China’s ‘996’ Backlash Continues with ‘Worker Lives Matter’ Campaign
What Happened: The “996” conversation is back on the table as a group of post-95 Chinese office workers launch a new attack on China’s grueling work culture. Called the “Worker Lives Matter” campaign, organizers are asking employees across various industries to share information on their base salary, position, and work schedule on an open access spreadsheet. As of October 15, the document has over 6,000 entries and the related hashtag, #1300CompaniesWorkSchedule, has garnered 30 million views on Weibo.
The Jing Take: In August, Chinese authorities ruled “996” — clocking in 9am to 9pm shifts, six days a week — as illegal and capped overtime at 36 hours per month. In response, tech giants like Kuaishou and Bytedance formally ended their “big week/small week” arrangement, whereby staff were forced to work an extra day every two weeks, making headlines at the time.
However, change is clearly slow to come. As the spreadsheet details, employees at Tencent, Alibaba, ByteDance, and Meituan still generally work from 10am to 9pm, while their counterparts at JD.com and Huawei toil even longer, from 9am to 9pm (Huawei is even known for its “wolf culture,” where it is killed or be killed, as one employee described to TechCrunch). Bilibili, in contrast, saw some praise with its 10am to 7pm schedule, enforcing fewer hours than its internet rivals.
Of course, given the collaborative nature of the project, it is difficult to verify the information. Organizers have said they may limit the number of submissions per person or add a voting mechanism to improve the document’s reliability in the future. Regardless, the campaign’s popularity reflects the desire for greater transparency in the private sector and an end to burnout culture. As one Weibo user commented, “This is a good direction, capitalists need to be supervised.” Another pointed out that even with companies modifying their policies, reality was still bleak: “After 996 changed to normal working hours, work is forced to be done at home and with no pay.”
Although Jack Ma and other tech titans have lauded “996” as a “huge blessing,” China’s younger generations have increasingly bucked against this idea. As such, their spending habits have shifted; while some millennials splurge on luxury purchases as a reward for their hard work (and this demographic is still on track to represent 40 percent of the personal luxury goods market by 2025), others are “lying flat” and seeking a slower lifestyle. In rejection of societal pressures and empty materialism, some youths have turned to zen hobbies, leading to the rise of gardening, fishing, RVing, and other outdoor activities.
But rather than fuel China’s “Sang” culture of hopelessness, luxury brands that want to speak to these consumers would do well to take a softer approach: demonstrate empathy, promote wellness, and inspire them to achieve their personal goals, ultimately showing them that workers’ lives indeed matter.
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.
Florasis Celebrates Dai Ethnicity in Latest Campaign
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, including Florasis latest campaign celebrating Dai Ethnicity, Alexander McQueen’s newly appointed China brand ambassador, and the collaboration between Marimekko and the Chinese coffee shop Seesaw.
Florasis Celebrates Dai Ethnicity in Latest Campaign
PLATFORMS Weibo, WeChat, Tmall
MEDIUM Image, Short film
FEATURED TALENTS Austin Li (29.5M) | Du Juan (no social accounts)
C-beauty brand Florasis will officially launch its “Dai Impression” series, which spotlights the Dai ethnic minority group in China, on October 20. To promote the debut, Florasis invited top Chinese film director Zhang Yimou and his production team to shoot a short campaign film starring supermodel Du Juan and livestreamer Austin Li. The campaign drew inspiration from a peacock totem — an ancient Dai symbol — to express the uniqueness of this traditional culture.
This two-minute campaign film received positive feedback from local netizens since its launch on October 13, garnering over 192,000 views. Many commented that the appearance and personality of Du Juan perfectly matched the collection and the creative direction. Thanks to the brand’s collaboration with local fashion media outlet Harper’s Bazaar China, which profiled the Dai collection, the campaign drove significant social traffic on Weibo.
Florasis is well known for its marketing tactics that leverage Chinese cultural elements. In a previous initiative, the brand featured the Miao ethnic group in China by highlighting its craftsmanship in silver engraving, which resonated greatly with local beauty shoppers. Now, this latest initiative continues to showcase the brand’s consistent commitment to cultural pride.
Alexander McQueen Announces Actor Turbo Liu as New China Ambassador
BRAND Alexander McQueen
PLATFORMS Weibo, WeChat, Tmall
MEDIUM Image, Short-video
FEATURED TALENTS Turbo Liu (32.2M Weibo Followers)
On October 10, Alexander McQueen, the Kering-owned British luxury fashion house, announced Chinese actor Turbo Liu as its Chinese brand ambassador, casting the male star in its Fall/Winter 2021 Menswear campaign. In addition to the announcement posted on social media, the brand launched a Weibo hashtag #WatchtheShowWithTurboLiu on October 11 to create some social buzz for its upcoming Spring/Summer 2022 Womenswear show.
The announcement hashtag #
Alexander McQueen has been relying on its hero products, such as sneakers, in China, as its ready-to-wear and handbag lines are less competitive compared to its sister houses under the Kering umbrella. Moreover, the collaboration with a popular new face in China not only stirs up the brand’s social media engagement, but also allows the house to strengthen its brand image among local shoppers.
Marimekko and Local Coffee Chain Seesaw Create Limited-Edition Collection
PLATFORMS Weibo, WeChat
MEDIUM Image, Offline Pop-up
Finnish designer brand Marimekko has teamed up with the Chinese coffee shop Seesaw to launch a series of co-branded products. With the theme of “splendid autumn limited,” the crossover draws inspiration from the fashion brand’s signature Kukkatori floral pattern. The collaboration features two exclusive coffee drinks, coffee cups, coffee hanging ear gift boxes, portable bottles, and handbags.
Chinese coffee lovers have shown a strong interest in this project, asking where they can purchase the products. According to snapshots at Seesaw pop-up coffee shops posted on Xiaohongshu, the adorable coffee cups with special floral prints and the complimentary handy packet are two major reasons that local shoppers have been drawn to this collaboration.
Although crossovers between fashion and consumer goods are nothing new to sophisticated Chinese shoppers, this tactic can be an effective way to rebrand and engage a broader customer reach — as long as it’s the right match. Indeed, this is not the first time that Seesaw has partnered with a fashion brand. Last year, the coffee shop collaborated with Maison Margiela Fragrance, which helped bring Shanghai’s younger consumers to the brand’s fragrance line.
Valentino CEO Jacopo Venturini On Redefining Luxury in a Changing China
Since taking the reins as CEO of the 61-year-old Italian luxury brand Valentino in June 2020, Jacopo Venturini has spent the last 16 months actively implementing a new vision and business model. Working closely with creative director Pierpaolo Piccioli, Venturini has focused his strategy upon building on Valentino’s decades of brand heritage and positioning the brand as the most established Italian Maison de Couture.
Early actions taken by Venturini include the gradual winding down of the RedValentino line and shifting of attention to the culture of couture via fashion shows and client experiences. Taking a timely view of the future of luxury sales, Venturini has strongly increased Valentino’s focus on digital and e-commerce, with the company’s omnichannel strategy increasing online penetration of total sales from 5 percent in 2019 to 15 percent last year and rising. The hiring of Chief Client Officer Enzo Quarenghi in January 2021 and the creation of a new division signaled a stronger shift towards digital content and on- and offline integration, culminating in initiatives such as the interactive Chez Maison Valentino and the immersive Valentino Insights. Valentino also committed the brand to going fur-free starting from 2022 and alpaca-free starting with the SS 2022 season.
In the China market, Venturini’s new model made its debut last December with the themed exhibition Re-Signify in Shanghai — the first event of its kind held by the brand in China. This month, Valentino is set to hold the second installment of Re-Signify, this time in Beijing. Designed as a traveling brand experience that landed first in China, the ambition behind Re-Signify is to literally “re-signify” and put a new spin on the well-known signatures of the Valentino brand in unexpected ways.
Ahead of the launch of Re-Signify 2, Jing Daily spoke with CEO Jacopo Venturini about the exhibition, his broader China strategy, and what we can expect from Valentino in the months and years ahead.
Jing Daily (JD): The Resignify 2 exhibition in Beijing comes a little less than a year after the first installment in Shanghai. Can you tell us a little about your experience in the first exhibition and how it helped shape the second?
Jacopo Venturini (JV): Re-Signify Valentino is a global project launched in China in 2020 set to travel around the rest of the world soon. An international project born with the objective to reaffirm the Valentino signature house codes with a more contemporary allure. An experience that effortlessly combines creativity and business.
We are thrilled to share that Re-Signify Part One Shanghai hosted around 25,000 visitors, equal to the maximum capacity allowed due to COVID-19 health restrictions and regulations mandated in terms of density per day and throughout the opening days. Following the debut of Re-Signify Part One Shanghai, at the Power Station of the Arts from December 19, 2020 to January 17, 2021, this immersive multimedia exhibition continues its global tour with a stop in Beijing this year, where it’s open to the public from October 16 to November 7, 2021. I’m really thankful to Mr. Ji who provided us 4,000 square meters in the outstanding and innovative SKP South to present our iconic codes in an ongoing dialogue with contemporary creative minds.
“Our aim is to open in Shenzhen by 2022 and Wuhan by 2023 and we are also considering reinforcing our presence in key cities such as Chengdu and Guangzhou.”
Part of the Resignification journey of the brand, for Re-Signify Part One Shanghai each room in the exhibition delved into different collections and the art, music, movies and photography that inspired Creative Director, Pierpaolo Piccioli. What we have learned is to create a unique experience to accompany people into the brand history through a contemporary lens, inviting them to cross the imaginary, the narrative, the unexpected.
From Shanghai to Beijing, this experience allows Valentino to be physically discovered and rediscovered at its core. Shanghai and Beijing are faraway cultures. As a matter of fact, our past is much less known in Mainland China than in Europe or the U.S., so we thought that it is a great opportunity to present this plot concept in Shanghai and continue to evolve it in Beijing.
We wanted an open project and a beginning of a different perspective. We intend to project a variant of this brand celebration on tour in Europe, though our next location is being decided. This reinterpretation continues to be practical, innovative and intent on breaking down barriers. Re-Signify essentially is a chain of thought where you look ahead by building on tradition and embracing the new.
JD: What aspects of the Beijing exhibition do you expect to resonate the most among local audiences?
JV: As previously mentioned, we should never take for granted that people are familiar with your past, so I think we need to be humble, walk you through our brand to gradually unveil it together. It is thus imperative to share what you have done, what you are doing and where you’re headed. I like to compare it to how you build a relationship with a person where you discover new aspects day after day.
A good balance of immediacy, immersion, and interaction reaches out to a hyper-connected client who is looking to discover, uncover and explore through multiple platforms. Human beings today are looking for a holistic, seamless and customized experience. With Re-Signify, we are initiating a captivating conversation that is further enhanced through differentiated and personalized experiences to embark on a journey of self-exploration and self-discovery through the Maison’s codes and pillars. Through our Re-Signify campaigns in the region we wish to strengthen meaningful bespoke relationships.
It’s about opening our house and connecting the codes of Valentino to art and culture. With Re-Signify Shanghai and Beijing, we are bringing heritage into the future, allowing our brand to be known and assimilated starting from the legacy alongside innovation and digitalization.
JD: What do you hope Chinese audiences will have learned about Valentino from Resignify 1 and 2?
JV: The Re-Signify brand experience is an opportunity to share a new interpretation of the brand’s codes in a journey veering from exclusivity to inclusivity. The still-relevant Valentino codes are rendered more contemporary. We believe that an interactive brand experience is an act of respect and passion towards heritage through an experiential approach, opening to the outside through a dialogue with different artists and different forms of art, with a more contemporary perspective.
We wish to channel the Maison’s past and present by merging them with forward-thinking artistic and visual research, from video, art to underground cinema, from photography to computer graphics. Curators and artists involved are chosen for their way of thinking and their singular points of view which lead to interesting grounds for reflection, exploration and conversation.
The resignification of the iconic codes allows guests to experience different grounds where the three pillars have been exploited. For instance, for Re-Signify 2 we created a connection between Haute Couture dresses and XU ZHEN artist sculptures, while the iconic Stud Sign bags dialogue with the Act Collection and imagery from Pajama or the Atelier pillar is presented in a collaboration with Robert Del Naja.
JD: You recently mentioned plans to explore new China locations in cities like Shenzhen, Guangzhou, and Wuhan over the next two years. Can you tell us a little more about your China strategy? How do you see the market has changed in recent years, and how important is it to Valentino today?
JV: Pre-COVID and before I came on board, our focus in Greater China was under-exploited. As a consequence, we currently lack a strategic presence in key cities but have plans to implement a thoughtful retail rollout for 2022-2023. Our aim is to open in Shenzhen by 2022 and Wuhan by 2023 and we are also considering reinforcing our presence in key cities such as Chengdu and Guangzhou. Needless to say, this vibrant region represents an incredible opportunity for us. It has always been one of the most stimulating markets with dynamic vibes which trigger inspiration and spur progress.
Although we currently lag behind in terms of a strong presence in Greater China, the approach we have embraced is strategic, cautious and humble. First and foremost, our desire is to transmit our longstanding legacy, still a major source of inspiration and the strong bond between our history and the current times.
JD: You’ve also mentioned that you and your team have made digital and entertainment programs key pillars of your new marketing strategy. Can you tell us about these programs and any plans you have to apply them to China?
JV: In my opinion technology is a pivotal element that can help us to be faster, smarter and in this post-pandemic era, to be closer as a Community. That said, I believe that the human touch is also fundamental in guiding technology. A case in point of what we mean by humanizing the digital experience is the We’re Not Really Strangers project, launched in January 2021 during the pandemic, which is a card game based on intimacy in which our Community can entertain and interact by discovering each other’s personalities. The first teaser video received over 5.5 million organic views.
We can cite other key projects that entertained our Community when e-commerce was the only channel to connect with clients at the peak of the pandemic: The world of literature seen through the children’s book project with Elsa Majimbo; online poetry readings with Rupi Kaur; and online music concerts with high-profile names such as Alicia Keys.
Chez Maison Valentino was the first project launched at the beginning of the pandemic with a series of live streaming events on site and Instagram. An immersive digital experience in our historical Piazza Mignanelli headquarters in Rome rendered as a 2D facade by illustrator Joanna Avillez. A click on each window opened a spate of content: our heritage, Piccioli’s vision and inspirations, a movie club for our clients, edgy collaborations and co-creation projects, quizzes and the world of Couture.
With Valentino Insights we embraced a hyper-realistic immersive navigation/shopping experience to discover our latest collections and products through virtual architectural spaces that we are redesigning season after season. With both projects, we filled the lack of physical relationships that led to a general increase of time spent (+55 percent) and engagement compared to the average of the site.
The combination of a more full-on engaging e-commerce and a capillary omnichannel strategy resulted in an online penetration that jumped from 5 percent in 2019 to 15 percent in 2020 and is still on the upswing.
On top of that, more recently, on 7th October 2021 we launched a special version of our iconic One Stud sneaker exclusively designed for Lay Zhang in celebration of his 30th birthday. In a unique colorway, it is also available as a limited edition in Mainland China.
Overall as you can perceive our approach in China and globally is fully centered and tailored directly for and around the client.
JD: What do you see as the most pressing challenges for Valentino in China? And what about the China market excites you most as CEO?
I believe that the most pressing challenge in China, just as in the rest of the world, is to unveil our longstanding heritage allowing our brand to be known. Our brand legacy continuously remains an essential inspiration and a strong fil rouge between our history and the current times.
I believe that Valentino is the most established Maison de Couture. The meaning of “maison” is home which decodes into faces, names, and people’s stories, in other words, a synonym of intimacy which should be translated into the stores, while Couture reminds us of the obsession for details and personal relationships between premiere and clients which should be transferred into our Couture-clientelling mindset. I feel a strong connection between these two words which live an incessant conversation: Maison and Couture define our world of values that should establish and permeate through the Valentino company culture. It’s easy to remember, but very difficult to want to put it into practice.
