Issue No. 2 April 2013 P H O to : Y a Z M I N

Issue No. 2 April 2013 P h o to : Y a z m i n

Y e

Fashion brands are embracing the digital phenomena in China Marivi Avalos Monarrez, Marketing Manager at Fashionbi

Daily we see how China is a major player in the world to the evolution of the fashion industry from the offline news. About the same Fashionbi Magazine, we didn’t to the online business, covering every area of interest want to be left behind, and it was very important to about the strategies the local and international brands offer our readers an issue with information about this are following to be successful on this country, from market and the way Fashion Industry is evolving. local social media to mobile and e-commerce and so on. An outstanding analysis of the online performance The role this industry plays is significant because of local and international brands has been done by anywhere you go it is easy to discover how important our team of analysts in Shanghai. Also featured in this it is through fashion shows and editorials screened issue are: Yu JuHong, owner of lingerie brand AIDAINI; on trains, airplanes and subway stations. But most Jett Qiu, General Manager in China for “earth music importantly, players in this industry are transforming & ecology” and Tristan Colvin, brand manager at the way businesses are done, by taking their brand Roberto Boticelli, who kindly shared their experiences experience to the online world, where the population with us about managing a fashion and luxury brand in of a billion is using local social media platforms to China. We are proud to present this second issue and engage not only with friends but also with their favorite we hope you enjoy getting updated about how fashion fashion brands. Consequently, we dedicated this issue brands have embraced the digital phenomena in China!

Fashionbi Magazine Issue 2 April 2013 2 / 53 Contents APRIL 013 04 05

08 10 13

14 17

27 Overview 28 From offline to online: the Evolution of the Chinese Fashion Industry 30 Fighting the stereotypes The high-fashion consumer of today The digital fashion world transforming the fashion industry Consumers Getting Technology-Smart International brands and their presence on SINA Weibo Fashion brands and their online phenomenon in China Online brand performance insights 35 The international labels surpass the local 36 Chinese labels, on a global awareness scale International brands are the most attractive, 39 be it on the local or global social media channels 42

44 45 49 50 51

Industry insight by the insiders Jett Qiu, japanese brand “earth music & ecology” ’s general manager in China Yu Juhong, The owner of the Chinese fashion lingerie brand “AIDAINI” Tristan Colvin, Brand Manager at Roberto Botticelli Future trend What the future holds? Business Gurus Monthly Contributors What our readers say?

Fashionbi Magazine Issue 2 April 2013 overview From offline to online: the Evolution of the Chinese Fashion Industry By Marivi Avalos Monarrez

It is known that China’s economic evolution has no historical precedent, just in 1978 China was one of the poorest countries in the world and few years ahead the situation in average living standard occurred positioning this country to be the second largest economy in the world.

Changing the world China is in the media today, taking a major role in the world news. Analysts are forecasting that it is the world’s fastest growing country, and it is estimated that by 2040 it will be the largest economy in the world, with India and the U.S. being the second and third, respectively. Nowadays, China is not limited to only its major cities of Shanghai and Beijing, instead the second tier cities like Tianjin, Qingdao, Chengdu, Dalian, Nanjing among others, are playing a major role in this nation’s booming economy. More and more international companies are finding these markets attractive and are gradually grabbing their The middle-income trap retail space in a middle-market population that is forecasted to have an important level News about China’s economy facing a “slowdown” is due to the of growing by 2020. manufacturing costs getting higher and as a result the region is reaching the levels of the “middle-income trap” where countries In addition, the local designers and fashion move from rapid to slow growth, and new sources of growth are brands are also transforming the scene, needed. This country has proved to be innovative and even though uplifting the image for “made in china” tag. this nation could become a less effective competitor in certain aspects, it could also become less predictive and more aggressive, gaining advantages in different areas like new technologies and sustainability.

Fashionbi Magazine Issue 2 April 2013 5 / 53 Online strategies are changing China’s Fashion Industry The use of new technologies, especially in digital communication arena is having a strong impact due to the fashion business taking an unexpected turn. Today, China’s real per capita GDP is exceeding by 8 percent per year, and according to the World Bank in 2011, the population was 1.3 billion. This country’s population uses local social media platforms for networking where they engage not only with their friends, but also with their favorite fashion brands, celebrities or even with the government officials, to express their ideas and feelings towards different happenings.

In addition to that, the e-commerce is having a strong impact in the way fashion retailers do business. Before everything was focused to be put on sale for people living in ‘first’ cities, but now with the e-retail, the fashion retailers can reach a much more bigger audiences in second tier cities, All this leading to the changing stereotype classification of the gaining a significant sales value. Chinese into wealthy and non-wealthy, as today, this country’s middle class is rapidly growing with an access to internet, study- abroad, and, consequently, their interest in new things and affordability of an “aspiring lifestyle”.

The young population is incredibly interested in everything “fashion”. Brands and retailers know it and are desperate to get a piece of cake of the expansion strategy for the Western brands in the country. International companies too, have learned the importance of being able to offer the consumers, local options according to their ‘new’ lifestyles and needs.

“The e-commerce is having a strong “Western companies are launching impact in the way fashion retailers do Chinese luxury brands” business” Shang-Xia InOut Collection Marketingtochina Blog Source: shang-xia.com Source: marketingtochina.com

Fashionbi Magazine Issue 2 April 2013 6 / 53 “Shang Xia is a luxury brand that is “The Li Fung Group, founded in “Li Fung Group is now the 100 percent produced in China” 1906 by the Fung family” owner of many Western fashion” Shang Xia Campaign Li Fung Group 2011 Annual Report Li Fung Group 2011 Annual Report Source: shang-xia.com Source: lifung.com Source: lifung.com

Entering the world of Luxury A major happening in the evolution of the fashion industry is the phenomenon of Chinese fashion companies becoming owners of Western luxury brands, or Western companies launching all Chinese luxury brands in partnership with Chinese designers and so on.

One example of a Western company owning one of the first Chinese luxury brands is Shang Xia, founded in 2008 and owned by the Hermès group together with the designer Jian Qiong Er. This brand is aiming to preserve the historical beauty and craftsmanship of Chinese design. What is remarkable about Shang Xia is the fact that it is 100 percent produced in China, and it is not a second line of Hermès nor is a version for this market. But it is the best way to rescue the value of traditional Chinese arts like weaving and porcelain- making. The pricing for most items goes What has also changed is the fact that old manufacturing from 2125 Yuan for a sweater to 7400 Yuan companies or luxury brand agencies are starting to build their for higher goods. own luxury brands. Recently, the Redston Haute Couture Company bought the Italian brand GIADA, and soon in July Another example is about the case of Hong 2013, they’ll open a new store at Via Montenapoleone in Milan. Kong-based Li Fung Group, established This company is recognized for introducing luxury brands in since 1906 by the Fung family in Canton China, with examples such as Salvatore Ferragamo, Saint and now has its headquarters in Hong Laurent and Valentino. Kong. This company is a global figure in the consumer products, and nowadays is very To summarize, the fashion industry in China is facing a stage known for acquiring Western luxury brands where new technologies are helping Western fashion companies like the recognized French fashion house to create awareness in this market even if they are not very well Sonia Rykiel, Cerruti 1881 and Gieves known, thanks to local social media platforms like Weibo, helping & Hawkes, Clergerie, Hardy Amies the population to be more connected to what’s happening in the amongst others. other side of the world. Further research demonstrated that on this channel, people talk about red carpet events and celebrities There is also the case of Shaw-Lang Wang, endorsements of Western luxury brands, an awareness that was the Taiwanese women behind the French hard to conceive a few years ago. The country once perceived as brand Lanvin. the biggest factory of the world is now the owner and creator of many luxury brands, worldwide. •

Fashionbi Magazine Issue 2 April 2013 7 / 53 FIGHTING THE STEREOTYPES By Jenny Perusek

Once only known for its low-cost, high volume production model, the Chinese Fashion Industry has been transforming itself in recent years into a heaven for emerging homegrown luxury brands. The question on everyone’s mind is: how did China changed to adapt its business model from external production to internal creation within a matter of years?

