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Beach-Phobic No More: Bikini Envy Hits China

As China dares to go bare, can international retailers such as Zara and H&M compete with domestic manufacturers and reap the rewards?
Chinese actress Xin Zhilei in Balneaire for Harper's Bazaar China | Source: Balneaire
By
  • Sam Gaskin,
  • Casey Hall
BoF PROFESSIONAL

BEIJING, China — Fashion Week Miami Beach Swim, the world's marquee swimwear showcase, came to a close on July 15. Over 1,000 brands exhibited their swimsuits to an audience of some 7,500 potential buyers at the Swim Show trade fair. That same week, manufacturers in the Chinese coastal city of Xingcheng produced around four million swimsuits without fanfare.

Located six hours north of Beijing in Liaoning province, Xingcheng — a city of roughly 500,000 — has little of Miami’s glitz. Lonely Planet describes it as “a bit dusty and rough around the edges” with “OK sands and calm waters.” Nevertheless, the city has become one of the global capitals of swimwear manufacturing. Embracing its new identity, a bikini-shaped shade is suspended over two ample outdoor amphitheatres in Xingcheng’s Bikini Square.

Xingcheng was little more than a fishing village 30 years ago, when 20 family workshops began producing swimwear. It was designated “China’s Swimwear Town” by the China National Textile and Apparel Council and the China Garment Association in 2010, but it’s only in recent years that it has come to dominate global swimsuit production.

A campaign by Chinese brand Sanqi Swimwear | Source: Sanqi, JD.com A campaign by Chinese brand Sanqi Swimwear | Source: Sanqi, JD.com

A campaign by Chinese brand Sanqi Swimwear | Source: Sanqi, JD.com

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“It took us three decades to reach the sales target of 5 billion yuan [$725 million],” Li Haifeng, president of the Xingcheng Swimwear Industry Association, told China Daily. “But via e-commerce, we tripled that figure in three years.”

“The local government launched a series of policies to support e-commerce,” said Daxue Consulting’s Bokuan Chen. “Nowadays, there are more than 36,000 online swimwear stores [operated from] Xingcheng, and the swimsuits have been sold to 140 different countries and regions around the world by cross-border e-commerce platforms.”

Xingcheng’s more than 1,200 swimwear manufacturers, which have over 100,000 employees between them, sell predominantly on sites such as Taobao, Tmall, JD.com and Amazon. Xingcheng brands sold over 200 million swimsuits in 2018, raising revenues of 15 billion yuan ($2.24 billion). Li said the city “contributed 80 percent of China's online swimsuit sales and 25 percent of the global swimwear market.”

Xingcheng manufacturers have been especially dominant in the domestic market. According to Liu Xiaojun, vice-mayor of Xingcheng, only $80 million (4.27 percent) of the $1.87 billion Xingcheng’s swimwear industry raised in 2015 came from exports.

The brand that sold the most swimwear during China's recent 6.18 online shopping festival — beating out other local players such as YouYou, Yuke and Li Ning, which together sold over 1.45 million swimwear items on Taobao and Tmall last month — is Balneaire (French for "seaside"). While Balneaire's Amazon store "About" page boasts Italian-inspired styles and stores in America, Spain, Dubai and Australia, its swimsuits are produced in Xingcheng, 20 times closer to Pyongyang than Saint Tropez.

A Place in the Sun

Balneaire’s success can be attributed to its marriage of foreign design — it has two design teams in Milan — with its understanding of the domestic market, where swimwear tastes are remarkably different, especially at the volume end of the market.

Tourists visit a beach in Qingdao | Source: Shutterstock Tourists visit a beach in Qingdao | Source: Shutterstock

Tourists visit a beach in Qingdao | Source: Shutterstock

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China doesn’t have a huge beach culture, with a majority of the population — between 80 to 90 percent of Chinese people, but the figures vary from province to province — unable to swim. Until a generation ago, swimming pools and beach holidays were a rarity for all but the most privileged Chinese, meaning that today’s young consumers, especially those in the post-'90s and '00s generations, are the first in their families to learn the skill.

China certainly boasts a number of famously overcrowded beaches, particularly in the north-eastern cities of Dalian and Qingdao (Fujiazhuang beach in Dalian alone sees crowds of 40,000 people per day in high season). However, it’s the growth of outbound travellers who are driving more of a trend for swimwear in the market.

Even so, relaxing, “fly and flop”-style beach holidays are not on the agenda for most Chinese travellers, even those heading to tropical destinations.

