Fashion Industry: opportunities for designers and operators if chinese buyers choose for brands made in China.

China means top sales for highly ranked international brands. Approximately 30% of expenditures for luxury industry comes from China. Nothing new of course, as long as we well know that top spenders in China are people with age range between 20 and 35 years, really important data comparing with same target of buyers that in America or Europe are over 50s for power of purchasing.

That means brands have highly to care about specific and diversified marketing strategy for communicating and placing products that are bought by younger customers comparing than western markets. we are talking about high volume of sales that are much more achieved through online platforms than traditional flagship stores; usual offline-retail system is becoming more or less a window which brands can spread additional contents or marketing / customer caring activities more than common sale.

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But the big change is represented by new dimension that influences common opinion about perception of what can be considered “high level” or luxury product.

If until few years ago, western brands were absolutely better for target of first tier’s zones and a must-choice for high power purchasing customers, nowadays connected spenders seem like to discover through WeChat new high-quality brands designed and produced in China, with branding that speaks about the beginning of new era for China, for both sides, production and purchasing.

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It’s not only trend that involve fashion industry. We can clearly see it as result of general development of chinese economy and market that are influencing a sort of chinese proudness about the emancipation of production and industries on the way for establishment of glorious “Made in China 2025”, goal that Xi Jinping enforced as concrete potential and representation of Chinese system’s evolution, considered today not only as homogenous destination’s market for luxury brands but also an high level production’s country able to export quality to western countries.

In particular chinese brands are more sensitive about local customers needs and approach. If we talk about fashion, we can find high attention in local and frequent campaigns with well framed selection of features for products according with specific preferences for the area where the collection is promoted and sold; if we talk about new collections, in China they much more follows online campaigns than seasons and it’s very important to get ready to face with high demanding and susceptible buyers, always attracted by influencers comments and promotions as long as new designs or promotions. There’s huge and quick demanding of “contents” concerning brands and products and collection and for sure chinese industry is pretty much on right timing to provide such elements.

I think that beyond well known brands that already got nice positioning online and offline as luxury brands (but of course D&G’s debacle remind us that quickness and dynamism can be for sure opportunity for western players as well as tricky playground if not properly managed) this new perception and interest by high spenders for chinese production opens a new way of cooperation on the market for european designers and operators from the fashion industry ( I would like to say european more than american concerning the common opinion about US that China is assuming after some Trump’s declarations).

The attention for chinese investors now are not only on purchasing shares of companies that own important brands with decades of business and fame leaving them to develop on chinese market as “international and well know luxury identity or style”, but they are really much more oriented to cooperate with skilled designers or brands with experience in the field to develop new businesses that can fit with new market needs in terms of freshness, chinese appearance, and brand’s charisma that can get guided by social commerce. (we have to remember that some feedbacks can be collected by users from first tier’s zones as well as different comments can be issued by second or third tier’s zones but it doesn’t mean that luxury can’t be positioned with different volume on each area. It means specific skills and continuous care must be spent in these terms).

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Yes, social networks, wechat’s community and campaigns guide towards the right route to build up a successful strategy for new chinese brand with something special (european engine and skills) and specific  tools useful to change quickly something that doesn’t match properly with socialnets, sometimes can be offered with best result by chinese business partner or investor more than being solved with marketing directors that few or never faced with China on proper and specific way.

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Brand’s perception in China: from coolness to substantiality

If customer – target for luxury segments in China is much bigger than its counterpart in US , it means that society is still growing up towards new era for consumptions that makes two different middle classes facing with the market : approximately 110 millions of chinese are going to represent the new upper middle class with specific “commercial identity” that’s clear representation of new awareness about products and quality in particular in terms of substantiality.

It’s like how we are passing from the commercial equation for middle class that was used to say “foreign brand = cool = prestigious = not for all = I must have it” toward much more consciousness for foreign products and in particular for their ” substantiality” as crucial point to define characteristics like quality, tradition and luxury.