A Dark History When mainland China opened its doors to the international world, the landscape of producing fashion changed forever. Known for its low production costs, China quickly became the premium destination for international fashion companies to produce their wares. And it wasn’t just fast fashion brands like H&M that got in the game either, with luxury brands like Armani and Ralph Lauren moving part or all of their production to this new region as well. The Changing Ways But these low costs didn’t come without a While some of these abuses still exist, China has been slowly hefty price. That price, paid mostly by women taking steps to upgrade the working conditions of its workforce. between the ages of 15 to 25, was lower wages, In 2011 alone, the monthly minimum wage increased about 22 longer hours, and unsafe working conditions. percent in 24 of China’s provinces and, according to Deloitte, For a specific example, one need only look at Chinese government officials have proposed a further plan to Nike. The sportswear brand has largely been increase labor wages overall by more than 80 percent by the year criticized for its manufacturing abroad and 2015. in 2008 conducted an in-depth study into the conditions of its Chinese factories. What they Some of these changes come as a result of pressure from found was an environment of underage and international brands, like Nike or H&M, who now regularly check unpaid workers, with documents falsifying their overseas production facilities for violations. While others the true conditions of the factories. come as a result of China’s aging worker population. According to the New York Times, by 2020 more than 200 million Chinese people will be over the age of 60. This younger generation of Chinese workers will not stand for the kinds of working conditions accepted by their predecessors.

Fashionbi Magazine Issue 2 April 2013 8 / 53 “Fashion industry leaders have decided “Industry leaders have chosen the small to take an internal approach and grow Chinese city of Shishi as the location for their luxury presence with Chinese talent this new capital city, with plans expected and technology.” to be finished in 2014.” Courtesy of Jing Daily Courtesy of Jing Daily Source: jingdaily.com Source: jingdaily.com

But, here in lies a major problem for the Chinese fashion industry. Improving the working conditions of its citizens, a positive and much needed step, is increasing its once unbeatable low cost of production. And as a result, many fashion brands are leaving China to produce their clothing in locations like Tunisia and Turkey.

The New Milan As all good organizations do when faced with such a challenge, China has chosen to evolve and adapt. Instead of backtracking on its mission to improve conditions, fashion industry leaders have decided to take an internal approach and grow their luxury presence with Chinese talent and technology.

The crowning jewel of this endeavor is known as the Milan Plan, a new fashion capital exclusively for the Chinese Fashion Industry. Based on the manufacturing infrastructure of Italy’s best known fashion city, which sees the blending of three points of Italian manufacturing, this community will bring “together Chinese designer Zhang Qinghui, deputy secretary-general of designers, retailers, raw material suppliers, the China Fashion Week Organizing Committee, told publication manufacturers and service providers”. Jing Daily that Shishi has the most skilled workers in the area, as well as a style presence for their own. Industry leaders have chosen the small Chinese city of Shishi as the Within the past decade, China has seen first-hand the meteoric location for this new capital city, with rise and subtle fall of its status of the country du jour to produce plans expected to be finished in 2014. fashion. But with its subtle fall, comes a fruitful new development: a Chinese fashion capital poised to take the international fashion industry by storm. •

Fashionbi Magazine Issue 2 April 2013 9 / 53 The high-fashion consumer of today By Ambika Zutshi

Day by day, Chinese consumers, irrespective of their ‘social status’, are getting more and more fashion conscious, more class conscious. Sophistication and individuality-seeking youth are more careful in their purchases and heavy investments in fashion and luxury products. They are well aware of how a purchase can define their status quotient.

China is becoming bigger and bigger. Brands are facing cutthroat competitions to acquire the best possible retail space in the heart of big cities in China. However, “with the trend of innovation, urbanization, and growing consumerism, it is clear that China is no longer limited to Shanghai and Beijing. Tier 2 cities with their ballooning middle markets are now the new battlefield in luxury consumerism, and everyone is invited to come and play.” [Fernandez, 2012]

Supporting the international Luxury With all the talks of China to become the biggest luxury consumer in coming years and all that, one is bound to think how the Chinese Luxury market has evolved and where is it going. There are talks of how “many fashion giants are already joining hands with Chinese brands/companies. LVMH backed fund L Capital Asia and other investors also acquired minority Another example of a luxury house to acquire stake in Chinese stakes in Chinese contemporary clothing brand is PPR. The luxury giant recently acquired a majority company Trendy International Group. stake in Chinese fine jewelry brand Qeelin. Also, we just saw how Salvatore Ferragamo increased stake in a joint venture in Greater China.” [Zutshi, 2013]

Fashionbi Magazine Issue 2 April 2013 10 / 53 “Brands are facing cutthroat competitions to acquire the best possible retail space in the heart of big cities in China.” The Luxury Society of China Source: chinaexhibition.com

“With all the talks of China to become the biggest luxury consumer in coming years and all that, one is bound to think how the Chinese Luxury market has evolved and where is it going.” Chinese Luxury consumers buying at International premium brands Source: jingdaily.com

Individualism The homogeneous and unified China market is a myth, now. Consumers are growing more diverse through their differences in values, as the younger generation along with people in the middle income level, often seek brands associated with fun and excitement and care more about product design, while older people and higher earners lean more toward efficiency and performance when looking at certain fashion product. In fact, the latest study on the China market also shows that men are becoming more aware and conscious in fashion term, than the Chinese women. According to CLSA Asia Pacific Markets, a Hong Kong-based financial services group, “Chinese male customers spend more on luxury goods than Chinese Women, with a percentage equal to 55 percent of the market. The report indicates that the proportion of Chinese male customers of luxury goods is higher than the global average of 40 percent”. [Karmis, 2013]

Fashionbi Magazine Issue 2 April 2013 11 / 53 FENGFEI.Z S/S 2012 collections at Mecedes- Raphael le Masne de Chermont, CEO of Benz China Fashion Week Shanghai Tang, with Morton Wilson at a launch Source: jingdaily.com party in Hong Kong Source: chinaexhibition.com

Growing out the ‘typical’

Another stereotype related to the market is Chinese consumers liking for Western ‘brands’ with overall Logos. That they still love to flaunt, flash their expensive logo-filled Louis Vuitton bags and overwhelming G-logoed Gucci shoes. This is simply not true anymore. Chinese consumers are realizing the worth of their own creative minds and many are working toward uplifting this image. Raphael le Masne de Chermont, CEO at Shanghai Tang (an international clothing chain company from Hong Kong), quoted by CNN, says the contrary, “The Chinese, who used to be a bit shy about their culture and their economy, all of a sudden they won those medals.” “They started to feel proud to be Chinese.” Although, he further adds, “Chinese brands have been recognized by mass consumers, but they are facing problems in building brand-reliability and trust.” [Zutshi, 2013] •

Fernandez, Ria [2012, Nov 14] Karmis, Nurgul [2013, Jan 6] Zutshi, Ambika [2013, Jan 7] Next wave in the expansion of China’s luxury China’s men lift the luxury market China emphasizes creativity challenges the fashion industry from http://fashionbi.com west from http://fashionbi.com from http://fashionbi.com

Fashionbi Magazine Issue 2 April 2013 12 / 53 the digital fashion world is changing the fashion industry Consumers getting technology-smart By Ambika Zutshi

Just emphasizing on the brand image and talking customers through TV and print ads is not enough. Keeping aside the norms, there has been a massive rise in the use of digital technology for reading, shopping, leisure – you name it! Studies show that Internet Word of Mouth (IWOM) is changing Chinese consumers’ purchasing decision process.

The brands need to be very well present and engaging in this direction, in the market that totals up to more than billion of population. With the rise of digitalism, e-commerce and social media marketing have also become crucial to uplift revenues and double the profits than ever.