Instead, according to market research from Nielson, Chinese tourists prioritise shopping (probably the reason they outspend travellers from other nations by a ratio of 3:1), natural landmarks, history and theme parks when travelling, pushing beach-going far down the list of priorities.

The most common search word used by female Chinese shoppers looking for swimsuits is 'conservative.'

This is a fact reflected in both men’s and women’s swimsuit styles. During June this year, sales of close-fitting performance swim trunks (908,306 items) more than quadrupled the sales of men's board shorts more associated with surf culture (203,641 items) on Taobao and Tmall. And while bikinis account for 68 percent of women’s swimsuits globally according to retail data platform Edited, only 147,660 were purchased on Taobao and Tmall, barely a tenth of the 1,384,307 one-piece swimsuits sold in the same period.

“Due to China's conservative culture and the preference to keep skin pale, one-piece swimsuits are far more popular than bikinis,” said Daxue’s Chen. “Also, skirt designs are popular as Chinese women believe they have a slimming effect.” Indeed, according to data from JD.com, the most common search word used by female Chinese shoppers looking for swimsuits is “conservative.”

Offshore Opportunities

Despite the potential design disconnect, mass market foreign brands are stepping up their efforts in China.

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"Brands such as Zara and H&M have been pulling back on their swimwear assortments in the US and UK over the past three months when compared to a year prior," said Edited's Kayla Marci. In China, however, "H&M launched 120 products in 2018 [compared to] 233 this year, equalling a 94.2 percent increase."

These retailers are aiming for a new generation of young, middle-class Chinese consumers who spend money on international travel, as well as investing in themselves and their own quality of life, driving a nationwide trend for health and wellness and a change in beauty ideals from the traditional “bai, shou, mei” (white skin, thin body, beautiful) to something that better reflects an active and international lifestyle.

Marysia's Spring 2019 collection | Source: Marysia Marysia's Spring 2019 collection | Source: Marysia

Marysia's Spring 2019 collection | Source: Marysia

Helen Tang, 27, is indicative of this new breed of consumer in China. Muscular and tanned (Tang makes a living as a fitness trainer in Shanghai), she regularly travels to tropical destinations such as Thailand, and is keen to show off the body she has worked so hard for.

"I'm definitely a bikini lover," Tang said. "I shop for most of my bikinis on Taobao and like the tiny ones that show off my body. The classic ones for Chinese girls have too much fabric," she added with a laugh.

Though they are still in the minority, it’s consumers like Tang who present an opportunity for high end swimsuit brands, both domestic and international, targeting Chinese travellers, who tend to be wealthier and have more international tastes.

For the right foreign brands, China’s particular swimwear preferences offer an outsized opportunity. Los Angeles-based swimwear brand Marysia, one of the labels that showed in Miami, is one example. Marysia Dobrzanska Reeves, a surfer and former ballerina who founded the brand in 2009, said “[China’s] preferences align with our brand DNA as evidenced by the popularity of our maillot silhouettes globally, where one-piece swimsuits drive a significant portion of our sales. We expect these styles to perform well in China.”

In addition to Lane Crawford, a chain of high-end department stores headquartered in Hong Kong, Marysia’s swimsuits are now available in China via a WeChat store the brand launched on July 15.

“Except for summer, some consumers also buy swimsuits during holidays such as Chinese New Year and Golden Week for traveling,” agreed Chen. “Based on my observations, the most popular destinations among Chinese tourists are islands and coastal areas where, obviously, you cannot do without a swimsuit.”

Swimwear and resort sell a lifestyle, one that is increasingly attractive to young Chinese consumers with international attitudes and money to spend.

Chinese citizens made nearly 150 million outbound trips in 2018, spending $120 billion. According to Chinese travel provider Ctrip, nearly half of outbound tourist destinations head to beaches or islands, with Australia, Thailand, Vietnam and Singapore all seeing more than 10 million Chinese tourists per year. Twenty percent of visitors contributed to 80 percent of total outbound spending, indicative of China’s wealthy class with money to burn.

Of course, many Chinese consumers will be glad to purchase swimwear made by Chinese brands, often at extremely competitive prices, before heading to the beach.

Reeves says she isn’t worried about those brands.

“Marysia is a luxury swimwear brand. We do not compete with locally produced low-priced swimwear,” she said.

But in Xingcheng, Balneaire, for one, isn’t limiting itself to cheap swimsuits. Its women’s swimsuits range from 108 yuan ($16) to 2,688 yuan ($390) on Tmall, almost as expensive as Marysia’s, which top out on Lane Crawford’s website at $440.

