- The Chinese economy and buying power. Do they support growth in the fashion industry?
- The direction the fashion industry is heading towards and if you can leverage it.
- What local partners are available? For instance, are there mature logistics companies, e-commerce platforms, fashion translation services, marketing channels, etc?
The Chinese economy
China’s rise as a global economic powerhouse since the 1990s has been remarkable. Its reverberations can be felt across industries, including the fashion one. One of the primary beneficiaries of said growth is the Chinese population. The nation’s middle class is growing at a staggering pace. Today, this segment can sustain significant industries that sell mid-to-high-end products.
That being said, the individual buying power of each individual remains low. In fact, the per capita disposable income stood roughly at ¥29,398 ($4,094.71) in the first three quarters of 2023. But, due to its sheer size, the Chinese middle class has tremendous buying power.
And prospects remain pretty positive. We expect the middle class to gain an extra 80 million new members by 2030. It will reach 40% of the total Chinese population. Currently, it sits at 400 million individuals. In contrast, the American middle class has shrunk by 11% since 1971. As you can see, its size and growing income make China a prime market for high-end goods. The Asian giant has outpaced the U.S. to become the world’s premier luxury goods market. It already accounts for nearly 20% of global luxury sales.
Why does it matter?
A prosperous middle class is a harbinger of two promising outcomes:
- The vast Chinese market presents an opportunity to reap profits through sheer volume (leveraging economies of scale, among other factors).
- As the middle-class burgeons, so does the potential to enhance your profit margins per item.
Fashion in China: A global powerhouse
Your potential partners
There are many supporting activities you can leverage in China, and we will cover 4 key areas:
- Deliverability of your goods, locally and internationally—logistics.
- Easy access to consumers—retailers and e-commerce platforms.
- Accessibility of your goods to the consumers—fashion translation services.
- Marketability of your goods—social media and marketing platforms.
Logistics
Whether you’re bringing your goods from another market or making them here, logistics is the key to your business. Luckily, in China, this field is well-developed and highly competitive.
Famous names, both local and international, are competing for market shares. Companies like DHL, DB Schenker, FedEx Express, XPO Logistics, SF Express, and Cianio (Alibaba’s logistics arm).
These companies have invested in building comprehensive regional logistics networks. From distribution centers to smart warehouses, they have world-leading performances. It’s not a coincidence that it has ranked 1st worldwide for 7 years now.
Regarding a vital area for the fashion industry—express delivery—the industry is highly competitive. In fact, sending a parcel to China costs $1.40 on average. In contrast, it costs $9 in the United States.
E-commerce
China’s e-commerce market is arguably the most competitive in the world. It is estimated to have generated more than $2 trillion in sales in 2020. Remember that China’s GDP is roughly valued at $17.9 trillion. That’s 11% of the Chinese GDP!
To leverage their immense value, partnering with mature local players makes sense. It is not uncommon to find famous international brands on local e-commerce platforms. And it’s for good reason. During the now-famous Singles’ Day, Tmall alone recorded an astounding $84 billion in sales.
E-commerce platforms are THE preferred shopping method of Chinese consumers. Companies like JD.com, Pinduoduo, Tmall, Taobao, and Douyin can instantly help you access millions of consumers.
Fashion translation services
Before you can market your products locally, you must overcome a basic hurdle—the language. To be clear, it’s not about word usage alone. Rather, it is about understanding the local culture and their communication style. In other words, it’s about understanding how to sell your goods.
Fashion translation services are essential here. Their specialized knowledge can be precious. Consider the many services any reputable local company provides:
- Localizing marketing content: Typically best done through transcreation. This task is usually handled by marketing experts and translators together. They can craft a consistent narrative to communicate your brand across channels.
- Following regulations: China has strict regulations, even for clothing. But fashion translation services can be reasonably helpful here. Due to their niche experience, they are familiar with laws like GB18401-2010 and GB 5296.4-2012.
- Effective communication with local partners: Fashion translation agencies are rarely limited to translation. You can hire interpreters to manage consistent and clear communication with local partners.
- Website localization: Assuming you don’t rely exclusively on third parties, you may decide to build a local website. If so, a translation company with experience in the field can be a boon. They will get ahead of any internationalization issues and start the process early.
- Social media and marketing: Being active on Chinese social media is essential. With the right team, building a local presence is easy.
- Product labels and packaging: Accurate translations are essential, but so is the look. Choose designs that appeal to Chinese customers.
- Customer support: You’ll need local staff to ensure you can communicate effectively with your customers and manage problems as they arise. Fashion translation agencies can typically provide said staff or provide training when needed.
The value of fashion translation services isn’t based on pure theoretical approaches; companies that settled in this market earlier can be decent indicators. Consider Michael Kors, a well-known American brand. They didn’t just translate their content; they adapted it to fit the Chinese market. This intelligent move led to a significant increase in sales across their Tmall store.