For me, the opportunities at Valentino are based on the Couture values — the attention and the obsession for details. So, I opted for a trickle-down effect through a well-defined and quite innovative strategy rooted, as just mentioned, in a client-centric and colleague-centric vision. Creativity, human capital and teamwork are the main drivers of this evolution. Creativity does not belong by definition only to the Creative Director and Design Team, but everyone within the company can carry out their work in a creative way without necessarily following predefined lines. Only through human values, creativity will cascade into all the processes and all the way down to the stores.
Everybody plays a part. It’s a chain of values where everybody is an internal client of its colleagues: the more the cascade-effect process is managed as a team, the more the power of creativity will be enhanced.
Whatever work you do, whether you are producing a document or attending a meeting, if you think the people you are relating to are your customers, you will automatically use appropriate language. By adopting colleague-centricity, the value chain that arrives at the stores becomes a straightforward, solid, and consistent path. This is the journey into the new Valentino.
JD: China has seen a boom in the popularity of immersive theater, which Valentino recently got in on with its collaboration with Sleep No More. Can you tell us a little about how that collaboration came together and how it could shape other upcoming marketing plans for China?
JV: The collaboration with Sleep No More Shanghai presented a special show “Reborn in Dream” inspired by the Valentino Act Collection, both sensual and romantic. A pioneering idea to showcase the collection in an immersive theater experience immersed in art, music and dance where new storylines, sets and performances brought the clothes “to life.”
The attendance rate reached 90 percent and almost 70 percent of the invited clients purchased before the event. It occurred on September 28 at the venue 1-2F of the McKinnon Hotel, Shanghai in which VICs (Very Important Clients), Media and KOLs were invited. Top 20 KOLs from fashion and art were present who created social buzz on all China social platforms including WeChat, Weibo and Xiaohongshu (Little Red Book).
The campaign hashtag #ValentinoActCollection reached over 150 million viewers as of publication, as netizens showed a strong interest in this unexpected crossover between fashion and theater. The concept event was incredibly well-received by all clients (current and prospective) who attended, mesmerized by the theatre-themed setup which ties the concept to the Act collection.
JD: In your opinion, how has the pandemic changed the global luxury industry? How has it shaped how you see the role of a luxury brand in 2021 and 2022?
JV: The impact of the pandemic was tough for everyone. It was also a moment to think and rethink what we were all doing. I started my CEO role in June 2020, 4 months after the health emergency broke. The first thing that I felt to do was to reduce the physical distance between me and my new teams, so I immediately involved all the company digitally to share my vision for the brand and establish an empathic approach. There was definitely a digital sprint that allowed us to expand and consolidate the entertainment programs in the pipeline and improve the digitalization rollout of initiatives alongside our distinctive personal human touch.
So as online penetration accelerated and shoppers demand intensified for ever-more sophisticated digital interactions, Valentino merged internal forces to optimize the online experience and channel mix while finding persuasive ways to integrate the human touch.
For sure, the economic consequences of COVID-19 have profoundly impacted the e-commerce landscape. Valentino online penetration on total retail continues to grow, e-commerce represents 15 percent YTD (it was 5 percent in 2019).
This way forward was very important at that moment. According to my new strategy, my team and I believed in seeding for the future by implementing some key pillars such as clientelling, distance sales, digital, omnichannel, entertainment programs and pampering activities such as digital shows.
JD: Since taking the reins as CEO last year, you kept a relatively low profile, building teams and laying the foundation for wide-ranging marketing initiatives. Can you give us a little insight into your leadership philosophy and how you’ve applied to that Valentino?
JV: It is an honor to return for the third time to Valentino, the only Italian Maison de Couture and my first love affair in fashion. It is a great privilege to restart working with Pierpaolo with whom we’ve always shared the deepest passion for our brand and for fashion itself. Now that I’m back in a different role, I am able to implement my own strategy developed accordingly with the Shareholder and Pierpaolo Piccioli whom I’ve known for over 20 years. Personally, I see this as a gift that life has given me.
Together with Pierpaolo Piccioli and the Valentino teams we have now entered a new chapter of the company’s illustrious history. We have achieved remarkable goals over the past years, but our eyes are always on the future. At Valentino we are building on our history and legacy with a new attitude and a new culture based on a Couture culture which I believe is absolutely vital to our next chapter. A culture of values is what we are trying to inject into Valentino. I am committed to this mission, I believe this is going to be key for the future. Today Valentino is the most established Italian Maison de Couture, a position we want to maintain and reinforce.
In a world where the human capital is at the epicenter of all the Maison’s activities, my responsibility is to create a more catered and mindful business model with a Company Culture based on Sustainability and ethical values. For us in Valentino becoming more sustainable is something we are doing step by step, also via a dedicated team of people. It’s not something you can embrace in one big leap. Operating in a sustainable manner means creating value and developing ethics and sustainability under the same hat by being client-centric and colleague-centric , while sustainability means safeguarding the environment and using resources in a way that is not harmful to future generations, which the company had already started to develop.
Our seven macro and multi-faceted sustainability points include: joining the Greenpeace Detox Solution Commitment in 2013 to eliminate all dangerous chemicals from our supply chain and signed up on Zero Deforestation Commitment projects to help protect our life-giving waterways and rainforests. Since 2013, Valentino has worked with its own supply chain in order to replace the chemical substances harmful to both man and the environment.
In terms of raw materials, we have committed to going fur-free starting from 2022 and alpaca-free starting with the SS22 season. Last but not least, we are working with virtuous viscose suppliers for 70 percent of our production supply chain. Also, we have a specific Valentino department which is in charge of scouting new raw materials and is looking into alternative materials and innovative techniques to investigate which resources are less harmful and dangerous. Moreover, we have recently introduced a brand new shoe made consciously with recycled elements: called Valentino Garavani OPEN FOR A CHANGE. Blending creativity, innovation and sustainability, this men’s and women’s sneaker is mindfully and consciously crafted. It will be available starting from December 2021/January 2022.
Lastly, we are ready to deliver a new sustainable packaging set to launch this Fall 2021 that will have an additional 15 percent of recycled paper (now we are at 55% of recycled paper in our packaging)
Our mantra is very much to preserve and give back. As I previously mentioned, in our vision, sustainability should go arm in arm with ethics, the reason why we are implementing a program of giving back to the planet, even locally like planting new trees in main cities where we are already present on a glocal level. In the previous year as a Valentino Community we have involved our Friends of the House in an Advertising charity campaign called Valentino Empathy. We donated 1 Million euros in favour of the Italian Lazzaro Spallanzani Hospital in Rome, the Italian Hub fighting against COVID-19. Our next goal is to upcycle leftovers. We want to be hands-on and increasingly structure ourselves responsibly to measure the social and environmental impacts of business. Consumer sentiment on sustainability is strong and so is Valentino’s.
Special thanks to Linda Ting and Niki Cheung for facilitating this interview.
Kenny Scharf On Brand Collabs and What Basquiat Would Have Done
Now a globally-renowned artist, Kenny Scharf has just rounded off his first-ever China-based solo show at Shanghai’s Almine Rech gallery.
Scharf rejects the popularized notion that artists should not be too commercial and has collaborated with multiple fashion brands, including Heron Preston, Dior, and Jeremy Scott.
- According to Scharf, his late friends Jean-Michel Basquiat and Keith Haring might have done things differently if they had survived to sign off each of the collaborations released in their names today.
When artwork is as visually rich as Los Angeles-based painter Kenny Scharf’s trippy utopian universe, collaborating with fashion brands is a given. Long before brand-artist collaborations were common, Scharf, who began his career alongside art stars like Jean-Michel Basquiat and Keith Haring, always made a connection between art and fashion, despite the “sell-out” attitude toward commercialization prevalent in the ‘70s and ‘80s. “We were finding vintage things in the garbage or cutting them up, and there was all this creativity going on,” he told Jing Daily. “I would always paint my clothes.”
Fast forward to 2021, and the world is getting accustomed to wearing Scharf’s artwork. The artist has worked with multiple global fashion brands over the past 30 years, from high-street names such as Urban Outfitters, to designers like Todd Oldham, Heron Preston, Jeremy Scott, and most recently Dior, for Fall 2021. The latter, Scharf said, has strengthened his Chinese fanbase and possibly contributed to him landing his first China-based solo show at Almine Rech gallery in Shanghai, which ended October 9.
Yet such international success comes with more commercial, collaborative work, which certain artworld critics would condemn as purely profit-oriented. “I’ve been dealing with getting critiqued for being commercial,” said Scharf, “but always found that surprising because I thought Andy Warhol changed the idea of commercial art and fine art, blurring those boundaries. So, I thought that when I came along in the 1980s, the doors were open.”
Despite the mainstream beliefs of his early art days, Scharf has always dreamt of working with fashion brands, particularly from the moment he saw Vivienne Westwood’s collaboration with Haring in 1983 — a marriage of talent that Scharf called “a harbinger of the future.”
In fact, he adores when the fashion and art worlds collide. “Applied arts don’t need to be limited,” he stated. “Even though most of my art is done solitary on a canvas, it was definitely made to be out in the world, not just hanging on a wall but meant to be outside… It’s meant to be on cars and clothes. And fashion is a way of applying art to your everyday life.” Scharf’s most recent collaboration with Parley for the Oceans, fighting against plastic pollution, is the perfect illustration of this statement, with his work painted across 12 surfboards.
When Scharf endearingly recalled seeing a teenage boy in Egypt wearing one of his paintings from his Urban Outfitters line a while back, his purpose behind collaborating became clear: it’s a way of making his art accessible and enjoyed beyond the exclusive art world. The artist attests that as long as you stay true to yourself and what your art is about, then, ultimately, any product launch is possible.
Of course, Scharf is alive to direct his collaborations while some of the most prominent members of his ‘80s art set are not, triggering extensive criticism when their work appears on too many arbitrary products without consent.
Scharf admits it is hard to decipher whether Basquiat would have wanted the number of collaborations that have been released. “I think he might have done some, but he would have said no to quite a few,” Scharf mused. “We used to collaborate, but when Jean-Michel got a little older, there was no way he was going to collaborate with anyone equal, only someone higher, which was Andy Warhol. If he had lived, he would have been pretty cantankerous, but it would have been great. I wish he would have.”
“As far as Keith Haring goes,” Scharf said, “it was part of his oeuvre. Although, sometimes I see things with Keith [on them], and I think there could have been a better way to do it. The same goes for Jean-Michel. As much as I love their work getting reapplied, it makes me long for how they might have used their art in that situation and how different it would have been. But sometimes, I’ll see some stuff that I would wear, and I love it.”
It’s impossible to predict how Basquiat or Haring might have approached collaboration in 2021. But in an era when artists struggle to maintain public attention due to the fast-paced and oversaturated online world, we suspect they might have chosen more commercial routes than critics expect.
“It’s a natural evolution,” added Scharf, while reflecting on how the art world has developed since his career started. “I think art is so much about communication. With communication, you want to reach as many people as you can.”
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PGI Fuels Platinum Jewelry Branding
What Happened: China, India, Japan, and the US have become the world’s major platinum jewelry markets, thanks to brands and consumers’ commitment to the metal due to market development activities by PGI. However, branding is a substantial yet underrepresented market opportunity in jewelry. This finding was affirmed by “State of Fashion: Watches and Jewelry,” co-released by Business of Fashion and McKinsey & Company this June. The study forecasted that the global fine jewelry market would become more branded in the coming years, and branded fine jewelry would grow at compound annual growth rates (CAGR) of 8 to 12 percent between 2019 to 2025, with price points around six times higher than unbranded products.
Still, only 18 percent of global fine jewelry is branded and this number is even lower in China at 15 percent. Hence, Platinum Guild International (PGI®) remains steadfast in promoting the use of branded collection strategy to consolidate platinum’s equity as a premium, high-quality metal that represents love, meaning and authenticity.
Branded collections are an effective strategy to build resonance with young consumers, both in the bridal and non-bridal categories, thereby driving jewelry category’s growth.
The Jing Take: Instead of selling pieces based on weight — the traditional sales strategy among Indian and Chinese jewelry retailers — branded jewelry is sold via piece-based pricing. Given that the value of these jewelry pieces has risen much higher than just the cost of the metal, branding is becoming a significant margin driver that can provide retailers with competitive edge.
Fundamentally, branded collections are about imbuing products with perceived intangible values in the mind of consumers. This approach necessitates a consumer-first mindset, in both design and storytelling to create a meaningful proposition that is important to the target consumer segment.
But even before the brand narrative, design is important for consumers and therefore is fundamental for jewelry makers. In recent years, PGI has been exploring new technologies and developing new alloys with partners, including hard platinum and heat-treatable alloys that allow for more refined contours, better polish & shape retention, and higher scratch resistance. These innovations have enabled greater design possibilities for platinum to capture a more competitive market position.
Branded collection has proven to be a powerful tool to ensure platinum will stay relevant within evolving consumer needs. It should even capture new growth opportunities such as the self-purchase segment in the US and young consumers in Japan markets, not to mention the emerging men’s jewelry segment in India and China.
With branded jewelry expected to lead the growth of the fine jewelry market, branded collections will continue to play a significant role in the platinum jewelry global market strategy.
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.
Why China Could Become First in Secondhand Luxury
The following is an excerpt from our newest market report, Leveraging China’s Online Resale Boom. Packed with detailed breakdowns of 11 leading Chinese secondhand luxury platforms, best practices, and insider opportunities for global luxury resale platforms, the report is a must-read for any brand focused on reaching and influencing China’s ascendant young luxury consumer. Get your copy today on our Reports page.
The current relatively small size of China’s luxury resale market and lingering consumer resistance means that China has perhaps the most immediate potential as a sourcing market for international platforms, particularly given their ability to ensure product authenticity. If international platforms can persuade China’s luxury owners to consign parts of their collections accumulated over the past decade of shopping sprees, they will obtain a steady stream of inventory for years to come.
In the near term, the best course of action for international luxury resale platforms in the Chinese market may be to wait it out and see how the market progresses. Another option would be to start by investing in direct marketing to Chinese consumers based in more developed resale markets like North America, Europe, and Japan.
Another route entails strategic partnerships with Chinese platforms, following the model of e-commerce retailers Net-a-Porter and Farfetch in launching branded marketplaces on Tmall Luxury Pavilion. The Japanese luxury resellers Reclo, Brand Off, Daikokuya, and Brandear all opted for this approach by establishing official flagship stores on the cross-border platform Tmall Global ahead of China’s 618 shopping festival in June 2021. Reclo reportedly surpassed RMB 10 million ($1.5 million) in sales during that sales event and has racked up more than 149,000 followers since launching its Tmall Global flagship earlier in the year.
Tmall Global is also looking to recruit more secondhand luxury partners from Japan, Europe, and the United States and is working with the CCIC to ensure product authenticity and quality on its platform. Resellers on Tmall Global can make use of Alibaba’s extensive marketing resources, which range from consumer data to content development. For example, to promote the Japanese resale platforms, Tmall Global curated a content series for a three-day “Global Discovery” event that featured short videos, live broadcasts, and mini-documentaries exploring Japan’s vintage culture and “what luxury means to young people in China.”
Alibaba’s dedicated livestreaming channel, Taobao Live, has also been embraced by platforms such as Brand Off, which found success using its own staff as hosts for broadcasts, during which they could share their expertise on luxury products, in contrast to the more common practice of using outside influencers to promote sales. Brand Off chief executive Yamauchi said the company now plans to expand its use of livestreaming to take Chinese consumers “on virtual shopping tours to our stores in Japan, as they still aren’t able to travel here in person.”
China’s luxury resale industry will continue to evolve according to the particularities of the market. A new generation of mainland Chinese luxury consumers is taking shape, and they have come of age in an era in which imported luxury goods and the presence of high-end boutiques could be taken for granted. And although some consumer resistance is likely to remain, it may more often be attributed to concerns over authentication, rather than a cultural avoidance of pre-owned items. Meanwhile, investments by domestic tech incumbents and venture capital firms will further incentivize China’s luxury resale industry to forge its own path, potentially spreading its influence far beyond the country’s borders.
Download your copy of Leveraging China’s Online Resale Boom on our Reports page.
What Luxuries China Still Craves From the West
Despite the plethora of products available on the Chinese market, consumers can’t locate all the items that exceed their expectations and meet their needs.
