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China Marketing Picks: Loewe’s 520 Brand Film, Seesaw’s Self-Collab, Calvin Klein’s Virtual Idols

Loewe Celebrates the Many Shades of Love for 520

With the popular 520 holiday – one of China’s multiple official and unofficial Valentine’s Days – just around the corner, LVMH-owned Spanish brand Loewe recently released a brand film celebrating love in its many shades, coinciding with a limited-edition 520 gift box that includes a Puzzle bag and two branded pens. 

 

Seesaw Coffee’s Self-Collab

As brand collaborations – ranging from boringly sensible to bizarre – continue to proliferate in the China market, the Shanghai-based specialty coffee chain Seesaw Coffee recently took the unusual step of collaborating with an earlier incarnation of itself. Launched in celebration of the company’s ten-year anniversary, the limited-edition “Seesaw x Seesaw” collection revives some products from Seesaw’s early days while introducing a new coffee blend, shoulder bags, and coffee cups.

Calvin Klein Sidesteps Lockdowns and Celeb Crackdown With Virtual Idol Collabs

Over the past several years, virtual idols have progressed from a gimmick to an effective way for brands to get in front of China’s younger consumers. This has become increasingly true over the past year, as the Chinese government has cracked down on celebrities and influencers, making traditional marketing efforts a riskier proposition. 

Amid China’s ongoing fight against COVID-19 and extended lockdowns, virtual idols have taken on even greater importance, with brands still able to keep marketing campaigns largely on track by “outfitting” virtual celebrities and casting them in upcoming efforts. One recent example of a brand taking this marketing route is Calvin Klein, which linked up with virtual idol CELIX 赛 and 星瞳 on two short brand films ​​to promote Calvin Klein’s latest underwear line in the China market.

 

Chopard Tiffany WeChat campaign copy

Luxury Watchmaker Chopard Accused of Copying Tiffany Ad

What Happened: Coincidence or copycat? A WeChat campaign published on May 13 by Chopard has been suspected of plagiarism by industry leaders. Titled “Still making a choice?,” the ad featuring brand ambassador Yang Zi wearing various diamond accessories has been accused of “unauthorized image exchange and misappropriation of the interactive structure” of a Tiffany WeChat campaign published on March 31. In the Tiffany post called “Play with avant-garde style and keep up with the rhythm of Rosé,” clicking on an image of Blackpink member Rosé transitions into a three rows of sliding images of products.

Chopard’s latest WeChat campaign uses the interactive page elements found in a Tiffany post published in March. Photo: Screenshots, WeChat

The Jing Take: As described by local new media art research institute JZCreative, Chopard’s use of the same interactive page design infringes on the copyright interests of service customers and contradicts luxury’s spirit of original craftsmanship. As such, the Swiss luxury jeweler has been blacklisted from the interaction design industry, according to the notice. However, beyond the advertising and design world, it is unlikely this news will make a big splash: searching for “Chopard copies Tiffany” pulls up no results other than JZCreative’s announcement. 

Although this is unlikely to influence Chopard’s brand perception, it does point to a promising trend in China: the strengthening of intellectual property (IP) rights. In September 2021, China’s State Council issued the “Outline for Building a Powerful Intellectual Property Country (2021-2035)” to comprehensively improve the creation, utilization, and protection of IP, noting that “brand competitiveness will be greatly improved.” JZCreative shows that besides cracking down on counterfeit luxury items, it is also important to tackle plagiarism online. Prior to this, JZCreative also revealed that Gucci had used copyrighted code from BMW on its WeChat page. 

Recommended ReadingCan Peacebird Shake Off Another Plagiarism Accusation?By Gemma A. Williams
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When it comes to content creation, brands now have more to worry about than misleading or culturally insensitive ads; what they build into their backend can be scrutinized as well. 

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

China boys love BL dramas

Is Boys’ Love Content Still a Promising Brand Opportunity in China?

With their attractive male leads and subtle gay romance, China’s “Boys’ Love” or BL dramas have become addictive to audiences. Whether it’s The Untamed, known for its sumptuous costumes and smoldering gazes, or Addicted, a high school web series with a more overt portrayal of sexuality, the genre has developed a cult following even under the government’s watchful eye. 

And Chinese actor Xiao Zhan has become the movement’s undisputed poster boy. On May 6, he was named a spokesperson for L’Oréal Professionnel, the beauty giant’s high-end salon line, adding to a long list of ambassadorships that includes Tod’s, Gucci, Nars, Bosideng, and Li Ning. The 30-year-old star continues to profit off his role in The Untamed, a mega-popular fantasy show that racked up 200 million views per day and over 70 million yuan in viewing fees on Tencent during its final month of broadcast in 2019. 

The show, which follows the adventures of two soulmates as they uncover a dark mystery, catapulted Xiao Zhan to global fame and helped him amass over 30 million followers on Weibo. Xiao Zhan’s co-star, Wang Yibo, similarly became a household name following its release, signing contracts with brands such as Anta, Chanel, and G-Shock and entering Forbes China’s Celebrity 100 and 30 Under 30 list for the first time. 

The Untamed helped propelled actors Xiao Zhan and Wang Yibo to global fame. Photo: The Untamed’s Weibo

Word of Honor, which racked up 1.2 billion views when it was exclusively broadcast on Youku from February to March 2021, served as actor Gong Jun’s big breakthrough, making him one of the faces of Tiffany & Co., Louis Vuitton, and Hogan.

There’s a good reason why so many luxury brands are turning to BL stars. According to Ralph Lauren’s CEO, the collaboration with Xiao Zhan to launch fragrances in China last December resulted in the sale of 40,000 units of Ralph’s Club fragrance in a 6-hour period. Luxury watchmaker Zenith reported more astonishing results a few months prior: “When we announced [Xiao Zhan] at the beginning of July, we got 342 million views on Weibo,” said CEO Julien Tornare to the New York Times. “Then, within a few hours, we got 9 million views of our video on the announcement. And we sold more watches in 24 hours than in a whole month.” 

After appointing Xiao Zhan as an ambassador last July, Zenith sold more watches in 24 hours than in a whole month. Photo: Zenith’s Weibo

However, it is largely because of these overzealous fans that the future of BL now hangs in the balance. (The risque subject matter doesn’t help either.) In September 2021, China’s National Radio and Television Administration held a meeting urging the entertainment industry to boycott the adaptation of BL novels amid a broader crackdown on celebrities and “toxic” fandom culture. In January 2022, Beijing’s National Radio and Television Administration followed this up with a ban on BL dramas in the name of a “clean and healthy cyberspace,” bringing the production of live-action dramas to a halt.

Yet, China’s BL genre has already grown so popular that it has spread beyond the country’s borders, ironically becoming part of Beijing’s soft power. Besides animated and live-action series — which overseas fans can browse on Netflix — BL literature (known as danmei) has also crept into mainstream culture. After getting authorized English releases in December 2021, three novels by the author Mo Xiang Tong Xiu (MXTX) landed on the New York Times’ Paperback Trade Fiction Bestsellers list in the first week of their release, reflecting the appetite for both queer romance and transnational texts in the Western market. 

The Chinese BL novel Heaven Official’s Blessing landed on the  New York Times’ Paperback Trade Fiction Bestsellers list. Photo: Seven Seas

Of course, China isn’t the only country cranking out BL stories (in fact, danmei is inspired by Japanese Yaoi, which is akin to the West’s slash fiction). Thailand is also a major BL drama producer, releasing 57 series between 2014 and 2020, as reported by the South China Morning Post. South Korea is another, with Chinese audiences recently showing love to the mini-series Semantic Error and using the show’s hashtag on Weibo over 850 million times before it was removed “according to the relevant laws.”

Although the 2022 ban may slow the production of new TV shows and films, it is unlikely to scrub the genre altogether. As with past regulations targeting the depiction of same-sex relationships in Chinese media, gay elements will likely be further downplayed as bromance or friendship. Plus, there are still a few highly anticipated series in the works: a live adaptation of the BL novel Heaven’s Official Blessing by MXTX, starring boy group R1SE’s Zhai Xiaowen, reportedly wrapped filming earlier this year, although no release date has been set.

As such, brands should keep an eye on how the space evolves. While Beijing may not love Boys’ Love, consumers in China and the rest of the world still do — and will spend to prove it.

Brandy Melville

Brandy Melville Size Discrimination Is a Big No-No in China

What Happened: The popular Gen Z “one-size-fits-all” Italian brand Brandy Melville has seen itself embroiled in a backlash — again. Recently, a blogger on Xiaohongshu under the alias “mean cousin” accused the label of discriminatory hiring policies. According to the post, the brand was called out for only recruiting tall, white, skinny girls as sales advisors. The video quickly went viral on the lifestyle app, instantly amassing 25,000 likes and receiving over 1,000 comments (most of them in agreement). One netizen commented: “Although I like the brand, the company vibe is really disgusting.” At the time of publication, the blogger’s video was unavailable on the platform — presumably removed but for reasons unknown.

The Jing Take: Young local demographics are no longer tolerating body shaming. On the popular lifestyle platform, the hashtag #RejectAppearenceAnxiety (#拒绝容貌焦虑) has over 10,000 UGC instances. And as young shoppers are embracing more inclusive values, companies that do not reflect those ideals will be soon on their way out.

When it first debuted in China in 2014, Abercrombie & Fitch, renowned for its good-looking sales assistants, would see 1,000 meters long queues in front of its Shanghai boutique. This year, the brand has withdrawn from the Chinese market. This should be a warning for Brandy Melville and others who are out of step with changing tastes. And it has already faced backlash: In 2021, it was called out by Western consumers for its toxic culture. Little has changed since then. 

The company has continued to foster the “BM style” on Xiaohongshu. “BM,” which stands for Brandy Melville, indicates a petite style suitable for slim girls, who fit in the label’s incredibly skinny sizing. Now the one-size-fits-all label is at a crossroad: To make garments that fit a wide-range of sizes or demand customers to fit in to their clothes. The brand may have reached agreement with the author to delete the video, but more might follow. After all, the issue appears embedded in its DNA. How can it not continue to damage the company? 

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Bags

Luxury’s Carrier Bags Get Second Life on China’s Resale Platforms

Update published May 17, 2022

Beijing Business Daily reported that many citizens are trading shopping bags from the likes of Prada, Louis Vuitton, Dior, Chanel, and Burberry on the second-hand e-commerce platform XianYu. There you can purchase a large-size Hermès one selling for $117 (800 RMB) while a Patek Philippe leather version (plus international postage) exceeds even that: on sale for a whopping $147 (1000 RMB). 

Shanghai’s doors were covered in glamorous paper shopping bags as citizens used them to hold their antigen tests during lockdown. As such, they became powerful symbols of wealth and taste even at a time of despair. Now their popularity has surged in the resale market, too — and for a number of reasons. 

Firstly, international shoppers, or Daigou, often exclude official packaging when supplying purchases; another reason is an uptick in the DIY and personalization trend popular among younger shoppers. Finally, luxury packaging increases the value of goods in the secondhand market, especially for hard luxury. The latter is specifically important for high-end watches where accompanying wrapping can make or break a sale. 

Published April 18, 2022

What Happened: As COVID-19 concerns persist, Shanghai’s 25 million residents remain locked down. Citizens cannot leave their homes and many must rely on the government or on private delivery drivers to supply food and basic necessities. The restrictions have been in place for more than 21 days, and frustrations are running high.

Although the situation is far from good, it hasn’t stopped fashion enthusiasts from showing off during this challenging time. Citizens are putting their at-home antigen tests in designer shopping bags and hanging them on their front doors for health workers to collect. As such, countless city’s doors are covered in glamorous paper shopping bags from the likes of Prada, Louis Vuitton, Dior, Chanel, and Burberry. Related videos on Douyin have more than 150,000 likes and 20,000 comments. Many netizens joked that in many cases the shopping bags are more expensive than the doors themselves.  

Shanghai residents hang luxury paper bags on their door to hold their at-home antigen tests. Photo: Jing Daily

The Jing Take: Shanghai’s current pandemic situation stands in direct opposition to the rest of the world, which has effectively moved on from lockdowns. Still, despite the difficulties, it shows the world the role of luxury in the face of hardships. Despite being stuck at home, these iconic shopping bags are a crucial signifier for fashionistas to express their personal sense of taste and status.

This surprising trend shows the power of packaging, which is often underestimated, and is free, unexpected advertising for the luxury brands involved. In September 2021, Prada cooperated with Wuzhong Market in Shanghai to launch its Fall 2021 campaign “Feels Like Prada,” wrapping vegetables and fruit in patterned paper. Images of the wrapping paper went viral, as KOLs shared posts on Xiaohongshu; the hashtag #feelprada(感觉Prada) currently has 376,000 views on the platform. 