That’s why two specific ways of doing advertising and promotional campaigns are characterizing the commercial scenario in China for those segments that concern fashion, luxury and design for example.

  1. Regular promotion for middle class that is mainly focus about spreading logo’s attractiveness through digital marketing with discount and special campaigns and some offline events in department stores with parallel events to promote special offers doing brand and product placements in strategic location
  2. Innovative promotion for upper middle class, which make on focus the “characterization” of brand going beyond the “logo-strategy”. It represents a competitive solution for those corporate that got something to educate about. That’s what upper middle class is looking for: values, imagination and charm

If we are choosing as potential target the new upper middle class (that according with McKinsey’s analysis  is growing for 12% on annual base and it  registers as household income more than 35.000 dollars x year) we should consider that we are dealing with mature customers with international vision and high-competence in purchasing. This segment will go probably over 160 millions in the next five years and it will improve household income reaching peaks of 40.000 dollars.

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They are people aware of their status,  and their style is basically going toward  something of “well characterized”. Maybe they discovered european brands in some multi brands stores during their leisure travels in Asia (Hong Kong, Singapore, Macao, Japan, Korea) and now they are much more interested to buy products that have something to say beyond the logo. It represents a good opportunity for those operators that maybe even they got good placement on international commercial scene with specific distribution they for sure didn’t have the funds to be a well-known world-wide label.

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Of course foreign nature of brands could be a plus (however it’s not always the best selling point for this target  ‘cause they also like chinese style,  in particular when the product is result of research and commingling with exotic influences from external scenarios) but this target wants to understand them now not only enjoy the equation “foreign brand is cool and it’s definitely for nice people like us”

History, own identity  but also care about renovation of distinctive features in step with time’s changes are elements which strategical plan for marketing  toward upper middle class must be focused about.

Certainly the “regular” middle class is still majority and it’s embracing, in particular in second tier’s cities ,  the boom for brands in department stores and  before that they are used to follow with  big interest the “foreign sounding”  of some advertisements and online commercial campaigns (sometimes it doesn’t matter if the brand was originally born in Italy or not but it’s the communication’s strategy used to make the brand featured with international elements as distinctives to make it a cool brand)

I don’t want to say that the importance that chinese people gives to “name” and “logo” is going to disappear but we have for sure to consider as new and mature commercial perception is becoming part of their behavior. How can this influence on functional way the marketing strategy of high level’s brands to improve sales? As follows some tips that should be added on marketing agenda of things to do

  • The history of brand means something to tell to your customer. In China it’s used to say “business got eyes”, it means that besides the quality of the product, first of all the value of the goods is emanation of human skills, vision about particular style or way of living, adaptability with social needs. Make your advertising like an educational tour in your group’s history, show your competence and why not the challenges you joined, it doesn’t matter if you’ve been the loser for some particular choices, what you’ve done is part of your commercial charisma
  • Make your target sure that you are really into to talk with people who are conscious of their status and are abel to understand your message. Try to communicate with them before making them your clients. They are looking for brand that can create such cultural and emotional liaison
  • Events. The scenario where upper middle class is proud to show and communicate own goals is the world. If you are not part of this world you cannot be part of their life. Don’t waste time of improving distribution’s channel if you are not ready to support him being present beyond the campaign to launch new products. We’ve already seen a lot of “cathedrals in deserts” in China, some investments for launch of specific brand or nee jv with chinese potential distributors never followed by specific and intense mission aimed to be in the market with consciousness of communicate own features.
  • Be yourself but take care of chinese taste. We don’t have to configure all our style elements in function of chinese mass target. The Upper middle class wants something different by us. And if we served them in periods when they still was “regular” middle class we should show that now we are aware of their new status and needs (some players are going to diversify their brands keeping on mind that they are talking with mature segment that maybe will not continue of being client if not satisfied on way that respect such awareness)

Our Made in Italy is for sure good horse to ride but now more than ever we need to show that’s not only a “logo” if we want to be one of favorite purchases by chinese middle class.