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Global Briefing | Chinese Fashion Brands Look West

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LONDON, United Kingdom — It's nearly impossible to go a week without reading about international fashion brands expanding their operations in China. But what about Chinese brands targeting the West?

A number of Chinese fashion and apparel brands are now aiming to build upon their domestic success and establish themselves in Western markets. Among them are companies like Bosideng, with recorded revenues of $1.3 billion in 2012 and over 10,000 retail outlets in China, and Eve Enterprise, the group behind four menswear collections now targeting the UK.

But not every Chinese brand that has targeted Western markets has been successful. Beijing-based Li Ning became the first major Chinese sportswear brand to establish a significant presence in the US, opening a flagship store in Portland, Oregon, in January 2010. But struggling to compete against established giants like Nike and Adidas, the company closed the store just two years later and has since overhauled its approach to the US market, focusing on e-commerce. "We're being calculated about our approach, analysing online data to understand the US market before we expand further," George Lu, chief executive of Digital Li-Ning, a joint-venture with Chicago-based consulting and private equity firm Acquity Group, told The Wall Street Journal in a piece entitled "A Chinese Brand Flounders in US."

So what will it take for Chinese brands to achieve success in Western waters?

While they may have a large footprint back home, perhaps the number one hurdle Chinese fashion and apparel companies face in the West is low brand awareness. "In China, Bosideng is as well-known as Marks & Spencer is here," said Jason Denmark, the company's UK director of retail operations. Not so in the West.

It’s a challenge Bosideng has addressed head on, making a splash earlier this year by opening a large flagship store with three levels of retail space (as well as two levels of offices, and, eventually, a penthouse for visiting senior management) at the corner of Oxford Street and South Molton Streets, right in the middle of Central London’s busiest shopping district.

“Instinctively, Bosideng’s aspirations were to open in Manhattan first, but with a potential footfall of over two million people a year at the apex of Oxford Street and South Molton, we’ve made the right strategic decision in terms of where to place the first store outside of China,” said Denmark. “Any organisation without any brand awareness in Europe would have a hard time elsewhere,” he added. Bosideng also plans to open concessions at three UK department stores.

For Eve Enterprise, a presence in London is also seen as critical to building international brand awareness. The company plans to open its first European store in London's Notting Hill neighbourhood by 2013, before expanding, eventually, to North America. "London is a very creative and tolerant city that perfectly combines traditional culture and modern fashion," said founder Xia Hua. "Now, our brand awareness and social influence will expand gradually and we will begin the internationalisation process," she continued. With the support of the British Fashion Council, Eve also staged a catwalk show at London Fashion Week, last February, followed by another show in July, to coincide with China Business Day in the UK.

Of course, getting the product right is also critical. “Understanding the local markets, consumers and tastes outside of China” is one of the biggest challenges, said Alexandre Quirici, a partner at IDG Capital Partners, a China-focused investment firm, and a private investor in Qeelin, a Chinese luxury jewelry brand stocked at leading European stores like Harrods, Selfridges and Colette.

It's a truth that Bosideng recognizes well. Indeed, tailoring product to local tastes is a critical part of the company's expansion strategy. "We need to make sure that the collection can travel," said Denmark.

Bosideng has enlisted Nick Holland, founder of UK men's tailoring brand Holland Esquire and Ash Gangotra, the founding director of former Oasis frontman Liam Gallagher's clothing label, Pretty Green, to launch Bosideng London, a completely new collection designed with a Western consumer in mind. In China, Bosideng is renowned for its down jackets, but at the company's new London store, down comprises no more than 10 percent of the product range. Instead, Bosideng London offers everything from trousers and suits to polo shirts, business shirts and trench coats. The result is a comprehensive but well-edited and cohesive collection that feels like a cross between Reiss, Hugo Boss and Paul Smith.

“What we do in the homeland wouldn’t work for the UK,” said Denmark of the Bosideng London line, which is largely manufactured in Western countries, including Bulgaria, Portugal, Hungary and the UK. Less than 10 percent of the collection is made in China.

Eve has also opened design studios in Western cities, including London, Milan, and Paris, which have enabled the company to enlist the expertise of employees who better understand local tastes. And while Eve’s collections incorporate subtle Chinese influences — Mandarin collars, carved jade buttons, and robe-like silhouettes, for instance — they all have European-sounding names: Eve de Cine, Eve de Uomo, Notting Hill, Kevin Kelly and Jaques Pritt.

“There are a lot of Chinese retailers doing feasibility studies in the UK right now,” said Denmark. “Bosideng is seen as a guinea pig; we’re showing other brands the collection, our development and giving them a sense of how a Chinese brand can be accepted within the UK marketplace. Confidence has grown substantially.”

But many Chinese managers don’t yet have a great deal of experience operating in the West, warned Quirici. “Having a coherent strategy, positioning, product range and communication both in and outside of China” remains a problem, he added, advising brands to hire good local managers, be patient and stick to a long-term strategy that is in line with the rest of the company. “Quick wins will not work,” he said.

Interestingly, Denmark feels that Bosideng’s UK expansion, though expensive — the Oxford Street flagship alone is said to have cost an extraordinary £35 million — will also help to drive greater desirability for the label in mainland China, where brands with established credibility in the West have prospered.

What’s more, a presence in London, with its heavy tourist flows, is a way to gauge demand for further expansion. Indeed, at the new Oxford Street flagship, Bosideng’s top-spending customers have largely been from the United States. “The American man is buying in very large quantities,” revealed Denmark. And while still unconfirmed, Denmark hints that Bosideng may launch a second international flagship within the next 18 months, calling discussions to secure a lease on New York’s Fifth Avenue “quite far down the line.”

Watch this space.

Rebecca Tay is a Canadian fashion writer and editor based in London.

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