Many Chinese shoppers believe that international labels use better ingredients in products manufactured for the Western market.
Young urbanites chase country-specific releases and limited-edition capsule collections from select countries because owning them communicates affluence.
Consumers in China can find every conceivable product in their domestic market, as e-commerce giants like Alibaba and JD.com have partnered with some of the most acclaimed global brands to bring innumerable foreign products to their shores.
According to data released by China’s Ministry of Commerce (MOFCOM), demand for imported consumer goods, especially beauty and luxury products, remained strong in 2020, despite the pandemic. Imported consumer goods were booming, rising by 8.2 percent to $242.1 billion (1.57 trillion yuan) in 2020, year-on-year. Meanwhile, on the other hand, sales of domestic consumer goods shrank by 3.9 percent, according to the National Bureau of Statistics and The South China Morning Post.
But despite the plethora of products available on the Chinese market, consumers cannot locate all the items they want. And although international luxury products get quickly snapped up through e-commerce websites and physical retailers, certain items still are not available for purchase in China.
So, what products that Chinese consumers crave that are not always available locally?
Most consumers wouldn’t associate baby formula with luxury purchases. But in a country that still hasn’t fully recovered from the 2008 food safety scandal that killed at least six infants and harmed 294,000 babies after consuming milk powder laced with melamine, foreign-produced infant formula is preferred.
According to Export2Asia, infant formula is one of the most imported products in China. The digital publication also highlights how Chinese families resort to the services of daigous to get their hands on these highly coveted milk formulas.
Baby milk brands from Australia and New Zealand depend heavily on China. New Zealand’s A2 Milk Co. cut its forecast in May for the second time in five months after its revenue declined by about 30 percent in the second half of 2020 because of disruptions in the daigou market, according to Bloomberg.
Luxe baby and maternity cosmetics
New parents constantly worry about the chemicals and harmful ingredients found in baby cosmetics. And pregnant consumers worry about finding pregnancy-safe beauty products for themselves. Established domestic beauty brands and international players like L’Oréal Paris have already developed pregnancy-safe skincare. Nevertheless, domestic consumers still prefer imported stretch mark creams, diaper rash creams, and maternity oils.
Why? Because many Chinese shoppers believe international labels use better ingredients in their products, which have been manufactured for the Western market. As such, they prefer to buy them abroad.
Eastern European consumers share similar views. And laboratory tests have confirmed that some global brands use cheaper and lower ingredients in groceries sold in Eastern Europe.
Korean skincare & K-Pop-owned brands
Korean skincare is undoubtedly available across China. And yet, beauty junkies know that there are more brands out there than Hera and Sulwhasoo. K-Beauty fans love returning to the services of daigous for all the latest facial kits, masks, and facial devices coming out of Seoul.
Additionally, K-Pop-owned brands like RDVZ and Tempus Studio have become in demand with the cool crowd in China.
Market-specific streetwear brands
Some Japanese and Korean streetwear brands are harder to come by in China or are only sold at concept stores for a premium price. Therefore, customers prefer to acquire them through daigou channels. For example, A Bathing Ape, MIYAGIHIDETAKA, and Mischief have become popular with the younger Chinese demographics.
Country-specific products and special luxury collections
Pre-pandemic, my husband booked a flight to Paris to buy a hat. He jetted between continents for 72 hours just so he could buy a wool fedora from a famous French luxury brand. Hats from the same Maison are available at Neiman Marcus and Net-a-Porter, but he believed that the collection on the US market is limited in sizes and designs.
Let’s face it: He is hardly the only one who enjoys cross-border shopping trips. Millennial & Gen-Z consumers are used to shopping differently than older generations. They do not feel any shame in buying pricey items abroad.
For example, while living in Spain, I befriended a young Russian woman who traveled for a weekend to Barcelona just because she wanted to buy a Tiffany & Co. necklace.
Pre-pandemic, European luxury cities lived off the back of affluent millennials and teens from the Asia-Pacific, Latin America, and Eastern Europe who felt their shopping options back home were limited. These young urbanites chased country-specific releases and limited-edition collections made available only in selected countries because their ownership communicates affluence. These modern shoppers can afford the luxury, but they are even wealthy enough to hop a flight and travel across the globe to buy a necklace or a leather bag. And these items are even more appealing today, with travel restrictions delaying international shopping sprees.
Chanel Takes on the Resale Market With One Bag per Person per Year Policy
What Happened: The resale market is about to take a hit as Chanel, starting this month, is now limiting the number of purchases for its most popular handbags — the “Classic Flap Bag” and the “Coco Handle” — to one of each per customer per year. The new policy also extends to other small Chanel leather products, which eager consumers can no longer buy more than two of the same product per year. Moreover, this comes as the brand has already raised the prices of its hottest products three times this year. But no matter, the two handbags continue to be sought after by consumers, as can be seen in the long lines to purchase them.
The Jing Take: As the resale market continues to surge, luxury Maisons are turning to a new scenario through purchase restriction policies to preserve their exclusivity. Recently, Hermès also limited the number of handbag purchases to only two of the same style twice a year. Needless to say, the high-end house’s cultivated consumers were less than thrilled to be limited in what they want to buy. However, for the brands, this is an indispensable move to tackle issues like daigou buying stock out and reselling them at marked-up prices.
China is known for its extensive resale grey-market, managed by scores of daigous. According to BCG estimations $35 billion was spent by Chinese consumers in the overseas luxury market in 2020, and a remarkable $28 billion (80 percent) was spent through the use of a daigou service. Although these surrogate buyers may in the short-term help brands to boost their sales, in the long run they can hurt global brands to not only identify loyal consumers, but also be able to establish proper relationships and share the appropriate brand experience to them.
But, perhaps a more worrying trend is the chaotic price positioning and the counterfeit issues that trails the resale market. As a result, companies can see their brand image diluted. Yet, there is also a bright side, as daigou are known for promoting and selling various brand collections thanks to their hundreds, if not thousands of loyal WeChat customers. On balance, however, Chanel’s move makes sense in the long run. But resale or not, luxury is about scarcity. And as demand surges, brands will continue to restrict purchases. They’re not looking to inundate the global luxury market with excess inventory and lose their aura of scarcity. Given this, it is foreseeable that more global brands will follow suit in China and beyond.
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.
How China Is Creating New Luxury Hotspots
At the heart of luxury brands is a social agenda that aligns perfectly with China’s national policy for urban renewal.
China’s focus on urban renewal has become crucial after the devastating effects COVID-19 had on the mental well-being of locals.
With the Xuhui district enjoying modern amenities today, it has become a perfect model for urban renewal across the country.
In cities across China — particularly the large ones like Shanghai and Beijing — several out-of-touch groups are still unaware of the country’s changing styles.
Yet things have been changing for the better. These cities are becoming new hotspots for various activities now that high-end global luxury brands like Prada and Gucci have set up pop-up stores or organized events to showcase their collections there.
As a result, these citizens are becoming more refined. Undoubtedly, this scenario is a blessing for a luxury sector eager to become a part of the Chinese government’s extensive development program, launched eleven years ago during the Shanghai World Expo.
At the heart of these luxury brand strategies lies a social agenda that aligns perfectly with China’s national urban renewal policy, which talks about changing the quality of life for the people living in these areas while creating a vibrant scope for business post-lockdown. In fact, it has been fashion and art coming together that has helped revive the architectural beauty of these vicinities.
Dior led the way
This March, the French luxury brand Dior staged its first-ever international event, titled “Villa Dior” — an extremely private spring show for VIPs, held at BAIwork at 133 Sichuan Middle Road.
And the show was a huge success. The brand showcased its heritage and craftsmanship alongside a massive collection of fine jewelry & watches, a part of its universally popular Rose Dior Collection. Each item in the collection glorified the essence of feminine beauty. Meanwhile, the renovation work of this great historic building was done by Shanghai Bailian Asset Holding Co., Ltd. (BLAH) under the aegis of its CEO Cheng Dali.
“We’re proud to have collaborated with Dior on this important project in China,” said Cheng Dali. “While this joint venture revealed our global aspirations, it also brought to light how committed and serious we are when it comes to modernizing each neighborhood in our cities.”
And in May, at the coffee shop Jiya Wukang Road in Shanghai, Prada held a long-awaited pop-up store event. The beautiful resort-like arrangement the brand tailored for this event attracted a large crowd, meeting the city’s overall urban renewal objectives.
Since Wukang Road, which was already a favorite photo-op destination for locals and tourists, is connected to four other roads (Xingguo, Huaihai Middle, Tianping, and Yuqing), the entire area has benefited from the success of Prada’s pop-up store.
This focus on urban renewal was welcomed after the devastating effects COVID-19 had on the mental well-being of locals. So, as China gets back on track, the government wants to create a sense of joy in every nook and corner of the country. With this vision in mind, it has built new infrastructures and industries for strong economic growth.
“This developmental program should be implemented, along with art and cultural initiatives,” said Ma Yansong, founder of MAD Architects. “After all, what matters most is the quality being offered at public places. And the core of any great city is measured by its thriving art scene.”
The Italian luxury fashion house Gucci also made headlines when it landed in Shanghai to celebrate its 100th-anniversary collection. To mark its centennial extravaganza, Gucci held a spectacular show titled “Gucci Garden Archetypes” at the Shanghai Exhibition Center. The show was attended by VIPs from around the country, giving them a unique chance to experience the brand’s history via its creative director Alessandro Michele, who put together 15 breathtaking campaigns within this exhibition.
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Even on Chengdu’s Jianshe Road, several famous buildings have recently been refurbished, ensuring that they will always get utilized. And in Beijing, even destinations known for their cultural aspects like the 798 Art District and the shopping street Dashilan are being reinvented.
China is poised to become a global superpower, but it isn’t necessarily following a Western blueprint. For example, the riverside belt of Xuhui district in Shanghai is currently a popular hub of cultural attractions, including the West Bund Artistic Center, the Long Museum, the Yuz Museum, Tank Shanghai, the West Bund Museum, and the West Bund Dome. But with scientific innovation remaining crucial in China, the area is now home to an unrivaled AI facility. With Xuhui surrounded by all sorts of modern conveniences today, it has become a perfect model for urban renewal across the country. Therefore, it is unsurprising that Xuhui has become another sought-after destination for indulging in luxury. The Hengfu neighborhood in Shanghai is another renewal project that’s well underway, now popularly known as the “Hengfu Lifestyle.”
Making the most of luxury brands
China knows that global luxury brands are beneficial to its image abroad. And in line with this vision, integrating these brands into the restoration of the country’s historical places and allowing them to make impactful differences in Chinese society will only strengthen its position. “The process of gentrification is new in China at the moment, and it has a long way to go,” said Zhang Yunting from independent design magazine Demo.
Meanwhile, Yansong believes that the focus of all urban renewal projects should be on making people feel rejuvenated once they look around. “If this criterion is genuinely applied, then everything will be pitch-perfect,” he added.
Another American Brand Exits China
Everlane and Urban Outfitters are the latest brands to withdraw from China, joining a growing list of fashion casualties that includes Asos, Topshop, and Old Navy.
Although Everlane is best known for its sustainability messaging, this is not appealing enough to Chinese consumers on its own. Green marketing needs to be paired with quality products, good customer service, and an understanding of the local culture.
- If Everlane wants to return to China, it will need a committed China domestic presence and greater brand visibility, expanding beyond its 530,000 followers on Tmall.
Just two years after entering China, Everlane is taking a step back. Last month, the San Francisco-based DTC company announced that it would stop selling on Tmall Global on September 12 and end customer service operations by October 10.
Although Everlane is not giving up on the lucrative mainland market — explaining in a Weibo post that Chinese consumers can still shop on its global website — the move marks a worrying trend of retreats by global retailers. On the same day as Everlane, Urban Outfitters also removed products from its Tmall store, shutting down its only official sales channel in China. The two join a growing list of casualties that includes Asos, Topshop, Old Navy, and New Look, among others.
For international brands, the challenges boil down to more than the pandemic. While the luxury segment has remained resilient in China, mass market players have had a tougher time given the rise of domestic competitors and online sellers on platforms like Taobao. With their ability to produce cheaply, quickly, and with acceptable quality, it has become hard for even the world’s big fast fashion players to keep pace.
Once regarded as America’s Uniqlo, Everlane looked like it had a promising future in China. The brand’s emphasis on sustainable practices and “radical transparency” in its supply chain set it apart from others and even attracted an $85 million investment by LVMH-linked L Catterton last year. So, where did the brand stumble and how can other apparel makers avoid its fate?
Everlane’s entry into China
During its brief stint in China, Everlane was not idle. In August 2019, the casual fashion brand opened WeChat, Weibo, and Tmall flagship store accounts where it promoted its full range of men’s and women’s clothing as well as its new environmental footwear series at the time, Tread. On these channels, Everlane introduced local audiences to its concept of “radical transparency” and broke down the hidden costs (such as raw materials, labor, tariffs, and shipping) behind its price tags.
Lacking a physical retail footprint, Everlane found creative ways to play up its sustainability messaging offline and appeal to the country’s impact-conscious consumers. For example, to mark its first anniversary in the market, the mission-driven label partnered with Alibaba’s delivery service Ele.me and Shanghai boutique roaster Seesaw Coffee to produce a gift box made from 100 percent recycled materials, which contained a limited-edition T-shirt, organic coffee, and plant seeds. Meanwhile, on this year’s Earth Day, Everlane opened its first limited-time concept store called “Reject Plastic Love” in Shanghai to highlight the amount of discarded plastics products used in daily life.
Challenges in China’s apparel market
However, these green tactics arguably cannot stand on their own. While Chinese consumers do care about the environment, the concept of sustainable clothing reached China after the west and is less mainstream, Allison Malmsten, a marketing director at Daxue Consulting, told Jing Daily. As such, “[sustainability marketing] also needs to be paired with quality [products], good customer service, and for the brand to show an understanding of local culture.”
And these are all areas where Everlane has struggled. While the brand chooses to produce high-quality wardrobe staples rather than adhere to seasonal trends, standing out from the crowd has been one of its biggest obstacles. “Whilst a small few are compelled by ‘lasting style,’ many still want trendy and ‘hot’ items,” said Adam Sandzer, Head of Commercial Strategy at Hot Pot China. From cashmere crews to simple white cotton tees, Everlane’s minimalist aesthetic not only lacks differentiation but also puts it at risk of being copied by Chinese competitors.
On top of this, Everlane’s biggest pull factor — its promise of ethical and sustainable fashion — has not been tailored to a Chinese context. According to Adam Knight, co-founder of cross-cultural consultancy TONG, Chinese consumers tend to care about different environment-related issues depending on their immediate geography and lived experience. “Depending on your location, this translates into a greater preference for brands that tackle water, air or soil pollution at the local level, rather than a focus on more abstract global issues.”
More concerningly, for a DTC brand, Everlane seems to lack a strong connection to consumers. Although its Weibo presence reportedly saw triple-digit growth from March to June 2020, its customer service “simply did not keep up with Chinese netizen expectations,” Malmsten noted. Plus, a lack of KOLs and KOCs — key drivers in a market that “revolutionized and then supercharged the concept of influencer marketing,” as Knight put it — has hampered the growth of its social media and e-commerce channels.
How brands recalibrate and resurrect
Despite these setbacks, the call of China’s $200 billion apparel market is hard to deny. That’s why Everlane has stressed that it will continue serving Chinese consumers even without a local presence. Everlane’s International General manager said as much in an interview with Jing Daily last year: “When it comes to China, we are only beginning our work here and plan to be in the country in the long run.”
But if the American label wants to return stronger than ever, it will need to go all-in. “[Everlane] needs to leverage profits from the US and other markets to invest in a committed China domestic presence versus cross-border,” Sandzer explained. Additionally, Everlane will require greater brand visibility, he continued, pointing out that it currently has less than 1,000 views per post on WeChat and half a million followers on its Tmall flagship store (far behind Uniqlo’s 24 million followers).
As Forever 21, which recently announced its third foray into China, stated, the road to return is full of thorns. However, by focusing on localization and cultivating Chinese consumer awareness around sustainability, perhaps Everlane can blossom and eventually become America’s Uniqlo its next time around — or, at the very least, stay in the green.