Prada’s takeover of a Shanghai vegetable market went viral last September. Photo: Screenshots, Xiaohongshu

Luxury shopping bags have already evolved into a budding business. Younger consumers enjoy purchasing them online and sharing them in their WeChat Moments or using them as they go out and about. For example, the Italian luxury brand, Bottega Veneta, is sought after by fashion fanatics for what is considered its “outstanding” shopping bag, with images popping up on Xiaohongshu and Weibo. Last year, Gucci collaborated with the Japanese manga character Doraemon for a new capsule that included paper bags with images of Doraemon. These were hot commodities trending on Xianyu, a popular second-hand e-commerce platform in China. 

But Shanghai’s lockdown will end and luxury consumers will flock back to the malls, boutiques, and brick-and-mortar stores to make their purchases. And with each purchase, the brand has another soft power opportunity to communicate not only with potential first-time buyers, but also with the world at large, signaling its brand message via a well-designed and constructed shopping bag — a rather inexpensive way to communicate so much meaning for both the brand and the person sporting the bag. 

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Tod's sales quarter first china

As Q1 Results Disappoint, Should Brands Look Beyond China?

Tapestry, Tod’s, and Tesla: these are just a few names in the long list of brands that reported less-than-stellar results in the first quarter.

While China was the saving grace for global companies when the rest of the world was shuttered, roles have been reversed. With the government relentlessly sticking to its zero-COVID policy, Shanghai has remained in lockdown for almost two months, trapping residents indoors and leaving retail outlets deserted. In fact, the financial hub moved to impose its tightest restrictions yet last weekend, barring commercial food deliveries and forcing those who live near positive cases to move into quarantine facilities.

Naturally, brands with wider exposure to the market were dealt bigger blows. Roger Vivier, for example, was the only label in the Tod’s Group portfolio to report single-digit growth rather than double-digit growth due to its larger footprint in China (22 stores in the mainland, four of which are in Shanghai). The owner of Tod’s and Hogan also reported that 30 percent of the company’s stores remain shut while goods are stuck at its distribution center in Shanghai, making it impossible to fulfill e-commerce orders. 

Luxury fashion wasn’t the only category impacted. Tesla, which saw its Gigafactory in Shanghai closed for weeks, was the automaker that suffered most in the world’s largest EV market, with sales in April plunging 98 percent from March. Although CEO Elon Musk downplayed concerns about the lockdowns, the company has cut its daily factory output to fewer than 200 cars because supplies of some key components had been suspended. 

Even F&B was not spared from sluggish spending: Starbucks suspended guidance after reporting same-store sales in China fell by 23 percent in the quarter — a stark divergence from the 0.2 percent increase analysts expected. “Conditions in China are such that we have virtually no ability to predict our performance in China in the back half of the year,” said interim CEO Howard Schultz on an earnings call. 

Starbucks stated 72 percent of the 225 Chinese cities it operates in experienced COVID-19 outbreaks in past quarter. Photo: Starbucks’ Weibo

However, many brands were able to offset these losses thanks to the strength in North America and Europe. Aeffe, the parent company of Mochino, nearly tripled its net income in the three month period, as Europe (which represents almost one-third of its total revenue) jumped 37.5 percent thanks to Germany and the UK. Tapestry shares even climbed on May 12 after it posted that sales in North America rose 22 percent year-on-year, fully offsetting mid-teens decline in China.

These two regions will be crucial as China slowly recovers from its worst COVID-19 wave since 2020. Although the mainland is on track to become the world’s largest luxury market by 2025, the US is still in top spot, accounting for 31 percent of the global market (China accounts for 21 percent). As such, it is important for brands to continue building traction in North America and Europe to cushion against near-term losses in Asia.

Given that about 375 million people in 45 Chinese cities were in some sort of lockdown in April, regional sales will likely continue to struggle in the second quarter. Beijing imposing stricter measures to curb the virus, although denying rumors of a Shanghai-scale lockdown, also makes it unlikely that the zero-COVID policies will lift soon, particularly as the capital gears up to host the party congress in November. 

Even when Shanghai inevitably does lift its lockdown, it may take a lot more than coupons to stoke consumer spending. Luxury should brace for a bumpy ride.

Web3 luxury brands metaverse

Luxury Brands Feel the Challenge to Master Web3

As the price of Bitcoin is down more than 50 percent over the last six months, investors aren’t the only ones asking questions about the opportunities and risks of aspects of Web3, which still feels mysterious and untransparent to most. Fuel was added to the fire when Coinbase warned that “users could lose their crypto holdings if the company goes bankrupt,” according to Business Insider. Owners of digital assets started asking themselves, what do they actually “own,” and where is the “value,” really.

Crypto, however, is just one part of Web3. Today, brands are mostly experienced in the Web 2.0, or what often is referred to as the centralized internet. Social media companies own and control everything that happens is there, even if the content is created by brands and users. Consequently, the centralized Web 2.0 structure does not give brands control and direct monetization opportunities over their own content.

The Web3, in contrast, provides a decentralized digital environment. Using blockchain as the core technology, brands and individual users now own the content they create, including having full control over monetization opportunities. A blockchain is a database which is hosted by a decentralized network of computers, allowing transparency of storing information. This enables the precise allocation of a digital asset to an owner. 

Categories like NFTs (non-fungible tokens) emerged and achieved an explosive growth, particularly since the record sale of Beeple’s 69-million-dollar artwork “The First 5000 Days” set a previously unthinkable record for digital assets. Moreover, industry experts estimate the NFT market at more than 40 billion dollars in 2021 — from zero in less than eight years. 

And new categories are emerging at sheer breathtaking speed, such as a DAO (decentralized autonomous organizations). Their fundamental idea is that they are governed in a decentralized way by their members according to a set of rules. 

This changes the way brands are building communities. Since its launch, the Bored Ape Yacht Club (BAYC) has become the biggest NFT community, now extending into a DAO-managed coin, the ApeCoin. In just one year, BAYC became a lifestyle brand by itself with multi-million-dollar sales and a list of celebrity owners. The community is also moving into areas like gaming, and it offers access to events and parties in the physical world as well as online activities.

Meanwhile, the metaverse, the highly immersive next internet iteration, is accelerating the rapid adoption of the Web3. Practically every luxury brand started strategizing about how to play in this new reality. Over the last three months I spent a significant amount of time traveling around the world discussing at least two or three times per week implications, opportunities, and pitfalls of the new internet with luxury and lifestyle brands. 

The most critical challenge most brands face is not having clarity on what the characteristics and critical success factors are that build competitive advantage in the Web3. Most companies today don’t know which strategic assets are needed, how to organize internally and externally, and what does it take to play to win.

Also, the mechanism about extreme value creation and pricing in the metaverse are not well understood. Crypto is a different “animal,” with surprising features. While it’s often referred to as “currency,” users often don’t see it this way. They feel more like being part of a computer game. This increases the willingness to take risks and potentially paying above the value that would be perceived if traditional currencies would be used for transactions. 

The challenges and implications for brands are huge. The risk to deploy the wrong pricing strategies is paramount, and the long-term reputational damage if you make the wrong move in the Web3 is grossly underestimated. But many brands feel the urge to react fast because they see their competitors creating initiatives. However, most initiatives are just copying what others do — innovation and luxury storytelling within the Web3 is fundamentally lacking. 

This will haunt many of the non-strategic early movers when the digital assets they create cannot retain the value expectations of buyers. Luxury brands also, in most cases, lack internal capabilities to evaluate initiatives. They are — traditionally — very good in craftsmanship and traditional savoir faire. Most established brands lack talent, knowledge, and technologies to apply the same in-house savoir faire to digital assets. Hence, they seek advice from tech companies and creative agencies in the Web3 space who may understand the tech side, but often lack the expertise in luxury brand building. 

As the Web3 expands rapidly, I advise brands to be extremely strategic and to separate hype and noise from winning opportunities. Experimentation is always exciting, but there needs to be a clear connection to the fundamental value creation system of each brand. And this is what is missing today.

Named one of the “Global Top Five Luxury Key Opinion Leaders to Watch,” Daniel Langer is the CEO of the luxury, lifestyle and consumer brand strategy firm Équité, and the executive professor of luxury strategy and pricing at Pepperdine University in Malibu, California. He consults many of the leading luxury brands in the world, is the author of several best-selling luxury management books, a global keynote speaker, and holds luxury masterclasses on the future of luxury, disruption, and the luxury metaverse in Europe, the USA, and Asia. Follow @drlanger

45-Degree Life

What China’s “45-Degree Life” Trend Means for Luxury

Overview: 

A new movement, tang ping, or “lying flat” (躺平) arose among China’s youth last year. It represents an attitude that refuses to engage with the country’s grueling “996” work culture  — that is, working 9am to 9pm, six days a week. 

Despite going viral online, is this trend indicative of a widespread cultural change? According to the latest study conducted by Fudan University’s Center for Communication and State Governance Research (on a sample of 4,000 Weibo users born between 1990 and 2005), it might not be so. The investigation found that over 70 percent of participants’ posts have shown the opposite: a hardworking attitude, and great appetite for learning and growth. In fact, only 10 percent had actually practiced “lying flat.” 

What It Is:

And so another neologism has emerged: “45-degree life” (45度人生). This refers to the gray area between burnout culture and “lying flat,” and is believed to be a more appropriate description of the younger generations’ attitude. 

Fudan University’s study results set the Chinese web alight, with the topic #post2000dontwanttolieflattheyareactuallyhardworking amassing over 700 million views on Weibo so far. Many netizens admitted that while they couldn’t afford to give up their salaries, they didn’t wish to “neijuan” (内卷), or overwork. Therefore they fit somewhere in-between: a “45-degree life.”

45-Degree Life

China’s youth cannot afford to give up their salaries, but also wish not to overwork. They see themselves as fitting in-between — and striking a balance between work and life. Sources: Weibo

This healthy, balanced lifestyle suggests practical avenues that luxury could explore: for instance, collaborations with sleep aid companies and therapy centers — or leveraging a diverse cast of KOLs instead of the usual fashion influencers.

Why it Matters: 

This cohort is known for defending their rights. Many post-2000s interns or junior employees have spoken out on the web to decry unfair work cultures and demand more transparency in the workplace. 

On this point, luxury should be wary. An industry based on selling fantasies, its own working practices are often far from dreamy. Low wages, especially in retail, can alienate young talents and sit uneasily with them — especially given the industry’s exorbitant (and rising) prices. The potential exposure of unpleasant working conditions and low salaries could well lead to a PR disaster: something every company wants to avoid.

The Bottom Line: 

Companies often place customers’ interests at the heart of their strategy. Maybe now it’s time for them to look to the people behind the scenes responsible for the business’ success. Maisons should take pride in fostering a transparent and healthy work culture. While the fact that it is the right thing to do should be reason enough, a positive brand image will arise from the prioritization of employee wellness — which, whatever angle you look at it from, is all-important to mainland Gen Zs.

3 Homegrown Brands That Won Mother’s Day

The Social Edition is our weekly series which deep dives into luxury initiatives in China’s social media landscape. Every week, we highlight brand campaigns distributed on Chinese digital platforms — WeChat, Weibo, Tmall, Douyin, and beyond.

Our coverage spotlights global luxury brands, global beauty brands, and local Chinese brands. The latter gives insight into some of China’s most successful campaigns, which often come from local players, and are outside of the beauty and fashion space.

In this week’s roundup, we look at three campaigns in celebration of the Mother’s Day this year, from homegrown brands including Proya, Beast, and Ubras.

C-Beauty Label Proya Mastered Female Marketing

BRAND Proya
CATEGORY Cosmetics
PLATFORMS Weibo, WeChat, Xiaohongshu, Tmall
MEDIUM Short Video

OVERVIEW 
In China, as in many other countries, housework traditionally fell to women and mothers: an unpaid and unsung form of labor that is perhaps the most vital and necessary of all work. C-beauty label Proya engaged this in their Mother’s Day campaign, “Exclusively Visible to Moms.” Shown from the perspective of a young mum, the campaign video explores “whether housework has gender attributes” — to remind viewers that responsibilities should be shared and contributions appreciated.

NETIZEN REACTION
The campaign video received extremely positive comments from netizens, garnering 4.5 million views within 3 days. Many commented that the firm’s approach resonated with mothers, and delivered well the moral that their work should not be taken for granted. One Weibo user commented: “Finally, there’s a brand that genuinely understands mothers.”

VERDICT
Proya is a veteran in marketing to women, especially when it comes to developing stories that speak to local audiences. In exploring gender equality, its previous campaign “Gender does not set boundaries; prejudice does” was a hit last International Women’s Day. It is a sharp contrast to the many beauty companies rolling out special gift kits or discounts on such occasions. Proya instead focuses on consolidating its brand values and image by tackling social issues.

BEAST Tap Nostalgia For Mother’s Day Marketing

BRAND BEAST
CATEGORY Lifestyle
PLATFORMS Weibo, WeChat, Xiaohongshu, Tmall
MEDIUM Short Film

OVERVIEW 
Ahead of Mother’s Day this year, Chinese lifestyle brand BEAST collaborated with Shanghai Art Film Studio to release the campaign Little Tadpoles Looking for Their Mother. Its theme drew inspiration from the first ink animation film (of the same title), produced by the studio back in 1960. The label incorporated elements from the film into designs, launching limited editions of ​​flower gift kits, bouquets, and homeware products.

