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In China, Showrooms Blossom

The wholesale business is finally getting more organised in China, encouraging the growth of a more robust domestic distribution network.
Ontimeshow showroom in Shanghai | Source: Courtesy
By
  • Aroma Xie

SHANGHAI, China — Over the years, designers have expressed many and varied grievances about China's fashion weeks, but one particular problem has persisted. However much these once parochial events have improved to become slick and professional affairs, weak showrooms have continually let them down. Now, change is clearly on the horizon.

If the latest season is anything to go by, 2015 could be the year that wholesale buyers and vendors finally get together to do substantial business at a new breed of multibrand showrooms that have cropped up in China’s fashion capitals. Most operate out of Shanghai, appearing during fashion week, but a few now have permanent year-round spaces there. Some are operating on the scale of a small trade show dealing almost exclusively with Chinese brands, while others are staking a claim in a variety of niche markets, catering to both domestic and international designer labels.

One of the forerunners of this new boom has been InLife International Group, which began organising the showroom China in Paris as early as 2010, to bring to an international audience the collections of mainland designers like Uma Wang, Masha Ma and others. Having tested the waters in Europe, InLife then launched the Boundless Mix Showroom in Beijing, Shanghai and Shenzhen, as a platform affiliated with the China National Garment Association. However, these China-based events didn't last.

It wasn’t until last year that a new breed of showrooms began to arouse the attention of the country’s key industry leaders, bringing several new players and collections to the market. Now, there are at least five designer showrooms wholesaling in China, each different in size and style. They include companies like DFO, VDS, and Project Crossover, which tend to focus on European designer brands; specialists like Ontimeshow; and Showroom Shanghai, the mainland’s leading designer complex selling brands from both China and abroad.

“We can clearly see that brands and buyers are both maturing, which makes us especially happy,” says Ian Lin, one of the founders of Showroom Shanghai. “We had almost no offline advertising and depended instead on Weibo and WeChat, the two social networking platforms with the biggest user base. Nevertheless, the number of brands participating in this latest season tripled since our first event [one season earlier]."

Lin estimates that the total sales recorded by brands at Showroom Shanghai for the Spring/Summer 2015 season reached somewhere between 77 and 90 million RMB ($12.5 to $14.7 million), a significant increase from the 28 million RMB ($4.5 million) generated at the first edition of the event.

Showroom Shanghai was established in April 2014 out of Lin’s desire to be more than a mere promoter of Chinese designers, as he felt he had been when working as a fashion writer. Wanting to find a more meaningful way to help the businesses of designers he was passionate about, Lin sought out Yang Qiong, an experienced investor in fashion brands and consumer goods, who then introduced the showroom idea to Yin Jiasheng, a Shanghai boutique owner. After just two seasons, the three founders of Showroom Shanghai can now boast that their event is the largest designer showroom of its kind in Mainland China.

According to Lin, about 80 percent of the showroom's 97 brands are independent designers, while the remaining 20 percent are influential, mature brands with an established distribution, including some international labels like Y's Yohji Yamamoto. For those young designers who have only put been in business a few seasons, gaining a single footprint or a key stockist is the most pressing issue, so a platform like Showroom Shanghai gives them valuable access to local buyers while providing support for brand development. During the S/S 2015 season, Showroom Shanghai was visited by more than 800 buyers, 70 percent of whom were from Chinese multi-brand outlets, 20 percent representatives of commercial brands and 10 percent online or department store channels.

“Customers vary from established designer multibrand retailers to others who want to evolve into such boutiques and others still who are purchasing agents but who can’t be considered real fashion buyers just yet. But I think this variety demonstrates the current state of the Chinese retail market. It’s still very uneven and in flux here,” says Zhang Na, the designer behind the up-and-coming Chinese label Fake Natoo, which has participated in Showroom Shanghai twice.

“For us, the debut season of Showroom Shanghai was not so successful in terms of attracting viable buyers, but we made the right adjustments and increased viable buyers by 20 percent this season. We’re still not fully satisfied with this number but the showroom is still young and the future looks promising,” says Zhang Na.

With Showroom Shanghai paying close attention to the market for local designers, another showroom is creating a more diverse and international platform: Ontimeshow, which had its debut edition late last year, attracting 500 buyers. Both showrooms are now beginning to operate on the scale of a small trade show.

Yeli Gu, the forward-looking founder of Ontimeshow, says: "This time we had 48 international and domestic brands as well as seven [spaces rented to] foreign showrooms from London, Sweden, Hong Kong and other places. Here, I've put the designers and showrooms on an equal platform, so on the one hand the showrooms can see the work of the designers and, on the other hand, the designers can learn about the business operation stage when an order is taken. It's very helpful for Chinese designers who need the knowledge and skills to sell abroad. The most important thing is that everyone can learn and interact."