Half Of Chinese Women Don’t Want To Marry. Should Luxury Worry?
What Happened: According to a survey released by China’s Communist Youth League, which interviewed 3,000 local people between 18 and 26, nearly half of China’s young urban women and a quarter of men said they do not plan to marry. Chinese Gen Zers gave several reasons for their choice, including not having time to get married, difficulty finding the right person, and the economic burden of marriage and children.
The survey results worry the country, which attempted to boost its birth rate this year by launching a new three-child policy, lifting its previous ban on having more than two children per couple.
The Jing Take: It may sound surprising that so many unmarried Chinese youths reject the idea of settle down and starting families of their own, but not for the Chinese. The country’s fast-paced “996” work culture, which indicates working six days a week from 9 am to 9 pm, means they barely have time to socialize and meet new people. Furthermore, China has very high living costs compared to its salaries. Today, saving money and buying a house — two indispensable elements for getting married in China — seem like true luxuries.
The news may be a bad sign for many sectors — bridal and childrenswear, for instance — but less so for the luxury industry as a whole. Without needing to save money for weddings, young consumers will have more disposable income to spend on self-rewards like luxury items.
And, as the idea of not getting married spreads among young spenders, high-end Maisons should start thinking about ways to address this target through related marketing strategies. For example, netizens pushed back against the idea that unmarried women could not buy their own engagement rings, which led to young women buying more diamonds for themselves.
Therefore, although this news may not worry luxury brands at the moment, they must continue to react to market needs to stay relevant.
Can Western Luxury Brands Survive the New China?
American businesses are left in limbo as they lack government support from Washington and are under siege in China.
Aside from adapting to changing consumer demands, the multinational enterprises that stayed in China had to deal with an increasingly hostile business environment.
- Instead of solely focusing on Chinese reforms, foreign brands should pay more attention to their challenges in the Chinese economy.
Beijing has come under fire for its policy shifts over recent months, with its new approach towards “Big Tech” and its harsh education and gaming reforms dumbfounding the international business community. Some global players have adjusted to the changing environment, while others didn’t respond well to the new challenges. As such, those businesses were forced to scale back their China operations or even move out of the country altogether.
Some US multinational enterprises (MNEs) have started looking for alternate sourcing sites in emerging markets, specifically Asia-Pacific and Latin America, while others moved factory production completely out of China. This shift, however, was provoked by the ongoing trade war and rising labor costs in China, and having less to do with policy changes.
Already in 2019, CNBC noted “an eight-fold rise in average blue-collar wages since 2004” has pushed toy-makers, shoe manufacturers, and apparel producers to look for alternatives to Chinese manufacturing. Just to put things into perspective, the average hourly wages for China’s manufacturing workers sit at $4.12, according to Barclays research, versus $1.59 in India.
However, CNBC and The Wall Street Journal also highlight the complexity of replacing China with emerging Asia-Pacific economies, as labor shortages, product quality problems, and a lack of specialized supply chains complicate the process.
In 2019, quality issues were on the rise in the South Asian manufacturing sector. According to Qima, India and Pakistan registered inspection failure rates of over 33 and 37 percent, respectively. Meanwhile, over 40 percent of all inspected goods in Cambodia during Q2 2019 were rated outside the acceptable quality level.
The MNEs that stayed in China not only were forced to adapt to changing consumer demands but also to an increasingly hostile business environment. Therefore, they had to lobby their governments for better trade and working relations with China. So far, European companies seem to have gotten a better deal than their American counterparts. And the signing of the EU-China Comprehensive Agreement on Investment (CAI) shows that the European Union is ready to strengthen economic ties with China even though Washington has embraced a tougher stance against the country.
As Corporate Europe Observatory reports, China has used its multinational corporations like Tencent, think tanks, and academic institutions to boost its image with the European Union and promote its flagship program, The Belt and Road Initiative.
Meanwhile, American businesses seem to have been left in limbo as they lack government support and are under siege in China. However, the situation isn’t as doomed as it seems.
Most of Beijing’s policies shifts have been blown out of proportion in Western media, falling into the category of “politics of blaming.” Rather than focusing extensively on China’s reforms, foreign brands should pay closer attention to challenges currently facing the Chinese economy: rising debt, a slowing economy, higher unemployment, and stagnant job creation for young workers.
The Chinese Communist Party (CCP) understands the possible blowback if the economic situation continues to deteriorate. Consequently, it aims to bolster its image through popular policies because Chinese consumers necessarily will demand greater transparency from tech platforms, brands, and idols.
In fact, the overwhelming majority of global consumers demand their governments protect their interests and rights. But too often, Western corporate lobbyists bully democratic government.
“America faces a crisis of corporate capture of democratic government, where the economic power of corporations has been translated into political power with disastrous effects for people’s lives,” says Liz Kennedy, director of democracy and government reform at the Center for American Progress.
Look at it like this: Amazon, Facebook, and Google’s power grab in the US goes unchecked despite consumer demands for limits to their power. Conversely, China’s new policies pose threats to big tech, not consumers.
So what is the endgame of China’s new approach to “Big Tech” and idol economy? Greater control. Not only are happier workers more productive, but they are also easier to control. Countries where ordinary citizens are dissatisfied with democracies fuel rebellions and street uprisings. That leads to economic and political instability.
Meanwhile, Beijing also understands that China is at a crossroads. The CCP faces the risk of losing power because some tech giants (Alibaba, Meituan, and Didi), business executives (Jack Ma), and idols have grown ambitions of becoming extremely powerful. So, to keep a country of 1.4 billion people under control, you cannot have any figure more powerful or charismatic than Xi Jinping or a private company that threatens the status quo of the CCP.
But similar rhetoric is even present in the US, where Republicans rally against big tech companies and business leaders who amassed too much power and became immune from public accountability, such as Mark Zuckerberg and Jeff Bezos.
In the end, taking back power from private companies means censoring Western entertainment and reviving the communist ideologies. Beijing saw firsthand the influence Western values have had on their youth, and they want to rectify that. Chinese cultural values, like those in Japan and Korea, emphasize collectivism, unlike individualistic Western values.
Luxury brands won’t find it too challenging to adjust to these unique circumstances. The impact on their operations will be minimal as long as they avoid controversies and scandals and embrace a more “harmonious” approach similar to the one championed by Elon Musk.
Government Crackdowns, Evergrande, and COVID-19 Dampen Luxury Boom
Index Moves is our monthly analysis of the biggest climbs and drops on The Jing Daily KraneShares China Global Luxury Index, which tracks the global market performance of the luxury sector. The Index relies on the Jing Daily Global Luxury Score and Jing Daily Brand Awareness in China Score in addition to fluctuations in market cap and stock closing price. Below, we highlight luxury brand moves for the month ending September 30, 2021.
September was the worst month for global equities since the coronavirus pandemic hit markets in March 2020 — and luxury goods were no exception. The Jing Daily KraneShares China Global Luxury Index dropped to levels not seen for five months, with every single company in the top ten suffering a decline in September. Given this, have investors realized that the recent growth in the luxury market was unsustainable?
Or perhaps, it’s China, the world’s leading growth market for luxury, that has spooked investors, with September bringing a trio of threats after August’s common prosperity push and a broader crackdown on Chinese tech companies.
First, the government’s renewed crackdown on the gaming sector christened the month, with its temporarily slow approval of new online games to follow. The effect on the luxury market was immediate, according to Thomas Chauvet, the head of luxury goods equity research at Citi. “It shows that regulators can intervene at any point in time in the cycle and decide that some form of growth might be excessive, and some sectors need to be more regulated,” he said.
Then came the Evergrande debt crisis and its impact on consumer spending. More than 80,000 high-net-worth Chinese had bought Evergrande’s wealth management products, and while the company has paid back some investors, others fear they won’t ever see their money again.
Even those that did not invest in those products face exposure to an uncertain property market, in part caused by Evergrande. “If your income hasn’t really changed and your property price has stagnated or even gone down a bit, that probably wouldn’t contribute very positively to you buying another bag because you don’t feel better off,” said Ling Xie, an equities analyst on luxury goods at Credit Suisse.
But the biggest factor affecting luxury markets in September was the resurgence of COVID-19 in Asia. More local lockdowns and restrictions on regional travel meant less luxury spending. “It’s the mechanical effect of restrictions in terms of store closures or restrictions on movements of people or just the fear of going to the mall,” says Chauvet. In fact, the Delta variant didn’t just hurt the market in China; it pummeled those in Japan, South Korea, Singapore, and Macau, as well.
And it also impacts Europe as a result of the continued absence of wealthy Chinese tourist-shoppers. Paris-based Kering, the owner of Gucci, has been the hardest hit among the top ten companies in The Jing Daily KraneShares China Global Luxury Index. Since August, its share price has fallen by around 20 percent, and Gucci has been the source of much of the group’s woes, says a recent report from UBS. Brand momentum has softened on a quarter-on-quarter basis, but investors remain hopeful for the fourth quarter of this year when the Aria collection hits stores.
LVMH led The Jing Daily KraneShares Index for most of September, which shows that investors are optimistic ahead of the company’s Q3 results, released on October 12 (the first set of seasonal results from the luxury industry).
“All in, Q3 shouldn’t be too bad, but with periods of doubt favoring leaders, we see no rush to buy stocks in the luxury sector outside of LVMH,” wrote Erwan Rambourg, the global co-head of consumer and retail research at HSBC, in a report from September 29.
Rather than being viewed negatively, analysts say September’s slump is just a reevaluation of luxury stocks. Watching the market reach record highs this summer, a mere 16 months after most of the world went into lockdown, was unsettling. “The market sentiment has really been around whether luxury companies can sustain that high level of growth into the rest of the year,” said Xie of Credit Suisse.
Investors can therefore expect less hammering and slower but more sustainable growth over the next few months. But there is cause for optimism, too: Analysts point out that travel restrictions will end, the Evergrande debt crisis will get resolved, and COVID cases will go down — they just aren’t sure when.
To Reach Chinese Big Spenders, Luxury Brands Should Open Their Vaults
- A growing number of luxury brands are seeing the benefit of offering archive products to reinvigorate sales and engage younger consumers.
- Meanwhile, brands are cracking down on gray-market resellers by limiting the number of “it-bag” purchases individual consumers can make per year.
- Offering archive collections can be an effective way to fight the resale market and gather data about which products to revive.
China’s luxury market has become far more domestically driven over the past two years, with formerly Europe- or Japan-bound consumers spending more at local brand boutiques and traveling abroad far less, forcing luxury brands to think creatively to boost sales within mainland China. Crimped by the government’s ongoing war on celebrities and the “fan economy,” a (hopefully short-term) spending slowdown, and a growing crop of up-and-coming local brands, 2022 is shaping up to be a complicated year for luxury brands in China.
But what some of the more intrepid brands have going for them is deep archives. Mining its century-long history, Gucci recently launched its “Vault” retail experience, an online concept store that functions, as the brand put it, as “a time machine, an archive, a library, a laboratory, and a meeting place.” Offering Gucci lovers the chance to nab archival pieces as well as new items by emerging designers like Collina Strada and Ahluwalia, the Vault could be a bellwether of what’s to come from brands hoping to keep consumers interested and — in China’s case — spending.
The store’s current stock includes Gucci accessories, leather goods, apparel, and homewares spanning the 1960s through the 1990s, with a smattering of one-of-a-kind, custom pieces not available elsewhere. As creative director Alessandro Michele put it at the launch of Vault, “In my mind, I always had the idea to create a place in constant evolution where ‘impossible’ conversations between objects from different origins, creators, and eras could take place.”
Archive or deadstock collections are becoming a popular way for brands to surprise and delight a global consumer base that is becoming both easily bored and heavily reliant on e-commerce after nearly two years of the COVID-19 pandemic. In the consumer space, earlier this year Nike launched its Refurbished program in 15 stores, giving customers a chance to trade in their worn sneakers, which the brand then refurbished for sale. Among others rolling out similar programs are Madewell and Patagonia. And in the luxury space, British brand Mulberry piloted its “Mulberry Exchange” program this past April, giving customers a chance to trade in their used handbags for credit towards a new purchase, with Mulberry restoring the pre-owned bags before offering them for resale via Mulberry.com and Vestiaire Collective. The same month, luxury giant LVMH launched a program to sell unused textiles to the public rather than letting them go to waste.
After years of being inundated with on- and offline advertising trying to get them to buy the latest and greatest, millions of younger Chinese consumers are turning to archive collections or resale platforms to stand out. As Torsten Stocker, COO of Thakral Corporation, told us in our report Leveraging China’s Online Luxury Resale Boom, “For people born in China in the 1960s and 1970s, maybe they grew up with hand-me-downs from family members, cousins, or neighbors, and it was a particularly tough time. So obviously it’s not a great memory. But of course, now the younger generations, Gen Z and millennials, would be interested in secondhand items. They look at these goods as something quite different and something that others can’t readily get their hands on. It plays into being a bit more individual in consumption, while giving these consumers access to luxury items they can actually afford at a lower price than at the luxury boutiques.”
Recent brand moves indicate that demand for archive or secondhand pieces could only increase in 2022 as brands clamp down on their new products going straight to the secondary market. Recently, Chanel announced a change to the sale policy for its most popular handbags, the Classic Flap Bag and the Coco Handle, limiting the purchases of each bag to one per customer per year. The brand also put in place a new policy limiting customers to no more than two of the same small leather goods per year.
“Opening the vault” to offer archive pieces and reinvigorate sales could be a smart move with a huge amount of content-commerce extensions for luxury brands with relatively long histories. But beyond that, it is also a smart move for brands considering which archive lines to possibly revive, as Dior did in 2018 with the re-release of its 1990s classic Saddle Bag and Loewe did with the 2021 reincarnation of its Amazona, originally created in 1975. Gathering data on which bags appeal most to consumers in different markets could be the perfect rationale to mine the archives and bring back old lines, promoting them via a new generation of spokespeople. (For the debut of the new Amazona, Loewe turned to a wide range of interesting faces, such as China’s Liu Wen and South Korea’s HyunA.)
What’s In A Name? From Fosun Fashion To Lanvin Group
What happened: Fosun Fashion Group has rebranded and will now go by Lanvin Group. Alongside the luxury house Lanvin, the Shanghai group also currently controls Italian luxury shoemaker Sergio Rossi, Austrian underwear label Wolford, American womenswear company St. John Knits, and tailor Caruso. The announcement included the acquisitions of two new investors: Japanese trading conglomerate ITOCHU Corporation and luxury footwear manufacturer, Stella International. This latest capital round sees Lanvin Group’s total amount raised to approximately $300 million. It was established in 2017 by the conglomerate Fosun International Limited.
The Jing Take: As the world changed amid the pandemic, the demand for luxury goods has held firm or even escalated. And with Chinese shoppers making up the largest segment of luxury consumers worldwide, it makes economic sense for the mainland’s conglomerates to double down on the sector. Both Lanvin Group and its main rival, Shandong Ruyi, have both eyed the title of the LVMH of China for a number of years. Reaching that goal would be the ultimate accolade.
When it comes to fashion, Fosun has failed to replicate the successes it has had in other sectors such as real estate and pharmaceuticals. It’s rebranding has to date received mixed reactions, with some advising against putting all their eggs in one basket. However, the move undoubtedly indicates its ambition to build a global portfolio of iconic luxury fashion brands. Lanvin Group sounds international while 复星 or Fosun is undeniably Chinese. Conversely, in China, the rebrand that sees its trade even more explicitly on the 132-year legacy forged by Jeanne Lanvin’s name also plays on words too: lan vin echoes the LV of Louis Vuitton or the LVMH group. (And only time will tell how “Lanvin the brand” which aims to be profitable by 2023 will fare in all of this.)
Although China has (admittedly new) luxury labels and designers, local groups have opted to acquire established European labels as a way of leveraging years of heritage and credibility. Shandong Ruyi continues to struggle and its recent default shows that luxury fashion is costly; success can’t necessarily be bought. The added expertise of Lanvin’s new investors to boost its global supply chain and distribution capabilities shows sound judgement. However, it’s not about mincing global luxury, but appreciating the nuance of creating a “Chinese” luxury group and the implications this will have on global consumerism.
