
     The proliferation of modern malls in China has seen      the hip cafes that serve them. These coffee chains                                                                  retailers on joint promotions and marketing activities.
                                                                                                                        international retailers who open in our malls.
     a sea change in the shopping habits of Chinese           are among the many international brands that have                                                                   These drive higher shopper traffic into our malls and
     consumers, who now patronise malls as they can get       entered the country to cater to this strong rise in                                                                 increase our tenants’ sales. In the first half of this
     everything under one roof as well as spend quality       consumerism overall.                                                                                                year, tenants’ sales in our China malls on a same-
                                                                                                                          Hongkou Plaza, Shanghai
     time there. With strong growth in incomes, we have                                                                                                                           mall basis grew 14.9%. As such, we welcome
     also seen a rise in aspirational consumerism. The        The fashion industry in China was similarly dominated                                                               retailers looking for malls that are well-managed
     world’s largest tea drinking country has developed a     by local players in the past but luxury brands led                                                                  and have good locations and a strong catchment of
     taste for expensive coffee at the international chains   the entry of the international fashion players into the                                                             young, professional and affluent shoppers, to work
     that have set up in the country – not just for the       country, and they have since been followed by the                                                                   with us.
     coffee, but also the experience of hanging out at        mid-tier chains.
                                                                                                                                                                                  On our part, we continue to look for new international
                                                                                                                                                                                  fashion brands to open in our malls in China and
                                                                                                                                                                                  the other countries that we operate in. We look
                                                                                                                                                                                  for brands that are trendy, with a regular stream
               We continue to look for new international fashion                                                                                                                  of new fashion collections that will appeal to the
                                                                                                                                                                                  fast-changing tastes of Chinese shoppers. China
               brands to open in our malls in China and the other                                                                                                                 represents the next frontier for international retailers,
               countries that we operate in.                                                                                                                                      as it is expected to lead world economic growth for
                                                                                                                                                                                  years to come.
Fashion retail opportunities in china - Your independent and authoritative guide
Retailers’ buying cycles
         : THE CHINESE MARKET                                                                                                                                                      >> If it is your own standalone store – street level or in
                                                                                                                                                                                      a mall – then buying cycles tend to be shorter and

    TRENDS & RECOMMENDATIONS                                                                                                                                                          more flexible.
                                                                                                                                                                                   >> Buying: monthly/4 seasons
                                                                                                                                                                                   >> 6 month deliveries are often not practical for
                                                                                                                                                                                      Chinese retailers as it does not allow enough
                                                                                                                                                                                      newness plus there are extreme weather differences
                                                                                                                                                                                      between regions
                                                                                                                                                                                   >> Deliveries into stores: As China is so big, logistics
08 Pure Shanghai will introduce an increasing number of international fashion brands                                                                                                  are often extremely problematic and so most               09
    to one of the most exciting and fast growing markets in the world. We asked the                                                                                                   brands tend to warehouse in the 1st tier cities
                                                                                                                                                                                      and deliver to nearby regions – Beijing servicing
    China team at WGSN, world-renowned trend and market forecasters, for their                                                                                                        northern, Shanghai ( central) and Guangzhou or
    recommendations and insights for any brand looking at opening in China.                                                                                                           Shenzhen (in the south)
                                                                                                                                                                                   >> This can take anything from a couple of days to 2
                                                                                                                                                                                      weeks as deliveries tend to be trucked.
    China: the key differences from other markets:                                                                                                                                 >> China tends to be split into north, south , west,
    >> China is a very youthful market.                      >> For womenswear: feminine usually works, China’s                                                                       central, east regions.
    >> Consumers want to dress up rather than dress             casual market is very price driven.                                                                                >> Drops can be weekly, 2 weeks, 1 month, but
       down.                                                 >> Franchising is key for smaller to mid-sized brands                                                                    needs to be frequent to keep new product for the
    >> To spend money on clothing, people need to               rather than the wholesale model                                                                                       customer.
       relate to the brand and product.                      >> As China has a strong manufacturing base for
    >> What is considered “cool and edgy” in many               many products, wholesale is well developed and
       global markets may not be understood by the              fast. Retailers want immediacy and will only pre-
       majority of Chinese consumers.                           order and wait for shipment if it is from a premium
    >> Extreme styling does not work, but “lifestyle            or much desired brand.                                For styling and sizing
       images” that help people aspire to a “better          >> Boutiques- there are a handful of boutiques that      >> In China, sizing is based on height. There are             need to be adapted by making the hips smaller
       lifestyle” can, whether it be a more European look       have begun to establish themselves to carry              body type differences between north and south.             for example. This is the same for Europe sizing.
       – such as Ochirly, or a more relaxed lifestyle such      international or high end domestic brands. This is    >> 155, 160, 165, 170 and 175cm for women’s.               >> XXS, XS, S and M usually work for the masses, if
       as JNBY or Zuczug.                                       still a small sector but is growing.                  >> Some sizing is close to UK Sizes – 6-10 for the            Euro or UK or USA whilst large sizes need to be
                                                                                                                         smaller sizes if fitted. The larger sizes – 12 and 14      looked at.