NETIZEN REACTION
Every local is familiar with the film Little Tadpoles Looking for Their Mother — a classic animation about motherly love. The campaign post racked up over 379,000 likes on Weibo, inviting netizens to share personal stories of their mothers in its comment section. The campaign’s visual assets, as well as product designs, feature a retro-style with a modern twist: a trip down memory lane that provoked fond recollections of childhood.

VERDICT
Nostalgia marketing has been proven effective in China. Perhaps it’s because of the increasing loneliness of young adults that there has been a great rise in the importance of shared memories. And of course, in the midst of lockdowns, such warm storytelling will be a comfort. Certainly BEAST is not one to miss a domestic trend or marketing opportunity: from camping to the upcoming 520 Valentine’s Day, it takes any chance it can to drive social traffic.

Ubras Celebrates Its 6th Anniversary



BRAND Ubras
CATEGORY 
Underwear
PLATFORMS Weibo, WeChat, Xiaohongshu, Tmall
MEDIUM Short Film

OVERVIEW 
On May 8, underwear company Ubras released the short film To Us in celebration of its sixth anniversary. Featuring relationships between mothers and daughters, girlfriends, and teammates, it celebrates the joy of companionship in communities of women. Ultimately, the campaign aims to encourage them to create more possibilities beyond what social norms might traditionally expect of their identities.

NETIZEN REACTION
The campaign hashtag #ToUs has garnered 12 million views on Weibo so far. Many Weibo and WeChat users shared stories of their own relationships with mothers, best friends, and partners. The social traffic was also helped by the underwear group’s collaboration with beauty labels Farmacy and Into You, which featured gift boxes including both brands’ best-selling products.

VERDICT
Founded in 2016, Ubras is known for its rimless bras, size-free underwear, and designs that prioritize comfort. Thanks to its precise brand positioning, it has won the hearts of young consumers seeking lingerie that feels good. This has been bolstered by strong brand ambassadors: Chinese supermodel Liu Wen and Gen Z musician Ouyang Nana, who have helped the business gain broad recognition in the domestic market. But for this specific campaign, it was the timing: the fact that its sixth anniversary coincided with Mother’s Day offered a chance to consolidate its brand values of caring, community, and women’s empowerment.

Gucci Adidas umbrella

Netizens Scrutinize Adidas x Gucci Collab

What Happened: The new Adidas x Gucci luxury umbrella is causing quite a storm in China. The item, which has gone live but is still unavailable for purchase, features a lavish birchwood handle and is emblazoned with Adidas’ trefoil print and Gucci’s signature trim. Even though netizens must join a waiting list to get their hands on it, two issues have already become hot topics. Firstly, the high price point — it retails for over $1,600 (11,000 RMB). And perhaps more surprisingly, its permeability: its production description states it is “non-waterproof.” The associated hashtag #not waterproof collab umbrella sold at 11000 yuan# has 130 million views so far and counting. 

The Jing Take: There’s plenty to unpack here. On one level, it shows how stringently local consumers scrutinize merchandise; it also illustrates how quickly any issues they disagree with gain traction. However, it’s not only the wrath of online sleuths or “Holmeses” 福尔摩斯 that brands need to be wary of: the country’s market supervisors are watching closely too. Last week, Lululemon was fined by the Beijing Xicheng District Market Supervision Bureau for selling poorly-made products. This follows fines on Bally, H&M, Chanel, and others for various transgressions such as mislabelling. 

Gucci reacted quickly. Its official China site altered the product name from 雨伞 meaning “rain umbrella” to 伞 which stands for umbrella only (and can be understood to mean a parasol). This illustrates a strong local team who are listening carefully to its prized Chinese consumer base — and then acting on it.

Although netizens were questioning the cost, ultimately the online discussion has only widened the exposure for the duo’s pairing. In fact, there will be plenty of HNWI who will be keen to showboat it in a rainstorm — and its high price tag. An umbrella that isn’t waterproof? Fashion is built on such beautiful impracticalities.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

China’s Booming Fragrance Market Offers Plenty of Room For Newcomers

The following is an excerpt from Jing Daily’s insight report, “How Niche Fragrances Are Winning Over Young Chinese Consumers,” available for download on our Reports page. This 25-page primer highlights China’s emerging niche fragrance market, one of the fastest-growing premium categories with plenty of untapped potential. Get your copy of the report here.

The Chinese market undoubtedly offers one of the most compelling opportunities for the global fragrance industry. Only 2.5 percent of its massive population of 1.4 billion use personal fragrance, according to local market research firm iResearch, which means that there is enormous growth potential. By comparison, nearly 52 percent of Americans (172 million) used or purchased perfume or cologne, according to data from the U.S. Census data and the Simmons National Consumer Survey (NHCS). In France, where the use of fragrance is deeply ingrained in the culture, 42 percent use scents on a daily basis, while another 42 percent use perfume products somewhat less often, according to a 2017 survey.

For decades, China’s fragrance market has been dominated by top-selling global names such as Chanel N°5, and Dior J’Adore. And while international luxury giants and beauty groups still account for the lion’s share of the fragrance sales in China, the evolution of consumer tastes in recent years has seen a greater willingness to experiment with lesser-known brands from both overseas and domestic producers.

While low awareness of fragrance in China has brought go-to-market challenges for brands seeking entry, it also means that there is plenty of room for newcomers to establish a foothold and develop followings of consumers who are new to fragrance. Between 2017 and 2019, the personal care market was booming, and fragrance was one of the fastest-growing categories, according to consumer research firm Kantar Worldpanel. An online survey by Chinese market research firm iResearch noted that fragrance ranked as a top category in fashion and beauty (excluding cosmetics and skincare) for Gen Z female consumers, coming out ahead of clothing and accessories.

The Chinese market took a significant hit in 2020 as a result of the coronavirus pandemic, with annual growth dropping to just one percent from 11 percent in 2019, according to global market research firm Mintel. But China’s rapid rebound in the second half of the year saw economic recovery and increased consumer spending, offering the fragrance industry hope for the near-term prospects.

Mintel forecasts that China’s fragrance market will grow at an accelerated compound annual growth rate of 17 percent over the next five years, with sales more than doubling between 2020 and 2025 from RMB 6.9 billion ($1.1 billion) to RMB 15.4 billion ($2.4 billion). Euromonitor International valued the Chinese fragrance market at RMB 10.9 billion yuan ($1.7 billion) in 2020, representing around 5 percent of the global market, and forecasts sales to reach RMB 30 billion ($4.7 billion) by 2025.

Get your copy of “How Niche Fragrances Are Winning Over Young Chinese Consumers” here.

Liu Genghong fitness livestreaming Douyin

Liu Genghong Is the Face of China’s Hottest Trend, Workout Livesteams

What Happened: The pandemic has unexpectedly made a hit livestreamer of singer and actor Liu Genghong. On Douyin, Liu and his wife Vivi Wang have sparked a fitness revolution: they gained more than 64 million followers within a single month (for perspective, the fitness app Keep took seven years to accumulate 34 million monthly active users) and their livestreams have been viewed roughly 100 million times. Chinese musician Jay Chou’s songs are often used by the influencer as his background music, and his song “Herbalist’s Manual” (本草纲目) went viral thanks to the workout classes. The interactions between Liu and his wife during the workouts have been credited as a prime reason for the duo’s popularity. 

The Jing Take: According to the keep prospectus, China’s online fitness market increased from 35.6 percent in 2019 to 44 percent in 2020, and is expected to climb to 60.6 percent in 2026. The lockdown is helping to accelerate this growth. Given this vast potential, brands have been tapping sports stars as ambassadors and KOLs. Now, sports companies can also incubate their own influencers on social media such as Douyin, Xiaohongshu, and Kuaishou. With any luck, they hope to emulate the success of the mainland’s latest livestreaming crush: Liu Genghong. 

Liu Genghong and his wife Vivi Wang livestream their exercise and dance routines on social media. Photo: Liu Genghong’s Weibo

The sports label Fila were quick to spot their popularity, and has become one of the first international names to be worn by the couple. According to an informed source, this month, the company reportedly spent nearly $2.53 million (17 million RMB) to appear in the livestream (being worn by the pair) for two days. Videos where the two praised the comfortable sportswear and recommended netizens purchase similar items when exercising have received 1.32 million likes in total so far. 

Fans of Liu Genghong can replicate his looks by searching for “Liu Genghong’s same style” in the Fila store. Photo: Fila’s Weibo

Working with influencers is essential for a business to build its reputation and boost sales. KOLs can help firms stand out and foster trust. But in this case, timing has been essential. As the country moves out of lockdown, Liu may struggle to maintain his leading position in the sports livestream sector, and Fila has been smart to act quickly. Long-term, rather than just selling items in livestreams, brands could produce their own content — like sports tutorials — as a more sustainable approach to driving sales. 

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Cupshe

Chinese Swimwear Brand Cupshe Makes Waves in the US

As spring approaches in the northern hemisphere, the swimwear category is also approaching its annual sales peak.

According to Euromonitor International’s research, the global swimwear market will exceed $16 billion (107.6 billion RMB) by 2020 and is expected to grow to $21.4 billion (143.9 billion RMB) by 2025. Statista’s forecast for the industry is even more optimistic: the database predicts that it will grow to about $29.1 billion (195.7 billion RMB) by 2025.

In the US, where the total value of the swimwear sector has surpassed $2.7 billion (18.2 billion RMB), an outbound brand from China has become one of the most popular swimwear labels — with more than 1.05 million followers on both Instagram and Facebook, over one million monthly visits to the company’s DTC website, and a 97 percent positive rating on Amazon.

As a leading player in the swimwear category, what makes Cupshe stand out from the crowd in America’s fast fashion market? That is, apart from the cliché of “supply chain advantage,” what other tricks does Cupshe have up its sleeve?

Finding The Right Positioning

Founded in 2015, Cupshe was initially a fast fashion overseas outfit operating in a wide range of categories, and had not yet found its defining characteristics. During this testing phase, swimwear was only a small part of its many offerings.

Cupshe set its sights on the promising swimwear segment a year later. It began by digging deep into this market through independent research and development, thus establishing clear brand positioning: “quality, stylish, and affordable.” With this tagline, the firm has been making inroads into global swimwear — led by its presence in the United States.

According to media reports, Cupshe founder Zhao Liming is a long-term resident of the US and understands American consumption habits and aesthetics. The label’s design team is based there also, which helps the brand stay nimble in capturing current domestic trends.

Cupshe includes mothers and plus-sized women in its marketing campaigns. Photo: Cupshe

Unlike Chinese fast fashion e-commerce companies like SHEIN, Cupshe is able to reach a wider audience beyond young Gen Z women: alongside a wide range of styles, it centers the needs of different groups, such as full-time mothers, plus-size women, men consumers, and so on.

Soon, Cupshe, which is deeply rooted in its vertical, will be on a high-speed growth train. In 2018, its global customer base surpassed 10 million and two years later, the business reached $150 million in revenue. Last year, its official software became the most downloaded swimwear shopping APP in the U.S. and the only swimwear APP in the Top 500 shopping APP category.

Two-line Layout: DTC + Amazon

Aside from its broader target audience, what sets Cupshe apart from other Chinese e-commerce companies is that it has not abandoned its Amazon store while setting up a DTC website.

In an interview with Morning Brew, Cupshe’s senior director of marketing Jessie Han said the group generates 70 percent of its sales from its DTC website, but still gets 30 percent of its sales from Amazon. In terms of channel distribution, Jamie Drayton, senior industry manager for e-commerce at SimilarWeb, explained how Cupshe serves as a great example of a fast-growing young brand that’s balanced its direct-to-consumer strategy with selling on the behemoth that is Amazon. “Cupshe’s managed to grow traffic to their own site by 41 percent year-over-year. This, however, was eclipsed by a 131 percent jump in sales on Amazon.”

Melissa Burdick, one of the co-founders of cross-border e-commerce service platform Pacvue, commented that she prefers to buy on Amazon rather than DTC platforms because of the complicated return processes that are common on the latter. She considers this option an advantage for the firm.

Cupshe maintains a store on Amazon, which contributes to almost one-third of the brand’s sales. Photo: Screenshot

In fact, in terms of service and operations, Cupshe has done well on both DTC and Amazon. Beau Ushay, a marketing consultant, told Jing Daily that it was his partner’s positive shopping experience on Cupshe’s website that attracted his attention to the brand: “The purchase experience itself was slick, the delivery quick, the packaging looked good, and the product like it should.” He also praised how the handling of return requests is very prompt and rapid, with multiple return options for customers.

Ushay went on to highlight why this was so important. “Buying online is fraught with danger, especially for something so specific and intimate as swimwear. Google ‘online shopping fails’ and you’ll see no end to the frustrating and often hilarious outcomes of impulse purchases from the far corners of the web. Cupshe recognized this and identified a really customer-centrist way to both take the pain out of the purchase journey and provide reassurance if things don’t work out.”