One of the earliest overseas showrooms to be introduced to the Chinese market was DFO (Danube Fashion Office) which, although headquartered in Budapest, represents 40 contemporary, designer and accessories labels from all over the world (including American Retro from France and Heliopolis from Singapore) in its Chinese space during Shanghai Fashion Week.

"This latest season we have a venue with almost a thousand square metres, a total of three exhibition halls and the final turnover that is 300 percent higher than the previous season. The reason for our rapid expansion in China is simply that the market is demanding it because the Chinese end consumer is now eager to see more fresh and interesting brands and even some niche international brands too," says DFO executive director Meimei Ding.

The arrival of such showrooms is important because they provide a much-needed wholesale marketplace, but also because that they serve as proof that the Chinese fashion industry is becoming more diverse, integrated and that it is giving rise to something it has long been lacking — a critical mass of multibrand designer boutiques around the country.

Although major Chinese and global brands have a vast network of monobrand stores in second, third and sometimes fourth tier cities, smaller designer brands without the scale to invest in retail shops of their own have had little access to markets beyond China’s fashion capitals. However, that is beginning to change through the multibrand boutiques scattered around China’s emerging cities like Sihe and Dressing For Fun in Chengdu, Galatea Wan in Changsha or Round Round in Nanjing.

At the same time, it is a transition period both for high-end department stores like Lane Crawford, which are beginning to open branches outside of the retail meccas of Hong Kong, Beijing and Shanghai, and for online channels that are now helping smaller labels to achieve brand recognition amongst customers in remoter parts of China.

"Five years ago, when Dong Liang was first established [in Shanghai], domestic buyers were still focusing on the foreign brands. Hong Kong-based Lane Crawford, Joyce and I.T. were what we originally knew but in those five years Shanghai and Beijing have seen the steady development of many [multibrand] shops with a strong personal style like Triple-Major, Alter, Le Lutin as well as some leading international players like 10 Corso Como and Maria Luisa. And now, in the capitals of almost every province in China, there are more and more multibrand shops selling Chinese designer brands," says Tasha Liu, owner of Dong Liang, the first multi-brand store in China focusing exclusively on local designer brands.

But at a time when the market landscape is changing, some inevitable chaos comes with the rising opportunities. Sonja Long, who in 2011 founded the designer concept store Alter in Shanghai, is concerned about the "mixed-bag situation of buyers" that now exists at some of the new showrooms catering to the domestic market.

"Whether it’s real estate investors [who come trying to convince designers to rent a shop space somewhere] or just rich girls who love shopping, they’ve have all started tagging along to the showrooms. So the level [of some showrooms and attendees] is pretty uneven. Many of them don’t understand yet that this industry needs qualities beyond just a keen eye for fashion. They need expertise in retail operations, strong marketing and branding skills and a very wide variety of designer merchandise," says Sonja Long.

Long continues: "Foreign showrooms operate at a different profit margin to the domestic Chinese ones. And this directly determines the content, scope and quality of their services. Some showrooms abroad get a certain percentage share from the brand's order quantity, which will directly encourage them to do even more work in order to reach a bigger deal."

The designer Zhang Na also shares concerns about drawing too many parallels with the showroom business model abroad.

"The Chinese market is very large and it has many different tiers and our sales system is very different from the foreign one. Overseas department stores have buyers who, by default, choose and merchandise the goods themselves, but China is still about shopping malls which rely on rent and royalties. So now there are many people who used to work at the traditional malls who want to transition into multibrand retail and create designer shops of their own. This is why the showrooms can feel disorderly and confusing at the moment — because that’s the way of the market," Zhang explains.

But whatever challenges there may be, the arrival of the showroom in China is a must-seize opportunity for those who can see that the market is crying out for a more professional and efficient commercial distribution system.

"Traditional fashion retail is now looking weak,” says Showroom Shanghai’s Ian Lin. ”In the past, China relied solely on finding a good space in an excellent shopping mall. Assuming [that they had] decent product quality and style, [big] Chinese brands could generate huge profits, just like that. But these shops didn’t have any real brand appeal or cultural added value. This is the reason why a new generation of shops are emerging. And the buyers from these newer shops are the bread and butter for showrooms like ours."

Today, the showroom itself must have a style and brand identity of its own, as well as an array of loyal clients and comprehensive services that follow the sale transaction through the stages of preparation to follow-up. Nevertheless, the main challenge for Chinese showrooms is to grasp and deal with the realities of the topsy-turvy domestic market, at a time when the wholesale business has not yet established very clear boundaries — and when most players are still trying out different models or fumbling to find their place.

Editor's Note: This article was revised on 19 January, 2015. An earlier version of this article misstated that Showroom Shanghai has estimated sales for the Spring/Summer 2016 season. It has not. Showroom Shanghai has estimated sales for the Spring/Summer 2015 season.

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