    Understanding brand positioning                                                                                   Styling
    >> The leading retailers in Shanghai for young              market and allow brands to reach the 2nd, 3rd
                                                                                                                      >> Clothes need to be easy to wear. For example, as
       women tend to be international retailers like            and some 4th tier cities.
                                                                                                                         soon as you put on the garment, the customer
       Uniqlo, Zara, and H&M. Most standalone brands         >> However the department stores are extremely
                                                                                                                         should be able to see the look. If the garment
       will also be present in both malls and department        competitive and it is advisable for international
                                                                                                                         gets complicated – too much draping etc it is
       stores because this is essential to extend their         brands to work with a local partner to help
                                                                                                                         not so sellable. Outfits are key, suggesting to the
       reach beyond just major cities.                          you through the maze. It is a very aggressive
                                                                                                                         consumer “how to wear” that look
    >> Different levels of market examples:                     environment and extremely competitive as
                                                                                                                      >> People tend to want to look “neat and tidy”
    >> High end designer – slightly more mature                 department stores are very promotionally-driven
                                                                                                                      >> Clean, neutral colours are ok but not muddy unclear
       audience brands: Ports, Marilsfrog, Jorya, Elegant       with the stores controlling the weekly sales
                                                                                                                         colours. Colours that can help flatter the Asian
       Prosper, Exception                                       product promotions and special holidays such
                                                                                                                         skin tone. China loves colour. Mid colours that are
    >> Mid-level: JNBY, Ochirly, Broadcast, Trendiano,          as Chinese new year, golden week, etc in which
                                                                                                                         popular in Europe are a hard sell in China.
       Schofield, Zuczug                                        most brands need to participate.
                                                                                                                      >> Colours that can make you look “poor” are not good.
    >> Young ladies and men’s casual: Vero Moda,             >> There are many rules and regulations for product
                                                                                                                      >> China’s women want to look more youthful and love
       Teenie Weeny, Etam, Esprit, Levi’s, Lily                 deliveries – as the department stores keep a tight
                                                                                                                         details. This does not mean over accessorizing. It
    >> “Mid-market mass”: Zara, Uniqlo, H&M                     hold on your stock levels and there is very limited
                                                                                                                         can be details in the cut, trim etc.
    >> The power of the department stores                       stockroom space. It is better to have frequent
                                                                                                                      >> Classics like white and black work well but browns
    >> In the local environment, the department stores          drops rather than hold stock in the store.
                                                                                                                         and navy are considered dowdy. Pick ones that
       are absolutely key. They form a major part of the
                                                                                                                         compliment or make one appear fairer, oversized
                                                                                                                         jewellery like cuffs and short statement necklaces
                                                                                                                         are often used for styling in windows.
Fashion retail opportunities in china - Your independent and authoritative guide
Modern retailing                                                                                                       Q&A
     takes shape in China                                                                                                   what retailers look for
     Gordon Lam, Vice President, Li & Fung Development (China) Limited, Fung Group                                          with Chen Xiao Dong, President and CEO, INTIME Department Store Company

10                        Li & Fung is one of the world’s biggest textile and garment suppliers                                                  The CEO of one of China’s biggest department store groups,                                    11
                          with long-standing relationships throughout China. Gordon Lam                                                          INTIME Department Store Company, talks to us about how
                          sets out their observations on how rapid growth is shaping modern                                                      he sees the market for international brands and what Chinese
                          retailing in China.                                                                                                    retailers and their customers look for.

