The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
LONDON, United Kingdom — For most of fashion media, this year has been a bloodbath.
Luxury brands have slashed ad budgets by as much as 80 percent in response to the pandemic, eviscerating the industry's primary revenue source. To cope, magazines like Paper went on hiatus and Australian editions of Elle and Harper's Bazaar were axed. Condé Nast laid off around 100 employees in the US, while W Magazine furloughed staff and reduced salaries for those working on digital content. The financial pressure has been compounded by a reckoning over institutional racism at major media brands that has prompted several high-profile exits.
In China, the industry was dealt a softer blow, with no major closures to speak of. "The mainland recovered comparatively quickly from Covid-19, so the industry wasn't affected on the same scale," said Dan Cui, stylist and former fashion director at GQ China. "The fallout might still be felt in the long-term, but if titles close I don't think it'll be because of the virus."
The country's fashion media landscape has developed at a breakneck pace since the late '80s.
The country's fashion media landscape has developed at a breakneck pace since the late '80s, when Elle became the first international title to enter the market. Titles including Marie Claire and Vogue followed in the early 2000s, establishing a local quintet of global magazine stalwarts that also included Chinese editions of Harper's Bazaar and Cosmopolitan. The 2010s saw the rise of platforms like WeChat and Weibo, spurring digitisation and resulting in the multi-platform, multi-title media groups. Today, players like Huasheng Media and Modern Media dominate in mainland China alongside global mainstays Hearst and Condé Nast. While many Western publications have been digital laggards, China's industry has thrived on the rise of new digital models.
This journey, which Cui experienced firsthand, wasn’t always smooth, and the industry still faces challenges. “It’s not there yet — the industry is still extremely vulnerable,” Cui added. Back in 2018, a slew of editorial departures at Condé Nast China, Trends Media and Modern Media signalled internal conflicts and growing pains as digitisation quickened. Despite their lead in this arena, Chinese fashion titles aren’t safe from the pressures weighing on American and European counterparts: namely, the need to stay on top of trends in "new media," the term used locally to refer to online content.
"Some countries are more agile than others," said Mia Kong, Dazed China's Style Director. "But the challenges of keeping up with 'new media' are universal."
Even so, China’s unique ecosystem holds valuable lessons for titles elsewhere as lockdowns accelerate readers’ ongoing shift to digital. Here’s what media brands need to know.
Because of their relatively late touchdowns in China, global media titles had to jumpstart their entries by aggressively courting their new market base, and they haven’t stopped evolving since, said Coolio Yang, chief executive of the media division of Kantar China. “The past 10 years of Chinese fashion media have been focused on becoming more relevant to the wider reader and closing that cultural gap.”
The flexibility afforded by robust 'new media' output helped Chinese fashion publications transform in the face of Covid-19, said Kong. "And it's clear that the pandemic will only accelerate the arrival of a 'new media' era...the likes of Dazed and traditional media outlets have been launching experimental initiatives in recent years."
This agility is also intertwined with the rapid development of the nation’s digital landscape, which continues to keep the media on its toes. “I find it difficult to imagine what it could look like in five years. In three, I’m positive we’ll be facing an entirely different ecosystem,” Cui said. Anticipating technological developments and opportunities — like augmented reality photo filters and 5G — is necessary.
Where publications in China have adapted more slowly, they've struggled.
GQ Labs — the Chinese edition's sponsored content arm — was first conceived by Cui and his fellow editors after several failed attempts to create a digital app and content-based e-commerce platform. Though the earlier experiments didn't succeed, GQ Labs has. Its ad revenues reportedly make up almost half of Condé Nast China's annual revenue. Its growth forms a part of GQ China's wider strategy of diversification. The magazine has also developed into a creative agency and media partner to the likes of Louis Vuitton, in response to high demand from European luxury brands for localised marketing expertise.
Where publications in China have adapted more slowly, they’ve struggled. Shifting resources from traditional media initiatives towards new digital strategies is key. “Using new media strategies as a traditional media business is different from operating as a new media brand,” said Cui.
Media brands’ offerings globally are already shifting away from their magazines and websites. But the usual platforms — Instagram, Facebook, Twitter and Youtube — shouldn’t be the be-all and end-all of digital strategies.
Keeping pace with the rapid rise and decline of online platforms is crucial, as is knowing when to branch out or experiment with new functions within existing apps. In China, platforms like Xiaohongshu and TikTok equivalent Douyin, which media brands in the country adopted en masse and well before their western counterparts, offer a few examples. “They’ve built up well-rounded content ecosystems and adapt their visuals and voice to the medium, as opposed to focusing on one app like Instagram,” said Cui.