Tech-addiction on a rise You are a big fashion label selling offline but not online? Time to re-think your strategies, and think them right. China is quickly gaining recognition in terms of consumers getting more and mor dicted, preferring to save their time and travel and buy the products online. “The China Internet Network Information Center report confirmed mobile Internet users accounted for 74.5 percent of nation’ total Internet population, which stood at 564 million, amid The E-shopping phenomena a slower growth rate since 2010.”[Zutshi, 2013] Talks of the town have also been not only brands selling their products online but also China getting its own version of Concluding also from that study is the international 3rd party websites selling all the high end labels and fact that the tech-savvy users of China are making them easier to reach and satisfy the appetite of the Fashion becoming more and more mobile and ipads hungry Chinese consumers. “E-commerce is booming, according addicted. It’s a rather normal scene at a to the Boston Consulting Group online, shopping is expected Chinese metro station to see people passing to reach 360 billion US dollars in sales volume by 2015, and time reading new, making purchases and according to an interview of Federico Marchetti (Yoox what not, while travelling to their work for owner) with WWD, they are expecting China to be on the three hours, everyday! top markets of the company within the next four to five years.” [Avalos, 2012]

Fashionbi Magazine Issue 2 April 2013 14 / 53 “China is quickly gaining recognition in terms of consumers getting more and more internet-savvy” Online shopping in China Source: atelier.net

For instance, Amazon, the United States largest online retailer bought its way into China in the mid-2000s with the purchase of Joyo.com. It later changed the name, in two steps, to Amazon China. Market researchers suggest that the Chinese online market is about the same size as in the United States, as a percentage of the total retail sales. With the ability to jump right onto the Internet without having to go through the development of physical stores or the technology behind the Internet, the online market in China should grow quickly.

Online influencing the offline Majority of Chinese Internet users (58 percent) find that consumer review and rating sites, forums and discussion boards, blogs, and other online spaces influence their purchasing decisions, compared with only 19 percent of their American counterparts. In the “parallel internet universe” as they say, they use native social media channels like OnlyLady BBS (bulletin board service) community, Sina Weibo microblog and social networking site Kaixin to share opinions and experiences about brands by the millions. Amongst these, Sina Weibo has recently been rated as something even beyond being just a ‘Facebook’ of China.

Yoox.cn - Local Yoox e-commerce website in China Source: dress.pclady.com.cn

Fashionbi Magazine Issue 2 April 2013 15 / 53 International Luxury Brands’ Official Sina Weibo Channel Source: missgreentea.com

Breaking through local social media The very famous The Business of Fashion (BOF) website reports that the platform, which grows at 10 million users per month, has been attracting an elite of Western luxe brands over the past month, testing ideas for campaigns or other projects directly on their Chinese audience. In October 2010, Louis Vuitton became the first global fashion brand to launch a Weibo presence. Since then, numerous big fashion names build up their presence with Chanel, Gucci and Burberry all launching accounts within the first few weeks of the year.

The very Twitter like Chinese social network lets users post messages of up to 140 characters, consider that in Chinese mandarin characters, 140 means a lot more detailed writing than possible with English on Twitter. “Weibo also offers threaded discussions, voting and polling features, and events, as well as Tumblr-like features which make it easy to post photos, videos and audio.” [BOF, 2011]

Interestingly enough, Weibo is very human-driven than anything else. The most popular accounts are held by the celebrities and influential personalities and sometimes, the individuals from a brand would end up having double the users that a brand would have on this platform. “For example, Vogue China’s editor- in-chief, Angelica Cheung with almost 200,000 followers, has a higher following Chinese consumers like to interact; they like to put a human face than both of the magazine’s two official to whomever they are interacting with and who is sharing any accounts — one for print, the other for online.” kind of news with them. [BOF, 2011] Hence, not only to buy apparel or shop luxury products online do the Chinese use the digital media today. It is much beyond this mission for them today. Digitalization today, is more like a media where Chinese socialize and express. Much away from their political upbringing, digital media is bringing the nation closer and playing a vital part in the lives of an average Chinese, where he has the freedom to be himself, irrespective of the platform being confined to the local parameters. •

Zutshi, Ambika [2013, Jan 22] Avalos, Marivi [2012, Oct 8] BOF [2011, Mar 8] Mobile internet on an all time high in China China will have a customized yoox website Brands experiment with Weibo from http://fashionbi.com from http://fashionbi.com China’s answer to Twitter

Fashionbi Magazine Issue 2 April 2013 16 / 53 International brands and their presence on sina weibo By MuMa and Marivi Avalos

The buzz about China’s fashion and luxury world its everywhere in all kind of media, but to follow the media is not enough for people living outside China (or not visiting frequently) to be truly aware about how fast things are moving there.

This is the main reason why it is always necessary to learn from people living there and being able to comprehend the way fashion luxury companies do the communication and advertising in order to succeed in its marketing strategy. Having a team in Shanghai, helped Fashionbi to get the more real and authentic information on the successful digital strategies used in the Chinese industry.

In China anywhere you go, it is possible to feel how important is fashion, because fashion shows and editorials are screened all over the subway stations, trains, planes and the buses, and it is also possible to see it featured in an unimagined number of print media. But what is most remarkable is that fashion companies are aware of how important it is to have a cross-channel campaign to engage the customers, not Two good examples to expose the way international brands create leaving behind the digital presence of their their digital content is for the premium or frequently called luxury brands. French brands like Chanel and Louis Vuitton.

Generally speaking, all the high-end fashion brands pay a detailed attention on having a Chanel’s Weibo Page Weibo account and update the content they On Chanel’s Weibo account it is observed that the layout used is create in this channel. Often the strategy is very clean and simple beige color as a background without any to organize events that are somehow linked pictures, but they do use the brand’s icon in the same way they do to make people engage and create activity for Facebook and Twitter. on this media. Mostly, these brands use Weibo to promote specific category products; The content is managed in four special topic pages: usually perfumes or bags are exhibited in the The first page is used to promote the perfume “Chance”, accounts. right now it has the biggest focus because once you enter the site they take you directly to “lucky chance” page.

Fashionbi Magazine Issue 2 April 2013 17 / 53 Source: e.weibo.com/chanel Source: e.weibo.com/chanel

Here, the fans have the option to post and vote for the three different color perfume, and they can watch promotional videos, also they promote the use of hash tags #幸运的邂# which means (#lucky Chance#).

Next, the second one aims to promote the Coco Mademoiselle perfume, and the name is “The world of Miss Coco Chanel”, here the content is linked to the Chanel’s Youku, which is a video page that includes all the advertising video campaign, the story behind the shooting, all of them with English subtitles.

The third page is used to promote the perfume Chanel No.5, and fans are free to post and express their opinions, all the microfilms with Brad Pitt are exhibited and they invite Lastly, the fourth page is dedicated to the brand’s history, and fans to use the hash tags :#我的幸运5号# here fans get an introduction the story of the brand and how it (#my lucky No.5#). was created. Fans or users can follow this timeline and close the timeline page.

Source: e.weibo.com/chanel Source: e.weibo.com/chanel

Fashionbi Magazine Issue 2 April 2013 18 / 53 “The third page is used to promote the perfume Chanel No.5, and fans are free to post and express their opinions. All the microfilms with Brad Pitt are exhibited” Source: e.weibo.com/chanel

“The fourth page is dedicated to the brand’s history, and here fans get an introduction to the story of the brand and how it was created.” Source: e.weibo.com/chanel

Fashionbi Magazine Issue 2 April 2013 19 / 53 Source: e.weibo.com/louisvuitton

Louis Vuitton’s Weibo Page The second example is another French international luxury brand, Louis Vuitton. For this brand it is very interesting the fact that they use their Chinese name “路易威登” for communication. Same as Chanel, they have a strong focus in a particular product category, but they do it towards handbags, and its products are featured by a Chinese celebrity. Today under this brand’s Weibo page they will lead you to a special promotion page for the “Alma” bags. On the top of this page there is the advertisement video campaign for “Alma” bag. In addition there is also a Picture Gallery, featuring the international model’s campaign, but the brand also included a special campaign featuring the Chinese movie star and fashion Icon Fan Bingbing. Then at the bottom of the page there is an open timeline for fans to post Street shooting, stories or New year’s wishes.