Marketing To A Community

In the United States, the swimwear category itself has an inherent communication advantage since consumers are more likely to share these products. Therefore, the vertical brands in this category are more suitable for social media promotion. As an e-commerce label, Cupshe is no slouch when it comes to this.

According to the data from similarweb, more than half (52.24 percent) of Cupshe’s official website traffic from social media comes from Facebook, with the rest coming from YouTube (28.53 percent), Reddit (8.94 percent), Pinterest (5.4 percent), and LinkedIn (2.4 percent). Facebook is obviously the main battleground for its social media marketing, with the business boasting an impressive 1.05 million followers and a total of 1.02 million likes on the platform.

Cupshe uses Facebook to announce new collections, post style inspiration, and host giveaways. Photo: Cupshe’s Facebook

According to Ushay, one of the advantages of Cupshe’s social media marketing is the use of customer feedback in its brand story. “Few real-life customers reflect the sizes and shapes showcased in most swimsuit advertising. With the average Australian woman long thought to be a size 14-16, they should be applauded for their realistic representations of their customers. If you’re looking to build attention in a really crowded space, this is a great way to do it.”

It is worth noting that in addition to its KOL promotion (the “Ambassador Program”) the brand’s website also has a dedicated page called “Cupshe Cares,” which is a special page that details the eco-friendly technology used for its iconic digital prints, as well as its high-quality fabrics, ethical workmanship, and recyclable packaging. This aligns with the sustainable consumer mindset, and will help it better integrate into its target market.

Last year, the label announced an expansion into athleisure with the launch of its series “Weekends at the Beach House.” The Chinese outbound e-commerce company clearly feels ready to explore new possibilities based on its brand positioning rooted in the beach vacation scene. And, given its expertise and knowledge, it’s more than ready to dive into something new. 

xiaohongshu content guidelines wealth flaunting

Xiaohongshu Cracks Down on Users and Businesses in Bid to Keep ‘Authentic’

What Happened: Flex those Gucci belts and Prada purses somewhere else. On May 9, Xiaohongshu renewed its vow to clamp down on wealth flaunting online in hopes of maintaining a positive community of “sincere sharing and friendly interaction.” 

The Chinese lifestyle platform stated that fake “entrepreneurial” personas will be punished for using misleading pictures of luxury products to drive traffic (e.g., posing with luxury goods and claiming to help people make a six-figure income in three months). Additionally, accounts that deliberately display luxury belongings without providing useful information — as well as those that promote excessive consumerism, such as launching a challenge to spend 1 million yuan a day — will also be targeted. 

The clean up campaign comes a few days after China’s version of Instagram released a code of conduct for businesses to keep the platform “an authentic space with transparent engagement.” Among the guidelines, Xiaohongshu emphasized that “brands should not exaggerate or whitewash their content.” Even when sponsoring content, they should ensure that creators are speaking from real experiences and “not overly interfere with the content creation process.”

The Jing Take: As marketing campaigns by luxury brands do not typically involve ostentatious displays of wealth or violate Xiaohongshu’s “sincere sharing” goal, the flaunting rule largely applies to consumers. What luxury players should be concerned about, however, is the broader trend: namely, luxury consumption and extreme wealth being seen as at odds with China’s social values. This comes amid Beijing’s push for common prosperity, which has led to several billionaire tech founders stepping out of the spotlight and more high-profile stars being fined for tax evasion.

Where brands could run into trouble on the platform is with false marketing. After posts by 29 popular brands, including Nivea, Dove, and Neutrogena, were deleted last December on suspicion of false marketing (with no further details given), the community guidelines now better clarify why certain posts are removed. Besides ensuring that products meet expectations, brands should also refrain from using clickbait, fear-based tactics, or “tension between different groups such as genders” in their marketing activities. 

Xiaohongshu’s advantage lies in the fact that it is a space where consumers can authentically share, discover, and review products. As many posts contain keywords like “how to buy” and “is it worth buying,” this user-generated content not only helps brands increase conversion but also learn how their audience is engaging with their business. As such, Xiaohongshu asking for more honesty from both users and brands should help preserve the reliability and trust that made it so popular in the first place.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

The Highly Caffeinated Future of Minimalist Fashion in China

Fourteen months after it was roped into a wave of brand cancellations spurred by Xinjiang cotton controversy, global fast-fashion powerhouse H&M is doubling down on minimalism as a conduit to tap the spending power of comfort-minded urban consumers. Following the opening of its first physical China location in Beijing last September, ARKET — H&M’s highest-end portfolio brand — recently announced plans to open its second and third China stores in Shanghai and Guanzhou this fall.

Like all ARKET outposts in cities like Beijing, London, and Seoul, the new Shanghai and Guangzhou stores will include the ARKET Café concept, which offers vegetarian and vegan dishes, pastries, and coffee.

As its China expansion effort gets underway, ARKET may find itself outnumbered, if not outmatched, by a growing crop of domestic Chinese brands also offering higher-quality, relatively affordably priced, minimalist apparel. The Hangzhou-based JNBY Group, perhaps most notably, has gunned for the middle- and upper-middle-class urban female professional since its founding in 1994, and launched its ARKET-like minimalist line LESS way back in 2003.

ARKET’s bridging of store-and-cafe is aimed squarely at urban professionals. Image: ARKET

In the first half of fiscal year 2022, LESS recorded a 27 percent jump in revenue as consumers stung by an ongoing pandemic continued to shop for low-key but premium clothing. The brand also recently unveiled a fresh Japandi-tinged visual brand image by Japan’s Irobe Design Institute, and last July named 47-year-old actress Zhou Xun as its official brand ambassador.

Where ARKET could find success where other minimal global brands like Everlane faltered in China is by offering more than “just a store” — namely, through its ARKET Café, which comes to China when interest in specialty coffee and well-designed coffee shops has never been higher. In recent months, the likes of Burberry, Prada, Jaeger-LeCoultre and domestic lifestyle brand THE BEAST have launched pop-up cafés in China or collaborated with domestic third-wave coffee upstarts like Seesaw or Manner.

With China’s coffee market projected to grow from around 381.7 billion yuan ($56.8 billion) in 2021 to 1 trillion yuan ($148.8 billion) by 2025, it’s perhaps no surprise even very unhip state-owned companies like China Post and Sinopec have opened their own coffee offshoots. The country’s coffee boom is even attracting the attention of sportswear brands like domestic Nike competitor Li Ning, which applied to register the trademark “Ning Coffee” earlier this month, presumably in preparation to roll out its own brand of coffee shops across its vast retail network.

luxury China COVID-19 sales 2022

LVMH, Hermès, and Kering Suffer From China’s COVID-19 Clampdown

The tables have turned from when China was leading luxury growth for high-end houses last year. Now, the reopened markets of the US and Europe are seeing plenty of revenge spending — and making the most of it. But fears over China’s Covid resurgence, as well as factors like Russia’s war against Ukraine and rising inflation, are spooking investors. 

LVMH

Global sales in the quarter ending March hit $19 billion (127 billion RMB), up 23 percent (comparable growth) for the French luxury conglomerate. But revenue would have been even higher if not for the negative impact in March of new COVID-19 restrictions in China.

This was manifested in LVMH’s Asia (excluding Japan) segment, where sales only managed an anemic performance: a single-digit rise of 8 percent. The year-on-year growth in the same quarter last year was 86 percent. Asia was the only region not to see double-digit gains in Q1: the US grew 26 percent; Japan 30 percent; and Europe 45 percent. The end result was that Asia’s share of LVMH’s sales dropped from 41 to 37 percent in the period.

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The flagship Hennessy cognac brand, a favorite in China, was down 18 percent on its global sales volumes: squeezed by supply and logistics constraints on the one hand (especially in the US) and multiple Chinese factors which, apart from COVID’s resurgence, included the unfavorable timing of Chinese New Year. Sephora too, while rebounding, was hit by reduced store traffic on the mainland. And travel retailer DFS is still counting the cost of missing Chinese consumers in its stores in Hong Kong and elsewhere in Asia, as well as in La Samaritaine in Paris.

LVMH’s overall improved financial performance sent its share price upwards after the results were revealed on April 12. However, since then it has tumbled. In the past month the stock is down 12 percent and year-to-date it has fallen 23.6 percent. 

Hermès 

The group’s first-quarter consolidated revenue reached $2.9 billion (19.5 billion RMB), up 27 percent at comparable exchange rates — with the most dynamic sales coming from the group’s own stores, especially in America and Europe (excluding France). Both markets over-performed the average with 44 percent growth. 

It was a different story in Asia (excluding Japan) where an underwhelming uplift of 20 percent was the result of a mix of factors that were not in the mix last year. Only Japan grew less at 17 percent. 

The company said it had benefited at the beginning of 2022 from “a very good Chinese New Year” and from “sustained activity, especially in Thailand, Singapore, and Australia.” But Hermès added in a statement: “Since mid-March, Greater China has been penalized by new health restrictions and some store closures, particularly in Shanghai and Shenyang.”

The brand’s stores in Pacific Place in Hong Kong and One Central in Macau reopened after renovation in January and February respectively, while a new store opened in Zhengzhou at the end of March, marking the first Hermès store in the province of Henan. In March, the company also held a “Hermès Fit” event in Bangkok, Thailand, highlighting fashion accessories themed around sport. It followed events in New York and Paris. 

Hermès opened its first store in Henan province at the end of March 2022. Photo: Hermès’ Weibo

Among Hermès’ product segments, the best growth came from watches — up 62 percent to $141.55 million (950.58 million RMB) — followed by the brand’s number two category of ready-to-wear and accessories (which includes belts, costume jewelry, gloves, hats, and shoes). It grew by 44 percent to $750.4 million (5 billion RMB), catching up to leather goods/saddlery’s $1.27 billion (2.3 trillion RMB) in the quarter.  

Hermès’ share price has been on a downward trend since its results announcement (on April 14) and may dip below the $1,000 (6,700 RMB) mark, something not seen since April 2021. In the past month the stock is down 19.5 percent and year-to-date it has fallen 32 percent.

Kering 

The owner of Bottega Veneta, Gucci, and Yves Saint Laurent opened the year with first quarter group revenue of $5.24 million (35.1 million RMB), up 21 percent on a comparable basis. However, the weakest growth for Kering came from its biggest money spinner — Gucci — at just 13 percent, contributing $2.75 billion (18.4 billion RMB) to the pot. 

YSL had the strongest quarter with growth of 37 percent to $780.6 million (5.2 billion RMB), though all Kering’s houses posted double-digit revenue growth. Other notable risers were Balenciaga, and Kering’s eyewear division.

Saint Laurent’s Chinese New Year 2022 collection featured a warm, earthy palette and tiger print. Photo: Saint Laurent’s Weibo

Kering said that Gucci’s performance was “solid” but admitted Asia Pacific was a more “mixed” picture due to Covid lockdown measures at the end of Q1, notably in mainland China. In fact, the region was flat and did not deliver any growth in Q1 — whereas Western Europe was up 75 percent and North America up 42 percent.  

CEO François-Henri Pinault commented in a statement: “Gucci’s strong showing in North America and Europe was overshadowed by its exposure to China, where we are boosting its organization to fully capture the vitality of the market. We opened 2022 on a very solid first quarter (but) in a more uncertain environment, notably impacted by tightening Covid restrictions in China since March.” 

Kering’s results (released April 21) were not well received, possibly due to Gucci’s slow pace. Since then the stock has fallen to below $528 (3,545 RMB) for the first time in about two years. Over the past month the shares have slipped by 16 percent and year-to date they are down 35 percent. 

NFT

How Viable is Instagram’s Latest NFT Initiative?

Following Twitter’s declaration earlier this year, Instagram is the next Web2 networking platform to announce that they will be implementing NFT display options into users’ feeds. Disclosed by Instagram Chief Adam Mosseri, the social media app will begin the initial testing phase of it’s long in-development NFT features, including the introduction of cryptocurrencies such as Ethereum, Solana, Flow, and Polygon, alongside allowing owners to connect their Rainbow, Trust Wallet, and MetaMask wallets to the application in order to verify NFT ownership. Creators and collectors will also be able to display their token’s on their main feeds, as well as in Instagram Stories and Direct Messages. 

The news comes as hype surrounding NFTs begins to wane, with the market experiencing a 92 percent decline in NFT sales since September, according to The Wall Street Journal. But this integration of Web2 and Web3 could make the transition into the metaverse more palatable for reluctant audiences, and once again set interest in NFTs upwards. 

Bridging the gap between the two virtual worlds could also herald the beginning of a wider, diversified Web3 community. But the announcement doesn’t come without its own implications. One of the biggest complexities surrounding the news is the fact that Instagram is a centralized platform, while the NFT market prides itself on being the complete opposite — something that Mosseri notes as possible “tension” during his announcement. How this will be navigated is something that will undoubtedly be scrutinized by audiences worldwide, as it seemingly undermines Web3’s foundational aspects of digital ownership and the appeal of a decentralized eco-system. 