Establishing a presence that is on-brand, well-executed and consistent across platforms requires a well thought-out strategy aiming to amplify the value of each account and asset. On WeChat alone, GQ China operates multiple accounts from GQ Lab to GQ Love (a relationship-focused stream known for its humorous cartoons) and GQ Report (long-form interviews and commentary). Tone and visuals differ across these channels, but each forms part of a cohesive suite of content.
Scattering content across different platforms also brings in more data and can strengthen other online and offline strategies. For instance, Elle China's Gen-Z focused SuperELLE has used data collected from short video content to inform its print issues, said Editor-in-Chief Stephanie Zhuge. Her team combined content with augmented reality (effects and animations activated on users' mobile phones) and CGI technology (in the form of virtual avatars Sam and Liz) to give younger readers an omnichannel experience. "This helped us take SuperELLE from a concept to a brand asset," said Zhuge.
The usual platforms — Instagram, Facebook, Twitter and Youtube — shouldn't be the be-all and end-all of digital strategies.
Eight out of 10 experiments flop, said Yang — almost every major Chinese publication attempted to launch an e-magazine or app that never took off. But “the brands that never stop evolving and finding new formats to showcase content will eventually succeed... the slow or unadventurous will miss out on opportunities.”
Don’t Succumb to Star Power
For all its innovations, Chinese media still face many of the same challenges as in the West.
Though celebrity covers are a long-term tactic employed by Western magazines, Chinese publications take this to the next level. Earlier this year, mega fans of actor and heartthrob Xiao Zhan snatched up 30,000 copies of Harper's Bazaar China's February issue and 100,000 copies of Renwu, China's answer to Time Magazine, both of which were released through highly-anticipated 'drops.' Teasers of these cover shoots published on social media regularly garner over 50,000 likes, illustrating the might of China's so-called idol economy.
But relying on celebrities and their fans isn’t a sustainable tactic, said Cui. “The media has lost the ability to be self-sufficient. Every cover story is sold to brands — usually up to four at a time — and fans don’t care about the content. An amount of compromise is understandable to keep revenues up, but this is a vicious cycle.”
While featuring celebrities of the moment can indeed boost sales and engagement for print and digital offerings, Cui warns publications against selling out and getting “hijacked.” He recounted an instance where a fellow editor, assigned to a cover feature that was already peddled to multiple brands, was only given a two-hour slot to shoot its star. For the publication, saying no was not an option. “We need to lead and have our own authority.” Again, refocusing on a brand’s voice, identity and authority could help set things straight, but it remains unclear whether Chinese media can wean itself off this tempting revenue stream.
Having said that, Cui acknowledged that publications like GQ China have widened the definitions of commercial content beyond the sponsored feature to reach a wider audience. Finding a healthy balance is the industry's biggest challenge.
Retaining a focus on quality is a must: “With the growth of ‘new media,’ I want to see content that is just as authoritative as that of traditional media outlets, and not just discourse around the entertainment industry and influencers,” said Kong. “Brands should stop blindly chasing virality and likes (where bots and fake statistics are more common than ever). Seeking out celebrities that are on-brand, talented, have personality and influence is much more important.”
FASHION & BEAUTY
Sandro store in Hong Kong | Source: Shutterstock
SMCP Revenue Dropped 31 Percent During H1
The French fashion group owned by Chinese behemoth Shandong Ruyi announced interim results this week. Sales plunged 31 percent year-on-year to €372.8 million (around $438.5 million) in the first half of 2020. The company reported a net loss of €88.5 million. Though SMCP said that its brands Maje, Sandro and Claudie Pierlot have resumed growth in mainland China since June, things are looking bleak for its parent company, which has seen its debt problems exacerbated by the coronavirus pandemic. In June, Shandong Ruyi secured support from bondholders to extend interest payment on its three-year $140 million bond again to December 15. (Weixin)
Chinese Youth Want to Retire Early. Should Luxury Be Worried?