In Luxury, Mindset Is All That Matters
The managerial attitude towards brand opportunities and the willingness to take decisive steps and make critical changes determines a brand’s potential.
Many luxury managers, often without knowing, slow down brand development rather than unleashing it, halted by internal beliefs, doubts, policies, or constraints.
If customers perceive extreme value in their interactions with a brand, there is almost no way for it not to grow.
One of the more fascinating discussions I have is about the preconditions for building successful luxury brands. To me, a fundamental factor, often underestimated, is the brand’s “mindset.”
When I managed one of my first brands, I inherited a situation where the brand had not been growing for fifty to sixty years. The brand’s owners got used to the brand’s size and were happy with the regular cash flow their company generated, even if it was relatively modest.
It was a typical “cash cow” situation. The organizational mindset was: Don’t make any mistakes managing the brand and preserve our market share and profit. In other words, no one could even imagine the brand two, five, or ten times bigger because it had not been growing for so long.
Organizational complacency took over (although no one on the inside saw it this way), and the strategy was “play not to lose” instead of play to win. When organizations believe the cash cow myth and feel content with their brand size, growth automatically stalls. Growth is always a result of the brand’s mindset and management team.
When I assumed responsibility for this brand, I decided not to accept the status quo. Brands with decreasing annual growth rates, flat performance, or decline always signal that the consumer insight they address, the benefit they provide, or the go-to-market strategy they execute have significant gaps and weaknesses. My approach to the brand was different. I asked my team two simple questions: “What would we need to do to double the business within two years?” and “why do we believe the brand is not growing?” I only had one condition: Their answers had to be brutally honest, without politics or unaddressed elephants in the room. Changing a stagnant mindset to a mindset of aggressive growth changed everything.
Our analysis identified that the brand positioning was once differentiated in the early days but grew increasingly like other brands. In other words, when the brand first launched, it addressed a relevant consumer insight, and its proposition was new and different from all other competitors. However, over the years, in a game of multiple competitive moves and intensifying competitive dynamics, four or five other brands emerged that, in essence, offered consumers the same or better propositions. Internally, the myth was that the brand was still “special.” But if we were honest, there was zero differentiation or at least too little.
Over the years, many of the top advertising agencies in the world created campaigns for the brand, infusing it with a lot of creative ideas. However, one critical point never was addressed: How can the brand evolve its positioning and story to unlock growth potential? Because the positioning was too similar to competitors, any attempt at convincing consumers via different advertising approaches, new products, or higher investments did not add interest in the brand.
When I changed the approach by working on the fundamentals first, the brand suddenly grew, surpassing a hundred million dollars in sales in just two years, a five-fold growth after decades of stagnation.
Today, after many years, when I analyze the competitive positioning of brands in many sectors and audit them, I find the same pattern again and again: a lack of differentiation, relevance, and consumer insights in the brand proposition. I also see a similar mindset of playing it safe rather than playing to win. Therefore, no matter how much the team puts in work to advertise, innovate, or expand its distribution, the results are always disappointing if the brand’s fundamentals have significant gaps and its mindset is not set on aggressive growth.
Mindset, as it turns out, is the most fundamental critical success factor. The managerial attitude towards brand opportunities and the willingness to take decisive steps and make critical changes determines a brand’s potential. Too often, brands look for the easy way — doing what they always did, working within clearly defined parameters, thereby allowing competitors to offer better, more customer-centric solutions. Many managers, often without knowing, slow down brand development rather than unleashing it, halted by internal beliefs, doubts, policies, or constraints. Sadly, for many brands, decisive action is only taken when it is too late: when brands tumble into rapid decline after a period of slow growth or stagnation.
A famous saying states that if there is no crisis, brands should invent one. That is because only a crisis breaks down barriers and initiates a mindset change. But a better way is to install a culture of aggressive growth that leads to the permanent optimization of the brand’s competitiveness. It doesn’t matter how brands see themselves from the inside. All that matters is how customers feel when they interact with the brand. If they perceive extreme value in their interactions with a brand, there is almost no way for it not to grow.
Daniel Langer is CEO of the luxury, lifestyle and consumer brand strategy firm Équité, and the professor of luxury strategy and extreme value creation at Pepperdine University in Malibu, California. He consults some of the leading luxury brands in the world, is the author of several luxury management books, a global keynote speaker, and holds luxury masterclasses in Europe, the USA, and Asia. Follow @drlanger
Masha Ma’s Local Playbook Pays Off
Masha Ma has certainly been busy. Following the roll-out of four new doors across Tier-1 cities in September, the local girl has opened Shanghai Fashion Week — a first for an independent designer.
Ma, who graduated from Central Saint Martins in 2008 and quickly launched her namesake company in London, became an early torchbearer for the global acceptance of Chinese designers. Spotted by Martyn Roberts, the founder of showcasing platform Fashion Scout, she became the first of her compatriots to show with him. He was struck by her sophisticated design approach but, even more so, by how she foregrounded her heritage.
“What really stood out to me even back then was that she was very clear that China, and being there, was core to what her brand was about – unlike other Chinese graduates at that time,” Roberts said. Later, as Ma moved to the Paris Fashion Week schedule and consolidated her name from there, she remained focused on building her empire back home through diffusion lines, activations, and experiential retail.
When the pandemic hit, Ma found herself locked down in Australia. But with time to think, she reassessed her priorities as income halted in the first quarter. Then, slowly, the outbreak accelerated business; in April, showroom sales doubled. That season, she stayed on Paris’ digital schedule but with the domestic market ballooning, she has concentrated on her home turf.
Until now, she has avoided its fashion week circuit — not uncommon for homegrown names — but, as she explained, Shanghai is no longer a commercial fashion week. “The government wanted to set the tone to make the fashion week more modern, and this was a precious chance,” she said. “It’s about starting a new wave of China. Eventually, it will be one of the most important fashion weeks, as determined by the market.”
As she debuted Spring 2022 to 800 guests in the iconic Xin Tian Di tent, Jing Daily analyzed her growing dominance in the home market.
Dressing China’s modern women
Since the creation of her brand, Ma has been preoccupied with new ways for women to dress. This season, it’s predominantly about suits and separates, or what she called “a new way of suiting” which debuted at the fashion week’s landmark tent. “I want to give Chinese women the opportunity to dress up,” she explained. “Successful Chinese women are very sharp and strong, but they are also very soft and motherly. So it’s this contrast — almost like soft armor. You wear it to be strong, but then you are protected.”
By using deconstructed draping, Ma’s storytelling reveals the duality that women in Chinese society face. The country is having its own reckoning at the moment with ongoing scandals and the #metoo movement. An empowered workforce are no longer happy with labels like “leftover women.” She herself is present in this duality — not only as a businesswoman and creative but also as a symbol of China’s new globalized generation.
According to Simona Segre Reinach, cultural anthropologist and editor of Fashion in Multiple Chinas, Ma’s position as a global-yet-local designer is an existential condition, of which she was a pioneer. “It is evident that the constant exchange between the creative imagination of the future and the concrete needs of real women in specific places is recognized in her production,” Segre Reinach offered. She continued: “Her clothes reflect the current female condition and are open towards new possibilities and go beyond cultural and geographical boundaries.”
Winning retail expansion on home ground
September 2021’s retail blitz is followed by a standalone boutique, located on the second floor of Shanghai’s Citic Pacific Plaza Mall (Zhongxing Taifu), in the prestigious retail destination Nanjing Road in the Jing‘An District. From December, she joins the likes of Max Mara and Versace on the third floor.
Her multi-brand concept (she stocks between 20 to 30 domestic labels instore) embeds her within the next generation of Guochao names. She’s also taken on a mentorship role by incubating another four brands. With so much talent coming through on the Mainland, Roberts sees this as “a great opportunity to sell a range of brands that compliment your own, but that may not have access to other outlets.” No doubt name-checks on Weibo and Xiaohongshu from one of China’s biggest KOLs, Viya, help to drive awareness.
This steady retail footprint growth, alongside the hometown fashion show, is geared towards a transition: from designer, to a group known as SPMA, which stands for Self Pride Massive Attack. A $40 million investment secured in 2018 attests to that ambition. Still, for Ma who is the artistic force behind the label, it’s about the basics.
“It was never about being a CEO of a group — that was never my starting point,” she said. “But I got through this pandemic and sustained a company and did a lot of commercial stuff to keep things going. So now, I just want to be creative.” Yet, as she concedes herself, this fledgling group is “pressure.” She can clearly handle it.
Hainan Sales Hit New Records During China’s Golden Week
What Happened: During China’s week-long National Day holiday, travel numbers fell 1.5 percent compared to the previous year. According to China’s Ministry of Culture and Tourism, 515 million domestic tourists traveled nationwide between October 1 and 7. And tourism revenue during the Golden week holiday only reached $60 billion (389 billion yuan) — roughly 60 percent of what it was in 2019 and a drop of 4.7 percent compared to the same period last year.
But Hainan offered a bright spot. Sales between October 1 and 6 at nine duty-free shops on the southern island totaled $252.3 million (1.64 billion yuan), according to state media. That marked an increase of 75 percent over the same period in 2020 and more than four times more (a 359-percent jump) compared to the same period in 2019.
The Jing Take: Known as “China’s Hawaii,” Hainan has become a favorite shopping destination — a substitute for the former shopping heaven of Hong Kong — for luxury consumers who couldn’t travel abroad during the pandemic. Luxury houses from fashion to hard luxury have already spotted this opportunity and accelerated their activities on the island. Recently, Ferragamo inaugurated a pop-up store that led visitors on a curated journey through the house’s silk heritage. Meanwhile, Swiss watches like Rolex and Audemars Piguet hosted an exhibition titled “Watches and Wonders” in Sanya, a city on Hainan. And given the continuous opening of major luxury boutiques on the island, Hainan will likely hold an increasingly important role.
As such, brands that fail to have a presence in the duty-free destination may lose a significant share of the Chinese market — or maybe not. China’s 14th Five-Year Plan proposes extending duty-free areas to cities like Shenzhen and Shanghai. Given the current popularity of Hainan, one can foresee a similar scenario for the major cities on the list.
Nonetheless, this exotic resort presents great experimental soil for brands to find the right approach to duty-free buyers that they can apply to future local shopping heavens.
LOUIS XIII Thriving on China’s Booming Luxury Market
First created in 1874, LOUIS XIII has made a name for itself as being one of the most prestigious cognacs in the world. Encased in a delicate decanter, it has been served at some of the most resplendent and majestic occasions throughout history.
The involvement of LOUIS XIII with China dates back to 1880 when the first decanter of LOUIS XIII was shipped to Shanghai. According to the “China Unstoppable 2020 Luxury Market” released by Bain & Company, China is expected to become one of the biggest luxury markets by 2025. LOUIS XIII has been growing its awareness amid a booming domestic spending in the luxury sector.
From communication to retail, LOUIS XIII continuously innovates by bringing meaningful topics to the attention of younger generations. With the respect of heritage and transmission, LOUIS XIII launched the “Heritage Awakening” (《再造100年》艺术计划) in 2014, a non-profit initiative serving to preserve Chinese craftsmanship by conversing with a new generation of contemporary and aspiring artists to reinterpret traditional culture and encourage exploration in the future.
With offline boutiques in Beijing, Xi’an, Shenzhen and Hangzhou, as well as digital flagship stores on Tmall, JD.com and WeChat, LOUIS XIII expanded its address book of China boutiques to a fifth location at Plaza 66, Shanghai in June of this year. This set a new milestone for its global retail strategy. At the opening event, Jing Daily caught up with Nicolas Beckers, CEO of Rémy Cointreau Greater China, to learn about the brand’s heritage, its long-standing journey with Chinese customers, and his vision for the local market.
Jing Daily (JD): What shifts have you observed in the industry in recent years?
Nicolas Beckers (NB): China has been one of the first major countries in the world to recover and thrive in recent years. Currently, the Chinese clients cannot travel internationally. This means that they now purchase LOUIS XIII in the domestic market.
Clients in China are getting younger and more sophisticated. They show greater interest in sustainability and environmental issues and search for brands who focus on this in their operations and marketing strategy. In addition, they are digitally savvy, mixing offline and online experiences as well as being active on social media.
JD: What do LOUIS XIII’s typical Chinese clients look like and how do they compare to ones from other markets?
NB: LOUIS XIII is not only a cognac, but also an icon of luxury. We believe that our clients are all looking for customized experience and refinement.
JD: Why did LOUIS XIII choose Shanghai as its next official offline presence for the brand?
NB: LOUIS XIII was first created in 1874. Then, in 1880, that very first decanter was shipped to Shanghai, thus beginning a history of more than 140 years with China. The story of LOUIS XIII in China started here in Shanghai.
LOUIS XIII is targeting only leading partners and luxury malls or department stores. We are delighted to open LOUIS XIII Shanghai Boutique at Plaza 66, which is a landmark for luxury retail in Shanghai, and in China.
[LOUIS XIII Shanghai Boutique at Plaza 66. Photo: LOUIS XIII]
JD: What experiences can visitors expect at the new boutique?
NB: Our clients will have access to our range of products: from the LOUIS XIII CLASSIC, LOUIS XIII MAGNUM, LOUIS XIII LE JEROBOAM to the monumental LOUIS XIII LE MATHUSALEM, in addition to limited editions. Furthermore, clients can ascertain our brand’s heritage in a more modern, digital approach through the ‘Century Wheel’ displayed at the center of the boutique. Customers can also revel in the ritual and the tasting experience of LOUIS XIII. Our boutique tasting officers are delighted to share the LOUIS XIII French art-de-vivre and tasting experiences.
Recently, we have revealed the “Time Capsule,” an artistic and interactive installation which offers different expressions of the time and space of LOUIS XIII, an invitation to embark on a poetic journey.
JD: Outside of brick-and-mortar, what has LOUIS XIII implemented to engage Chinese consumers and what are your digital initiatives?
NB: In addition to offline boutiques, LOUIS XIII has two flagship e-boutiques on JD.com & Tmall, and also one on WeChat. In selected cities like Shanghai, we offer special services like delivery within six hours after confirmation. When possible, our brand ambassadors would ensure the delivery, as they are able to provide a full tasting experience while professionally representing LOUIS XIII.
JD: LOUIS XIII has shown its commitment to Chinese culture through various projects. How do you approach traditional Chinese culture in the modern context?
NB: At LOUIS XIII we believe that the present is a promise of the future, it’s also a reminder of the past. When we look into China – a civilization with a brilliant legacy – we discovered that there are a lot of exquisite techniques, and craftsmanship that have been passed down over centuries. Thus, the “Heritage Awakening” Project (《再造100年》艺术计划) was initiated in 2014 to recreate or to develop some Chinese artisan heritage in a more twenty-first-century approach. This idea aligns with our brand value “THINK A CENTURY AHEAD” and hopes to convey the original heritage and delve into what it could mean for the Chinese consumers in the coming future.
[LOUIS XIII Heritage Awakening Xishuangbanna Experience of Transmission and Recreation. Photo: LOUIS XIII]
JD: In addition to the Heritage Awakening Project, how does LOUIS XIII interpret and communicate “THINK A CENTURY AHEAD”?
NB: We have two global initiatives engrained with this vision. The first is a film called “100 years” imagining what the world might be like in the next 100 years. This film will be released in 100 years, meaning that no one will see it before then. The second project is a song also named “100 years” which is engraved on a clay disk made of soil from the Cognac region which is where LOUIS XIII comes from. This clay disk has been enclosed in a box for safekeeping and will only be opened if we have managed to control climate change.
JD: How will LOUIS XIII expand its footprint in China in the coming years? And what kind of future, in China, can we expect from you?
NB: China is a strategic market in which LOUIS XIII genuinely wants to develop its business. We will continue to develop our own boutiques as we have a client-centric approach and we will continue to engage with our clients and provide them with a memorable and customized experience. The essential channels for LOUIS XIII right now are leading malls and department stores so we can expect even more exciting openings throughout China.