     China’s retail market is evolving as quickly as it         Key challenges:                                             What womenswear brands does
     grows. With higher incomes and increasing affluence,       Increasing operation costs. The ever-escalating rental      INTIME department stores stock?
     consumers are demanding better quality and unique          and labour costs have hit many retailers over recent        It varies between our stores. In some of our high-end
     products and services. At the same time, new               years. For leading retailers, average rental costs in       stores, there are brands like: Giorgio Armani, Dolce
     technologies are revolutionizing the way retailers are     prime locations increased by 21% yoy in 2012 for            & Gabbana, MaxMara, Burberry, Balmain, Versace
     running their businesses. This is impacting on Chinese     example. Labour costs have increased by between 5%          and others. In some of our middle-to-high stores, we
     retailers in the following ways:                           and 10% since 2012.                                         stock brands such as Max&co, Patrizia Pepe, Pinko
                                                                                                                            and Ports plus some popular womenswear brands
     Aggressive store expansion is being replaced by            Unstructured development of retail properties and           from Japan and Korea like Eland, Teenie Weenie,
     a focus on improving core competencies and store           lack of centralized city planning. In some key cities,      Snidel etc. Moreover, we have many good Chinese
     productivity.                                              duplicated investment, lack of centralized city planning    womenswear brands, which play an important role
                                                                and mismanagement are giving rise to problems such          in China’s market. For example, you will find that
     Private label: Launching private labels or proprietary     as traffic congestion, increased competition, poor          Marisfrolg, OTT, Girdear, Amass, Mo&Co, Dazzle and
     brands is a profitable way for retailers to underline      customer footfall, an uneven trade mix, high vacancy        Ochirly appear often in China’s department stores.
     uniqueness, pushing up margins while improving             levels and commercial disputes.                                                                                      that they consider it as Europe rather than a single
     customer loyalty.                                                                                                                                                               European country. For example, some foreign brand’s
                                                                Logistics bottlenecks are here to stay. As China’s retail   What do you look for from                                winter collection is not very thick because of the
     Mobile-commerce is increasingly popular, as is mobile      market continues to become increasingly sophisticated,      international brands?                                    efficient heating in their home country, but thick
     payment. The mobile sales channel has become               the efficient movement of goods is proving to be a key      We look for the appropriate international brands         winter collection is very necessary in China if you
     extremely important. Transaction values have seen a        success factor for retailers. Retail logistics management   matching our stores’ positioning. Those international    want to have a good performance.
     tremendous leap, up 181.0% yoy to reach RMB 37.52          is increasingly important. One key approach is to           brands that have a good image and strong track
     billion in 2013.                                           partner with reliable and capable logistics service         record of sales in the market. Or, as new comers in
                                                                providers to improve delivery capabilities and enhance      China, these brands need to prove that they have the     What is the potential for
     Social media is having an explosive impact on              customer experience and satisfaction.                       capability and potential to do as well as what they      international mid-tier brands in
     consumer purchasing decisions. Influential social media                                                                have achieved in their home market.                      China over the next few years?
     websites are increasing the sales conversion rate and      Facing the headwinds of an increasingly competitive                                                                  We think those mid-tier international brands
     encouraging more customers to purchase goods.              retail landscape, together with the growing affluence                                                                with fashionable design, good quality and, most
                                                                and sophistication of Chinese consumers, the real           Do international brands have to                          importantly, reasonable price, will have potential. But
     Tier 3 and tier 4 cities become the development            retail winners are those which constantly innovate and      adapt for the Chinese market?                            pay attention to the local Chinese brands that have
     focus. With ongoing urbanization and rising incomes,       improve business practices.                                 Sure they have to. Foreign brands need to adapt          grown rapidly in recent years and learn from them.
     consumption is growing fast in lower tier cities. Tier 3                                                               their cut, design and fit according to Asian/Chinese
     and tier 4 cities are expected to be the key focus for                                                                 customer’s figures. As China is a big country, the
     China’s retail business development over the next few                                                                  climate, habit, likes and dislikes, customer’s figures   What appeals to your customers
     years as competition gets tougher in tier 1 and tier 2                                                                 and sizes vary between the North and South,              about international brands?
     cities.                                                                                                                1-tier cities and 2- or 3-tier cites. Sometimes the      Chinese customers trust international brands for their
                                                                                                                            differences are similar like what is in Norway and       strong brand image, services, fashionability, quality,
                                                                                                                            Italy. I would suggest to any brand looking at China     fit and the cut.
In their own words                                                                                                       protecting your brand
                                                                                                                             Ed Baden-Powell, Partner, Michael Simkins LLP
                                                                                                                             Michael Simkins LLP is a leading UK media and commercial law firm.

