China is a fast-paced growing economy which has pushed many fashion and luxury brands to enter this market to seize a unique market opportunity. However, the divergences between western and Chinese consumer behaviour have created a cultural threshold to establishing a brand’s influence over this market. In this post, we are going to discuss what companies should be doing to manage the risks associated with establishing a presence in China.
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China has been able to become an engine of growth for many fashion firms, as it’s population is increasingly growing in both pro-capita income and sophistication. The companies wishing to enter this market, however, need to understand the Chinese practice of luxury consumption, while at the same time build a brand.
Entering the Chinese market is a challenge in itself as firms are required to:
An example of the last bullet point can be seen in the remarkable differences between Beijing, and Shanghai. In Beijing, a stronger attachment to heritage and tradition can be emphasized through exhibitions and cultural events, while in Shanghai, a more glamorous approach can be pursued through fashion shows and media exposure.
The drive to purchase luxury products is often associated with the desire to conform and the pursuit of status. This is common to most countries, but in China, the status component of luxury purchase is associated with in-your-face eye-catching items.
In this context, therefore, the status component pushes consumers to use luxury as a marker for social categories.
At the same time, China is growing its taste for sophistication, and consumers will need to be informed and educated about the more behind-the-scenes elements of luxury. This poses a marketing challenge, as customers may be confused about the ‘noise’ created in fashion communication, and consider streetwear brands like Adidas as a fully-fledged luxury brand.
This poses a particular challenge for Italian luxury brands, as the Made in Italy country of origin effect draws its values and quality from the fashion pipeline as opposed to loud marketing campaigns.
Location is undeniably one of the most important elements in the pursuit of exposure. Retail distribution for luxury brands needs to be both extensive and impressive to generate a perception of exclusivity. A thorough retail network is especially important in China, in consideration of the – relatively – small distribution of fashion magazines. In this sense, flagship stores are a valuable approach as an entry method, as a larger store is able to draw deep into the brand’s heritage and history.
By looking at this first glimpse into the Chinese market, we can conclude that developing a brand in China is an expensive endeavour. Firms will need to invest in boutiques, advertising, talent while creating a culture of sophistication around luxury goods.
Most of all establishing a brand in China is a long-term goal, where consistency and perseverance are important values to bear in mind.
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