Source: e.weibo.com/ louisvuitton

Fashionbi Magazine Issue 2 April 2013 20 / 53 How many fans do international brands have on Sina Weibo in comparison to Twitter?

Brand Weibo Twitter

Coach 555 350

Adidas Originals 493 405

Louis Vuitton 372 395

Zara 287 132

Converse 174 98

Levi’s 148 89

Ermenegildo Zegna 103 8

Bottega Veneta 107 4

All the numbers are from December, 2012 (expressed in thousands)

International Fashion Brands on Sina Weibo Today high-end luxury brands are aware of how important it is for a brand to communicate directly to their current and potential customers. As a result, almost every famous brand has its own official Sina Weibo in China, some examples are Chanel, Louis Vuitton, Gucci, Burberry among others. But not only premium and luxury brands, also the mass market and sportswear brands are owners of more than one account. A good example Here on this table it is possible to see how many fans the is Nike with more than 12 official Sina international brands have in Sina Weibo in comparison to Weibo accounts for a specific product range Twitter. It is possible to observe how the mass market, bridge and (basketball, soccer, foot-ball, etc). premium brands are more successful on Sina Weibo rather than The brands use Weibo accounts to Twitter. From mass market we can see how Adidas Originals, communicate with fans, and also to promote Zara, Converse and Levi’s, are performing better on Weibo and organize special events in this country. with a higher number of fans on this channel rather than the number of followers on Twitter. Second, it is clear how Coach is representing the bridge brands with a higher performance on Weibo. Lastly, the premium brands that are represented by Louis Vuitton and Bottega Veneta, only the second one achieved a better performance on Weibo, but with a strong difference, while Louis Vuitton which has a number of followers on Twitter higher than on Weibo, there is only a 23 thousand of difference.•

Fashionbi Magazine Issue 2 April 2013 21 / 53 Fashion brands and their online phenomenon in China By Seyma Korukcuoglu

In 2009 China surpassed the United States as the world’s second- largest luxury market, and now trails only Japan. While most luxury brands have ignored the digital phenomenon in China, some have embraced digital and are beginning to reap rewards.

Digital phenomenon in China Marketers in the fashion industry are leading on China’s digital playing field with brands including Burberry, Louis Vuitton and Chanel rounding out the top 20 most- savvy, according to a report from L2 Think Tank which was made in December 2012 last year. L2, a think tank on digital innovation, believes that the “the success of prestige brands in China is inextricably linked to digital competence.” According to L2′s third annual Digital IQ Index,China benchmarks In fashion sector, Burberry is among the top 10 performers, so the digital competence of 100 luxury brands it shows that Burberry’s digital efforts are paying well in China in China including the automobile and beauty including its e-commerce website and social networks. sector. For example, the Burberry Body commercial has made nearly 3.5 million views on Youku, while a Burberry Body video Online competence among fashion featuring chief creative officer Christopher Bailey attracted brands 58,000 views and popular initiatives on Jiepang and Sina Weibo led to enviable engagement. Of the 100 brands in the Index, 22 are Probably their best effort was the time when they opened the new considered top performers (genius and flagship store at Beijing in April 2011, the brand wanted to do it gifted), 17 are average performers, and 61 are bigger and better than any of its competitors with a digital fashion underperformers (challenged and feeble). show. As we covered in our previous articles on Fashionbi, their goal was to create a fashion show unlike any other, employing the latest in digital and filmmaking technology. Its heritage of music, fashion, innovation and the great British weather was presented using holograms, projections, animation, and real-life models and musicians. [Korukcuoglu, 2012]

Fashionbi Magazine Issue 2 April 2013 22 / 53 “The success of prestige brands in China is inextricably linked to digital competence.” Source: facebook.com/l2thinktank

Social Media Marketing in China

More importantly, according to Emma Li, research lead at L2 Think Tank, New York “Digital campaigns in China are very different,” and she added that: “Social media marketing is less about fan growth, and more about increasing interactivity and driving user-generated content.

She further claimed that: “Genius-ranked brands share the ability to simultaneously launch multichannel, multi-platform digital campaigns, maintain a strong social presence and foster a natural symbiosis between online and offline activities.”

Literally, it is a very good sign that the luxury brands are aware of the high potential market in the region and they are working to strengthen their digital competence in China, but they still have a lot of work ahead. The most important aspects of L2 outcomes and notes in its report showed that two thirds of fashion brands and 64 percent Beauty category continues to lead in site sophistication and of watches & jewelry brands are feeble. beauty brands are most likely to feature live chat and user reviews but fail to provide international store locators for global travelers, but some local fashion brands also offer social media innovations.

Source: facebook.com/burberryperfumes

Fashionbi Magazine Issue 2 April 2013 23 / 53 Burberry Beauty Source: fashionbi.com/newspaper

TaoBao Source: dangerousprototypes.com

International E-Retail vs. Local

Speaking of international retailers, nearly half of the 47 international prestige retailers have e-commerce available for China, including Macy’s, Neiman Marcus, NET-A-PORTER, and YOOX. Only four premium fashion brands (Coach, Dior, Burrberry and Hugo Boss), have launched direct e-commerce since 2011, so clearly other fashion retailers should discover the integration ways to this market in their digital activities.

Local e-commerce retailers Despite the lack of a functional shipment and payment infrastructure, Chinese companies have also invested heavily in e-commerce in the past decade and have created an online demand worth hundreds of billions of dollars. TaoBao.com and its higher-end sibling Tmall.com, jd.com which sell clothing but also other products Besides these China local brands opened their online stores on such as Amazon.com. Together, these sites T-mall, also many international brands did the same and now generate a market share north of 80 percent have stores on T-mall: Puma, Kappa, Only, Vero moda, Gap, of all transactions online in retail market. Levi’s, Mango, Forever21, Nine West, Fion, Dickies, Ecco, Esprit and so on. Some brands are opening their online stores on both T-mall and their own website. For Another interesting case is Vancl.com. It all started with an example: Ochirly and flive plus (these 2 online brand that competes with giants like Uniqlo and H&M brands are all under the Trendy Group). for China’s post-1980s consumers. The brand was selling other things from bed linnen and light furniture, through cosmetics, to watches, shoes, and electronic gadgets. However, now they started selling their own brand and used aggressive offline advertising to establish this genuine apparel brand.

Tmall Source: east-west-connect.com

Fashionbi Magazine Issue 2 April 2013 24 / 53 Luxury brands offering Chinese version on their websites Among all fashion brands, most of them do not maintain a Chinese version of their website. The majority of luxury brands are barely out of digital and lack simple functionality such as a store locator. More than a third of brands do not offer customers the opportunity for email communications. Here are some examples of fashion and luxury brands which maintain Chinese language in their website: Fendi, Gucci, Dsquared2, Salvatore Ferragamo, Going Mobile Versace, Valentino, Burberry, Jimmy Choo, Cartier and Balenciaga. Surprisingly, other People are using mobile to connect, to do shopping, to engage, luxury brands such as Missoni and Dior do communicate and stay updated with fashion brands. In China, not maintain a Chinese language in their luxury consumers spend less time on PCs, increasingly plugged website yet. into their tablets and smartphones for everything from communication to commerce, mobile shopping has become a an important bright spot in the country’s booming e-tail market.

Interestingly, Swarovski has used a Chinese mobile application called Jiepang, which is similar to foursquare, along with country-specific social media channels to enhance its Sparkling Secrets exhibit. The presentation was hosted at the Shanghai Exhibition Center in July 31 2012, showcasing the brand’s history from establishment to present, and pinpointing major collaborations with over the years. And this mobile app also drove their consumers directly to the website.

Not just luxury brands but also cosmetics industry aimed high and stayed creative in China’s digital innovations of mobile ipad apps. As part of the opening of the Sephora flagship store on West Nanjing Road in Shanghai, this year in February, Sephora created an in-store experience to assist customers in the delicate art of fragrance selection. Moreover, it is an exclusive iPad application made available to customers visiting the new flagship Sephora store.