Additionally, Instagram’s move also opens up the possibilities of increased security concerns. The NFT market has already fallen victim to a multitude of safety, trademarking, and theft entanglements — over the past year particularly — so how will this new avenue for NFTs fare? One way the platform is tackling the issue is through authentication features, such as a tick box which indicates that the token is verified. 

The Web2 platform’s move into the metaverse is likely to just be the start of their metaversal roadmap. Instagram’s next step could be to begin facilitating and trading NFTs via its application. With this in mind, many are left to question as to where exactly Web3’s purpose will stand if Web2 was to adopt one of the metaverse’s most integral — and unique — selling points.

Chow Tai Fook Mother's Day China

How Brands Celebrated Mother’s Day in China

Between the general hardships of raising children and being stuck in a seemingly never-ending lockdown, mothers in China deserve some extra love. And businesses are stepping up to spoil this demographic: in the days leading up to the second Sunday of May, JD.com found that products with the phrase “Mother’s Day” have increased at an average rate of 342 percent over the past three years.

One luxury brand cashing in on this growing opportunity was Lanvin. On May 8, the French fashion house collaborated with fashion KOL @Akiiiko to host a livestream on Xiaohongshu, featuring hundreds of products for its Spring/Summer 2022 collection. Within just 15 minutes, the livestream hit over $150,000 (1 million RMB), and many of the Mother’s Day exclusive releases sold out in half an hour. On Weibo, the brand also posted photos and videos of Chinese actresses Zhao Xiaotang and Zhang Jianing donning the new pieces with their own mothers.

Lanvin dressed Chinese actresses Zhao Xiaotang (left) and Zhang Jianing (right) in its Spring 2022 collection. Photo: Neufmode, Glass

But clothing isn’t the only category jumping in sales; in fact, many consumers are opting for more practical gifts. According to JD.com, the turnover of refrigerated dishes saw the biggest surge in 2022, up 1,292 percent month-on-month. Meanwhile, revenue of health service packages and nourishing health products increased by 87 percent and 45 percent, respectively, month-on-month.

Jewelry remains a favorite choice, with pearl accessories sales more than doubling month-on-month. In fact, whereas more than half of the products geared toward Mother’s Day in 2020 were clothing, jewelry gifts counted for 35 percent this year, fueled by China’s young consumers (ages 18 to 25).

Leveraging this trend, Chow Tai Fook took a more interactive approach to the holiday. In addition to the usual promotional posts on Weibo, the Hong Kong-based jeweler created a fun online quiz helping consumers define their relationship with their mother (asking questions like “What would your mother do if you hadn’t woken up by noon?” and “What would she do if you started dating?”)  and then recommending products based on the results. Since May 1, the brand has reported a 70 percent year-on-year increase in sales on the e-commerce site Vipshop.

Chow Tai Fook recommended gold and pearl products based on the type of relationship consumers have with their mother. Photo: Chow Tai Fook

Granted, Mother’s Day isn’t even the biggest shopping event in May, sandwiched between Labor Day and 520 Valentine’s Day. However, as China’s “she economy” and “silver economy” become increasingly important, so too does this opportunity for brands to hone both their women-focused messaging as well as their health and wellness initiatives. A mother’s love knows no bounds, and perhaps the brands that successfully tap this celebration will be shown a little extra love as well.

Jewelry Luk Fook

Luk Fook Wants to Be the Virtual Pioneer of China’s Jewelry Industry

What Happened: Luk Fook Holdings Limited, the Hong Kong based jewelry retailer, has spent the best part of this year planning its entry into the metaverse. On April 28, the brand announced the release of its upcoming inaugural three-part NFT collection. The group published its “Love ∞ Digital Wedding” tokens to customers on April 29, stating that buyers who spent $1,000 (6,666 RMB) on items from the company would be in with a chance of acquiring one of the NFTs, while 520 “Digital Bee” NFTs went live to the jeweler’s consumer base on May 4. The final component of the series is set to be released May 13, when 6,666 “1314 Carat Digital Diamond Ring” tokens will be available in a “meta-universe confess conference” (an online event hosted by the brand), running until May 31.

The Jing Take: Luk Fook’s comprehensive take on tokens marks the beginning of something. From now on, we’ll see more jewelry brands moving into the NFT sector — particularly within China. The luxury jewelry market’s revenue jumped in 2021 (after a 4.7% decline the year before) with purchases rising 35 percent as consumers continued to spend locally, according to Bain & Company. As sales continue to rise, brands should turn to the metaverse to maintain this growth in profit and attract new consumers. 

In March, Hong Kong’s T Mark diamond brand released its “Starry Sky” digital collection. A collaboration with digital collection service platform Amall.ART and AI artist Simon Meng, the drop used AI algorithms to generate NFT maps for the date selected by customers. Despite T Mark being the first jewelry brand in China to launch a digital collection featuring AI, customers were hesitant to invest. Some labeled the drop as a “scam” via the brand’s Weibo page, while others expressed confusion as to how to participate.

Luk Fook released the “Digital Bee” and “1314 Carat Digital Diamond Ring” NFTs ahead of China’s 520 holiday. Photo: Luk Fook

With China’s ambiguous restrictions on digital collectibles, consumers don’t need any more uncertainty in this area; something Luk Fook should keep in mind. Additionally, subjecting investment pieces to the volatility of the crypto market is a move that needs to be navigated with precision. As of today, it’s unclear as to what measures have been put in place to secure the value of Luk Fook’s tokens and ensure their authenticity. 

The (albeit slow) rise in luxury brands moving into the metaverse proves that, despite the mainland’s ongoing stringent restrictions on the trading of digital goods, China is cautiously optimistic about the NFT market. Consumers across the country continue to embrace the trend and its growing dominance over the luxury goods sector. While Luk Fook aims to position itself as a virtual pioneer in the luxury jewelry NFT industry, it must remember that user experience is just as valuable as the product itself. Particularly within a country where investing in the metaverse is precarious enough. 

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

soft power luxury Covid-19 China

How Luxury Can Navigate China’s Zero-Covid Policy

What’s a mindful way to navigate the sale of luxury goods when customers are struggling to get the most basic items? This is the dilemma now facing countless companies doing business in China. 

Compared to the first wave of pandemic lockdowns in 2020, China’s latest wave has impacted luxury’s more bankable higher-tier cities, like Shanghai and Beijing, and is much more stringent.

This time, even e-commerce has been affected due to the closure of warehouses and ongoing struggles with deliveries. Add to that, the majority of luxury brands — both domestic and international — are located in these main cities, which means not only consumers are affected, but also the companies themselves, rendering them with limited mobility and a host of other concerning issues. 

Naturally, this uncertainty around COVID-19 restrictions has been reflected in financial results: Kering Group listed China’s lockdown as a major negative factor during its April 21st earnings call. Among others, LVMH’s Asia segment (minus Japan) was also hit; sales only managed a single-digit rise of 8 percent. Meanwhile, Hermès admitted in a statement: “Since mid-March, Greater China has been penalized by new health restrictions and some store closures, particularly in Shanghai and Shenyang.” 

Therefore, as Kering said, even though China’s fundamentals are good, these lockdowns are making life “extremely difficult.” Given this, Jing Daily offers four soft power approaches for luxury to aid China during this difficult time. 

Donating

The first is, of course, the most obvious: pledging to causes in China as a way of generating goodwill. So far, few international brands have offered support in this way apart from Uniqlo, which gifted items of clothing to healthcare workers at various hospitals, and Pepsi, which has also donated products and encouraged employees to help in their communities. 

Ashley Galina Dudarenok, Founder of ChoZan (超赞), says that aside from financial support, brands can offer rapid testing kits, discounts on selected items or services, or “anything that can make life a little easier on citizens. Being ‘human’ is important for luxury brands, like never before.” Here, local companies have taken the lead: Ele.me, Hema Fresh, and Cainiao sent 3,000 frontline workers to aid in the lockdown. 

Popular bubble tea chain HeyTea and the Shenzhen government collaborated to increase the uptake in COVID-19 testing. Together they launched a co-operative testing point under the theme “Safe and Happy” which has received positive reactions from residents and netizens alike. Meanwhile, the Chaoyun Group’s pet food brand, Stubborn Mouth, donated pet food and supplies to stray animals in Shanghai — a recent pain point for residents. 

HeyTea worked with the Shenzhen government to support COVID-19 testing. Photo: HeyTea’s Weibo

Showing Compassion 

According to Dudarenok, and other analysts, empathy and compassion is paramount to navigating this stage. “Not only does it showcase your brand in a much more positive light, but it is just the best thing any brand can offer in these times,” she continued. 

This can be shown not only through physical goods but also through non-purchase related ways, such as via communication. Customer services, social media posts, and employee care can all be more considerate at this time. 

It’s not always plain sailing though: some luxury names have been gifting elaborate food packages to their top clients as a way of showing empathy. However, Chloe Reuter from agency Gusto Luxe said to tread with caution here. “Images of the packages have been posted online, and this backfired as some clients who had not received them actively complained.” 

Recommended ReadingWhat the Shanghai Lockdown Means for LuxuryBy Glyn Atwal
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Adjusting your message

When people are concerned with ensuring they have the very basic necessities, it’s key for companies to err on the side of caution and not push too commercial of a message. “Brands must understand what is the key priority for their consumers, and be able to adapt their communications accordingly. Previously, we’ve seen brands offering concerts through social media, and exercise classes,” Reuter added.

In April, Fendi launched a series of courses that invited professional trainers from different fields, including sound meditation, exercise (pilates, Zumba and Yoga) and cookery (homemade Risotto) for clients. Prada launched an online club “Prada April List” on WeChat and Xiaohongshu. The company also invited four film directors, three singers, and three writers to recommend the top three picks in their respective fields. The membership-free online culture club serves as a form of support system for fans who appreciate the house’s alignment with high art and values. 

Luxury

Fendi launched a series of online courses during the pandemic, including meditation and Pilates. Photo: Fendi

Tapping the metaverse and livestreaming 

Luxury is also being hit by a lack of new, first-time, customers. According to Antonello Germano, China Luxury Market Analyst at Daxue Consulting, this climate has resulted in a “slowdown of entry-level luxury consumers in China.” Considering that first-time consumers in 2021 accounted for about 50 percent of the overall luxury shoppers in China, luxury brands need to connect with potential customers and persuade them that buying luxury is still a good proposition. 

“The metaverse and NFTs can be powerful tools for gaining visibility and catching Chinese Gen-Z’s attention,” Germano suggests, especially as citizens now have plenty of available screen time. Here too, local efforts have been interesting: In lieu of being postponed again, Shanghai Fashion Week collaborated with Xiaohongshu to create “digital collectibles” with nine designers including Masha Ma and zi ii ci ien. Shanghai duo Staffonly held an auction for their own NFTs through a bespoke virtual currency called “LikeCoin,” which received hundreds of bids. They told Jing Daily that winners used the NFTs as virtual avatars during lockdown. 

Shanghai Fashion Week collaborated with Xiaohongshu to release a total of 3,000 digital fashion items by nine designers. Photo: Xiaohongshu

Finally, livestreamer Liu Genghong has unexpectedly grown his Douyin following to 53.8million, as his popularity skyrocketed due to unprecedented interest in his workout sessions. Lui and his wife, who also appears in his broadcasts, have just teamed up with shrewd sportswear company Fila — the first international sponsorship to nab the pair since the couple tapped the growing craze. 

During this challenging time, brands need to be reactive to what’s happening on the ground in China — like Fila and Fendi — but also play the long game — like Prada. Navigating this difficult time properly should be of the utmost importance for luxury brands, helping them set up for future success post-COVID-19 — and beyond. 

Net-A-Porter

Net-a-Porter Taps Supermodel Liu Wen to Woo China

What Happened: On May 4, Net-a-Porter, the luxury e-commerce platform, announced that Chinese supermodel Liu Wen, who enjoys 26.1 million followers on Weibo and works with the likes of Chanel, Gucci, and Tods, is now its China ambassador. In an interview with Jing Daily, Net-a-Porter said: “Liu Wen perfectly fits with Net-a-Porter’s ethos. And the collaboration is a demonstration of Net-a-Porter’s commitment to representing the power of women’s diversity.” 

At the same time, the site unveiled its new Chinese name, “Po Te” (“颇特”) — individually the characters mean “plenty” and “special.” Net-a-Porter also partnered with Tmall Digital Collectibles to launch its “Infinite New Possibility” Net-a-Porter galaxy project. The initiative allows 6,000 participants to creatively build their own Net-a-Porter galaxy NFTs; already invited are Liu Wen, as well as four homegrown designers Samuel Gui Yang, Windowsen, Rui, and Shushu/Tong.

Net-a-Porter’s new China ambassador, Liu Wen, formerly a Victoria’s Secret Angel. Photo: Net-A-Porter’s Weibo

The Jing Take: Here, Net-a-Porter is banking on an undisputed star. As a globally renowned supermodel and style icon, the former Victoria’s Secret Angel has established a solid reputation in China’s upscale fashion market. Her looks are often copied by local shoppers and quickly sell out in stores. She could also provide targeted traffic to Net-a-Porter from well-off fashionistas not afraid of trying new designer brands.

