Fashion  Market  overview:  China  

Business  Opportunities  for  Finnish  Companies

Executive  Summary

Having  achieved  a  market  size  of  Approximately  $185  Billion  in  total  apparel  sales  in  2013,  China  is  expected  to  become  the  world’s  largest  apparel  market  surpassing  the  US  by  2018.      Due  to  the  nearly  unlimited  potential  of  the  market  it  offers  vast  opportunities  for  foreign  fashion  brands  wishing  to  develop  their  international  business.  

This  market  study  is  prepared  for  Finpro  and  attempts  to  accomplish  several  things:

• Inform  the  reader  of  the  general  China  market• Educate  the  reader  about  the  Fashion  industry  in  China• Provide  a  detailed  analysis  of  the  Fashion  distribution  eco  system  in  China• Discuss  opportunities  for  Finnish  brands  in  the  China  market• Provide  a  clear  understanding  of  the  marketing  landscape  in  China,  especially  as  it  relates  to  digital  marketing  and  accentuate  the  need  for  Finnish  brand  to  optimize  their  digital  strategy.

• Provide  a  road  map  for  Finnish  brands  detailing  keys  to  success  in  the  China  market.• Provide  key  recommendations  for  China  market  entry  specifically  tailored  to  the  needs  of  small  to  medium  Finnish  Fashion  brands.  

Executive  Summary

Key  Finding  of  the  following  China  market  study  include:

• China  will  be  the  largest  apparel  market  by  2017/18.• Chinese  consumers  are  willing   to  experiment   with  new  brands.  • Although  department  stores  still  dominate  the  retail  sector,  multi  brand  boutiques,  online  and  mobile  are  the  fastest  growing  channels.

• China  is  the  largest  e-­‐commerce  market  in  the  world  surpassing  the  US  in  2013.• Online   retail  sales   in  China  totaled  $458  billion   in  2014.• By  2020  the  number  of  multi  brand  buyer  boutiques  is  planned  to  exceed  5,000  stores  with  annual  revenue  of  more  than  60  Billion  RMB.      

• Due  to  the  proliferation  of  showrooms  and  trade  shows  there  is  increased  competition  from  both  foreign  and  local  niche  brands,  but  few  manage  to  make  an  impact  due  to  their  undifferentiated  marketing  strategy.

• Chinese  consumers  are  the  most  digitally   savvy  in  the  world  and  brands  require  an  optimized  digital  strategy.

• Effective  PR  is  imperative  to  build  a  positive  e-­‐reputation  in  China.• Chinese  consumers  are  very  susceptible   to  brand  image.  • In  order  to  succeed   in  China  brands  must  be  fully  committed  to  the  market  and  pursue  innovative  marketing  tactics.  They  must  control  and  manage  their  marketing  program,  create   localized  offerings  and  pursue  more  involved  forms  of  market  entry.

Executive  Summary

Due  to  the  fast  growth  of  the  China  fashion  market  there  exists  numerous  opportunities  for  Finnish  fashion  brands  each  with  its  own  advantages  and  challenges.  Highlighted  below  are  some  of  the  key  opportunities:

• Due  to  the  growth  of  multi  brand  buyer  outlets  in  China  considerable  opportunities  exist  for  Finnish  fashion  brands  either  through  utilizing  showrooms  or  direct  sales  to  the  boutiques.

• Showrooms  are  located  in  key  cities  primary  Shanghai  and  Beijing  and  offer  fashion  agency    services  promoting  the  brand  to  key  multi  brand  buyer  outlets.

• Opportunities  exist  to  form  a  collaborative  showroom  to  exclusively  promote  Finnish  brands  while  establishing  direct  relationships  with  key  fashion  buyers  in  the  China  market.

• Opportunities  exist  for  Finnish  fashion  brands  to  create  co-­‐branded  collections  with  Chinese  designers  and  thus  gain  positive  reputation  in  the  market  and  also  increase  channel  opportunities.

• Three  options  exist  for  E-­‐Commerce  sales  in  the  China  market:– Exporting  direct  from  overseas  website– Exporting  via  third  party  platforms  in  China  such  as  Tmall– Exporting  Via  China  hosted  e-­‐ commerce  site,  which  can  be  a  monobrand or  Finnish  collaborative  multi  brand  website  and  APP

Executive  Summary

• Department  stores  are  restructuring   leading  to  some  unique  opportunities  for  Finnish  brands  to  directly  open  shop-­‐in-­‐shops  in  select   locations  or  work  with  a  distributor  who  will  open  on  their  behalf.

• Since   the  process  of  opening  a  wholly  owned  retail  business  has  been  relaxed,  opportunities  exist   to  open  a  company  owned  specialty  or  collaborative  Multi  brand  store.

• Opportunities  exist   to  participate   in  a  growing  number  of  trade  or  showroom  shows  to  directly  meet  potential  multi  brand  outlet  buyers,  distributors  or  fashion  ecommerce   buyers.

• Opportunities  exist   for  Finnish  brands  to  optimize  their  digital   strategy  including  creating  a  localized  • Chinese  website  and  setting  up  key  Chinese  social  media  pages  on  Weibo,  Weixin and  Youku.

In  SummaryAs  this  plan  will   indicate,  there   is  a  vast  amount  of  potential  for  Finnish  brands  to  capitalize  on  the  growth  and  size  of  the  China  market.    But  due  to  increased  competition   from  both  foreign  and  local  brands  and  differences  in  culture,  consumer  attitudes,  environment  and  other  market  complexities   in  China  challenges  do  exist  in  the  market.    It  is  therefore  critical   for  foreign  brands  to  create  strategies,  which  differentiate  themselves   in  the  market.    Likewise   they  need  to  create  marketing  strategies  and  offer  products  that  resonate  with  and  offer  value  to  Chinese  consumers.  

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