Swarowski mobile app Sephora instore iPad app Source: top10apks.com Source: labbrand.com

Fashionbi Magazine Issue 2 April 2013 25 / 53 Sephora instore iPad app Source: labbrand.com

Through a simple quiz, the application guides users in selecting the appropriate fragrance to match the occasion, whether it’s; work, dating, going out or gifting. The application was designed and created in co-operation with Labbrand.

Recently, Wechat has also become more and more popular among the Chinese mobile users. Especially after they add the “Moments” section where you can share the pictures with your Wechat friends. Wechat is going to be the most strongest competitor of Weibo and now the feature of Wechat looks like the combination of “What’s up” and “Weibo”. In addition If we want to understand more clearly the digital in China, it can to Chinese version, they have English, be considered that China’s digital landscape is frenzied, and local Japanese, Korean, Italian, and Turkish and Google had difficulties to understand this. Although Chinese version which are great aspects of getting consumers love foreign brands, in the digital space, they will opt more users around the world. for interfaces that cater to local tastes. That’s why, to increase the digital opportunity in the region, partnering with Chinese technology firms, agencies, and vendors can be a better way for recognizing and increasing the brand awareness in China’s digital platforms. Clearly, localizing site content and building out local fulfillment should be the top priority. •

Wechat Source: smartphonesmart.blogspot.com

Korukcuoglu, Seyma [2012, Nov 14] Digital and technological inclinations in the Fashion Industry from http://fashionbi.com

Fashionbi Magazine Issue 2 April 2013 26 / 53 online brand performance insights The international labels surpass the local Chinese labels, on a global awareness scale

By MuMa

The factors that depict if a brand is liked, known and talked about, in the world, define the awareness quotient of that brand. Shanghai Tang and Vivienne Tam are the most well known Chinese Fashion Brands not just in China but also internationally.

The brands are analyzed in terms of their global brand awareness, as compared to the international ‘Benchmark’ brands, Diane Von Furstenberg (DVF) and DKNY. (As we know that the Chinese network is relatively closed, this data could be considered as the overseas performance of the Chinese brands). Apparently, the two international brands, DKNY and DVF, Vivienne Tam is more famous in comparison to Shanghai Tang win most of the share (85 percent) in the in the international market. It achieved more than a 10 percent competitive arena, and DKNY is the most share of voice in the international competitive arena. Shanghai mentioned brand overall. Chinese brands Tang is the least spoken about brand amongst all the 4 brands still lack awareness in the overseas market. that accounts for approximately one-twelfth of its benchmark brand (DVF).

Share of Voices Overall

Total DKNY 45 % 944 mentions: Diane Von Furstenberg 40 % 839 2029 Vivienne Tam 12 % 232 Share of Voice Shanghai Tang % 3 61 Number of Mentions

45Period: January 2013 +31240+C Source: fashionbi.com Scope: Worldwide Share of Voice: Based on the number of mentions, using More the number of mentions, more the certain algorith, the Share of Voices for the percentage of share for a brand, out of the main brand and its competitors is calculated total mentions of the brands chosen. (within the competitive arena). Fashionbi Magazine Issue 2 April 2013 28 / 53 Topics around brands on China WEB

DVF Diane Von Furstenberg Shanghai Tang Chain-link Bomoda Warparound pants Moleskine Spring summer 2013 Xin Tian Di Lana Crawford HU Bin Fixed-Gear DVF Loves Roxy Chinese and West New York Fashion Week Oriental

DKNY Vivienne Tam Rihana Jeans Lea michele TSL Dancing Saffiano Snake Don’t Knock New York New York Fashion Week Discount kiko mizuhara Fossil Double Happiness Square be delicious Monster

Source: Chinese social media channels Scope: China Note: Words are translated from Chinese to English

Fashionbi Magazine Issue 2 April 2013 29 / 53 International brands are the most attractive, be it on the local or global social media channels

By MuMa

DVF did 37 posts on Facebook and 68 posts on Weibo in January 2013, that is, more than 1 post per day.

DVF is the most active brand on both Facebook and Weibo platforms As a Chinese local brand, Shanghai Tang has an obvious stronger positioning in the home country; the fans quantity on Weibo is twice as much as the second best brand, DVF. But the brand hasn’t been very active in the local social media. With 20 posts on Facebook and just 6 posts on Weibo in Jan 2013, the brand is the least active amongst others chosen in the list. DKNY leads in terms of Facebook fans, whereas Vivienne Tam is the brand with least fan count both on Facebook and Weibo.

DKNY DVF ( Diane Von Furstenberg) 915,750 16,744

NUMBER OF FACEBOOK NUMBER OF WEIBO FANS FANS

275,601 30,046 9,160 70,802 2,050 70,802 Fans quantity on Facebook and Weibo DVF ( Diane Von Shanghai Tang Vivienne Tam DKNY Vivienne Tam Shanghai Tang Period: January 2013 Furstenberg) Source: fashionbi.com

DVF ( Diane Von Furstenberg) DVF ( Diane Von Furstenberg) 37 68

NUMBER OF NUMBER OF FACEBOOK POSTS WEIBO POSTS 4 18 20 38 16 6 Number of posts DKNY Vivienne Tam Shanghai Tang DKNY Vivienne Tam Shanghai Tang Period: January 2013 Source: fashionbi.com

Fashionbi Magazine Issue 2 April 2013 30 / 53 International brands are the best performers on Facebook DKNY is the most successful brand on Facebook in comparison with other 3 brands. The brand just did 4 official posts on Facebook, but exceeds with huge Fans, bagging 375 reactions per official post made by the brand in the month of January 2013. DVF came second with 234 reactions per official Are the Chinese brands enagaging more fans on Weibo? post. The Chinese brands’ performance in terms on Facebook fans engagement is not so Shanghai Tang Weibo Impact comes second in comparison with high, engaging around an average of just 50 the others; even though the brand did just 6 posts during the fans per one official post. month. But the performance is much behind DKNY. DKNY is the most engaging brand also in Chinese social media. DVF as the most active brand on Weibo but it didn’t fetch the brand a high Weibo Impact (fan reactions). Vivienne Tam is the bottom-ranked in terms of the Weibo Impact in jan 2013.

Analyzing from the results below, it can be concluded that the Chinese brands have no advantages on Chinese local social media even if they are the Local brands. The international brands are still most talked about on Chinese channels due to the strong 4 375 DKNY brand awareness and time to time innovative promotions and marketing they make.

DVF 38 607 DKNY 37 234 (Diane Von Furstenberg)

Shanghai Tang Shanghai Tang 6 13 20 58

DVF 68 11 (Diane Von Furstenberg)

18 50 Vivienne Tam

16 3 Vivienne Tam Number of official Posts Number of official Posts Facebook Impact (Number of Weibo Impact (Number of Actions per Post) Actions per Post)

Facebook Impact Weibo Impact Period: January 2013 Period: January 2013 Source: fashionbi.com Source: fashionbi.com Scope: Worldwide Scope: China

Facebook Impact: Weibo Impact: Facebook Impact score shows how a brand is performing Weibo Impact score shows how a brand is performing on Facebook in terms of the number of actions made on Weibo, in terms of the number of actions made by by fans per official brand’s post made by the brand on Weibo fans per official brand’s post made by the brand its official page for the month being analyzed. It is the on its official page, for the month being analyzed. It is the average user engagement per official brand post. average user engagement per official brand post.