Social media platforms
The development of social media networks in China is as fascinating as it is unique. While American companies tend to specialize, Chinese apps aspire to become “mega apps.” WeChat is the most famous example, but it is far from being the last.
Consider TikTok; on the international scene, the app is similar to YouTube. Sure, there are key differences (the algorithm, the video length, the video editing features, etc.). But they are more similar than not—two major video-sharing applications.
In China, the local version of TikTok (Douyin) is a very different beast. You can think of it as an app that combines features from Amazon, Netflix, WhatsApp, YouTube, Twitch, Instagram, and Snapchat. It’s not an overstatement.
With this incredible depth of competing platforms, the landscape of social media networks at your disposal is enormous. Here is a non-exhaustive list you can consider using:
- WeChat: Over 1.3 billion registered users. It serves as a messenger, photo and video timeline sharing, online banking, and networking platform.
- Douyin: As mentioned above, it’s the TikTok equivalent and it has over 600 million active users users.
- QQ: Over 558 million monthly active users. QQ is one of the most popular messengers in China.
- Weibo: Over 573 million active users monthly. Weibo is a blogging platform.
- Kuaishou: Over 355 million monthly active users. Kuaishou is a short video-sharing and live-streaming platform.
- Bilibili: Over 317 million monthly active users. Bilibili is a video-sharing and livestreaming platform.
- Xiaohongshu (RED): 300 million registered users. Xiaohongshu is a shopping, product reviews, and e-commerce platform.
- Zhihu: Over 25 million monthly active users. Zhihu is a knowledge and encyclopedia platform similar to Quora.
- Dianping: 500 million annual active users. Dianping is a review and directory platform akin to Yelp.
- JinRi Toutiao: Over 270 million monthly active users. JinRi Toutiao is a news delivery platform.
- Huya: Over 151 million monthly active users. Huya is a gaming video and live-streaming platform.
- Douyu: Over 165 million monthly active users. Douyu is a gaming livestreaming platform.
- Yizhibo: Over 7 million daily active users. Yizhibo is a livestreaming platform.
Despite their competitiveness, these networks manage to keep their users hooked. On average, Chinese social media users spend 90 minutes per day on said platforms. As such, they often build powerful relationships with local content creators. Said creators can be the linchpin of your branding efforts.
Below, on the left, you can see the famous live-streaming queen—Viya. She has a massive following on Weibo (17 million), Douyin (16 million), and other platforms. During her live streams in 2020, she sold $890 million worth of goods—in less than 3 months!
Another major influencer in this space is Austin Li Jiaqi, the “Lipstick King” that you can see on the right. He is famous for his live-streamed broadcasts on Taobao, China’s largest e-commerce platform. He earned himself his monicker during a sales competition. Li Jiaqi managed to outcompete Alibaba’s founder, Jack Ma, selling over 15,000 lipsticks…in 15 minutes!
Influencers of their caliber routinely generate millions in revenue during their live streams. And keep in mind that you don’t have to start with the biggest names. Each platform has a deep network of creators of different sizes, suitable for any company.Why do they matter?
- Logistics companies are essential for efficient product distribution. A competitive market leads to lower costs. And Chinese logistics are 84% more cost-effective than their American counterparts.
- E-commerce companies provide the quickest ways to access a massive market. In fact, this industry roughly accounts for 11% of China’s GDP. By leveraging their reach, you can compound yours.
- Without overcoming language and cultural barriers, success is impossible. Specialized fashion translation services are the perfect partners to reach the local market quickly.
- Social media is essential to reach your customers. By leveraging the insane power of local influencers, quick revenue can be generated. As a reminder, Viya sold $890 million worth of goods in 3 months!!
Final considerations
In-depth market research
Understanding the local market is crucial. Your established brand identity and target segments may not fit the local market. You must re-evaluate them in the context of Chinese consumer behavior and preferences. For instance, what is perceived as fast fashion in your current market might be viewed as high-end in China, and vice versa. It’s essential to adapt your pricing and marketing strategies accordingly.
Consider China’s tiered cities (1, 2, 3, 4) system. Each city tier likely represents a bump in purchasing power and thus preferences. We’d encourage you to collaborate with market research firms. But keep in mind that fashion translation services often come equipped with the right market research capabilities.Regulatory navigation
The complexity of Chinese regulations makes partnering with a knowledgeable local entity indispensable. They bring more than legal understanding; they offer established relationships with key players, including government agencies. This network is crucial for navigating the bureaucratic landscape and can be the deciding factor between success and failure in your expansion efforts.
We strongly advise investing time and resources in identifying and forming alliances with partners who not only understand the legalities but also have a proven track record of successful collaborations.
The Chinese fashion market is a lucrative opportunity for those equipped to seize it. But without preparation and the right partnerships, it may end up becoming an ordeal. In doubt, it’s always better to get more information first.