As data shows that the traditional, offline-based luxury retail landscape may drastically change over the next few years, Net-a-Porter will need all the help it can get. Last month, the 2021 China Luxury Digital Report released by Yaok Research Institute pointed out that in 2022 online sales are forecasted to exceed $34.6 billion (220 billion RMB), meaning that they will account for more than 30 percent of the total luxury goods sales in China. 

Undoubtedly, opportunities will increase for digital players like Net-a-Porter, but so will competition. From Farfetch to SSENSE, which has been present in the mainland market for over half a decade, and LUISAVIAROMA, with more than a decade of experience in the country, the three-year-old Net-a-Porter is still a relative novice in China. 

As such, moving into the metaverse could be another stealth move. As the first international luxury e-commerce to pioneer the nascent space of China’s metaverse, it has the advantage to be the first to capitalize on local Web3-native consumers and turn them into a loyal clientele. The move will undoubtedly open up a new era for multi brand e-retailers and unlock fresh collaboration modalities with brands — further reshaping the retail game. 

If well-executed, Net-a-Porter could carve out a slice of China’s $8 trillion Web3 market for itself and finally reach profitability. Given this, Net-a-Porter would be smart to run with this opportunity before other rivals join this potential lucrative space. 

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Color

4 Lessons in Color for Luxury and China

Colors are a key mechanism in luxury fashion’s trend engine. Take yourself back to circa 2017, when the dusty rose shade of Millennial Pink covered tracksuits, tailoring, and everything in-between. Designers couldn’t get enough of the romance, with the likes of Helmut Lang, Moschino, Gucci, Fendi, and more bringing out collections dotted with that same blushed hue. 

Pantone might have birthed the Millennial Pink hype by naming Rose Quartz its Color of the Year for 2016, but the prediction could have been made much earlier. The proof is in trend forecasting agency WGSN and color system Coloro’s latest Key Colors Forecast, which details the trending shades for 2024. 

This takes the form of a collaborative digital experience, “A Window to the Future of Color,” where you become immersed in the upcoming tones-to-watch. It’s not only an insight into which colors we’re going to see more of, but an expression of the moods of consumers — and their resultant shopping habits.

As we bid farewell to 2021’s Gen Z Green and 2017’s Millennial Pink, below are four lessons in color, luxury, and China from WGSN and Coloro.

1. Colors are a mood

“When selected and applied with care, color offers us agency over human mood, behavior, and interaction,” explained Coloro’s Head of Content Joanne Thomas. “It ties into what we have seen recently with the boom in ‘dopamine dressing’ and hedonistic brights. Consumers want to feel optimistic and hopeful, and exude their personality again after periods of uncertainty and restriction.”

Ultimately, bright hues are doing so well right now because they actually release dopamine when viewed or worn, explained Thomas. A contrast to 2020, when beige and gray tones performed best — as they offered comfort, reassurance, and safety during a difficult time.

2. Uncertainty, virtual reality, and relaxation

Thomas said that this season’s colors portray how humanity has attempted to realign since then. “Uncertainty will remain a dominant force due to ongoing economic, political, and environmental crises, but consumers will be seeking ways to balance their uneasiness with optimism.”

Alongside this, the metaverse will continue to influence color choices, with the spectrum of shades available broadening. “This will accelerate the popularity of clean, bright, and chromatic colors,” said Thomas, adding that there will also be a contrast of foundational mid-tones and neutrals, due to people pursuing rest and balance. Perhaps Millennial Pink is about to have its comeback too, as the color expert hints at “soft-tinted pastels and playful, warm brights” which reflect The Caring Economy.

3. A Pink, Red, and Green 2024 For China

The key colors of Radiant Red, Elemental Blue, Nutshell, Cyber Lime, and Fondant Pink are all expected to be popular in the mainland for 2024. As WGSN’s Head of Color Jenny Clark highlighted, “Red has a strong cultural connection [to China] and this lighter, sweeter shade is a fresher take on this traditional hue.” She added that Fondant Pink is predicted to appeal to young Chinese consumers also.

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These five colors are expected to be popular in China in 2024 (swipe left). Photo: WGSN

Cyber Lime, on the other hand, will be popular for its connection to wholesome and nourishing food, like fresh vegetables and rice. Clark said, “We have already seen this color coming through in fashion and street style, and we expect it to grow and be used for technology and digital environments.” 

For Chinese shoppers in particular, the brightest colors of the Key Colors of 2024 are expected to perform best due to their optimistic nature. “Radiant Red and Cyber Lime give a positive feeling and good energy which will feel attractive post-pandemic,” explained Clark.

4. China’s Gen Z and Vibrant Virtual Realities

“All markets love brights, but we are noticing consumers in China — especially the youth — embracing color with confidence,” Clark said, discussing how digital-friendly tones are going to become increasingly significant in fashion and beyond. “This connects directly to Chinese Gen Z’s enthusiasm for technology and the Metaverse.”

Being the first-ever netizens, or digital natives, Gen Z’s shopping habits are of course going to be dominated by virtual realities. Color is no exception.

For more analysis on the latest collaborations, sign up for the Collabs and Drops newsletter here.

Gucci crypto

Gucci Puts Other Luxury Brands on Notice by Accepting Crypto

One of the best predictors of future success or failure of a luxury brand is the ability to innovate, influence, and inspire. Brands that set the tone, that disrupt, and that gain cultural influence through relevant actions that resonate with their target audiences typically grow disproportionately. Brands that just follow trends are typically those that decline. 

Since the arrival of Marco Bizzarri and Alessandro Michele at the helm of Gucci, the brand has repeatedly raised the bar and challenged conventions. It is now one of the most influential brands in the luxury space, leading to a spectacular business performance in recent years and making it one of the world’s most appealing luxury brands among Gen Z, outperforming almost all peers in that critical customer group. 

Gen Zers are already today the most influential luxury customers and by 2030 they will also be the number one customer group in terms of luxury spending. Therefore, it is critical for luxury brands to be seen as leader of the pack by this extremely critical audience. 

Gucci has a track record. It was the first major luxury brand to ban fur years ago. At that time, the move was seen as very controversial by its competitors, given that many brands had a high exposure to fur. And while, according to personal shoppers of affluent luxury customers, some traditionalist customers simply switched from Gucci to other brands that were still offering fur, the brand made a much more important point. That it puts sustainability before short-term results — and this resonates with Gen Z and millennials. This move, and others that followed at rapid pace, made Gucci overnight one of the leaders in sustainable luxury. 

Other firsts were the introduction of a gender-fluid line, Gucci MX, and the Hacker Project with Balenciaga. It was a disruptive initiative where each of both brands reimagined the other’s icons. In music, Gucci embraced K-Pop much faster than most other luxury brands, making Exo’s Kai the new face of the brand, now dubbed the Human Gucci. The recent Love Parade collection included sex toys, again a first for a luxury brand. 

Gucci brand storytelling

Alessandro Michele’s Spring/Summer 2022 collection featured sex toy jewelry. Photo: Gucci

The Italian brand also was among the first and most influential movers in the luxury metaverse, which is rapidly evolving into the new playground for luxury brands. Gucci was the first luxury brand to release an NFT in the form of an art film, which was sold for $25,000 (166,650 RMB). Two subsequent NFT collections, SuperGucci and Gucci Grail, became instant hits, and Gucci just announced on its Gucci Vault Discord server that the owners of these collections have the exclusive right to pre-order a new collection prior to its public release. Additionally, Gucci started to develop real estate on the blockchain-based platform The Sandbox. While others wait and see, Gucci acts rapidly. 

For the Gucci Grail project, Gucci customized 11 PFP (“Picture For Proof”) NFTs with looks inspired by collections from Alessandro Michele. Photo: Gucci

Now Gucci is making a significant new move in accepting crypto payments in North American stores. Accepted coins include Bitcoin, Bitcoin Cash, Ethereum, Wrapped Bitcoin, Shiba Inu, Dogecoin, and Litecoin, among others. This is particularly clever given the extraordinarily high adoption of crypto among Gen Z. 

In recent qualitative focus groups by Équité, there was a directional indication that the diffusion of crypto among Gen Z luxury customers is significantly higher than among Gen Xers and beyond. Therefore, leading in crypto in luxury will further solidify Gucci’s influence among Gen Z.

An aspect of crypto that is often overlooked is that owners often see crypto as something different compared to established currencies. In the focus groups, mentions like “crypto feels like a computer game,” “it does not feel like money,” “the fast fluctuation of value makes it practically impossible to understand the true value of a coin,” and “it’s like a chip in a casino” indicate that traditional pricing anchors through reference prices don’t exist here or are much more muted. This means that crypto may lead to a much higher willingness to pay compared to traditional currencies, making it enticing for the luxury sector.

Gucci’s moves show that it pays to constantly push the envelope and play to win. It creates extreme value, increases the brand’s desirability, and makes it culturally one of the power players. Other brands: take notice before it’s too late. Catching up will not be sufficient to be influential and inspiring. It requires determination to make bold moves first. The future of luxury is unfolding in plain sight. 

This is an op-ed article that reflects the views of the author and does not necessarily represent the views of Jing Daily.

Named one of the “Global Top Five Luxury Key Opinion Leaders to Watch,” Daniel Langer is the CEO of the luxury, lifestyle and consumer brand strategy firm Équité, and the executive professor of luxury strategy and pricing at Pepperdine University in Malibu, California. He consults many of the leading luxury brands in the world, is the author of several best-selling luxury management books, a global keynote speaker, and holds luxury masterclasses on the future of luxury, disruption, and the luxury metaverse in Europe, the USA, and Asia. Follow @drlanger

Li Jiaqi MCN multi-channel network

4 MCNs You Need to Know in China

Livestreamer Li Jiaqi, known as China’s “lipstick king,” once sold 230 Bottega Veneta bags in a minute. With the items selling at $1,931 (12,300 RMB), the achievement was nothing less than shocking. Now, of course, he’s a household name who is drafted in to sell any number or range of products — from any sector.

But behind the scenes of all this was Mei One, the MCN company responsible for Li’s dramatic influence. The studio and talent agency helped Li gain 44.76 million followers by consistently producing attractive short video scripts for Douyin, managed by a production team in charge of setting, content, and products. Li owes his reputation and extraordinary sales performance at least in part to them.

So what exactly are MCNs? The term MCN, or multi-channel network, was first coined by YouTube and is now widely used in the mainland. They manage the activities of KOLs not just on short video platforms such as Douyin, but also across a wide range of avenues that include social media and e-commerce. They are particularly good at social media and navigating various online platforms’ constantly evolving features and algorithms.

Acting like agents, these companies may sign contracts with multiple KOLs. But they primarily work with two kinds: established influencers with large followings, and ordinary netizens with potential.

According to the world’s leading consulting agency, iiMediaResearch, there were more than 30,000 MCN institutions in China in 2021, a number expected soon to exceed 40,000. Last year, 74.5 percent of buyers purchased commodities through a short video or live broadcast platform. And the analysis firm EMarketer forecasts that the total global spending on influencers by brands will reach $16 billion (106 billion RMB) in 2022.

So should global luxury groups collaborate with MCNs? They are now so popular that it can be difficult to work with KOLs without them. The most significant advantage of the agent is that it always knows what content can draw followers’ attention and make them purchase. Each company has influencers in different fields, such as home, fashion, beauty, and clothing. When a marketer provides specific requirements to MCNs, they can match them with suitable KOLs. This makes these entities direct conduits to consumers (especially millennials and Gen Z), a serious business indeed.

Here, Jing Daily analyzes four of the more well-known MCNs.

Dayu Media

With KOLs like The Little Monk Yi Chan (left) and 仙姆SamChak (right), Dayu Media covers both ACG and beauty. Photo: Weibo

Dayu Media is one of China’s largest MCN organizations and supplies content to more than 600 million users. Currently, Dayu is certified by Tencent as one of the top developers, and is continuously ranked in the top three on lists of new media platforms like Weibo, Tencent, and Douyin. Besides this, the firm is one of Weibo’s four strategic partners in video production.

Location: Suzhou, Jiangsu Province

Founded in: 2011

Featured Talents: The Little Monk Yi Chan (一禅小和尚) (47 million Douyin followers) and 仙姆SamChak (13.47 million Douyin followers)

Platforms: Douyin, Kuaishou, and Weibo

Services offered: Livestreaming, marketing campaigns, media promotion

Competitive advantages: Dayu Media has various IPs which give partners a range of options, including virtual influencers like The Little Monk Yi Chan, who has more than 47 million fans on Douyin.

The bottom line: Covering ACG (anime, comics, games) culture, makeup, and games gives them a very broad scope, and their original comics and cartoons are extremely popular with the young. A safe bet to secure appealing content and quick sales.