The key for global players looking to capture market share is less about price, or even style, and more about storytelling. More than other categories, swimwear and resort sell a lifestyle, one that is increasingly attractive to young Chinese consumers with international attitudes and money to spend on looking and feeling fantastic.

时尚与美容
FASHION & BEAUTY

Backstage at Chloé's Shanghai Show | Source: Courtesy Backstage at Chloé's Shanghai Show | Source: Courtesy

Backstage at Chloé's Shanghai Show | Source: Courtesy

Chloé Chief Executive Opens up About China Strategy 

Fresh from a sell-out collaboration with Chinese KOL Tao Liang (better known as Mr Bags) on its WeChat mini-programme, Chloé Chief Executive Geoffroy de la Bourdonnaye sat down with BoF China to elaborate on the brand's strategy in China, a country the executive visits at least twice a year. As one of the first luxury brands to embrace WeChat, de la Bourdonnaye says Chloé has realised the importance of innovation and limited edition products to the market here. In the future, the brand will continue to utilise WeChat as a channel to create marketing buzz in conjunction with limited edition "drops" with updates of classic styles to simultaneously satiate Chinese consumer's need for story-telling, luxury and newness. (BoF China)

Australian Fashion Brands Investigate Suppliers in China over Forced Labour Claims 

There is mounting evidence that detained members of China's Uighur minority in Xinjiang province are being forced to work in factories supplying textiles to international fashion brands and retailers. An Australian current affairs programme identified the Urumqi Shengshi Huaer Culture Technology Co., based in a technology park 30 kilometres north of Xinjiang's capital, Urumqi, as one such factory and has called out fashion retailers in Australia, including Target, Cotton On, Jeanswest, Dangerfield and H&M for using suppliers in Xinjiang. Target and Cotton On have since announced plans to investigate their supply chain. (ABC News)

Vintage American Fashion Finds Foothold in China 

Following in the footsteps of Japan, which has long been home to an "Amekaji" (American casual) movement, a subculture of middle class Chinese consumers in major cities are seeking out vintage American fashions, at a premium price. Levi's denim, World War II-era Air Force jackets and band T-shirts are proving to be popular items. It's men in their 30s and 40s driving the movement, with the timeless aesthetic said to be part of the appeal. The subculture is biggest in cities such as Beijing and Shanghai, but a nationwide movement has coalesced around the influential online forum 33oz. (Sixth Tone)

科技与创新
TECH & INNOVATION

Xiaohongshu's user interface | Source: Xiaohongshu Xiaohongshu's user interface | Source: Xiaohongshu

Xiaohongshu's user interface | Source: Xiaohongshu

Xiaohongshu Risks KOL Wrath with New Regulations 

Xiaohongshu won favour with its user base of 250 million with KOL-created content and recommendations. Recently, however, more rigorous partnership requirements have been instituted to police fake reviews and products on the platform, resulting in the number of validated KOLs on Xiaohongshu plummeting from 17,000 to 4,700. In order to make the platform less reliant on KOLs, Xiaohongshu also instituted Xiaohongxin (Little Red Heart), which allows 500,000 experienced users to rate more than 3,000 products. KOLs are angered by these moves and many are threatening to migrate to competing platforms, threatening the lifeblood of China's social commerce darling. (Technode)

JD.com Founder Richard Liu Will Face US Court on Rape Case in September

The hits just keep on coming for China's second-largest e-commerce firm. JD.com's founder, Richard Liu, will face Minnesota Hennepin Civil Court in September to fight a civil case stemming from rape allegations levelled by a student against the billionaire in 2018. Though police declined to press criminal charges, citing insufficient evidence, Liu's accuser proceeded by filing a civil case against Liu and his company in April of this year. Since the accusations first came to light and JD.com saw its share price fall as much as 60 percent from the historic highs seen early in 2018, Liu has moved away from the core business and investors have cautiously returned, more legal drama is unlikely to help matters. (KrAsia)

New Report Investigates How WeChat Censors Images 

Canadian internet watchdog group Citizen Lab recently released research showing how China's most popular social media platform, which boasts more than a billion active users, autonomously censors images by checking them against a database of blacklisted pictures in real time. After delivery, images that pass this initial test will then be queued for retroactive screening using two further tools: an optical character recognition (OCR) tool that scans the image for sensitive words or phrases, and another that checks the picture for visual similarity with other previously censored images. The image censorship for 45 billion messages sent daily on the platform is ever-evolving to respond to news cycles and political events. (SCMP)

