How Niche Western Brands are Accidentally Gaining China Market Share

GANNI, a Danish mid-market contemporary label, has risen to prominence in the past decade thanks to its cult Instagram following of swipe-happy “cool girls.” The brand now leverages a following of over 600k and turns over an estimated $100 million in sales. GANNI’s success is the result of a tight strategy that includes its effortlessly hip Scandinavian style, sweet-spot pricing, and successful efforts to sustain the brand’s exclusivity. What has not been part of the brand’s strategy, however, was accidentally gaining a following in the Chinese niche market.

GANNI does not have an official presence in China, nor an official Weibo or WeChat account and does not ship directly to China. Yet, the brand has recently made huge waves among Chinese consumers via the Internet. Chinese fans tout GANNI as a niche brand that hails from Copenhagen and view it as a sophisticated, insider alternative to larger name brands. At the time of publishing, GANNI had over 1,600 mentions on RED and a long stream of organic content on WeChat. Appropriately, when asked for a comment for this story, GANNI politely declined as the brand is not yet working in Asia.

GANNI is not alone when it comes to sought-after “Instagram brands” gaining unexpected exposure in China without putting any direct effort into advertising or marketing in the region. A similar crossover happened with Réalisation Par, an Australian brand also with zero official presence in China. While major Western brands are spending serious dollars to gain exposure in China, how are these niche brands accidentally gaining a foothold in this lucrative market?

The Main Drivers of China’s Sharing Frenzy

The rise of niche brands in China highlights the power of information transfer across social media. Outside of mainland China, fashion trends can easily spread from country to country. For China, however, it’s more complex.

Instagram, like most major Western social media platforms, is blocked by a firewall in China. Thus, the crossover of information, such as fashion trends, is largely driven by Chinese netizens who are not only passionate about sharing.

Clay Shirky, an American writer, consultant, and teacher on the social and economic effects of Internet technology, categorizes these sharing-frenzy Chinese netizens into two groups — extrinsic and intrinsic.

Chinese KOLs and influencers help spread fashion trends by sharing their unsponsored fashion recommendations on Chinese social media. They are motivated by what Shirky calls extrinsic motivation, which points to concrete things like monetary rewards that are measurable without a social context. Their fashion recommendations strengthens their personal style and unique taste, which in turn helps them to gain followers’ loyalty, traffic, and potential brand sponsorships.

However, there is another group of sophisticated Chinese consumers, most of whom have extensive overseas travel experience, and have access to first-hand fashion information through Instagram. They are well-informed by the Western media and thrive on being fashion-forward. They are also well-connected and active on Chinese social media channels at the same time, and enjoy sharing their lives, their fashion styles, and their way of living via Chinese social media without really expecting anything in return.

“Sharing my fashion styles and preference on Chinese social media is the same thing as sharing my life,” a Chinese Gen-Z consumer who follows Instagram trends closely commented. “I want more people to know about these niche brands and sharing then helps the recognition of these brands in China.” This group of consumers is motivated by what Shirky calls intrinsic motivation, which points to the reward from something about a person and a person’s world, such as “showing one’s taste” and “feel like helping one’s friends.”

While a KOLs’ motivation is easy to understand from a business standpoint, the drive behind a regular Chinese person’s desire to share something like a niche fashion brand are in fact not as philanthropic as it would first seem. In fact, the calculation for intrinsic motivation is more obscured and happens unconsciously. “Intrinsic motivation is never pure. It’s always in a social context. People are collecting something, but it’s just not like money,” Shirky says. “For example, one may calculate the positive feedback from friends, and such is an example of the calculation of the reward from intrinsic motivation.” Intrinsic motivation prompts this group to share new information on fashion trends as they benefit from this action internally.

In China, The Power of Niche

The calculation of intrinsic motivation becomes most obvious when considering the type of brands Chinese netizens like to share. They tend to avoid the big name bands and instead turn their sights to niche brands and less recognized products. According to the McKinsey China Luxury Report 2019, “The concept of a niche brand has multiple meanings across luxury segments, from one that exhibits unique design to those that are niche in the sense of being rarely seen on the street, or simply not available in mainland China.” While the definition of a niche brand for Chinese consumers is quite subjective and depends on the consumer’s level of sophistication, the general sentiment is that labeling something as “niche” makes the brand, or product, feel more premier (“高级”), which is the new equivalent of “premium” and “bespoke.”

“I personally think that niche brands are very premier. They are the opposite of mainstream, and I love the statement of freeing myself from the mainstream by wearing and supporting niche brands,” says a Chinese Gen-Z consumer, who gets most fashion ideas from Instagram and overseas fashion icons.

The restricted nature of information on platforms like Instagram ultimately feeds into this newfound power of “niche.” Consequently, if a brand does not have a presence in China, it can become more appealing to consumers who want to access to what they think of as “new information.” And with a rapidly growing middle class in China, more and more of the population is looking to information to help them advance, which only increases the power of “discovered” brands like GANNI. “Everyone instinctively wants to be in a position to share new information,” Shirky says. “This creates value for a person as they want to go up on the ladder.”

Ultimately, tapping into this information becomes integral to a person’s identity, in a way that is unfamiliar to other markets. “What’s unique to China’s case today is that information sharing is highly related to identity formation, unlike anywhere else in the world,” adds Shirky.

For fashion in China, the ubiquity of well-known brands and the growing fatigue for mainstream aesthetic (“大众审美”) has opened the door for the transmitting this new type of fashion information, which speaks to a Chinese person’s psychological need for self-differentiation and individuality. For the lucky brands, niche or otherwise, it’s resulted in accidental attention from fashion’s most sought after market, the Chinese consumer.

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