How LVMH Dominated Luxury and Where the “Bling Supremacy” Goes Next
LVMH shares what many other successful luxury companies have: a family shareholder and a long-term view.
LVMH differs from its peers through its decentralized model, which favors entrepreneurial attitudes, speed, and the spirit of conquest.
- As the biggest group in the sector, it is LVMH’s role to help redefine luxury itself.
LVMH has become the proxy for the luxury industry, thanks to its strong organic sales growth and acquisitions. In fact, after having published The Bling Dynasty in 2014 and Future Luxe a year ago, I might have to publish another book in 2030 called LVMH: A Luxury Supremacy.
Indeed, the only element of guidance the group has ever offered is its commitment to taking market share. In Churchill’s spirit of “you should never let a good crisis go to waste,” the group pushed its leading brands (Louis Vuitton, Dior, Tiffany, Hennessy, and more) further ahead and welcomed new ones into its sprawling portfolio. Meanwhile, some others went stale over the past 18 months. I don’t think there is “secret sauce” at LVMH, but I would like to point to four differentiating factors:
When LVMH announced it was purchasing Tiffany, the group said it would enable the jewelry brand to move away from a quarterly focus, as it was a victim of being a listed company that came under investor scrutiny every three months. The irony of this comment was lost on no one, given that LVMH is a listed company itself. But with a family shareholder, a proper next-generation view, and a long-term target of gaining market share, few decisions could be made in the short-term that even remotely affect brand equity or long-term prospects.
One of the 21 projections I made in my book is that CEO Bernard Arnault would eventually become the richest man in the world (and he has topped Amazon’s Bezos a few times since then, depending on equity market vagaries). And while many will argue there are more important things in life, you don’t build wealth in the luxury sector by having a “take the money and run” attitude. Put the work in, be ambitious, take risks, stay hungry and keep in mind that success does not happen overnight.
Dior has undoubtedly been a phenomenal success of late, tripling sales over the past three years and likely approaching 6 billion euros this year — steady growth in the face of COVID-19 constraints. But this strength wasn’t built overnight. The brand many consider Bernard Arnault’s “baby” for which no expense should be spared and which has only one external benchmark, Chanel, has had the best retail locations, talent, and financial means. But “consistency” has only recently enabled it to break out.
Just because you think long-term, it doesn’t mean you can’t be quick. Witness what is happening at Tiffany. Nine months after taking it in, LVMH has hired a dream team for the jeweler while launching new products (when that usually takes more than a year to accomplish) and a global media campaign (don’t tell me you missed Jay Z and Queen B).
It is difficult to imagine that happening anywhere else. And, yes, it likely helps the process that one of Bernard Arnault’s gifted sons works at Tiffany. But six months in, most observers already said LVMH had turned it around when, more than four years in, Burberry’s turnaround is still a point of contention, and the CEO responsible for the repositioning of that brand has chosen to move on. There is a sense of urgency and execution that is almost dizzying at LVMH, which, sure, implies risk. But consumers want to have fun, and the “same, same” won’t cut it.
Having a good track record and a very diversified brand portfolio helps attract top talent. But the group is also good at moving star managers around quite efficiently, and many top CEOs have gone through the “Louis Vuitton school” and then applied their magic on other assets.
That is the case for the Dior and Tiffany CEOs, but it is also true at the helm of cognac and Champagne leader Moët Hennessy (the “MH” in LVMH). While the group has decidedly been influenced by Mr. Arnault and his family, key assets at LVMH are run by some of the best professionals in the luxury business (in management and creative roles.) The rise of Virgil Abloh within the group is the most visible example.
As an innovative independent company, Moncler has successfully defined “new luxury” as the space between Chanel and Nike. As the sector’s leader, it is the role — in my view — of LVMH to define where luxury goes next and how it should capture an incremental portion of wealthy consumer wallets. Travel? Sure, welcome, Rimowa. Hospitality? Why not. Welcome, Belmond. What’s the next Champagne-like category? Rosé wines? Perhaps they have taken that on board, as well.
With its financial means, the group has the luxury to look at M&A, JVs, and other approaches to continue to reshape and redefine the industry. As Abraham Maslow once said (yes, the same Maslow whose pyramid luxury consumers are climbing): “In any given moment, we have two choices: step forward to growth or step backward into safety.” LVMH is not drawn to safety.
Erwan Rambourg has been a top-ranked analyst covering the luxury and sporting goods sectors. After eight years as a Marketing Manager in the luxury industry, notably for LVMH and Richemont, he is now a Managing Director and Global Head of Consumer & Retail equity research. He is also the author of Future Luxe: What’s Ahead for the Business of Luxury (2020) and The Bling Dynasty: Why the Reign of Chinese Luxury Shoppers Has Only Just Begun (2014).
What’s Behind China’s Luxury Shopping Slowdown?
What Happened: Insight group LookLook has conducted research in September among 100 Chinese affluent women under 40 who spend at least $10,000 a year on luxury purchases and revealed that the recent slowdown in spending is just a temporary short-term pause. “After healthy levels of spending on luxury skincare, handbags, and jewelry in early 2021, the Chinese luxury buyer is recalibrating to global caution around the Delta variant,” stated LookLook, adding: “Feeling less urgency to purchase due to travel restrictions, she’s waiting until she can resume her luxury spending abroad. When borders reopen, expect luxury ready-to-wear sales in particular to jump dramatically.”
The research also sheds light on the power of domestic luxury brands and the local enthusiasm for national brands. Beauty and cosmetics are particularly sensitive to the changing attitudes of Chinese consumers. Foreseeably, LookLook also highlights that virtual luxury is the big winner. Chinese luxury consumers like brands who give them the ability to experiment with AR and AI try-on, new avatar technology for e-commerce, and gamification elements.
The Jing Take: Nearly all major luxury brands have implemented advanced gamification strategies to attract the ever-growing gaming tribe. However, to date, most global brands don’t seem well-equipped to deal with rising competition from local players. For example, take the Chinese beauty industry, which has seen a serious shakeup over the few years, with Perfect Diary and Pechoin stealing market share from L’Oréal Paris, Lancôme, and Estée Lauder. But this is hardly surprising when you consider that local brands continue to be much better at hyper-targeted advertising and identifying specific regional needs.
Furthermore, domestic brands have lower volume capability; thus, many of their products feel a bit more unique and seasonal than products produced on large scales by beauty groups like L’Oréal Paris. Considering that seasonality has become the key marketing trend of the beauty industry, it is understandable that domestic beauty brands have found a path to success in China thanks to their flexibility and adaptability.
As for LookLook’s insights on the temporary short-term pause on spending, it’s too early to conclude that Chinese consumers are cutting back on luxury purchases because they await the moment when international trips resume. Instead, concerns over China’s economic slowdown, energy shortages and supply chain disruptions are increasing, and with them, the growing fear of a perfect storm, ushering in a decline in economic activity and consumption, which would hurt far more industries — at home and abroad — than luxury.
Who Won the Chinese Market at Paris Fashion Week?
Jing Daily analyzes the final of the “big four” fashion weeks for the Jing Daily Fashion Week Score. From Paris Fashion Week — which managed to produce an impressive and inventive array of physical runway shows — we evaluated how a brand’s collection resonates with the Chinese audience through a range of parameters. Brands took guests on journeys, not only flights of the imagination, but to glamorous locations around the city too: Saint Laurent’s thundering waterfall underneath the tower Eiffel, Louis Vuitton at the Louvre Museum, and Chloé by the Seine.
Iconic names like Dior, Saint Laurent, and Chanel drew huge traffic to their shows thanks to the presence of their Korean ambassadors, namely Blackpink members Jisoo at Dior, Rosé at Saint Lauren, and Jennie at Chanel. There was, however, some disruption as well, namely at the Louis Vuitton show, where a climate activist protested the runway show.
Moreover, while independent labels from China were notably absent, the Hermès’-backed brand Shang Xia created much buzz following the appointment of fashion maverick Yang Li. Its debut at the event was a minimalist, tailored affair. Chinese model Cong He walked the runway, and appeared in eight other shows including Miu Miu, Givenchy, and Fendi. Overall, there was a distinct lack of Asian faces at the show with an average of three looks per show.
And finally, The Simpsons made an appearance thanks to Balenciaga’s branding experiment, but the closing show was the most poignant: 45 fashion houses celebrated the late Alber Elbaz under the banner “Love Brings Love.” Gucci, Dior, Valentino, Louis Vuitton, and Comme des Garcons all created looks for the AZ FACTORY Spring Collection. A fitting tribute to one of fashion’s icons.
Model representation: evaluates representation of Asian models on the runway.
Digital impact: evaluates Chinese netizen reception and engagement on leading social media platforms, including Weibo, WeChat, and Xiaohongshu.
KOL & celebrity visibility: consider the star power associated with the brand through strategic KOL and celebrity partnerships.
Special brand efforts: consider special programs or efforts on a brand’s part to speak to the Chinese audience. Company or brand contributions toward the ongoing virus crisis are also considered.
Design context: a qualitative assessment of how the brand’s collection will speak to the Chinese audience based on current trends and preferences.
Brand history: considers existing brand history in China, including overall presence, social reach, number of stores, earning trends, and brand missteps.
Brand History: Louis Vuitton enjoys over 7.3 million followers on Weibo and is one of the most followed luxury brands on the platform. The house counts 57 stores in China, placed in the most prestigious venues. In 2020, the brand kicked off its worldwide popup exhibition “See LV” in Wuhan, which had just recovered from the COVID-19 outbreak. The popup received immense popularity, drawing between 2,000 and 3,000 visitors daily.
Model Representation: 6/45 looks
Influencer Impressions: The show’s livestream invitation was sent by celebrities like Liu Yifei and Zhong Chuxi, while influencers @ElephantKingdom, @AnnyFan, and @Mr.Jiliang posted about the show, leading to a remarkable social reach of 210 million netizens in total.
Netizen Reaction: Overall divided. Louis Vuitton’s 19th century-inspired monumental skirt was a focal point for netizens, but opinions were mixed. While some found the design very appealing, others judged it to be “clumsy.” However, the focus quickly shifted from the collection to the protester who managed to get onto the catwalk while carrying a sign that read “Overconsumption = Extinction.”
The Verdict: By leveraging its two popular ambassadors, Liu Yifei and Zhong Chuxi, Louis Vuitton garnered nearly 40 million views for its livestream show. This number is impressive, especially considering the brand lost an important ambassador — Kris Wu — in recent months. It seems this celebrity scandal has not affected the French Maison much at all.
Brand History: The French Maison Saint Laurent, beloved for its handbags and glamorous dresses, owns over 50 stores in China’s Tier-1 and Tier-2 cities. But, surprisingly, the luxury house lacks a Chinese brand ambassador. As such, its official Weibo follower count is well below the average of its rivals — numbering only 427,900.
Model Representation: 3/62 looks
Influencer Impressions: With influencers like @MaissenH, @Dipsy迪西, and @PipiJuice as well as fashion media outlets @Vogue, @Bazaar, and @MadameFigaro posting about the show, social reached an impressive 210 million netizens in total.
Netizen Reaction: Overall highly positive. Netizens were charmed by the thundering waterfall set of the Spring 2022 show, set beneath the Eiffel tower. But even more charming were the dresses and all the collection details. Some netizens commented that they wanted to purchase as many as ten items, with some stating that Anthony Vaccarello was a genius.
The Verdict: Although Saint Laurent missed the opportunity to have a Chinese ambassador promote the show, the collection still reached the Chinese market. Thanks to Rosé, the brand’s global ambassador, Korean idol, and Blackpink member who attended the show in Paris, the brand received impressive organic content and traffic on Weibo (the celebrity has a solid following of 3.2 million followers in China).
Brand History: Dior is one of the top luxury brands in China, where the French Maison has over 7.2 million followers on Weibo and 286,000 followers on Xiaohongshu. The brand’s popularity is due to its long legacy and heritage, and local consumers prefer its handbags, ready-to-wear, and makeup line.
Model Representation: 6/87 looks
Influencer Impressions: With celebrities like @Angelababy and fashion press such as @Cosmo, @Vogue, and @Elle posting about the show, social reached an impressive 270 million netizens in total.
Netizen Reaction: Overall negative. This time, Dior’s womenswear creative director, Maria Grazie Chiuri, delivered a clean and minimalistic collection for its Spring 2022 show. However, the sudden shift from its original style has not impressed netizens, and they have accused the brand of plagiarizing Prada and Miu Miu’s previous runway looks. Some even mocked the show, describing it as “Dior by Miuccia Prada.” So, will the collection sell in China?
The Verdict: Dior knows the formula for garnering traffic on Chinese social media platforms: leaning on celebrity influence. Before the show, it invited six domestic stars with a combined following of over 45 million followers to announce the preshow invitation. Yet, K-pop idol and Blackpink member Jisoo was the idol that attracted the most traffic for Dior both in China and worldwide. The brand livestream on Weibo hit over 50 million views, and many of those viewers were supporters and fans of the Korean celebrity.
Brand History: The 184-year-old Maison Hermès has over 65 stores across China. The French house is one of the most valuable brands worldwide, and its iconic handbags — the Birkin, Kelly, and Constance — are considered social currency for Chinese consumers. Nonetheless, the brand is diversifying its offerings to avoid over-relying on one hero product. Recently, it launched a gym store popup in Chengdu and created a WeChat Mini Program offering free gym courses. Additionally, the brand released a China-exclusive blush for its newly introduced makeup line.
Model Representation: 6/57 looks
Influencer Impressions: With influencers like @Anny Fan and@Mr.Jiliang and fashion press @Elle, @iWeekly, and @Bazaar posting about the show, social reached a remarkable 83 million netizens in total.
Netizen Reaction: Overall positive. “Superior” and “classy” were adjectives used to define Hermès’ Spring 2022 collection, if not its entire collection. As usual, the brand used fine fabric and clean, majestic silhouettes for its garments. The monochrome looks and the use of leather were also widely appreciated by netizens.
The Verdict: As usual, Hermès does not lean on any celebrities or KOLs. Yet, thanks to the preshow announcement from media outlets @iWeekly and @Elle, who have a combined following of 25 million followers, the livestream show attracted over 8 million views.
Brand History: With 35 stores across China’s Tier-1 and Tier-2 cities, Balenciaga has yet to expand its footprint in the country despite its current popularity. Indeed, the brand’s street-style approach to luxury is beloved by local Gen Zers, and its latest collaboration with Gucci heated up the Chinese web. Although the brand became embroiled in some controversy for a racist campaign, the house still enjoys a solid following of culted buyers in China.
Model Representation: 4/64 looks
Influencer Impressions: With influencers like @Fashion_Bangz, @Mr.Jiliang, and @Youranmila and fashion press @Elle, @Bazaar, and @MarieClaire posting about the show, social reached an impressive 163 million netizens in total.
Netizen Reaction: Overall positive. Finally returning to physical shows, Balenciaga’s Spring 2022 collection surprised the audience with its originality. The show opened with a short film in collaboration with the cartoon The Simpsons. Then, the collection was presented just like a Hollywood red carpet film festival. The show’s originality has amused netizens, and many looks were loved (yet some expressed it was far from their understandings of fashion).
The Verdict: Balenciaga continues to capture netizens’ attention through its groundbreaking approach to fashion and catwalk shows. The brand does not lean on any celebrity influence, but the originality of the short film has paid off: The brand garnered over 8.2 million views for its livestream.
Brand History: After its acquisition by the Fosun Group, the brand consolidated its presence in China by appointing actress Zhang Xiaofei (5.6M followers) and actor Yu Menglong (27M followers) as brand ambassadors. The brand now counts 11 stores in Chinese cities: Beijing, Shanghai, Chengdu, Hangzhou, Sanya, Hong Kong, and Taipei.
Model Representation: 4/49 looks
Influencer Impressions: Thanks to the coverage from influencers like @ElephantKingdom, @FashionAmberR, and @PipiJuice and fashion media outlets @Elle, @Bazaar, and @Wallpaper, social reached a remarkable 153 million netizens in total.
