| Joanna Chiu |
SHANGHAI/BEIJING (dpa) – Chinese trendsetters are no longer exclusively interested in Western brands – and this isn’t just because the world’s second-largest economy is slowing down, industry insiders say.
“Yes, the big brands offer good quality, but the prices are too high and the styles can be boring and old. I feel like we need fresh air, new blood,” said Coco Ma, a Shanghai-based designer and instructor at the Fashion Institute of Technology of Donghua University.
This is bad news for international companies that have relied on Chinese sales for rapid growth and profits in the wake of the global financial crisis. Adding to the woes, China’s economy grew 7.3 per cent in 2014, the weakest annual expansion in 24 years.
Eighty-three per cent of international luxury brands have closed some of their retail outlets in China this year, and this rate of closures is expected to continue, according to a Fortune Character Institute report released in November. Domestic consumption of luxury goods in 2014 declined for the first time in years.
“It’s partly because things like property are getting so expensive in China and people have less disposable income. The middle class is also becoming more individualistic in their tastes rather than just wanting to show off,” said Yvonne Ma, a Mandarin Chinese teacher in Beijing.
A salesperson attends to a customer (left) trying local brand shoes at a shopping district in Beijing, China, August 3, 2015. Chinese trendsetters are no longer exclusively interested in Western brands – and this isn’t just because the world’s second-largest economy is slowing down, industry insiders say
An employee sorts out parcels at a store of JD.com online shopping website at a university in Beijing city, China, November 11. China’s online sales account for about 10 per cent of the country’s total retail turnover. Chinese consumers also tend to buy more and a much wider variety of goods online than Western consumers
In Shanghai, many shoppers can be seen browsing in small boutiques selling clothing, bags and jewellery from local designers. Huaihai Road, which is dominated by international luxury labels, seems emptier in comparison.
Many others didn’t even bother going outside, since online shopping has become the preferred way to shop for millions of Chinese.
“China-made products used to lag behind Western designs in terms of quality, workmanship and design, but now the gap is closing and I find Chinese designers’ tastes tend to be more similar to mine,” said Shanghai shopper Karen Li, who said she buys most of her clothes online.
China’s online sales account for about 10 per cent of the country’s total retail turnover. Chinese consumers also tend to buy more and a much wider variety of goods online than Western consumers.
Internet giant Alibaba broke its own sales record to make 14.3 billion dollars in sales during China’s Singles Day, a 24-hour online shopping holiday in November, with more than 70 per cent of those sales come from its mobile sites.
Meanwhile, the apparent wane in Chinese consumers’ interest in Western brands is not only limited to clothes and accessories. Sales of goods such as foreign cars are taking a hit as well.
The China Association of Automobile Manufacturers said sales of all makes of cars tumbled to a 17-month low in July. Demand was also hurt by a rout on the Shanghai stock exchange.
China is the most important market for Europe’s largest carmaker, Volkswagen, which sells more than a third of its production there. The company saw a 4.5-per cent decline in sales in China in the third quarter.
Analysts said the recent scandal over the company’s diesel engines did not have a large effect in China, because diesel-powered cars are rare.
Shoppers take an outdoor escalator at a commercial shopping district in Beijing, China, August 25. According to industry insiders, Chinese customers are discovering locally made wares, from clothing to cars to computers. PHOTOS: EPA
Auto sales in China will grow 4.1 per cent annually through 2018 then slow to 2.9 per cent annual growth to 2023, a significantly lower growth rate compared to a compound annual growth rate of 19.3 per cent over the past 10 years, according to a recent AlixPartners report.
“Chinese people still think foreign cars are much better than Chinese ones. But even with the recent government tax cut, people are less willing to make big purchases when the economy is so uncertain,” said an owner of a Mercedes-Benz sedan in Beijing.
There are no simple tips for success in the China market, said Susan Jenkyn-Jones, academic director of design education at Conde Nast China’s Center of Fashion & Design.
“People ask: ‘What is modern Chinese style? What do Chinese consumers want?’ I think it’s very subtle. It’s not about embroidered dragons and qipao dresses (a form-fitting, one-piece dress also known as a cheongsam) anymore and I think that makes the West nervous because they cannot understand the China market easily,” she said.
There is potential for international companies to reach more of China’s younger generation, a powerful and influential segment of the world’s consumers, in part because they are more willing than older generations of Chinese to take on credit card debt, according to independent e-commerce analyst Li Chengdong.
“But local designers have an advantage of being able to set up their businesses at low cost and sell their goods directly to customers on Wechat (a mobile chat app) or Taobao (a popular online marketplace),” said Philip Cacouris, academic director of the Condé Nast centre.
“They are operating online in a way that the Western companies do not have a comparable equivalent for, but should catch up to if they want to be successful in China,” Cacouris said.
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