Fashionbi Magazine Issue 2 April 2013 31 / 53 What do Chinese people say about local and international brands, on Weibo? Vivienne Tam

« Love the dress (Vivienne Tam « Vivienne Tam 2013 Fall winter « Vivienne Tam is co-branding CNY Collection)! Thank u! New York fashion show is full with TSL Jewellery to launch ---廖碧兒Bernice » of Chinese elements in red the “Dancing Snake” collection and black colors ----在野时尚 ---Vogue服饰与美容 » 主编 »

Shanghai Tang

« Lina Zhang Stars in Shanghai « The new collection of « Are Multinational-Acquired Tang’s Spring 2013 Campaign Shanghai Tang is showing us Chinese Brands Really by Richard Bernardin the high-end Luxury China “Chinese Luxury”? ---- SheClub » fashion which combining Qeelin, Shanghai Tang, Gieves the retro ,casual and classic & Hawkes, etc. ---theWOWA Chinese elements. ----奢华中网 » 国luxechina »

DKNY

« DKNY, CKJ sales up to 50% » « Rihanna：DKNY for Opening « Rihanna in DKNY for Opening Ceremony Spring 91 Sweat Ceremony! Isn’t she amazing? Jumpsuit + Alexander Wang --Vivian小霖子 » Cameron Boot + Joyrich python PU Backpack ----LADY_STYLE »

DVF (Diane von Furstenberg)

« Diane Von Furstenberg co- « The DVF fall/winter fashion « The inspiration behind #DVF branding with sport brand show pay tribute to the rock - Diane von Furstenberg#’s Roxy to launch The limited icon David Bowie spring Palazzo collection Swimsuit collection “DVF loves --- missforever » focusing on classic Roman ROXY” landscapes and Diane’s --- 魅力惠GlamourSales » infamous jet-setting lifestyle --- THEVILLA »

Fashionbi Magazine Issue 2 April 2013 32 / 53 H&M Social media performance

Weibo v/s Facebook v/s Twitter

The recent collaboration between Maison Martin Margiela and H&M, did a big boom on Sina Weibo in November, 2012. H&M as a brand, really knows how to use the “star - Advertising - Branding - the audience” connection in Social media, very well. They invited Yu Wen Lei, one of the “hottest” fashion Icons in China, as the photographer of Silent Manifesto, and posted his photos online. This activity attracted a lot of Weibo audience toward the brand.

Silent Manifesto H&M Source: weibo.com/hm

Fashionbi Magazine Issue 2 April 2013 33 / 53 H&M is more active on China social media During the sales campaign, H&M did 64 tweets, 71 posts on its official Facebook page and almost 100 posts on Sina Weibo. Again the interaction rate was much bigger on China social media platform. The content of the posts on Weibo was almost the same as on Facebook and Twitter, Just for H&M engaged the largest quantity of fans on China social few ads H&M used the Chinese models. The media Weibo fans quantity of H&M is 3 times less than Twitter followers and 34 times less than In order to understand the brand’s activity for this event, the H&M Facebook fans. Obviously, the Weibo Impact per post on each social platform was measured. Impact fans of H&M are more active in comparison of one post on Facebook done by H&M was higher than that on to Facebook and Twitter. Weibo, with more than 3400 overall fans responding to one post. One tweet engaged 208 followers, again a significant amount considering the pace at which the platform runs. The Facebook 98 1985 WEIBO Impact is followed by Weibo, which engaged 1985 Chinese fans per one Weibo post. During the same period, H&M has been mentioned almost 10 times more on Weibo than on Twitter even the brand followers quantity on Twitter is greater than Weibo fans. With less fans of H&M Weibo’s account, brand still managed FACEBOOK 71 3410 to gain a lot of mentions, re-posts and replies.

Taking into the consideration that unlike the well-known Luxury brands, Maison Martin Margiela is not so famous in China. Plus H&M has 3 times less fans on Weibo than on Facebook and TWITTER 31 208 Twitter. Despite all these factors, joint campaign between Martin Margiela and H&M was very successful on Weibo. • Number of Official Posts on Social Media

Social Media Impact (Number of actions per post)

Number of H&M Posts and Impact Period: 1st November to 19th November 2012 Source: fashionbi.com Scope: Worldwide

WEIBO 173,040 15,356 6,083 Mentions Re-post Replies 194,479

FACEBOOK 230,603 7,087 4,445 Likes Shares Comments 242,135 H&M number of fans actions on Weibo, Facebook and Twitter TWITTER 8,891 2,804 1,638 Impact: Number of Actions per post Mentions Re-tweets Replies 13,333 Period: 1st November to 19th November, 2012 Source: fashionbi.com Number of Actions Total Reactions Scope: Worldwide

Fashionbi Magazine Issue 2 April 2013 34 / 53 industry insight by the insiders JETT QIU, JAPANESE BRAND “earth music & ecology” ’s GENERAL MANAGER IN CHINA By Marivi Avalos Monarrez & MuMa

In the interest of providing useful insights from the insiders in China’s fashion industry, it was very significant being able to obtain the valuable knowledge from the players on this field. Fashionbi Magazine was fortunate to have the participation of Mr. Jett Qiu, who is the General Manager in China for the Japanese brand “earth music & ecology” in a short but important interview, where he shared with us how the Japanese brand developed its business in China.

Expanding to Overseas market is always the Jett Qiu long-term goal of Japanese groups For Mr.JettQiu the fact that establishing a subsidiary Japanese brand “earth music & ecology” ‘s and direct-sale store in China has always been the long- General Manager in China term goal of Japanese groups, is very clear. Speaking in terms of the brand he is managing “earth music “earth music & ecology” has faced & ecology” , it has already launched lots major challenges entering the of stores in Taiwan, before entering Chinese Market the Chinese Inland market. The direction for this Japanese According to Mr.Jett Qiu company, always has been the Chinese customer oriented to find a market clothing style is inclined to that will offer a growing European, American and opportunity to achieve a Hong Kong style, and this development for the brand represents a challenge but business similar to the one also a opportunity for the in Japan, therefore Chinese Japanese style. In relation S o u inland market was the r to competitors Mr.Qiu said c e : C that Chinese rivals are really choice. It was in 2011 the year R O S S fast on developing and opening when the brand entered formally C O M into this market and established a PA new stores, because they are quick NY branch with 2 direct-sale stores, the in finding the Chinese customers expansion continued and today there is a needs of fashion in both aspects, design total of 13 stores in China, and the plan is to increase and visual merchandising, and some of the examples the number to 40 stores. of the main competitors for the brand he is managing, are “Ochirly” and “Five Plus”(which belong to Trendy Group).

Fashionbi Magazine Issue 2 April 2013 36 / 53 “Asian brands pay much attention to in-store marketing” Particularly on the subject of promotion of the brand and how to engage the customers, Mr.Qiu‘s observation is that Asian brands pay much more attention to in-store marketing, and particularly speaking of Japanese brands there is a strong focus on customer care, as a result, there is a big attention to staff training, because it is through them that brand characteristics are being communicated. Additionally he sees that customers from Shanghai like taking advice from sales staff, and that is the main reason why sales man in the large Chinese region use different communication modes to satisfy the customers. Therefore “earth music & ecology pays much more attention to in-store marketing.

Social Media is the marketing focus of “earth music & ecology” this year Like many current fashion and luxury brands, “earth music & ecology” pays much attention to Weibo marketing in China, said Mr.Qiu. “Weibo promotion was a part of the brand’s marketing strategy since the three months before it entered China”. Today Weibo is the main platform of the new-bornmedia and it is very well received by young people, and the price to be there is What is more important is the fact that not only the brand’s very low. According to Mr.Qiu the Micro-blog message can be transmitted but also the brand’s culture by is the fastest transmission platform of brand connecting off-line Events and Weibo promotion. information, and consequently it gets more engagement from the targeted customers. He also mentioned how after only one year “earth music & ecology” had presence in Weibo, it achieved more than 50 thousand fans. In words of Mr.Qiu “there is no doubt that social media is the marketing focus of “earth music & technology” this year.

Source: CROSS COMPANY

Fashionbi Magazine Issue 2 April 2013 37 / 53 Source: CROSS COMPANY

“earth music & ecology” plans to open its own online store in China Mr.Qiu explained that the brand owns an online shop, but in China they have decided for this starting stage it is more convenient to use T-mall Platform and it is being managed by a special agency. With good results so far, the monthly volume of business reaches RMB 500,000 Yuan, and daily sales have achieved RMB 800,000 Yuan during the period of the National Day holiday in China last year, exceeding the forecasted sales. The brand is planning to its own online store in China after the sale reaches to a certain degree.