Netizen Reaction: Overall divided. While some netizens considered Lanvin’s use of bold prints and metal colors too daring, other people appreciated the fashion-forward spirit. Additionally, the brand collaborated with the Marvel hero Batman. There were many references to the character, for instance, on a sneaker with Batman printed on it, which attracted particular attention from netizens, who joked about the shoes.
The Verdict: Thanks to the actor Yu Menglong, who enjoys a loyal following of over 27 million fans on Weibo, the brand garnered massive traffic for the show’s livestream, which was co-hosted by the young celebrity. As Chinese stars are unable to attend physical shows in Europe, co-hosting livestream shows seems like a great way for brands to lean on their ability to drive traffic.
Brand History: Chloé owns 18 boutiques in China’s major cities and is present on popular social platforms Weibo, Wechat, Xiaohongshu, and Douyin. Renowned for its iconic Faye, Drew, and Nile handbags, it is time for the brand to release the next IT bag to consolidate its positioning in the dynamic Chinese market.
Model Representation: 3/31 looks
Influencer Impressions: With influencers like @悠然米拉, @YangfanJame, and @ElephantKingdom and fashion media outlets @Vogue, @InStyle, and @Grazia posting about the show, the brand reached an impressive 170 million netizens in total.
Netizen Reaction: Overall divided. There were mixed opinions about Gabriela Hearst’s latest collection for Chloé. Some netizens expressed their appreciation for the vibrant color tones and the exquisite tailoring presented in the collection. Yet, others argued that it was far from being commercial and couldn’t be sold.
The Verdict: The collection continued Chloé and its creative Director Gabriela Hearst’s commitment to sustainable and ethically-made garments. But although China has seen much talk around sustainability, its consumers are not prepared to fully embrace the concept yet. Nonetheless, as more netizens become climate-conscious, pioneering brands could get reimbursed for their initiative. Perhaps Chloé can find some sustainably committed ambassadors in the Chinese market for better targeting its consumers?
Brand History: On September 22, SHANG XIA — jointly owned by Exor, Hermès, and Qiong’er Jiang — announced it appointed designer Yang Li as its fashion creative director. Following a 60-percent sales increase in 2019, the brand expects to keep growing under Li’s new creative direction while expanding its retail presence in exclusive locations in China and beyond. Currently, SHANG XIA has garnered around 69,100 followers on Weibo.
Model Representation: 7/37 looks
Influencer Impressions: With coverage from fashion media outlets @Bazaar, @SohuFashion, and @SinaFashion, social reached an impressive 60 million netizens in total.
Netizen Reaction: Overall divided. This time, Yang Li’s distinctive gothic-punk design approach wasn’t present in the collection. Instead, the designer showcased clean and minimalistic silhouettes that focused on colors and tailoring. This exquisite craftsmanship was enjoyed by the majority of netizens. Yet, fans expected a greater infusion of Chinese aesthetics, and for some, the show felt boring.
The Verdict: Yang Li’s debut collection for SHANG XIA was highly anticipated by the media, and netizens were intrigued to know what the talented designer would bring to the brand. For Spring 2022, the creative director perfectly married the brand’s DNA, with some netizens calling the collection “China’s Hermès.” Although the looks were sober, considering the progressive clientele of SHANG XIA (who looked toward more sophisticated and less ostentatious garments), the clothes ultimately fit with the brand’s targeted segment.
Brand History: Marine Serre’s official Weibo account only has 4,045 followers, but this figure does not do justice to the brand’s popularity in China. In fact, it has garnered over 6,700 UGC instances of consumers showcasing their Marine Serre looks on the lifestyle platform Xiaohongshu. Currently, the brand is stocked at 14 renowned stockists in China, including Lafayette, SKP, and Dover Street Market.
Model Representation: 5/53 looks
Influencer Impressions: Thanks to the coverage of fashion media outlets @Sinafashion, @Tencentfashion, and @Phoenixfashion, social reached 30 million netizens in total.
Netizen Reaction: Overall positive. Although the looks featured unearthly designs and style combinations, netizens found the collection oddly beautiful. Aside from Marine Serre’s avant-garde approach to fashion, the brand’s popular moon monogram has been a key sales driver in China and worldwide.
The Verdict: The niche brand has raised impressive awareness in China, thanks to its instantly recognizable moon monogram. However, hype brands succeed quickly but quickly fade from the public eyes, too. Given its current popularity, Marine Serre should further penetrate the market by dressing local celebrities and KOLs. That would ensure continued exposure and keep it relevant in China.
Reported by Lisa Nan and Gemma A. Williams
Secondhand Luxury Platform Profile: Alibaba’s Idle Fish
The following is one of 11 online resale platform profiles included in Jing Daily’s latest market report, Leveraging China’s Online Luxury Resale Boom. Packed with case studies, revenue-generating best practices, spotlight interviews, and in-depth profiles of domestic Chinese resale platforms, the 68-page report is crucial for anyone looking to understand the huge potential of secondhand luxury demand in China.
Secondhand Luxury Resale Platform Profile: Idle Fish (闲鱼)
Alibaba launched its resale platform Idle Fish (originally “Taobao Secondhand”) in mid-2014, and it was the first e-commerce channel focused exclusively on resale. Leveraging Alibaba’s vast user base and well-developed ecosystem for transactions, Idle Fish was founded on the concept of providing a convenient way for users to resell any unused (i.e. “idle”) goods, especially Taobao purchases that they may have come to regret (the platform’s competitive pricing and frequent discounts have tended to encourage excess consumption).
Idle Fish allows secondhand items to be listed for sale online (for Taobao purchases, this can be done with one click), and incorporates Alibaba’s Alipay to streamline the payment process.
Idle Fish has become the dominant force in the secondhand market, with around 300 million registered users. As of January 2021, Idle Fish held a 70.7 percent share of China’s total resale market. Idle Fish’s 72.9 percent market penetration rate is more than double that of its nearest competitor, Zhuan Zhuan (33.1 percent).
Idle Fish expects to hit RMB 500 billion ($77.2 billion) in GMV in 2021, a significant increase from RMB 200 billion ($30.8 billion) in 2020 and RMB 100 billion ($15.4 billion) in 2019. In 2020, Idle Fish sold more than 10 million luxury items worth approximately RMB 4.5 billion ($702 million).
Idle Fish has yet to make a strong move into luxury resale, but this could change given parent Alibaba’s vast resources. As Tmall Luxury Pavilion, the leading platform for designer fashion e-commerce in China, continues to expand and consumers become more concerned about sustainability, Idle Fish could potentially become a major player in China’s luxury resale market, perhaps even spinning off a premium goods division following the Luxury Pavilion model.
Idle Fish has also established a strong connection with celebrities and influencers, launching a dedicated sales channel for them to part with their unused items and PR gifts that has proven popular among fans as well as shoppers who may be intrigued by secondhand luxury but concerned with authenticity and provenance. And as Chinese consumers show greater willingness to shell out for big-ticket purchases online, luxury resale can stand to benefit. In April 2021, Idle Fish hosted a charity auction of costumes and other items from the hit fantasy drama Word of Honor that raised nearly RMB 1 million ($154,000), with an elaborate robe worn by one of the stars going for more than RMB 220,000 ($34,000).
Idle Fish has also emphasized boosting trust for its users. In December 2020, the platform introduced a “worry-free purchase” (无忧购) service, contracting with professional examiners to provide certificates of authenticity and offering seven-day returns with free shipping, with triple refunds guaranteed if a counterfeit product is delivered. Idle Fish has also been developing online community-based and offline authenticity services, and while it is not alone in prioritizing consumer trust, Alibaba’s experience in quality control via Tmall and Taobao and the integration of Alibaba’s “Sesame Credit” system, which uses consumer data and transaction history to assess trustworthiness, could offer consumers greater assurance than other platforms are capable of.
In July 2021, Idle Fish doubled down on initiatives to appeal to Gen Z consumers by emphasizing trendy shopping categories, which could serve as a gateway for sales of more premium goods. The “Idle Fish Trend Community” (闲鱼潮社) channel targets young consumer passions for sneakers, streetwear, and collectible designer toys. At the same time, Idle Fish launched a campaign inviting well-known collectors, brand managers, and sellers to participate in the new community. Idle Fish’s large user base and name recognition create the potential for it to outpace its rivals as a streetwear community, and it can draw on the experiences of Tmall, for example, in leveraging Alibaba’s vast trove of consumer data to capitalize on the latest trends among fans of popular product categories. Already, one collector of the trendy Be@rbrick figurines has noted that almost half of China’s Be@rbrick collectors are active on Idle Fish.
While Idle Fish is pivoting towards encouraging users to buy and sell more high-end items, its origins as a sort of online “flea market” give it a distinctly non-luxury sheen, potentially making it a harder sell for the platform to enlist luxury brands to get on board.
Get your copy of Leveraging China’s Online Luxury Resale Boom on our Reports page.
Death by a Thousand Cuts: The Financial Perils of Bad Luxury Choices
The pandemic has been an accelerator in the world of luxury across several dimensions. And while only a few brands publish their numbers, chatter behind the scenes reveals many smaller brands have come upon significant financial troubles, many self-inflicted.
When analyzing these underperforming brands, the same themes recur: too much focus on internal matters and managing the brands from a manufacturing perspective. That results in myopia when it comes to consumers, trends, preference shifts, and consumer connection.
One of my most vivid memories over the past two years comes from an ultra-luxury food brand I visited two years ago in Europe, just a few months before the pandemic started. The brand owner refused to pivot to a more consumer-centric approach to create desirability and went out of business when consumption patterns changed. That is because the brand didn’t have tools in place for sensing these changes early enough — nor did it have a consumer community to serve digitally.
Strategic mistakes come at a high cost. One of them is the lack of brand differentiation that hits many brands hard. What I hear often is: “We play it safe and follow market trends.” But that is the safest way to go out of business. Customers expect luxury brands to be influential and inspiring. As such, a bold and differentiating approach that delights consumers with new, creative, and original ideas is a prerequisite for luxury success.
And when brands do fundamentally the same thing as their competitors, they don’t generate enough desirability to price for the value they create. Even worse, the mantra persists in many companies that promotion is the only way to stay in business. What promoting luxury brands underestimate is how each promotion is like a small wound, weakening brand equity by nearly begging loyal customers to not buy at full price ever again. The final result is massive profit erosion. Luxury brand promotions are like death by thousand cuts: long and painful but inevitable.
Another strategic mistake is to run a luxury business in China with the same principles as businesses in the US or Europe. According to Équité’s market monitoring, this leads a large percentage of luxury brands to lose money or never recoup their cumulative losses in China. As local social networks and digital platforms become the predominant retail platforms (now at a digital share of almost 50 percent in China), losing momentum versus the leading brands will throw already disadvantaged players into an uncertain future.
Today, much more strategy and a change in execution are needed to manage luxury brand finances. Brands need to pivot their focus away from the product and toward a holistic brand experience, from being a manufacturer to being an extreme value creator, from acting as a follower to acting as an influencer, and from working on promoting to working on brand equity building. “Easy growth” is death by a thousand cuts in disguise. Don’t take that route.
Squid Game Star HoYeon Jung Is Louis Vuitton’s New Global Face
What Happened: Right after its Paris fashion show was interrupted by a protestor who walked onto the catwalk carrying a sign that read “Overconsumption = Extinction,” Louis Vuitton named Netflix hit series Squid Game star HoYeon Jung its global brand ambassador for the house’s three main lines: fashion, jewelry, and watches.
The news quickly sparked interest on the Chinese internet. Although Netflix is not accessible in China, interest in the South Korean survival drama has exploded there. The hashtag #鱿鱼游戏# (#SquidGame#) has racked up more than 1.7 billion views. Meanwhile, Jung quickly amassed 14 million followers overseas on Instagram. Given her resonance with a local and global audience, the actress seems a perfect addition to the luxury house’s impressive list of ambassadors, which already boasts the popular K-Pop band BTS.
The Jing Take: High-performance names are rare, and numerous rival brands are eyeing rising stars’ influence. In fact, Louis Vuitton had to act quickly to secure a shoot with HoYeon Jung. However, the title given to this young actress is substantial and raised many netizens’ eyebrows. Since the loss of Kris Wu, the former Louis Vuitton menswear global ambassador, Chinese consumers have been guessing which local celebrities would be appointed as the brand’s next spokesperson (or which of the current ones would get upgraded to a global title). But instead, new Korean names were added to the Maison’s endorsement list.
With Korean idols carrying more weight than Chinese stars, netizens have started disclosing that they are upset with brands for valuing Korean stars more — not just Louis Vuitton but Dior, as well. Some complained about Dior’s Spring 2022 show in Paris because it invited Blackpink member Jisoo to attend but had only two domestic actresses involved in the livestream among all its ambassadors.
Yet, following the government crackdown on China’s entertainment industry, many brands chose to start distancing themselves from Chinese superstars, who have a massive following in the country but lack resonance internationally. Given this issue, it seems reasonable that brands would opt for Korean celebrities, who are increasingly enjoying international fame. Nonetheless, that may leave space for domestic brands to take on national names, grow their influence in the country, and stir up patriotic feelings among local consumers. But global labels must cautiously map out their next steps in this highly “irritated” market.
Tod’s, PVH & Richemont See a Growing Reliance on China
As 2021 unfolds, it is becoming increasingly clear that China’s luxury dominance has gone into overdrive. Today, nearly 40 percent of Tod’s sales are driven by Greater China. And at PVH, international business is booming, with its CEO saying that China remains “a significant growth opportunity” for its Tommy Hilfiger and Calvin Klein brands. And finally, at the global watches and jewelry leader Richemont, a new power dynamic is emerging with retail landlords.
The first six months of 2021 were a mixed bag for the Italian luxury shoes, accessories, and apparel group Tod’s, whose brands also include Roger Vivier, Hogan, and Fay. Revenue climbed 55 percent to reach $463 million (€400 million), led again by Greater China, which more than doubled its sales versus the same period in 2020 when numerous global Covid lockdowns occurred. Other regions also grew but to a far lesser extent.
Compared to the equivalent pre-pandemic six months in 2019, only China— where Tod’s has sought to boost its image — was ahead (44 percent). All other regions still showed contractions of between 20 and 35 percent. These vast regional differences have helped secure China’s dominance. In H1 2020, Greater China had a 29-percent share of Tod’s turnover, but that number has now climbed to 39 percent.
The Milan-listed house’s biggest brands (Tod’s and Roger Vivier) grew at 51 and 84 percent, respectively, versus the same period in 2020 (the latter benefiting from its high exposure in Asia). Meanwhile,sales at Hogan and Fay rose by 39 and 35 percent, respectively.
Diego Della Valle, chairman & CEO of the group, acknowledged China’s strength while noting that other regions were “penalized by the absence of tourists” — typically the Chinese. Tod’s stated that, during the first half of 2021, the average opening rate of its store network was 85 percent “as a world average.” Valle added that “given the pandemic context, the group decided to remain prudent and not place too many goods on the market, to protect the prestige of the brands.” Year-to-date, Tod’s stock is up 58 percent. But in the past month, more or less since its H1 results were released, it has dropped by 8 percent.
The owner of Calvin Klein and Tommy Hilfiger, PVH Corp, also noted China’s importance when it released its second-quarter (and half-year) results. In a September earnings call, CEO Stefan Larsson told analysts: “China remains a significant growth opportunity for both Tommy and Calvin. We are driving brand heat and relevance through our integrated marketing and capsules around key shopping moments, including 618 this quarter, and most recently, Chinese Valentine’s Day.”
Revenue in Q2 exceeded guidance, increasing by 46 percent to $2.3 billion as PVH’s international businesses “significantly exceeded 2019 pre-pandemic levels.” Digital channels grew by just over a third at 35 percent, though its penetration has stabilized at approximately a quarter of total revenue. The good results were enough for the company to raise its full-year outlook, projecting sales to increase between 26 and 28 percent versus 2020.
Tommy Hilfiger and Calvin Klein represent about 85 percent of PVH sales. In Q2, Tommy Hilfiger broke through the $1 billion mark (reaching $1.14 billion), with its international business soaring to $843 million (now almost three times the size of North American sales). Calvin Klein hit $922 billion during the quarter.
