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China’s Fashion Giants Get Sophisticated

Global fashion brands are facing increased competition as China’s large domestic players invest heavily in branding and retail experience in a bid to become more sleek, sophisticated and cosmopolitan.
Mo&Co Spring/Summer 2017, styled by Xander Zhou, produced by Declan Chan | Source: Mo&Co
By
  • Kati Chitrakorn

SHANGHAI, China — When brothers Jiangping and Jiangbo Zhang borrowed 20,000 RMB ($2,900) to set up a garment factory with only six sewing machines and a handful of workers in 1996, they couldn't have imagined that Peacebird would transform into a business as unrecognisable as the city of Ningbo itself.

Twenty years later, the fast fashion enterprise, whose price points range between $10 to $250 and is comparable to Western peers like Zara, has 3,800 retail outlets across China and saw $870 million in annual sales in 2015. In January it launched its IPO on the Shanghai Stock Market. Rags to riches stories in China are not unusual, of course. Neither is the scale of their success. What is surprising to many outsiders, however, is how sophisticated the brand's approach has become.

For Spring/Summer 2017, Peacebird tapped globally renowned models such as Molly Bair, Natalie Westling and He Cong for its ad campaign. It was shot by Josh Olins, one of the industry's most prolific photographers, whose clients include Burberry and Tory Burch. Olins also worked on Peacebird's Autumn/Winter 2016 campaign, featuring in-demand Korean model Sora Choi and Ruth Bell, who opened Dior's Spring/Summer 2017 show, one of the most highly anticipated shows of the season as creative director Maria Grazia Chiuri made her debut.

Peacebird Spring/Summer 2017 photographed by Josh Olins |
Source: Courtesy

To those unfamiliar with the evolution of China’s domestic brands, it may seem curious to see such a high-profile photographer and models collaborate with Peacebird, a brand that carries weight in China but is virtually unknown elsewhere. But China’s fashion giants are increasingly moving from a domestic talent pool to a global one in order to find the best models, photographers and creatives, as they work toward improving their brand image to take on fashion imports — and in some cases to prepare for expansion abroad.

Peacebird and other Chinese apparel giants like Septwolves, Ellassay and Heilan Home have long penetrated the domestic market, with thousands of stores across first to fifth tier cities in China. But while they have loyal customers thanks to their affordable price points and strong brand awareness, some of China’s contemporary brands were once considered to be little more than cheap imposters of status-enhancing or trendy international brands. But times are changing.

“Five years ago, I wouldn’t pay any attention to brands like Peacebird. They were not for people like me,” says Renee Gao, a former fashion buyer, now marketing manager at e-commerce site ModeSens. “Today, you can see that the products are getting better, and the brand is becoming more fashionable and modern.”

Gao's perspective is not unique and, in fact, reflects the opinion of many of her peers. Indeed, as Chinese brands focus on "premiumisation," they are no longer inherently looked down upon as they were just a few years ago. According to a recent McKinsey report, 62 percent of Chinese consumers now prefer Chinese brands over international ones if the quality and price are equal.

According to a 2017 report by global research firm Kantar Millward Brown, “The need to provide for the aspirations and growing sophistication of consumers in China has changed the competitive dynamic for many brands. Many have now reached the limits for penetration-led growth and are instead focusing on premiumisation as a better way to attract wealthier, middle class consumers.

"The Chinese consumer carries very similar aspirations to her international peers. She wants appropriate style for her life at a reasonable price. The willingness to 'buy Chinese' has moved from a stigma to a benefit. When the domestic buyer today chooses Mo&Co over Theory or Peacebird over Zara, she's not sacrificing trend and quality for price," says Brian Buchwald, co-founder and chief executive of consumer intelligence firm Bomoda.

Jiangping Zhang acknowledges Zara as one of Peacebird’s competitors but maintains that in China only using the “Chinese way” can brands succeed. “Some foreign brands in China cannot adjust to the climate and fail especially in second and third tier cities. Peacebird has a better understanding of Chinese consumers’ demand, size, shopping environment and habits.”

Brand Premiumisation

Domestic brands are now working harder than ever to create a more elevated and fashionable image, and a popular approach is to “make their visual style more ‘Western,’” says photographer Jumbo Tsui, whose clients include Peacebird and Erdos, a Chinese clothing company with cashmere being its leading business. “They’re hiring fashion designers from abroad and the most popular fashion models from New York, London, Milan and Paris. Some of them are even going as far as removing or changing their Chinese name to cater to the Western market,” he adds.

Ellassay uses international models to front its campaigns, previously featuring the likes of Jessica Stam, Jac Monika Jagaciak and Sigrid Agren. Based in Shenzhen, the womenswear enterprise’s products range between $200 and $500, making it comparable to global brands like Maje or Sandro and has an estimated annual revenue of around $265 million. The aim is to become “a Chinese high fashion group with international influence,” Ellassay’s founder and chairman Guoxin Xia tells BoF. “We’re constantly seeking and finding what suits a high-end crowd.”

Blue Erdos Spring/Summer 2017 photographed by Jumbo Tsui |
Source: Courtesy

Then there is Mo&Co, launched in Guangzhou in 2004 by Jenny Kim, who set out to create a range of wardrobe staples she couldn't find for herself elsewhere. Over the years, the retailer has been popular with a younger generation who enjoys experimenting with their personal style. Today, Mo&Co has 587 stores in China and 36 wholesale accounts across 18 regions worldwide, with stockists such as Selfridges in London, Galeries Lafayette in Paris, Lane Crawford in Hong Kong and De Bijenkorf in Amsterdam, along with million-dollar advertising campaigns starring the likes of Freja Beha Erichsen and Liu Wen.