消费与零售
CONSUMER & RETAIL

Vipshop debuts on the New York Stock Exchange in 2012 | Source: NYSE Vipshop debuts on the New York Stock Exchange in 2012 | Source: NYSE

Vipshop debut on the New York Stock Exchange in 2012 | Source: NYSE

Online Retailer Buys Offline Outlets

Online discounter Vipshop has announced plans to expand its physical retail presence by outlaying 2.9 billion yuan ($422 million) for brick-and-mortar chain Shan Shan Outlets. Vipshop positioned the acquisition as a way to strengthen its proposition in the domestic discount retail sphere, but investors seemed unconvinced, with Vipshop Holdings losing 7.5 percent off its share price immediately following the announcement. Though investors may be baulking at the price paid for Shan Shan, the move is indicative of China's evolving offline to online to offline retail environment. (Caixin)

Suning Tesco Releases Profit Warning for First Half

Following major investments in Wanda Department Stores and Carrefour China in the first half of 2019, Suning Tesco released estimates that its first half net profit will fall to 2.1 to 2.3 billion yuan ($305.4 million to $334.5 million), or 62 to 65 percent lower than the same period last year. The net profit drop is due in part to a 2018 sell off of Alibaba shares, which netted $1.5 billion, as well as the aforementioned investments, which have made the online electronics giant one of China's top five players in the grocery segment. Originally an electronics retailer, and with strong links to Alibaba, Suning Tesco is betting it needs to spend money to make it back in the long run. (Hexun)

China's Gen-Z Plan to Buy Fewer Fakes 

A new report by the International Trademark Association researching consumer attitudes among Gen-Z consumers surveyed shoppers in China, Argentina, India, Indonesia, Italy, Japan, Mexico, Nigeria, Russia and the United States. The survey revealed a significantly higher-than-average awareness of intellectual property rights among Gen-Zs in China, with 99 percent of respondents claiming some knowledge of IPR. Although 84 percent of Chinese respondents had bought counterfeits in the past year, 70 percent of them also said they expected to buy fewer fakes in the future. These results show the prevalence of counterfeit goods in the Chinese market in recent decades has influenced the younger generation, who are keen to trade up to legitimate products. (Jing Daily)

政治,经济与社会
POLITICS, ECONOMY, SOCIETY

The so-called Beijing bikini | Source: Wikimedia Commons The so-called Beijing bikini | Source: Wikimedia Commons

The so-called Beijing bikini | Source: Wikimedia Commons

The World Is Becoming More Aware of China, but Not Vice Versa

The McKinsey Global Institute's (MGI) new China-World Exposure Index shows that the world's relative exposure to China has increased, while China's to the world has fallen. Accompanying this shifting exposure are signs of stresses in the relationship, including trade disputes, rising protectionism, geopolitical tensions and the bifurcation of technology development between China and the rest of the world. Though China is now undoubtedly a global player in terms of scale, that scale does not necessarily translate to integration. (McKinsey)

Chinese Crackdown on Domestic Films Exacerbates Box Office Downturn

Late July and early August have traditionally been a special period in the Chinese film calendar. Regulators traditionally hold back Hollywood film imports to give local Chinese titles an uncontested run at the summer blockbuster season. Within the local industry, the window has come to be known as "domestic movie protection month." But in a baffling reversal, Beijing's film regulators this year have chosen this period to crackdown on domestic productions. This week alone, two high-profile Chinese films, martial arts movie "The Hidden Sword" and buddy comedy "The Last Wish" cancelled much anticipated releases. Meanwhile, Hollywood's politically neutral summer popcorn fare continues to be welcomed into the market untouched. (Hollywood Reporter)

“Beijing Bikini” Under Threat as Temperatures Rise

Visitors to China are often struck by the practice of local men rolling up their shirt to reveal (often not particularly buff) midriffs in order to cool off during the summer months. The style has been dubbed the "Beijing bikini" and on the whole is fondly thought of as part of China's intangible cultural heritage. This heritage is under threat, however, with the eastern city of Jinan banning the practice, which it describes as "uncivilised behaviour." Anyone caught violating the new guidelines could face punishment, with authorities specifically calling out the city's older men, referred to as bang ye or "exposing grandfathers," who they accused of tarnishing the city's image. (Vice)

China Decoded wants to hear from you. Send tips, suggestions, complaints and compliments to our Shanghai-based Asia Correspondent casey.hall@businessoffashion.com.

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