PVH does not break down its regional sales. But in China, the company said it continued to create new content and activations and engage better with consumers, “including expanding our work with WeChat.” Larsson also added: “We have leaned into our most successful hero products, which are delivering strong KPIs, higher conversion, and sell-through. Inventory levels remain very lean as we focus on buying closer to demand.”
Year-to-date, PVH stock is up 14.5 percent but down 4.7 percent in the past month.
Switzerland-based luxury leader Richemont did not release earnings statements in September. But board chairman Johann Rupert led the company’s AGM, where he described 2020 as “truly a stress test for our business model.”
Despite a negative cash flow of over $464 million (€400 million) in April of 2020 as the pandemic took hold, the owner of coveted brands like Cartier, Dunhill IWC, Montblanc, Vacheron Constantin, and Van Cleef & Arpels turned things around fast through cost controls and strategy pivots.
As a result, while Richemont’s last financial year, ending in March of 2021, saw a sharp decline in the first half, sales recovered to exceed $15 billion (€13 billion), led by jewelry (primarily Cartier and VanCleef & Arpels), online retail, and the Asia Pacific. The company’s net cash position also rose to $3.9 billion (€3.4 billion), even after a $293 million investment in Farfetch.
Over the current year, the business has been buoyant — more than doubling at 121 percent in the quarter ended in June versus the same period in 2020. “Sales exceeded pre-Covid levels, driven by a robust performance by the jewelry Maisons and specialist watchmakers, with the Americas generating the strongest regional performance,” said Rupert.
The chairman was also candid about retail leases, which cost close to $1.16 billion (€1 billion) annually, leading to an inevitable shift to DTC and online channels as another route in the market during the pandemic. “(This has) changed the lessor/lessee power dynamic,” noted Rupert. “So, after years of absorbing heavy investments, we are now finally seeing other parties willing and eager to share the evolving platforms. We should be able to share more news on this matter later in the year.”
Key Lessons From China Brand Failures
International brands often make the mistake of downplaying the local competition, which can compete very well on cost and supply chain operations.
In China, many fashion brands still fall into the trap of bypassing the need to develop locally appropriate strategies.
A lack of newness or stand-out appeal contributed to the downfall of many fashion retailers in China.
China is regarded as a massive market that almost guarantees sustainable growth and profitability. In the past, the country has provided huge opportunities for profit, and many success stories exist across wide swathes of the economy.
Nevertheless, the reality is that numerous fashion, premium, and luxury brands have failed in this mega-market. The list of high-profile casualties includes the recent announcement that US retailers Urban Outfitters and Everlane are withdrawing from the Chinese market.
Although every brand failure has its own idiosyncratic story, we have outlined three critical lessons to facilitate brand success in China. These lessons are about learning from the costly mistakes of others because the Chinese market is too important for brands to falter in.
International brands often make the mistake of downplaying the pressures of local competition. Luxury brands may be less susceptible, but numerous fashion retailers, including Bershka, Pull & Bear, Stradivarius, Old Navy, New Look, and Superdry (to name a few), failed to break through the competitive chaos and lure shoppers away from domestic options.
But that is not an easy task when domestic brands can compete on cost and supply chain operations. The phenomenal rise of Shein is not just about its speed but, ultimately, but its ultra-fast fashion.
Furthermore, many brands that have exited China lacked a distinctive brand positioning in an increasingly crowded market. Urban Outfitters may embody a sense of cultural identity in the US but it lacked a clear, crystalized, and coherent identity in China.
As Chinese brands continue to move up the value chain, as evidenced in the beauty category, premium and even luxury brands must question if their brand proposition can still win over aspirational Chinese consumers. And national pride matters: According to WPP BAV Best Countries 2021, 76 percent of Chinese respondents are willing to pay more for something made in China.
A visit to a Starbucks in China is a compelling example of how this coffee chain has adapted to the Chinese market. And yet, many fashion brands still fall into the trap of bypassing the need to develop locally appropriate strategies. Forever 21, which famously exited China in 2019, having appeared to have neglected local preferences across many items by making them too big or too revealing for the Chinese consumer.
These issues were compounded by slow growth in the brand’s new and existing stores in major shopping districts — capital investments that are difficult to recuperate. The final oversight was a lack of social media visibility. But in August of 2021, the brand returned to China, adapting its strategy by outsourcing its sales to Lasonic Limited Xusheng Co. Ltd and its subsidiary, Xusheng Electrical (Shenshen) Co., Ltd. For Forever 21, it is expected that clicks will lead to bricks in the future.
Regional differences also played a role for Asos, which dramatically failed in 2016 when it tried to sell one seasonal range in a country with several different climate zones. Yet, brands should not assume that integrating local meaning will be a shortcut to results. It is critical to determine what touchpoints matter to different consumer groups.
Norwegian Cruise Lines learned this lesson the hard way when it launched a new ship, the Norwegian Joy, specifically for the Chinese market. Unfortunately, the craft featured typical Chinese features, including teahouses and karaoke rooms, when, in fact, Chinese passengers were seeking a more Western-style experience. Its failure to adapt left Norwegian Cruise Lines “high and dry” in the Chinese market circa 2019.
Every brand executive will undoubtedly agree that agility is the key to business success. Nevertheless, the failure to develop an innovation-led growth strategy is one of the reasons that some brands continue to struggle in China.
According to a Harvard Business Review article, KFC in China introduced about 50 new products a year compared to only one or two in the US. Fast fashion and fast beauty are not very different from the fast-food business model, which explains why a lack of newness or stand-out appeal contributed to the downfall of many fashion retailers.
Indeed, the K-beauty brand Innisfree’s retreat from China can partly be attributed to its inability to differentiate product performance from other natural beauty offerings. China is a breathtaking fast-moving mosaic of consumer markets — and the importance of social media activity is a key indicator that reflects this dynamic. It is perplexing how many international brands still fall short on investing in their social media content entrance, tailored to a specific market. It is probably no surprise that many of the brands that have withdrawn from China lacked Chinese executives making timely marketing decisions in a market they innately know better than their foreign counterparts.
Brand failures in China should serve as a warning for incumbent brands and companies with plans to enter or re-enter the Chinese market, including luxury brands. Although brands are committed to China, managers need to be aware of the shortcomings that have led to brand failures in China. Insolvency in this country is a nightmare scenario, but it can be avoided if executives are willing to impose a Chinese-based model for success.
Glyn Atwal is an associate professor at Burgundy School of Business (France). He is co-author of Luxury Brands in China and India (Palgrave Macmillan).
Hong Kong Continues to Trump Local Design Abroad
For fashion fans in the know, the Libération building on Rue Béranger was a must during Paris Fashion Week. Here, independent Hong Kong designers were given free rein to transform the storied building with shows, presentations, and installations through the international program HKFG, with support from Fashion Farm Foundation (FFF). After that, guests could sip cocktails on the rooftop, taking in what was one of the city’s best views as they basked in the Parisian sunset.
And while Paris managed to make the most of its return to a physical schedule, it was clearly not business as usual for everyone this season. The first international FFF event since the pandemic is back, albeit slightly more restrained: a two-day “phydigital” showroom featuring three brands at the chic Hotel National des Arts et Métiers. In parallel to this, the online shows were opened to the public, offering worldwide audiences “a translocality digital fashion performance experience” and a groundbreaking new partnership struck with luxury e-tailer, LN-CC.
With designers sadly offsite, FFF offered a curated slice of PabePabe, PONDER.ER, and VANN’s brand DNA in their absence through videos and objects. Here, Jing Daily reports on Hong Kong’s new talent showcase as it ramps up digital connections.
“After the pandemic the whole fashion world has changed and even for a physical show there are now formats and possibilities,” Tianyo Mayao, the director of FFF, explained adding that brands now need to be “open to this new approach to reach both industry and consumers.”
Through FFF, he commissioned campaign videos specifically targeting the Paris Fashion Week market as a way to navigate each brand’s absence yet still deliver a specific message. For the gender fluid label, PONDER.ER, it was a welcome return to the city. “We’ve not been back since we launched so it has been absolutely difficult to connect with buyers, media and people in the industry, especially as we are very new. You need to see our textiles in person to understand the development and craftsmanship, so it’s been difficult,” co-founder Derek Cheng stated.
Still through this, albeit small, selection of paradoxical looks on view at the Hotel National des Arts et Métiers, a sense of PONDER.ER’s layered world is quickly evident. “We design for men but predominantly sell to women,” he added — and even more looks would have amplified the collection’s complex tension.
Beside them, duo PabePabe have physicality at the core of their concept; this PFW experience was a way for co-designer Logan Chan to balance his love of in-person communication with the breath and immediacy of the virtual world. “Our brand gets far more exposure in a short time [here] so I am trying to balance this fact with preferring face to face contact.”
In June 2021, the whimsical accessories brand opened a standalone space in Central Hong Kong where it sells flippers, a piano-hell bag, and luxury fast food trays. “The pandemic lowered the rent here a lot, so this was a good chance to rent a space for our own brand which we run as a gallery store. Alongside that we hold exhibitions for other brands, which was our starting point,” Chan continued.
Having a space to showcase amid the pulsating heartbeat of the fashion week was a way to replicate that tactile connection from the other side of the world. But, at such a downbeat time, can new labels such as PabePabe’s with humorous offerings translate for global buyers? This challenge is mitigated, as Maymo outlined, by the moving image: “This season, showcasing the video helps the buyers to visualize [the product].”
This concept is not new but skyrocketing interest in online applications and video since 2020 attests to the ability of video to compensate or at least temporarily compliment for the “hands on” touch and also to convey brand personality; with vibrant visuals conceptualized around a TV game show, PabePabe’s campaign is a case in point.
Indeed, a hybridization model is expected to cement its staying power as recovery from the pandemic gathers pace. According to the State of Fashion 2021, 89 percent of fashion executives expect a hybrid model of working to be part of the new normal, and FFF’s gear shift included a pioneering tie-up with London’s progressive platform LN-CC to launch these collections at PFW.
The opportunity to promote itself to wider audiences and to be representative of fresh talent from the area was a key facet to the partnership for niche jewelry label Vann. “Before, we were only able to show buyers and industry insiders our collection. With this, we can reach new potential customers directly,” Vann Kwok told Jing Daily on the game changing move.
“For us it’s about finding new talent and giving them a platform,” Reece Crisp, Buying & Creative Director at LN-CC divulged on the collaboration. “Each brand has a point and view that fits in with the direction we are taking our edit. Each designer is challenging any preconceived perceptions of what HK style is and can be.”
For so long, all eyes have been on the mainland’s rich tapestry of emerging designers but they still struggle to pick up international retailers. Now, with a strong customer base in key capital cities, LN-CC offers Hong Kong’s PabePabe, PONDER.ER, and VANN a captivated global audience, plus a new, diverse customer base — ready for something new. Let’s see what next season brings.
K-pop Idol Jisoo’s Presence at Dior Had Unexpected Consequences
What Happened: The livestream of Dior’s latest collection recorded over 54 million views in China — a new record for the luxury house. Still, behind the high figures, the Paris Fashion Week event was not without controversy. Overall, the collection was less than well received with some citizens calling out the brand’s looks as “ugly” copies of earlier designs from Prada and Miu Miu.
Secondly, while the viewing figures were undoubtedly boosted by the attendance of K-pop star Jisoo, a member of the Korean music group Blackpink, she became a focal point for netizens. The idol yields considerable influence in China and is the house’s global ambassador for fashion and beauty lines. Her presence prompted netizens to ask why Chinese celebrities were “worth less than Korean ones?”
The Jing Take: According to Coresight Research, Chinese consumers are expected to spend $300 billion on products featured in livestreaming videos this year. This means luxury brands can’t afford to ignore the sector. And, despite its efforts, Dior continues to garner mixed results from the strategy.
On the up side, it certainly knows how to attract traffic: This viewing figure towers over the previous season’s 16.3 million which is good news. On the down side, an increased reach is a double-edged sword, and, as a result of its widespread popularity, Weibo was flooded with negative responses.
Influential critics, bloggers and fans, including @YangFanJame (1.3 million followers) and@starstylefashion (with 2.3 million fans) criticized the change of style indicating it was out of step with progressive shoppers’ desires. @Pipijuice (1.8 million) reposted images of looks that illustrated questionable fashion plundering from Prada and called to mind Diet Prada’s scathing takedowns. “Auntie Maria is destroying Dior” indeed.
The reactions also amplify the complexities of using KOLs as conduits. Despite the attendance of two Chinese actresses, Dior was accused of racism by irate fans demanding to see even more representation at the event. As the country’s role in luxury increases, sophisticated consumers are looking for authenticity and increased visibility in brand communications. Dior’s recent hiring of transgender icon Jin Xing as a fragrance face was a positive step, but more needs to be done. Isn’t it time for Dior to appoint a global ambassador from China?
Can Independent Brands Survive Without Luxury Conglomerates?
During the pandemic, the biggest luxury conglomerates have preserved their status quo and consolidated their assets through new acquisitions.
Chanel, Hermès, Burberry, Missoni, Salvatore Ferragamo, and Ermenegildo Zegna prove that family ownership and investments from private equity firms remain appealing alternatives to conglomerates.
The continued success of family-owned businesses depends on access to capital and affordable financing, the relationship they build with their customers over the years, their strategic adaptability to market volatility, and even the resilience of their supply chain.
With the COVID-19 pandemic wreaking havoc in retail and luxury, some brands might consider an association with a luxury conglomerate. Glossy rightfully highlights that “the ongoing pandemic has only increased conglomerates leverage over the industry, putting them in a perfect position to snap up even more struggling independent brands.”
Indeed, recent developments have pushed some independent brands into bankruptcies while others lost revenues because of an unexpected shutdown of consumer activity. On the other hand, the biggest luxury conglomerates have preserved their status quo and consolidated their assets through new acquisitions.
In a post-pandemic future, can a luxury brand be independent of a luxury group and matter?
The simple answer is yes. Take, for example, Chanel, Hermès, Burberry, Missoni, Salvatore Ferragamo, and Ermenegildo Zegna. These independent global fashion brands prove that family ownership and investments from private equity firms remain appealing alternatives to M&As and conglomerates.
While getting acquired by LVMH or Kering could be the path forward for many brands saddled with massive debt, not every problem can be solved with a merger or an acquisition. Moreover, many family-owned businesses are not open to conceding a controlling stake in their company in exchange for funding, know-how, and protection from market volatility. Sure enough, the continued success of family-owned businesses depends on access to capital and affordable financing, the relationships they build with their customers over the years, their strategic adaptability to market volatility, and even the resilience of their supply chains.
In 2012, Credit Suisse surveyed nearly 280 family businesses from the Family Business Network across 33 countries for research. On average, the respondents were representatives from large companies, some fourth-generation businesses or older. The research showed that during the 2011-2012 recession, family-owned businesses outperformed their competitors in revenue growth.
“In the midst of the tough economic climate, the majority experienced material revenue increases in the 12 months to June,” says the report. Indeed, around 60 percent of these companies registered increases of above 5 percent, and more than 10 percent of them saw increases of over 15 percent.
In China, Confucianism preaches the virtue of filial piety (孝, xiào). Accordingly, younger family members are bound to respect, honor, and obey the elderly. The same interaction is present in a family business. And while we encourage youngsters to find their path and develop personal skills in the West, the youth in China are motivated to seek continuity in family businesses.
In fact, a 2019 survey by PwC on Chinese family businesses showed that 42 percent of Chinese entrepreneurs plan to ensure their company’s legacy by passing on its leadership or ownership to a next-generation family member.
Overall, this approach has led to high trust in family-owned businesses. Meanwhile, conglomerates have seen a decline in trust that’s been linked to capitalist and corporate values. Accordingly, luxury companies that remain in family ownership might hold a special appeal in China, as they are associated with loyalty, trustworthiness, and family values. It also helps that some of the most successful Chinese companies are family-owned (Wanda Group, Amer International Group Ltd, etc.)
Overall, independent luxury brands can have a second life in a post-pandemic reality if they seize the opportunities that come within today’s new retail environment and build a foundation based on shared values and beliefs.