“As the local market develops, we’ve had to adjust to meet the needs [of Chinese customers]. We’re focused on an image upgrade,” says Gaga Kwan, senior manager of creative content at Mo&Co. “We need to maintain our brand DNA while at the same time, evolve with global culture and trends.”

Declan Chan, a stylist, creative director and one of Mo&Co’s longest collaborators, however, notes that the brand has recently shifted its marketing strategy. “When I first started working with Mo&Co, we worked with top-class models and grade-A international photographers in order to elevate brand value and build a more international reputation. A few years down the line, the branding has matured along with the product range. They’re moving more towards new faces and talent, because they no longer need the association of big names to drive their brand,” he says.

Product Upgrade

Consumer sentiment towards Chinese brands is changing, not only because of marketing tactics, but because many labels have improved the design and quality of their products.

Peacebird isn’t giving up market share easily. The brand has launched a new teenager line called LED’IN. With a design team of over 500 people producing up to 8,000 products a year for a multitude of lines, the group recently spent 500 million RMB (about $72 million) on an in-house logistics centre, and has also invested significantly in R&D.

Daphne Spring/Summer 2017 photographed by Jumbo Tsui |
Source: Courtesy

“We need to react more nimbly, not to just blindly design. Consumers like what is instant and in the moment, and this requires us to react immediately,” Zhang adds.

For stylist Chan, this makes a lot of sense as Chinese consumers are increasingly informed and all the more finicky when it comes to purchase path and timing. “Thanks to the information they get from social media channels like Wechat, Weibo and even e-commerce like TMall, there are so many options and they are constantly looking for new products. They’re generally looking for fast, trendy delivery,” he says.

While garment quality may be improving, some say there’s still work to be done when it comes to product innovation. “The problem is that with brands like Peacebird, they don’t have a specific style. They’re just following the trends from brands like Vetements. [On the other hand] Mo&Co have their own opinion, they’re not just following the trends,” says Fil Sishi Yan, style director at Yoho! Girl, a youth culture publication based in Beijing.

“Initially, Mo&Co were very trend-focused and similar to Zara in that they would take catwalk trends and recreate them for the mass market. Now the look is less about ‘copying’. Mo&Co is striving to create a specific woman so their recent collections are based on this ideal instead of following runway trends. Like many brands now, they are promoting this idea of individuality,” says Divia Harilela, former fashion editor of Hong Kong's South China Morning Post.

Shopping Experience

One of the competitive advantages Chinese brands have over foreign firms is that they are more innovative when it comes to mobile, a very dynamic and important channel in China. They all have a strong mobile presence — and not simply as purveyors of products and services. Their mobile experience represents the brand in all its aspects: advertising and marketing, social communications, shopping, purchasing and payment.

More than 85 percent of Chinese millennials use in-store mobile payments at least once a week, compared to less than 45 percent of their US counterparts, according to Lab Brand, a China-based global brand consultancy, who surveyed 20- to 35-year-olds in both countries. Mobile payment systems such as Alibaba’s AliPay and Tencent’s WeChat Pay have become more popular than cash and credit cards among many.

Urban Revivo Spring/Summer 2017 styled by Declan Chan |
Source: Courtesy

“The experience is very different now compared to five years ago, but so are the target customers,” says Xiaomu Fan, former style director of Harper’s Bazaar China and creative director of the agency Moodsight, which was hired by Peacebird to help with its rebrand. “However, because there are so many product lines, there’s still a gap between the products worn and promoted by fashion editors, stylists and celebrities, and what’s actually being sold and bought in their stores.

“The gap may also be due to the different buyer selections for different regions. I’ve been to Peacebird stores from Beijing to Ningbo. The stores differ depending on the cities they are in. Peacebird is very actively improving their stores, and new flagship stores are being planned,” Fan adds.

Mo&Co, on the other hand, got off to an impressive start. One of their earliest stockists was luxury department store Lane Crawford. And now they have stockists like Selfridges and Galeries Lafayette. “This created the perception of a more elevated label. Since then, we’ve seen Mo&Co position themselves as a higher-end brand, placing them among Western counterparts like Club Monaco or Sandro. They may still be mass market but they are not fast fashion such as Zara or H&M,” says Harilela. “Their new Hong Kong store is also cool and contemporary, which helps to elevate the brand’s positioning.”

"Consumers in China have evolved from blindly buying famous Western brands to buying patterns that reflect their own identity. Chinese consumers are fast learners and have moved very quickly through the phases of acquainting themselves with existing brands to forming their own styles and interests," says Xander Zhou, who was the first menswear fashion designer from China to show at London Fashion Week Men's. He has also recently collaborated with Heilan Home, a local Chinese menswear brand which has a huge sale network in China. Jianping Zhou, the owner of Heilan Hoeme has been just listed on Forbes billionaire list, with 3.6 billion USD, Forbes assume he is the richest person in China fashion industry.

“The internet has definitely made Chinese consumers more tolerant to new things and they’ve developed a better judgement of what is ‘cool.’ They’re no longer enticed to buy things solely based on a good sales pitch.” said Xander Zhou.

Queennie Yang and Tianwei Zhang contributed research for this article.

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