12 To help provide brands with some expert views on the Chinese market                                                                             Protecting your brand and its designs is one of the biggest                                        13
    opportunity, we asked a selection of international retailers for their advice                                                                  concerns for many expanding companies and particularly in
    and comments.                                                                                                                                  China. According to Ed Baden-Powell, a leading legal authority on
                                                                                                                                                   brand protection, the key is intellectual property.

                  Adrian Cheng Director, Chow Tai Fook Holdings & General Manager, New World Development
                                                                                                                             How can you protect                                           be protected under copyright as artwork without
                    “As economic growth and urbanization in China continues and overseas travel and internet                 your brand?                                                   registration. Alternatively, unregistered designs
                    are increasingly popular, Chinese women are more open to experiment with fashion and                                                                                   in packaging or decoration of products can be
                    are becoming more passionate about international fashion brands. Through this education                  The strongest form of protection is to register your          protected against unauthorised third-party use
    process in recent years, Chinese women are becoming more sophisticated in fashion, and lifestyle and sense               trade marks at the Trade Mark Office. The main                under the “unfair competition” rules.
    of personality are slowly taking over the importance of logos. This opens up doors for international women’s             difference is that China operates a “first to file”
    fashion brands to find a place in China and to compete with the traditional large fashion houses. However,               system, rather than a “first to use” system. Foreign          It is also possible to register designs by applying
    with the competition in the women’s fashion market more fierce than the men’s fashion market in China, the               marks enjoy priority if the application is filed within six   for a patent at the State Intellectual Property
    new market entrants should develop the right strategy before they enter. It is also important to know that the           months of the foreign filing. So it is often important        Office. Designs can be registered as long as
    Chinese fashion market is a market of a continent rather than a single national market, especially in women’s            to register your mark as early as possible, before a          they are distinctively different from any existing
    fashion. It involves different customer preferences, build and culture. It is therefore advisable to spend time          third party beats you to it.                                  designs (or combinations of the features of existing
    and effort to investigate the market landscape so to maximize the growth potential in this market.”                                                                                    designs).
                                                                                                                             Do you need to register, or are
    Jesus Echevarria Chief Communications Officer, Inditex                                                                   unregistered marks protected?                                 How can you deal with
                                                                                                                                                                                           squatters?
                  “The demand for fashion by Chinese consumers is really remarkable. It combines traditional                 Brands that are well established in China may be
                  elegance for both men and women with the new exciting era that China is living.”                           protectable even if the marks are not registered.             Given the “first to file” registration system, a foreign
                                                                                                                             Under “unfair competition” rules, an unregistered             business can find that a “squatter” has already
                                                                                                                             mark can be protected in some circumstances.                  registered its mark, or the Chinese-language version
                                                                                                                             This tends to be difficult, unless the brand is               of it. It is possible to bring a case before the trade-
                                                                                                                             very well known in China (and has been for a                  mark board or the courts to try to reclaim the mark,
    Jose Gomez Senior VP, Business Development, Mango                                                                        considerable length of time) and the infringing               but concrete evidence is needed to show that the
                                                                                                                             use confuses consumers about the origin of the                brand is (and more importantly was before the date
                  “You cannot ignore China. The sooner you establish your brand in the country the better. China             products.                                                     of filing) well known in China.
                  offers great opportunities as well as great challenges. In order to efficiently deliver your product
                  to the consumer you must study the infrastructure of the country thoroughly and focus on the               How can you protect your                                      How can you enforce your
                  regions that will offer the best potential. Do not treat China as one country, think of it as being        fashion designs?                                              rights against bootleggers &
                  many countries with their own requirements, tastes and even regulations.”                                                                                                counterfeiters?
                                                                                                                             As in the UK, registration is not necessary for
                                                                                                                             copyright protection to be effective. Under the               IP infringement claims can be brought through the
    Thomson Cheng Managing Director, ImagineX Group, (Lane Crawford Joyce Group)                                             Berne Convention, a copyright work created                    lower-level Chinese courts for all types of IP rights.
                                                                                                                             in the UK is automatically protected in China.                It is also possible to start an administrative action
                  “We see exciting opportunities for brands that can speak to the fast-rising affluent middle class in
                                                                                                                             A registration with the National Copyright                    via local authorities instead. In practice, that can be
                  China. Brands that have a distinct point of view, a strong personality and a lifestyle to aspire to, are
                                                                                                                             Administration can, however, provide evidence of              a quicker, cheaper and ultimately more effective way
                  more likely to succeed as customers want to differentiate themselves. China’s fashion consumers
                                                                                                                             ownership in the event of a dispute. So designs can           to enforce IP rights.
                  are now typically well-travelled and very knowledgeable of brands from runway to high street. They
                  aspire to international fashion and to express themselves through style more so now than status.”
                                                                                                                             Note – This is general information only and is not legal advice. Specific advice should be taken in individual cases.
Pure Shanghai your                                                                                             What Pure shanghai
    gateway to china                                                                                               will deliver