A growing number of young Chinese are planning their careers with the FIRE approach in mind: "Financial Independence, Retire Early." On Zhihu, China's answer to Quora, the topic has drawn over a million hits, and resistance against the country's intense '996' (9am to 9pm, six days a week) working culture is gaining ground. But will a trend — which encourages living frugally to save money — affect luxury brands that rely on China's Gen-Z and millennial spending more than ever? Perhaps, but building loyalty and long-lasting relationships can help brands defy a slowdown. Positioning products as investment pieces, introducing a loyalty program, repair and resale services could also work in the long-run. (Jing Daily)
Shaolin Temple Speaks Out Against One-Sided ‘Collab’
The iconic Buddhist temple in China's Henan Province published a statement on Weibo after fast fashion brand Semir released a "Semir x Shaolin Kungfu collaborative collection" decorated with martial arts graphics. The monastery said it was never contacted for the use of its intellectual property. The items were soon removed from Semir's e-commerce platforms and re-released under the name "Guochao Kungfu," but the brand has yet to release a statement of its own on social media. In a later interview with local media outlet AI Finance, a Semir spokesperson denied wrongdoing and said that the brand had dealt with a subsidiary of the Shaolin Temple. (Jiemian)
TECH & INNOVATION
An F5 Future Store near Keyuan metro station in China | Source: Shutterstock
Autonomous Retail to Gain Ground Post-Pandemic
Vending machines and 'unstaffed' stores (many still hire workers to oversee stock and assist consumers) saw growth during China's lockdown, but the segment's growth is expected to outlast Covid-19. Even before the pandemic, iResearch forecasted that the country's autonomous retail sector would reach 48.5 billion yuan ($7.1 billion) by the end of the year, more than double its size in 2017. The segment still represents a meagre 0.12 percent slice of China's overall retail market, but businesses like F5 Future Store (a food and beverage chain) and Bianlifeng (a convenience store operator) are planning expansions, with the former slated to unveil 60 locations across the country by the end of the year. (Technode)
Shiseido to Invest 10 Billion Yen in H2, Prioritising the Chinese Market
The beauty giant, which owns the likes of Nars and Drunk Elephant, will focus its funds on digitising operations in China. With tourism and travel retail at a standstill, the group is one of many players turning to the key market for a much-needed boost. Shiseido plans to inject around $94 million into a digital upgrade, with a focus on recruiting employees for digital advertising in China, as well as creating a new 100-person division dedicated to global digital strategy at its headquarter in Japan. (Nikkei CN)
CONSUMER & RETAIL
Russell Street in Hong Kong | Source: Shutterstock
Luxury Players Retreat From Hong Kong’s Top Retail Strip
Hong Kong's Russell Street has long been an illustrious shopping hotspot for fashion brands from Prada to Burberry, boasting the city's highest commercial rents. But the past year's political unrest and waves of Covid-19 have decimated tourist flows and emptied out its storefronts. Valentino, Chloé and Victoria's Secret abandoned the location earlier this year and Prada announced the closure of its 15,000-square foot flagship in August. Omega, La Perla and Kiehl's have moved out in recent weeks. Meanwhile, Rolex will reportedly relocate to a smaller boutique nearby. Data released earlier this month revealed a 23 percent drop in Hong Kong retail sales, which have fallen for 18 consecutive months. In May, the city's jewellery and watches retailers alone suffered a sales drop of almost 70 percent. (South China Morning Post)
Alibaba Amps Up Global Offering for Singles Day
The Chinese retail giant will introduce 2,600 new global brands at its annual shopping extravaganza in November, which last year generated around $38.3 billion in sales in a day. The move signals Alibaba's efforts to increase cross-border partners across its platforms while travel restrictions prevent Chinese shoppers from jet setting to their favourite destinations across the globe. For brands, the opportunity is a tempting way to boost sales or gauge demand in the Chinese market, as the event does not require an official business license or registration in the mainland. Additionally, Tmall Global, the cross-border arm of Alibaba's Tmall e-commerce platform, plans to curate 2,000 products from overseas brands that will each hit a gross merchandise value of 1 million yuan (around $146,168). (Alibaba press release)
POLITICS, ECONOMY, SOCIETY
Farmers picking cotton in a field in Hami in China's northwestern Xinjiang region | Source: Getty Images
US Could Ban Cotton, Apparel Products From Xinjiang
The White House is expected to announce a decision on a ban that would block imports of textiles and apparel that can be linked to reports of forced labour in China's Xinjiang Uighur Autonomous Region. Goods falling under the potential ban would have to be re-exported or destroyed if US customs determined they were made using forced labour. This could implicate tens of billions of dollars of imports containing yarn or fabric made in Xinjiang, where around 85 percent of China's cotton is grown, according to the US Agriculture Department. The US imported $40 to $50 billion in textiles from China last year, and the ban could be announced as early as this week. (The New York Times)
Beijing Condemns Washington’s ‘Bullying’ of Tech Firms
China's State Councillor Wang Yi called the Trump administration's threats and moves to block Chinese firms like Huawei, TikTok and WeChat "naked bullying" and an example of Washington "conducting global hunts on leading companies of other countries under the pretext of security." Meanwhile, Beijing launched a series of global guidelines for tech players that prohibits illegally obtaining personal data and large-scale surveillance, mirroring the US' 'Clean Network' plan launch last month. The governments' actions mark further efforts to decouple their two economies as their 'New Cold War' escalates, but the extent to which the tech firms and companies reliant on them to do business will be affected remains unclear. (BBC)
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