American accessible luxury label Michael Kors has announced an official collaboration with Alipay’s online credit card Huabei, becoming the first luxury brand to work with the credit system. According to Vogue China, Michael Kors' online boutique store in China will accept Huabei pay, allowing consumers to pay with the Huabei installment plan and place pre-authorization orders.
Huabei (just spend), the online credit card launched in 2015 by Ant Financial as part of the payment system on Tmall, has attracted more than 10 million users, many of whom are Chinese millennials. According to Ant Financial’s latest report, for every four Chinese born after the 1990s, there is one person using Huabei.
And the attraction for millennials is clear. Unlike traditional credit lines, where the applicant needs to have a letter of employment and a stable income, to qualify for Huabei, an applicant need only have a good record of financial activity on Alipay (spending on the online platforms Tmall and Taobao). The catch, though, is that the user can only use the Huabei credit card online, and not in a physical store.
Since many consumers in this age group have a strong desire to shop but don’t have enough disposable income, their source of money still comes from parents as well as work. As the only child, they value individualism and desire to become financially independent.
Huabei, whose philosophy is “enjoy first and pay later" positions itself to solve their dilemma. The company grants easier access to a credit line and gives members relative spending freedom (they can spend up to 30,000 yuan over the course of 41 days) with the option to pay over a period of three to 12 months at different interest rates.
Michael Kors kicks off this collaboration in celebration of the upcoming Chinese Valentine's Day, offering the option to pre-order the exclusive SELMA city bag to Huabei credit holders.
From August 15 to 18, fans could place pre-order requests on Huabei’s platform, and the credit company froze part of their Huabei money as a deposit to reserve the bag. Michael Kors offers five styles of different Selma handbags, four of which were inspired by four cities (London, Paris, Tokyo and New York), and one more that showcases select elements of the four city-themed bags.
As a result of the exclusive offer and credit payment, Michael Kors saw a boost in sales. Within the first 300 seconds of the start of the promotional event, 150 Selma bags were sold.