The Casualwear market is booming in China and we will explain where excatly most of International Brands are extanding their Business in China.
FT Confidential Research‘s latest quarterly brand survey showed a substantial growth in third tier cities amongst casual clothing brands, with Uniqlo, H&M and Zara all showing increased profits. The survey indicated Uniqlo was the most popular casualwear brand amongst the urban consumers. 19.3% of those surveyed said it was one of the two major brands they would purchase, showing a 1.9% growth in the fourth quarter of 2015.
Popularity of global casualwear brands rises in second- and third-tier cities
This success is a sharp contrast to a domestic economic slowdown in China and a particular slowdown within the fashion industry. Growth in retail sales amongst apparel companies grew 6 per cent in the same period, but this was the slowest pace of growth in over a decade
The market points to a greater advantage amongst fast paced companies who can supply a demand for the fast onslaught of fashion trends and high consumer margins, as opposed to more established high end retailers. Thus, imitation seems like an unlikely course for Chinese based companies, and they would see greater improvements in acquisition based strategy.
This high paced ‘fast-fashion’ trend had pervaded beyond China’s richest urban centers. Uniqlo is well-established in China’s first-tier cities also with 24.9% of respondents there opting for the brand. Its popularity rose 3.7 percentage points in second-tier cities compared with FT Confidential Research’s last survey at the end of 2015, and also showed a 2.4 percentage growth in third-tier cities.
H&M and Zara in China
Competing fashion brands, H&M and Zara, secured second and third place in first-tier cities, with an overall popularity rising from 2.7 and 1.5 percentage points respectively since the last survey. H&M in particular showed their brand popularity increase in second-tier cities, up 4 percentage points, while Zara’s rose 3.5 percentage points in this city tier.
However, despite companies navigating through a market downturn, it doesn’t mean the future is an optimistic as it would seem. Fast expansion is competing against a domestic economic downturn that could prove costly to companies that exert their hubris disposition.
Uniqlo is “hot” in China
Fast Retailing, Uniqlo’s parent company, operated 472 stores in China at the end of August, which was substantially up from 387 a year prior. They are also intent on opening 100 stores a year in China, with a focus on youth brands, until they hit their target of a thousand. It is believed that they are looking to raise their overall count in Chins to a 3000, making China’s market account for half their revenue. It is a huge gamble on a booming economy that has economic perspective questioning can such a growth be sustained with a growing middle class populace.
Sweden’s H&M also added 47 new stores this year, bringing their store count in China (store count to 400). Inditex’s Zara brand was the most conservative of the three, with a store count rising by just nine in the same period, bringing its total to 188.
Despite this growing popularity, there are concerning signs that these brands these brands will not been immune to China’s broader economic slowdown. Uniqlo’s greater China sales rose to 9.3% by the year to $2.9bn in the fiscal year of 2016, which was a harsh decline from 46.3% in the previous year, while operating profits slipped 5.5% by the year. H&M’s China sales growth also declined sharply, falling from 16% last year to 5% in the first nine months of 2016.
Expansion in 2nd & 3rd Tierce Cities
It is evident that expansion beyond first-tier cities does not equal automatic success in a country that still has deepening economic divisions between the rich cities and the poor countryside. Although brand popularity is increasing, it remains to be seen if lower-tier city demand will justify aggressive store growth. It would seem brands are hoping that China will continue to build and succeed, thus rising future profits. Urban disposable incomes in the provinces can be roughly half those of Beijing and Shanghai, and has shown in market trends that fashion purchases are sharply lower to lower-tier cities.
How to Market a Casual Brand in China…
Branding is everything in China
- Awarness via social Media
- Reputation with Influencers
- PR campaign for the Credibility
- Engage with People with Game and 020 campaign
- E-Commerce via Tmall & Wechat
More information, contact us (pretty Simple)