For the future development: sales & services According to Mr.Qiu the company’s future is optimistic, and the center of it will be the good combination between sales and service, aiming to maintain the rigorous style of the Japanese brand in China. But also He also shared some points that the local brands in China should the brand will design and promote some high learn from the Western brands, and that is when deciding the level price products in the Chinese market. commodity and design, Chinese brands should be open minded to an international point of view, and accept the consultation and the connection with the international fashion companies in a fast way. •

Fashionbi Magazine Issue 2 April 2013 38 / 53 Yu Juhong, The owner of the Chinese fashion lingerie brand “AIDAINI”

By Seyma Korukcuogl & MuMa

Today, China is booming on attracting the world’s fashion companies, that has handed its Asian neighbors a big opportunity. However, the country has been living some difficulties on its manufacturing phases recently. In knowledge of this fact, we interviewed Yu Juhong, the owner of the Chinese fashion lingerie brand “AIDAINI”.

The current difficulties in China’s manufacturing Yu Juhong industry According to her, for Chinese manufacturing industry Owner of the chinese fashion the biggest difficulty is the shortage of front-line lingerie brand “Aidaini” workers. Because Chinese economy has changed positively since the reform and open policy, and the guiding ideology of Chinese government- She mentioned the surprising fact that in recent stimulation of domestic demand has years, the salary of front-line employees improved the economic development has increased by 10 percent-20 of marginal areas and increased percent every year, but there is the employment opportunities in still lack of front-line employees. rural areas. As a consequence, Moreover, about the country’s she added, that especially new generation of young for those families who are people she claimed that the married, they have to generation after 90s is not work near their homes while willing to work in sewing considering caring about their industry. Thus, it is very family members. Speaking of difficult for the development pricing, she told us that the price of the industry because people rises sharply in the front-line cities who have money cannot go to work with the economic growth, leading far away from home and young people to the continuous increase of labor cost. are unwilling to do so. As a result, this fact brings to us the difficult results with a low return rate for the apparel industry in the front-line cities, and it is not suitable to establish clothing processing enterprises in big cities.

Fashionbi Magazine Issue 2 April 2013 39 / 53 The downturn of the world’s economy and its effects in China Next, we asked how the downturn of the world’s economy influences the Chinese fashion manufacturing industry and which aspects it shows specifically. According to her, the world’s economy has a great influence on China, especially on the factories that deal with processing of international brands. Due to current negative situation in economy, there are no good pricing options. Additionally, the power of consumption in foreign markets is not enough. Thus, the quantity of orders of single style has been reduced, and the quantity of styles and colors are increasing. In addition, the rising housing price in China has led to the annual rising of rents of stores, but it is hard to increase the selling The Preference in consumer Tastes in Brands price while the other costs are rising, which causes the constant decreasing profit space. After that, we wanted to know how is the preference in consumer During our interview, this was probably the tastes, and if Chinese customers prefer foreign underwear most interesting affirmation proving how can brands or local brands? other factors affect retailing and store spaces in She responded that speaking of the attitude towards brands, the country. Chinese customers should be divided into different groups. Generally, low-budget consumer definitely buys from local brands. Their consumption is determined by the price and they will consider buying products at low price and of fine quality according to their actual income. She added that, the consumers with medium income do not have loyalty to brands and they usually buy as soon as they see appropriate products when they like them. On the contrary, most consumers who are coming from a high-budget and enjoy good living condition and pursue top foreign brands but are not interested in domestic brands.

Source: AIDAINI Co., Ltd.

Fashionbi Magazine Issue 2 April 2013 40 / 53 Source: AIDAINI Co., Ltd. Source: AIDAINI Co., Ltd.

To Create a Successful local Chinese Brand Finally, we wanted to understatnd how is it possible to create and market a successful local Chinese brand and if he can give some tactics to our readers. In order to observe more closely local Chinese brands, she started by explaining the importance of a good management for the brands. According to her, a good management team is required to create and market a successful local Chinese brand. Additionally, the key success factors that the implementation The team members are supposed to have of good products and creative designers are the most important a great market vision in order to make a realities of successful brands today. Then, comes a good good analysis of Chinese market, including production plant and it is supposed to select a good supplier. the facts about the lack in the current Finally, it is required to have a good general marketing Chinese market and what the market needs. planner and a big advertising investment. To be as precise as possible, with its seemingly limitless supply of cheap labor and the rapid acquisition of technological power, China appears to be unstoppable. However, rising costs in labor are affecting this huge success today. Although, the manufacturing phases are having difficulty, on the other side local brands are emerging every day with a high potential of competition towards the international brands. Apart from the current difficulties, the country is moving to a bigger market and will always attract the big companies to go there and will remain an attractive place to invest. •

Fashionbi Magazine Issue 2 April 2013 41 / 53 Tristan Colvin, Brand Manager at Roberto Botticelli By MuMa

To understand better the challenges Western brands have to face to be introduced in China, an interview was done with the Brand Manager of Roberto Botticelli brand.

With China’s 2nd-tier cities rising up, would your Tristan Colvin brand be targeting toward them or still hold the 1st-tier cities as the potential sales spots, in the Brand Manager at Roberto Botticelli near future? It is always important to have your flagship boutiques in 1st tier cities for branding and market entrance What is the difficulty and difference purposes, preferably in 1 of the 2 best for a Western brand to launch the luxury malls or sites (SH: Bund or brand in China? Plaza 66, BJ: North Sanlitun). Now that SH, BJ and GZ are The difficulty is to get mass filled with so many luxury PR to the common people, brands it is hard to achieve to achieve aspiration and significantly high sales - due brand desirability . This can to mass competition and be achieved only through brand saturation. expensive advertising, Therefore, to really make through celebrity money, brands must now endorsements, large look at tier 2 and 3 cities expensive events or a brand where brand education is low that is already globally and thus can achieve quicker established. Indeed it is hard C ou to achieve brand differentiation if impact and sales. So , yes we will rte sy of T target them now we have achieved a rista you are not already a big global brand. n Colvin brand presence in the tier 1 cities. In the west consumers’ brand education is very high and consumers can see the difference between brands, thus they are more likely to base their purchases on brand uniqueness, quality and style. In China, luxury goods are bought for different reasons: trend following, FACE, gifts, and because everybody else is buying it.

Fashionbi Magazine Issue 2 April 2013 42 / 53 Source: Courtesy of Roberto Botticelli

Source: Courtesy of Roberto Botticelli Source: Courtesy of Roberto Botticelli Source: Courtesy of Roberto Botticelli

How to figure out the relationship between your brand andthe Departement stores?Is there some unspoken rule in China fashion market? The relationship is all about SALES SALES SALES, and how you can bring in traffic and business to the mall. They want to see projected traffic and sales that will give the mall good business, and in turn, secondary purchases to the other brands in the mall. The relationship is also dependent upon what kind of contract the brand has with the mall - either a rental contract or a commission on every sale.

How to promote Roberto Botticelli in China since it is the High quality and perception Italian shoes brand? What’s the strategy for your company? Have you considered to use Weibo the most used social media Chanel? I am unable to answer this question, i cannot give strategy planning details for RB.

Are you happy about the China performance until now? Did your company achieved your goal or not? Yes we are happy, especially with our sales in tier 2 cities. We will be seeking to expand to wealthy tier 2 cities in the future. •

Fashionbi Magazine Issue 2 April 2013 43 / 53 future trend What the future holds? By Ambika Zutshi

China is a home to more billionaires than anywhere except the United States. Its luxury market is forecasted by McKinsey & Co. to go upto to a roaring 27 billion US dollars by 2015 -- one fifth of the world total.

