Ask any luxury brands or any luxury retailer who values European fashion brands the most. Chinese customers are the number one fan for European luxury brands. World’s 2/3 of luxury brands bought by Chinese, However, most of high –end fashion brands are bought from overseas instead of domestic Chinese market .
Even though some of huge luxury fashion brands like Prada, Hermes and Gucci have been built their flagship store in China, However, they are all barely make profit in Chinese market. So for those brands who as new to Chinese customer from European, is there any chances or market for them ? The answer is yes, but with more realistic marketing strategy which adapts into Chinese market and needed to do more research of Chinese market if brand want to succeed in China.
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What we advise to fashion brands that want to enter into the Chinese Market?
Set reasonable price tags in Chinese market.
Although Chinese people are highly in demand of European luxury brand, as to Chinese customer, however, are just recently make enough money to spend their spare money more in Luxury brand.
Currently, European premium brands in Chinese retail have much higher price than in Europe in terms of adding transport cost and taxes Which makes them set higher pricing strategy and furthered their retail prices. However, Chinese people are not fool, they know how much the same product selling in overseas and domestic market. Normally overseas price will be much lower than domestic market from range 30% to 50%. Yes, Chinese recently have more money to spend on luxury goods, but they will spend their money while they are in overseas trip and buy luxury goods in the overseas with cheaper price! As result, the domestic premium store is barely selling a product with extremely high cost of rent. Maybe it’s their marketing strategy in China. However, it is not the case for developing their brand in China in long term business strategy.
So, set a reasonable price and adjust according to Chinese market will be a good choice for new coming Luxury brand. Otherwise it will cause a bad result.As we can learn from Marisfrolg for its Chinese marketing strategy by acquisition Italy brand Krizia. They set their price at 300euros to 1000 euros at begin and years and years after , they won Chinese market with more than 400 stores in China and 300million sales annually( source from China daily)
Learn from the local high –end brand about pricing strategy, management and customer services.
Most of Chinese brands do better than European brands in terms of management customer service. When it comes to hiring the manage team, European brands are tend to transfer their manage team leaders from home country instead of local talent with foreign business mode.
However, most of them are lacking of Chinese market experiences and management experience with Chinese team. (more information about perfum in China )
With the customer service, foreign brands should acknowledge that there is Chinese way to deal with customers from many aspects of customer service, Shopping experiences is very important for Chinese customer not just in store service, but also after sale service and online service and customer care etc. .Here I would like to stress on the online shopping experience as well, Chinese people like to spend time and most of time on the E-commerce platform than ever before nowadays.
How to create shopping experience online is a lesson for these premium brands too.
Adjust the Channels and distribution strategy
Most European brand would like to stick on to their ‘Made in Europe’ labels instead transfer their production team into Chinese factories. This issue causes high production cost. However, there is no difference to put their production team between China and Europe in my opinion. You can still have label of European brand and gain the most advantages of capacity of production in China.
We can learn from L’OREAL with its approach to adjust regions in China. They are premium brand from Europe, but they are willing to attract middle class from second- tier cities and even third .
Understand how the E-commerce and digital trend of fashion brand in China.
Chinese have become the second largest E-commerce shoppers recent years. There are no brands should ignore the power of E-commerce which can increase your sales and brand awareness in Chinese market.
Of cause, these premium brands might think that E-commerce might lower their brand image and destroy their local strategy in whole. However-commerce is not the trend just happened in China, but the whole wide world. It is matters to how you manage your E-commerce platform to maintain your brand image, not the Platform lower your brand image.
On the other hand, digital also the worldwide trend for fashion business. How to take advantages of the digital platform makes difference to your brand. For example, well manage your social media platform will really increase your fan base and guide them to visitor your physical store in China or online store with increasing sales.
The British Luxury brand has been gained favorable annual sales by setting up the official online store with 7.6% annual sales increased in 2013 ( Source from Luxury daily ) So even for the well-known luxury brand has been trying to step up to the online sales, why not for new European brand ?
To sum up, there is full of potential fashion business opportunities in the fashion market in China. To enter into Chinese market, European fashion brands need to adjust the Chinese market with smart marketing strategy and make the most advantages from different aspects.
More information about Chinese fashion industry here
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Written by Elliot Dao