H&M Continues To Fail In China

At the beginning of June, Hamp;M got embroiled in another controversy when it infuriated Chinese customers after officials announced that they had banned several of the brand's products over safety concerns. A notice published on the website of China’s General Administration of Customs announced that authorities would take measures against Hamp;M for manufacturing low-quality, hazardous products that fall below China’s quality and safety standards, according to The Indian Express. As stated in the notice, nine batches of Hamp;M cotton dresses for girls were found to contain harmful color additives and other chemicals that might be hazardous if ingested or absorbed through the skin. The Western media alleges that Beijing is singling out global fashion brands that made statements on forced labor in Xinjiang. And while some actions might appear retaliatory, China isn’t the only country to accuse the Swedish retailer of producing low-quality garments, despite its sustainability pledge. For instance, in 2019, the US Consumer Product Safety Commission (CPSC) announced that Hamp;M would recall two sets of children's pajamas because they violated the Federal Flammability Standard. And in 2014, CPSC reported that the Swedish retailer recalled girls' leggings due to choking hazards. In an increasingly polarized world, it is easy to forget that the Swedish retailer faced serious challenges in China even before these threats over its Xinjiang boycott. What went wrong with Hamp;M in China? Market sophistication On the heels of a retail revolution, fast-fashion retailers now face a new reality in China that pushes against excessive consumerism. As consumers become more sophisticated, they expect unique shopping experiences at every channel and touchpoint; thus, they stop prioritizing pricing and discounts. That will favor incumbent retailers that produce unique designs and offer personalized experiences but will punish fast-fashion retailers that sell inexpensive, quickly-made clothing items. China Daily already highlighted this phenomenon in 2019 when it analyzed the challenges faced by fast-fashion retailers in China. “Many foreign fast-fashion brands have seen slowing growth in the Chinese market in recent years, in sharp contrast with earlier days when they could make some quick and easy money,” said China Daily. “But now, they are struggling to meet Chinese consumers' increasing demand for quality goods.” Fast retailers face a longer downturn, and Hamp;M is not the exception. While Uniqlo has understood the “new consumption patterns” of Chinese buyers and built legions of super-fans thanks to the superior quality of their garments, Hamp;M has lost the market because it failed to meet consumers' increasing demand for quality goods. According to China Daily, from 2014 to 2018, Uniqlo’s market share grew from 0.7 percent to 1.2 percent in China, but the Hamp;M market share remained consistent at 0.4 percent. The Western aesthetic lost authority and influence In recent years, Western styles and trends have lost influence. With the rise of patriotism came a revival of traditional Chinese culture and fashion trends, but international fast-fashion retailers ignored the new reality and continued to promote the same old Western designs. Moreover, Hamp;M didn’t get localization right. In fact, Hamp;M clothing items have a strong Western aesthetic that doesn’t resonate with Chinese customers. “Most foreign fast-fashion brands are not doing a good job in localization, as they are not familiar enough with the commercial culture and consumer mentality in China,” said Zhao Ping, deputy head of the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce, to China Daily. “They think that since fashion brands originated in developed countries, Chinese consumers will buy into them easily. That's not true now.” Low prices and promotional discounts don’t make a difference in China Chinese netizens argue that Hamp;M’s only leverage is that it commands lower price points. But that cannot be seen as a competitive advantage in a country like China, which is known as the largest producer and exporter of clothing, textiles, and apparel. Chinese consumers already have access to trendy, low-cost clothing designed by domestic players in accordance with the taste preferences of local consumers. As such, China doesn’t need affordable Western brands. In the near future, Hamp;M should steer clear of controversies and focus on expanding its product lines to incorporates items that reflect the local culture. Moreover, the Swedish retailer should improve the quality of its ready-to-wear line and take its sustainability and social responsibility pledge more seriously.

H&M Continues To Fail In China

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Published June 30, 2021

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H&M Continues To Fail In China