Mei One

Li Jiaqi, Mei One’s biggest KOL, has helped C-beauty brand Florasis generate more sales. Photo: Li Jiaqi’s Weibo

In 2015, Mei One became the first MCN to propose incubating BAs (beauty advisors) into livestream retail talents. It has also built an empire of e-commerce systems on Taobao and has hundreds of influencers on platforms such as Weibo and Douyin. The company has successfully raised numerous IPs such as “Li Jiaqi livestream” and “Naiva Family.”

Based in: Shanghai

Founded in: 2014

Featured Talents: Li Jiaqi (44.65 million Douyin followers, 30.37 million Weibo followers)

Platforms: Weibo, Douyin, and Kuaishou

Services offered: Livestreaming, marketing campaigns, media promotion

Competitive advantages: Their most significant asset is Li Jiaqi, who has a remarkable influence on beauty and fashion. Take the success of domestic beauty brand Florasis, for example. According to media statistics, the Li effect helped Florasis rake in $460 million (3 billion RMB), an increase of 165.4 percent from last year’s $170 million (1.13 billion RMB).

The Bottom line: Mei One is among the largest of the Chinese livestreaming operators. Although the firm has other KOLs, it is Li Jiaqi — the first bona fide smash hit in the local industry — who generates its core resources.

Papitube

Papi酱 is a Chinese comedian known for her vlogs, where she pokes fun at everyday topics such as dating and family relationships. Photo: Papi酱’s Weibo

Papitube is a short video MCN platform established by the well-known short video bloggers Papi Jiang (or Papi酱) and Yang Ming, founder of Papitube’s parent company Mountaintop. The business’ specialty is scouting and incubating video bloggers for brand promotion. It has signed contracts with more than 100 creators, including @Bigger研究所 and @网不红萌叔Joey, across topics such as food, beauty, pets, fashion, and lifestyle. The number of fans on the network exceeds 500 million.

Based in: Beijing

Founded in: 2016

Featured Talents: Papi酱 (31.906 million Weibo followers, 32.08 million Douyin followers) and网不红萌叔Joey (3.2 million Weibo followers, 17.324 million Douyin followers)

Platforms: Weibo, Douyin, Bilibili, Zhihu, and Xiaohongshu

Services offered: Marketing campaigns, media promotion

Competitive advantages: Mountaintop, the parent company of Papitube, has various resources in film and television meaning the platform has the unique ability to turn KOLs into real stars. Its most popular KOL, Papi酱, participated in The Exciting Offer reality show in 2019 and played the heroine in 2021’s movie Tomorrow Will Be Fine.

The bottom line: The firm provides a highly-qualified content spectrum from a matrix of often humorous KOLs. It concentrates on supporting clients to broaden their business, increase brand awareness with compelling content, and boost sales in China.

Hive Media

Hive Media has signed over 1000 KOLs, including 陶白白Sensei (left) and 零食少女 (right). Photo: Weibo

Winners of the “Media Agency of the Year” award for five consecutive years, Hive Media has multiple critical IPs in many areas. Its strength lies in having exclusively signed up around 1000+ high-quality KOLs, giving its content great variety and authenticity.

Based in: Shenzhen

Founded in: 2014

Featured Talents: 陶白白Sensei (17.49 million Weibo followers, 23.52 million Douyin followers) and 零食少女 (10.23 million Weibo followers)

Platforms: Weibo, WeChat, Douyin, and Bilibili

Services offered: Video production, livestreaming, marketing campaigns, media promotion

Competitive advantages: Hive exerts a powerful influence on Weibo and offers brands a way to save valuable time with its broad talent reach. It can enact collaborations by quickly sourcing KOLs to woo consumers across an impressive variety of industries. In March, it had 25 bloggers on Weibo’s hot search list and an aggregate of 1.514 billion followers on this platform.

The bottom line: With its sophisticated use of new media and the ability to promote self-media talent, the company has become a critical player in the market.

 

Prada Beast glamping China

Glamping Swept China’s Social Media This Labor Day Holiday

What Happened: Short trips and staycations were how Chinese spent their Labor Day holiday this year, amid COVID-19 control measures and ongoing domestic travel restrictions. Of these, “glamping” (glamorous camping) came out on top. According to travel booking site Qunar, ticket sales for parks that allow campsites increased by over 50 percent compared with the same period last year. Ctrip data also shows that on the first day of the holiday, its online traffic for “camping” reached a historic peak and the search volume increased by 90 percent from the week before.

The Jing Take: Glamping has become one of the hippest trends among young Chinese travelers since COVID-19 hit the country in 2020. Distinct from its perception as a niche experience favored by outdoor enthusiasts, the high-end outdoor activity has now hooked a broader consumer demographic. Aside from the experience of nature (and the draw this represents for those in urban centers), its connotations of glamor and luxury translate well to social media: on Xiaohongshu, there are over three million campaign-related UGC posts, from snapshots of gear to the adventure itself. 

This booming trend has projected a promising future for the outdoor equipment and apparel market. As Daxue Consulting forecasted, the sector is expected to reach $100 billion (666.8 billion RMB) by 2025. 

Luxury houses have been quick to tap this opportunity. Last year, Prada unveiled its Outdoor Collection, a special ready-to-wear range inspired by the great outdoors. And local players like the lifestyle brand Beast launched Spring 2022’s “Inspired by Camping,” with gear like mats, night lights, and portable cookware, as well as fragrance gift boxes. 

Prada Outdoor encourages consumers to spend more time in nature. Photo: Prada’s Weibo

Glamping shows no sign of going anywhere. The challenge for luxury companies is not whether to engage — that’s a given — but what to offer. As the market saturates with more of the same traditional gear, there is money to be made for a label that can think creatively.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

ByteDance Douyin e-commerce luxury guide

Navigating Douyin — A Guide For Luxury

The entry of new players has reshuffled China’s competitive e-commerce landscape. Bytedance’s short-video platform Douyin, which boasts 600 million daily active users, is one of these rising stars. Despite launching its e-marketplace as recently as June 2020, the mainland’s TikTok has already consolidated its position in the industry: it now ranks among the top five e-commerce apps with the largest market shares.

But the short-video platform is relatively small in terms of reputation compared to the two top players, Alibaba’s Taobao and JD.com, which account for 70 percent of the total online transactions. What’s so exciting about Douyin is how it offers a new consumer journey that is transforming the e-tail game altogether.  

“The social commerce app drives sales through an ‘interest e-commerce’ model, where users are attracted by the content and product seeding created by the KOLs of the platform, and then they make the purchase there,” said Franklin Chu, US Managing Director of Azoya. As such, the app closes the loop from interest to final transactions. With traditional online marketplaces, shoppers only search for the products they would like to buy; the interest is generated elsewhere (perhaps on Douyin).

Bytedance is now showing greater ambition in the e-commerce space. In March, Douyin announced the launch of Douyin Global Choice, a cross-border e-marketplace, posing a direct threat to Alibaba’s Tmall Global. More recently, the short-video app began testing a new homepage layout, which replaced the former “Friends” button in the navigation bar with the “Mall” function. Such a move signals the direction of travel: towards a greater emphasis on the marketplace. 

Luxury names such as Louis Vuitton, Gucci, and Dior are all on Douyin, and it has the potential to gain many more. Given China’s ongoing lockdown, it could well be the right time for maisons to leverage the app’s e-commerce features to reach consumers kept at home. 

Below, Jing Daily presents an analysis of exactly what Douyin offers to help luxury brands decide what is right for them.

Douyin Livestream 

Coach regularly hosts livestreams, sometimes more than 40 per month. Photo: Screenshots

Launched in December 2017, Douyin Livestream is one of the platform’s most popular features. Widely enjoyed by young consumers, the app’s live broadcast has a low entry barrier: users with a verified identity, over 1,000 followers, and who have published at least 10 posts are able to sell products through livestreaming by paying a $75 (500 RMB) deposit fee. 

However, since October 2020 the service no longer supports external product links (such as Taobao or JD.com) which were once facilitated on the platform. As Douyin seeks to affirm its own marketplace, the move means brands have to make items available on the app itself.

Although only a few luxury maisons have leveraged the tool, those bold enough to do so have achieved remarkable success. Take Coach, for example, which hosts many livestream events each month. In one of these, featuring actress Qi Wei, it only took six hours for its collaboration capsule with streetwear label BAPE to sell out. Similarly, Korean premium skincare company The History of Whoo reached $45.5 million (300 million RMB) in 10 hours thanks to a promotion from a top KOL.

Live broadcasts are a great opportunity to reach and entertain locked-down consumers. Jack Porteous, client services director at the cross-border e-commerce group Samarkand Global, explained: “A livestream can be an incredibly personal as well as a commercial forum. A creator has an audience wanting to understand why this brand and this product will enhance their life.” In this way, it offers firms the chance to develop close, lasting relationships with shoppers. Yet, as with all livestreaming in China, Porteous warns of the challenge of picking the right collaborators and “not compromising” on pricing or values for a quick sale. 

Douyin VIP Room 

Gucci, Cartier, and Louis Vuitton are among the luxury brands that use Douyin’s VIP Room feature. Photo: Screenshots

The Douyin VIP Room is an additional zone on the accounts’ homepage, where brands can categorize their content and include external links. In this area, luxury labels are authorized to direct their short-video traffic elsewhere — to their official website or Tmall flagship store — so consumers can make purchases via familiar methods. 

With many high-end brands still reluctant to join Douyin’s sales channels, Chu, the US managing director at Azoya, believes that this function can help.“Douyin VIP Room provides a great gateway for heritage houses to convert traffic generated on the platform to sales, driving them to their own flagship store,” Chu commented. 

Louis Vuitton has realized this. It leveraged the Douyin VIP Room to create an archive for its runway livestreams. Gucci and Cartier, meanwhile, have taken a step further: the former embedded its official mainland website links in the VIP Room, enabling customers to browse its products; the latter uses the space to direct traffic to its Tmall flagship store.

Chu advises businesses to develop their VIP Room section by making it specific to their purpose. “It’s an extra feature for luxury houses to flexibly engage customers, including runway shows, links to flagship stores, official websites, new collections, limited-edition items, etc.” That said, the space doesn’t have great visibility. To fully take advantage of it, brands need to actively drive virtual footfall: for instance, by announcing exclusive news and capsule releases.

Douyin Flagship Store 

The flagship stores of Perfect Diary, Coach, and The History of Whoo. Photo: Screenshots

Douyin Flagship Store represents another attempt to close the loop of social commerce. Introduced in March 2021, the feature includes campaign banners, brand recommendations, vouchers, product recommendations, and offline information. Consumers can make purchases directly on the platform through the verified retailer without leaving the site. At least 220 labels have joined the Douyin Flagship Store since its launch: Coach, Huawei, and Perfect Diary, to name but a few.

Strict requirements guarantee the authenticity of products and flagship stores. Only companies established for more than one year, and with registered capital of more than $152,000 (1,000,000 RMB) can qualify. They must submit business licenses and trademarks — not to mention a refundable deposit fee of $15,200-45,000 (100,000-300,000 RMB). Such stipulations indicate that the service is targeting mature enterprises over niche brands wishing to test the waters.

However, to attract more high-end labels to join the platform, Douyin needs to upscale its offerings. Anaïs Bournonville, head of the luxury division at Gentlemen Marketing Agency, revealed, “the average basket purchased on Douyin is very low, around $30, and mainly concerns cosmetics products. Chinese buyers on the app are more interested in viral and low-priced products, as they want to make fast decisions. For a more complete and luxurious experience they prefer Tmall and JD.com” 

Jing Daily noted that Prada has opened a Douyin Flagship Store but hasn’t made its products available on the online boutique yet. This shows that while high-end houses are tempted by Douyin’s 600 million active users, they are still worried about the risk of diluting their image. 

Douyin Global Choice

Douyin Global Choice is one of the most recent of Bytedance’s experiments in ways of taking on Alibaba. Similar to Tmall Global, the new service is also a cross-border marketplace that permits brands without local business licenses to sell goods in (and ship to) China. 

Still in its testing phase, the feature is by invitation only and details are vague. The regulations of the service are yet unclear, but deposit fees are expected. It will take time and liquidity for Douyin to build Alibaba-like supply chain capabilities, procurement centers, and bonded warehouses. 

In the future, though, it could be a gateway for niche outfits to make their first attempts at the mainland market. Porteous confirmed that “it’s a great starting place for beauty labels because it bypasses the more complex import registration requirements.” He also added that other categories which are traditionally strong in cross-border sales are fashion accessories. 

As it develops, this is one for luxury to keep an eye on. 

New horizons for luxury leveraging Douyin

China’s zero-COVID policy is weighing on the financial performance of luxury conglomerates. Recently, during the release of their first-quarter results, Prada revealed it shut down over 50 percent of its local stores in the past fifteen days, Kering missed its Q1 estimates, and LVMH warned about the short-term impact of the country’s Covid outbreak.