At a “China in Paris” cocktail party held last year, Didier Grumbach, head of France’s fashion federation, told AFP, “It is a country that is passionate about fashion, like all emerging nations where appearance is of the utmost importance.” William Zhao, chairman of the COPAIS industrial group, which is setting up a network of multi-brand designer stores in China, who was also present at the event said, “I think it is just the beginning for the luxury industry in China.” “We are targeting The fact that domestic consumption taxes and the prices of luxury the richest 10 percent of the population -- goods are higher than the overseas market does not result in the and these people want novelty.” decline of China’s luxury goods market, which has an annual According to People’s daily online, 53 percent sales growth rate of more than 20 percent. Therefore, Chinese of high-end brands purchased by the Chinese consumers’ consumption volumes for domestic and overseas will be from the mainland in 2014, rising to 55 luxury goods are growing at the same momentum and, is only to percent in 2015. It also stated that according rise in both the markets. tot the studies and facts, 80 percent of However, these facts cannot be taken for granted. An example of the world’s top-level luxury goods brands such incident was that of the luxury king itself - Hermès who have entered China’s domestic market. refused to provide counter inspection services in China, when an issue of counterfeit was discovered. Similar quality-crisis happened with Gucci where online, a Weibo user broke the news of Gucci’s store manager in Beijing reporting the theft of its ten thousand Yuan bags when actually it was worth only a few hundred Yuan. This led to the public discontent and trust crisis toward the brands’ quality and services.

Fashionbi Magazine Issue 2 April 2013 45 / 53 “China is a home to more billionaires than anywhere except the United States.” Future Fashion Center in China Source: i.dailymail.co.uk

“53 percent of high-end brands purchased by the Chinese will be from the mainland in 2014” Gucci Ad in China Source: www.emploom.com

Fashionbi Magazine Issue 2 April 2013 46 / 53 “Another tactic the brands are applying is the use of local models/ starlets for their shows” Chinese Prada Ad Source: www.emploom.com

The above examples state two things, certainly: • Luxury brands have been focused more on only the distribution and expansion aspect rather than the product itself • The power of local social media, that is, Weibo.

Another tactic the brands are applying is the use of local models/starlets for their shows. For instance, Chanel and Dior paid for the A-list Chinese stars to attend their Paris Fashion show, last year. Big luxury names also started using Chinese backgrounds and models especially for the A report recently released by China’s E-Commerce Research ad-campaign launch in China. Center, showed that by the end of December 2012, the transaction Besides these usual behaviors, concluding volume of China’s online retail market reached 1.32 trillion from the previous articles in this magazine, Yuan, which is a year-on-year increase of 64.7 percent. The e-commerce and mobile shopping is figure is projected to jump to 1.81 trillion Yuan RMB in 2013, also on an all-time rise in the country. according to expert forecast. In the next few years, with more and more fashion and other enterprises entering the e-commerce industry, the online shopping potential in the western region as well as third-tier cities in central and east China will be further enhanced, as depicted by the industry insiders. In fact, if a comparison is to be drawn between the e-commerce sales of China versus the USA, starting 2013, China leads and is likely to continue leading by high numbers. Huang Lihua, director of the E-commerce Center of Shanghai-based Fudan University in Shanghai also added, “Customers used to buy things only when they can see and touch them personally.

Fashionbi Magazine Issue 2 April 2013 47 / 53 Total Retail e-commerce sales 445

USA 348 China

270 265 250 230 209 188 194

125

2011 2012 2013(E) 2014(E) 2015(E)

Value: billion of dollars Source: iResearch, eMarketer, Macquaire Research

But thanks to the complete online information such as the evaluation and price check systems, information asymmetry has been solved.” In addition, the mobile shoppers accounted for 23 percent of the nation’s 242 million online shoppers during the second half of 2012. Mobile Internet users, in general, grew to a record 420 million at the end of December 2012, which is about 74.5 percent of China’s total Internet population of 564 million. And this number is likely to grow leaps and bounds by the end of this year. As the development of mobile Internet makes mobile shopping more convenient, China’s online shopping market will maintain its fast growth pace and is expected to surpass 3 trillion Yuan by 2016, The power of a Chinese fashion consumer and its growing online as per the experts. digital and social media sector cannot be ignored. It is only to grow bigger and one of the most deciding aspects for the brands, when they will be planning their next promotion strategies in the China of today! •

Mobile Shopping Source: red-luxury.com

Fashionbi Magazine Issue 2 April 2013 48 / 53 BUSINESS GURUS

Ambika Zutshi Digital Analyst and Business Developer at Fashionbi

“ It’s about time Fashion brands get digitally innovative in their marketing actions, to climb the success ladder with a pace faster than ever. ”

Seyma Korukcuoglu Business Developer at Fashionbi, Middle- East

“ While rising as a global power, it’s clear that China is where the future of fashion lies. ”

Mu Ma Business Developer at Fashionbi, China

“ China is setting on fashion digital’s front row. ”

Fashionbi Magazine Issue 2 April 2013 49 / 53 monthly CONTRIBUTORS

Ria Fernandez Fashionbi Marketing, Philippines

“ With the direction of wealth and power towards the east, and the rise of the digital age, China has the capacity and the opportunity to push digital fashion further into the future. ” Nurgul Karmis Fashionbi Newspaper Contributor

“ Digital fashion is living its golden age in China with its irrepressible rise. An exciting expect for the near future might be China based global luxury e-retailers. European fashion markets have to be ready for this challenge and embrace it to survive! ” Jenny Perusek Freelance Fashion Communications Specialist

“ The Beauty of Chinese design is finally being explored, by the Chinese themselves.” Fashionbi Magazine Issue 2 April 2013 50 / 53 What our readers say?

“ Your magazine is brilliant! I am a former fashion designer, currently studying design research, to see how fashion can instead be a medium for social commentary. The topics you cover are very inspirational! Thank you for sharing this insightful information. ” Anonymous Texas, USA

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“ I’ve just read your Fashionbi Magazine on Turkey. Well done. Thank you. ” Miguel Martins, HEC-Paris Executive Education, Associate Director Certificate Programs

“ The FashionBi magazine is really interesting and is pleasure for me to read it! Congratulations to all the Fashionbi Team! ” Rubina Guardiani, Web Marketing Manager at ALBERTO GUARDIANI

“ I was so happy to find Fashionbi Magazine while doing web research for my thesis, because it was easy to read and it was possible for me to learn more about the Turkish Market. ” Anonymous, Milan, Italy

Fashionbi Magazine Issue 2 April 2013 51 / 53 Fashionbi is “The best way to discover, compare As the fashion industry becomes more interactive and and follow any business information on the Fashion the business activity data becomes more valuable, industry”. owing to a rapid transition to new technology features such as digital marketing and e-commerce, it has We are an international team of analysts, scattered become imperative for fashion brands to identify in the major parts of the world - Italy, USA, Mexico, objectives that can help them remain relevant and Hong Kong, China, Philippines and Turkey, to be updated by having access to real-time opportunities. up and running round the clock, because the fashion world never sleeps! This is where Fashiobi helps bridge the gap by offering We analyze large fashion content and the scope an in-depth data analysis by studying consumers of brands’ facts and figures via social media preferences across a broad range of KPIs that can help analytics, continuous data gathering, structuring fashion companies adapt their business direction and and management that has a wide-ranging benefits also the product design to augment their revenues for leading fashion and luxury labels; effortlessly, i.e. profitability, increase their footprint and win enabling them to support and develop corporate customer loyalty! strategies and build their brand presence from strength to strength, over the time.

ITALY MEXICO ARGENTINA BRAZIL SPAIN TURKEY INDIA RUSSIA CHINA HONG KONG

USA PHILIPPINES

Fashionbi Magazine Issue 2 April 2013 52 / 53 Credits & terms of use

Fashionbi is part of ADVB Strategic Minds

Email: [email protected] Website: www.fashionbi.com Telephone: +39 02 45712471 Attribution-NonCommercial CC BY-NC Address: Via Morimondo 26, Milan, Italy This license lets others remix, tweak, and build upon your work non-commercially, and although their new works must also acknowledge you and be noncommercial, they don’t have to license their derivative works on the same terms.

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