14 Pure London, with its reputation for contemporary brands and a strong business                                  The Market opportunity                                                                                       15
    focus, will launch Pure Shanghai in October 2014, bringing a proven concept into
    China’s £98bn fashion market. The need for individual style and the desire for                                 Pure Shanghai gives brands a trusted vehicle to access China and open up
    western fashion, means that China will account for 30% of the global fashion                                   previously undiscovered opportunities.
    market’s growth over the next five years. Pure London is therefore proud to
                                                                                                                   There is a strong consumer demand in China, and with 40% of all
    be working with CCPIT TEX to bring you Pure Shanghai, your gateway to the
    Chinese fashion market                                                                                         purchases now trend driven, there is a need for high quality product
                                                                                                                   and a broader product offering.
    Pure Shanghai will enable brands to build strategic relationships with:
    Influential buyers • Shopping malls • Agents and distributors • Multi-brand                                    PURE SHANGHAI SUPPORT
    department stores • Online retailers • Franchisers
                                                                                                                   Pure Shanghai will support you by providing you          >> List of hotels with easy access to the venue
                                                                                                                   access to:                                               >> Potential presence on the catwalk showcasing
                                                                                                                   >> Onsite translators                                       your brand
                                                                                                                   >> List of approved agents and distributors              >> Answers on key business questions including
                                                                                                                   >> Information on key department stores and                 payment terms and tax

    Our Partners for Pure                                                                                             shopping malls in China
                                                                                                                   >> Insight into what is trending in China through WGSN
                                                                                                                                                                            >> Research material on China’s growth rates and
                                                                                                                                                                               retail structure

    Shanghai                                                                                                       >> Support and information on China from UKTI
                                                                                                                   >> Networking opportunities at events and briefings
                                                                                                                                                                            >> Support from i2i China on key local knowledge

                                                                                                                      throughout the show

                                                                                                                   To promote exhibitors’ brands to the market
    CCPIT TEX                                             i2i China
    Pure Shanghai will partner with CCPIT TEX, China’s    Benefitting from a local knowledge, our resident         >> A platform to build your brand visibility to both     >> Create visibility through local media channels
    leading apparel trade association has a database      team in the Shanghai office will support all                domestic media and retailers
                                                                                                                                                                            >> Promote participation through our PR and press
    of 150,000 contacts including retail buyers, agents   exhibitors in the lead up to the show as well as         >> Deliver a networking opportunity and other               connections in the UK and Europe
    and distributors, to ensure strong attendance from    onsite. Additional knowledge is also available from         potential match-making events
    throughout the region.                                our satellite offices in Hong Kong, Singapore, Taipei,
                                                          Seoul and Tokyo.
    WGSN
    WGSN China, our sister company, the leading           UKTI                                                     PACKAGES
    global trend forecaster, will empower buyers with     UK Trade & Investment is helping UK-based
    valuable insight on what is trending.                 businesses to succeed in international markets.          £320psqm for full shell scheme package
                                                          UKTI is partnering to support Pure Shanghai.             £270psqm for space only
For more information or to
secure your stand contact:
E: Katy.Roberts@i2ieventsgroup.com
T: +44 (0)203 033 2016
W: www.purelondon.com/shanghai

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