Yet, according to Yaok Research Institute, the Chinese luxury goods market will continue to grow by 15-19 percent in 2022 despite the current omicron struggles. Online sales will contribute to more than half of this increase and are forecasted to exceed $34.6 billion (220 billion RMB). The data seems to point to online being a safe harbor in a challenging year. In light of this, having a presence on different and newer platforms, such as Douyin, may help brands garner further traffic and sales. 

As Jing Daily previously reported, the short-video app is launching its own community: Pheagee. This involves both virtual fashion and idols, as well as links to the group’s e-commerce platform. The ultra-competitive nature of the e-market makes this a compelling prospect. Indeed, many such as Bournonville believe that virtual idols are the next frontier for luxury, especially as Bytedance pushes further into the field of extended reality. The tech giant has been busy: acquiring Chinese VR startup Pico in August 2021 and investing in virtual characters A-Soul and Li Weike more recently.

Hyper-futuristic tactics such as these shouldn’t be surprising. Of course, closing the loop between interest and final sale means an increasing number of consumers will complete their purchase directly on platforms such as Xioahongshu and Douyin. This will be a prime battleground in the future of luxury. But perhaps as important is Porteous’ insight that, with the profile of luxury consumers in China skewing much younger than other global markets, “being active on Douyin is a question of staying relevant today.”

Do Chinese Consumers Want Hyper-Luxury or Hyped Luxury?

The following is an excerpt from Jing Daily’s insight report “The Drop: Understanding Successful Brand Collaborations.” Packed with 45 pages of market research, spotlight interviews with industry insiders and brand executives, and revenue-generating consumer insights, the report is a must-read for anyone interested in understanding how expertly planned drops can drive sales in the critical Chinese market. Get your copy today on our Reports page.

When and where consumers have access to collaborations is critical. While both factors contribute to a drop’s level of exclusivity, the former allows brands to control the pre-release anticipation, and the latter refers to its accessibility. Offering early or first access to upcoming co-branded products can drive up conversations surrounding their release, once such access is revealed. If a brand’s chosen partner is an artist, their fan base makes them the initial source for such hype; they can utilize the fame of their family and friends to drive engagement surrounding a collaboration months, or even years prior to its launch.

Labels adopt a variety of early access tactics. In China and the West, it is common for beauty brands to grant first access to key opinion leaders (KOLs), allowing them to review and demonstrate the product before it goes on sale. For instance, Estée Lauder gave several Chinese beauty KOLs early access to the Estée Lauder x SHUSHU/TONG limited beauty gift boxes for 2021’s Qixi Festival — China’s traditional Valentine’s Day. On local social media platforms such as Weibo, the KOLs posted pictures of themselves using the makeup and praised the collaboration for its quality and originality. One beauty influencer with almost 3.7 million followers even produced her own 90 second-long promotional video to promote the collaboration, receiving more than 25,000 likes. The same strategy was adopted by the Bobbi Brown x Monopoly collaboration released in fall 2021, in which KOLs created over 75 percent of the original promotional content on Weibo.

Top luxury brands rely far less heavily on private influencers to generate consumer anticipation in China. Instead, they typically grant early access to brand partners or celebrities. For their collaboration, Gucci and The North Face released photos of various Chinese celebrities (many of whom were the former’s brand partners), wearing outfits several days before the collaboration was launched in China (on December 29, 2020, the earliest worldwide). Another Louis Vuitton tie-up, this time with Supreme, was boosted by Chinese idol Lu Han, who acquired a highly sought-after collaboration hoodie before its official drop in China on June 30, 2017. One day before, Lu posted pictures of himself wearing the hoodie on Weibo, which received more than 1.8 million likes.

Beauty and luxury brands use a wide range of first-access strategies as a result of commanding different levels of cultural capital. Beauty brands are relatively prolific in introducing new offerings and conducting cross-brand collaborations, and thus make more of an effort to distinguish their products. The beauty market in China in particular sees fiercer competition than the country’s luxury market, given the simultaneous presence of Chinese, Korean, Japanese, and Western beauty companies. Therefore, beauty influencers play a critical role in explaining and demonstrating the uniqueness of products in detail.

While individually, beauty KOLs have much fewer social media followers than celebrities, in aggregate they are crucial to persuade their followers, who are the targeted consumers of beauty names, to purchase products. In contrast, renowned luxury fashion houses like Louis Vuitton and Gucci command much higher cultural capital, so their collaborations require more hype-assistance to build virality, instead of needing to convince potential customers to purchase. Thus, images of pop idols wearing yet-to-be-released collaborations generally suffice for promotion.

Get your copy of “The Drop: Understanding Successful Brand Collaborations” on our Reports page.

Lululemon fined substandard products

Furious Chinese Netizens Are Boycotting Lululemon

What Happened: On May 5, the Hermès of yoga wear, Lululemon, topped Weibo’s Hot Search List — but for all the wrong reasons. The Canadian fitness brand was fined more than $12,000 (81,000 RMB) and confiscated $3,500 (23,000 RMB) of illegal income by the Beijing Xicheng District Market Supervision Bureau for selling poorly made products. Following this, the hashtags #Lululemonsellspoorlyqualifiedproducts and #Lululemonapologies trended on the platform’s Hot Search List garnering a combined 200 million views, thus far. Lululemon quickly released a statement of apology via Weibo, but it had to turn off its comment section to avoid the flood of negative comments from irate Chinese netizens and shoppers.

The Jing Take: Lululemon’s impropriety is a hard hit to the momentum it was having in China. As its Q3 2021 earnings report shows, the brand achieved a growth rate of 70 percent in the mainland market over the past two years. As such, it has accelerated its expansion, launching its first stores in Nanning, Ningbo, Jinan, Hefei, Lanzhou, and Sanya, while opening its largest store in Beijing and renovating a host of boutiques in key Chinese cities in 2021.

The high-end yoga clothing label is just the latest in a long line of luxury and high street brands being fined for selling substandard products. In March, Bally had a similar incident: It was fined for selling overpriced, substandard shirts. Meanwhile, H&M, Nike, Zara, and GAP’s childrenswear were discovered to contain unqualified dyes and other harmful substances. However, after the episodes, neither the high-end house, nor the fast fashion retailers, have had any significant impact on their brand images. Can Lululemon hope for a similar scenario?

Only time will tell. Yet, one thing is clear. Luxury will face stricter scrutiny from Beijing going forward. In recent years, China has been the growth engine for many high-end brands. However, initiatives such as ongoing price hikes from global maisons — Chanel increased their price points three times in the course of one year — has alarmed local market supervisors and consumers associations, which called out shoppers to be weary.

Recently, China’s national newspaper Worker’s Daily defined luxury as “non-essential” and “unworthy for investment.” Given this, could government actions potentially cool down domestic shoppers’ enthusiasm for luxury purchases, especially now, as China suffers through its worst wave of COVID-19 since the start of the pandemic? Will Chinese luxury consumers — once projected to be the future of the global luxury market — still find spending outrageous sums of money on bags and shoes and clothes a priority once the mainland opens up again? That’s the multi-million dollar question.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Luxury lockdowns Shanghai

What the Shanghai Lockdown Means for Luxury

Luxury shopping malls in Shanghai remain closed. These strict measures, part of China’s zero-COVID policy, have put the country’s commercial capital of 26 million people into lockdown. Frustrations continue to run high as people confined to their homes reach what has been described as an “emotional tipping point.” 

As the lockdown in Shanghai enters its fifth week, designer labels are understandably not a consumer priority when food and medical supplies have become scarce commodities. This comes against a backdrop when prestige brands in China’s luxury hub were benefiting from a strong recovery in spending. In fact, JLL reported that property absorption in the retail sector in Shanghai rebounded from negative levels in 2020 to nearly 1.5 million square meters in 2021. 

Recommended ReadingLuxury Lives on During China’s Latest LockdownsBy Tiffany Lung
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Luxury business owners are now in a state of instability as they consider how to navigate through this unprecedented crisis. Indeed, Shanghai is not the only city facing COVID-19 restrictions. A report by Gavekal Dragonomics, as cited in The Economist, found that all but 13 of the mainland’s leading 100 cities ranked by GDP were implementing COVID-19 restrictions, with ten cities in “severe lockdown.” And there appears to be no respite as press reports suggest that Beijing could soon follow Shanghai.

As such, the need for luxury executives to confront uncertainty is dominating boardroom discussions. Common concerns to the following questions echo within boardrooms: “When will restrictions be eased?” “To what extent will restrictions be eased or even tightened?” “Will restrictions be expanded to new cities and provinces?” “Will China rethink its zero-COVID strategy?” 

There are obviously no definitive answers without risks. Yet luxury executives are hedging their bets that the Omicron variant of COVID-19 will eventually be tamed and shoppers will return to the malls with a vengeance. Possibly. The latest lockdowns, however, could be a catalyst for change with longer-lasting effects. Given this, Jing Daily outlines how a seismic shift in the psychology of luxury consumption patterns could potentially not only disrupt but transform the future of Chinese luxury consumption.

First, a faster than anticipated economic slowdown is likely to dampen the appetite for luxury goods and services. UBS, for example, cut its 2022 China GDP growth target to 4.2 percent. A financial squeeze will oblige consumers, especially those belonging to the middle classes, to reassess what they can afford. Although the propensity to consume recovered in 2021, it remained below pre-pandemic levels. Memories can be short: it was only back in 2015 when luxury companies such as Gucci, Louis Vuitton, and Prada had decided to close underperforming stores. 

Second, fear of the unknown could inhibit indulgence in “nonessential” purchases. Younger generations in urban areas, notably Gen Zers and millennials who have been brought up in times of relative abundance, are experiencing shortages of essentials for the very first time in their lives. The rise of community group buying in China has been a lifeline for residents to get grocery supplies. Not only this, but strict lockdowns have reinforced the fragility of psychological well-being: as they reassess their needs and priorities, it is an experience that many will not forget lightly.

Finally, there is a risk that consumer confidence will fall as uncertainty about the future becomes a growing concern. The “feel-good factor” is the driving force behind luxury spending. Simply put, if shoppers are optimistic about the future, they will spend and take advantage of all that life can offer — notably luxury products and services. Mainlanders have traditionally been very positive about their future personal situation. But this is changing. Ipsos’s latest survey conducted between March 25 and April 8, 2022, reported a significant fall in consumer confidence in China. It is likely that this downward trend will continue as the public feel the strain of pandemic pressures. For example, the nationwide survey-based unemployment rate increased to 5.8 percent in March 2022, the highest since May 2020. 

A yo-yoing between lockdowns has left a dilemma for millions: to spend or not to spend. The luxury industry could be left in a state of limbo if there is no indication as to when Beijing will end the mass COVID-19 lockdown. Greater uncertainty will also lead investors to rethink whether luxury groups need to diversify their geographical risk. With that in mind, is it time for the luxury industry to take a more balanced approach to China?

Chinese designers BFC NEWGEN London

Chet Lo is London’s New Chinese Designer Star

On May 4, the British Fashion Council (BFC) announced this year’s recipients for its annual program to support emerging fashion talent. 

The BFC’s platforms — BFC NEWGEN, BFC/GQ Designer Fashion Fund, BFC/Vogue Designer Fashion Fund, and BFC Fashion Trust — provide 35 emerging designers, and a number of students, with financial support and business mentoring to help them scale up their new companies. 

22 brands were shortlisted for the 2022/23 annual BFC NEWGEN award, which supports the very best ready-to-wear and accessories designers. Among them, three designers of Chinese origin — Yuhan Wang, Chet Lo, and ASAI — were awarded sponsorship. 

Yuhan Wang, whose designs are inspired by a romantic portrayal of femininity that blends Eastern and Western representations, was also a finalist of the 2021/22 BFC NEWGEN. Chet Lo, the queer POC independent designer, is another name to keep an eye on. His colorful and avant-garde knitwear garments have quickly secured a loyal following for his label. And ASAI, founded by the British-Chinese-Vietnamese designer A Sai Ta, is renowned for its tie-dyed and curve-hugging dresses.

Chet Lo (left) and ASAI (right) are two designer brands to keep an eye on. Photo: Chet Lo, ASAI

“This year’s list of talents truly showcases London’s reputation as a global capital for creative industries, and we are delighted to be able to help so many of them through the BFC Foundation,” said Caroline Rush, Chief Executive of the BFC.  

The BFC revealed that last year it had remitted £1.3 million in funds to designers and scholars, with £932,500 provided by BFC Foundation. £400,000 was paid through brand partnership collaborations with Chanel, Dior Men, Paul Smith, and London Fashion Week’s principal partner, Clearpay. 

Meanwhile, the consistent presence of Chinese labels winning BFC awards (last year Feng Chenwang was one of the finalists of the BFC/GQ Designer Menswear Fund) affirms China’s growing presence on London’s fashion scene. 

That said, unlike other fashion capitals dominated by global luxury and fashion brands (that often overshadow emerging designers), London’s diverse and inclusive fashion landscape continues to be a solid breeding ground for Chinese designers to blossom. However, the UK capital does have one ongoing challenge — can it retain these talents as they soar?