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Anti-Asian Attacks Organizations Support

As Anti-Asian Attacks Hike, Here’s How Brands Can Help

Over the last year, Asian Americans have not just been battling for their health and livelihoods but for their lives.

Blamed for the so-called “Kung Flu,” hate crimes against this demographic have jumped by 1,900 percent in New York — from 3 cases in 2019 to 28 in 2020 — with many more incidents unreported or not classified as hate crimes. Nationwide, over 2,800 race-based verbal and physical attacks were reported firsthand to the Stop AAPI Hate site from March to December 2020. Several on the receiving end of this violence have been the elderly, including an 89-year-old Chinese woman set on fire in Brooklyn and a 61-year-old Filipino man slashed with a boxcutter on a subway. 

To raise awareness around this crime surge, Asian Americans are now using the hashtag #StopAsianHate to amplify news coverage as well as share their own experiences with discrimination. From prominent Asian celebrities like Olivia Munn and Henry Golding to fashion influencers like Phillip Lim and Kimora Lee Simmons, those with a platform are encouraging others to take a stand.

Brands, too, have begun breaking their silence. Kate Spade, Nike, Michael Kors, Tommy Hilfiger, and Valentino, among others recently made statements online condemning racism, though many simply offered variations of white text on black squares. But as speaking out on social movements becomes increasingly expected from businesses (Edelman found that 53 percent of customers agree every brand has a responsibility to get involved in at least one social issue), it’s not enough to “stand united.” Beyond talk, businesses need to take action — and perhaps the easiest way to do so is by donating. 

 

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For companies looking to make a difference, here are three organizations that can directly help the Asian American community.

Stop AAPI Hate 

Launched in March 2020 in response to the escalating xenophobia, Stop AAPI Hate is the leading aggregator of anti-Asian hate incidents in the US. The nonprofit and organizer coalition offers multilingual resources and technical assistance to impacted community members, supports restorative justice measures, and pushes for policies that reinforce civil rights protection. Learn more here

Asian Americans Advancing Justice | AAJC

Asian Americans Advancing Justice | AAJC is one of five affiliates under the umbrella organization Advancing Justice, which advocates for the civil and human rights of Asian Americans. The nonprofit ensures Asian Americans can fully participate in democracy by providing legal referrals, organizing youth leadership summits, and building local partnerships through its 130-organization strong network which spans 30 states. Following the spike in attacks, AAJC now offers training workshops to break down the “spectrum of disrespect” Asian Americans face — from microaggressions to violence — and educate others on bystander intervention and conflict de-escalation. Learn more here

Asian Mental Health Collective

In addition to reporting crimes and safeguarding civic rights, it is also crucial to keep the community emotionally safe. That’s where the Asian Mental Health Collective comes in. The group works to destigmatize mental illnesses — which are often compounded by culturally-specific barriers like intergenerational trauma — while making wellness resources more accessible to Asian Americans. Through their interview series, podcasts, meet-up groups and other events, the nonprofit hopes to facilitate the difficult, but necessary, conversations. Learn more here

Of course, this is just the tip of the iceberg (for more organizations, check out the New York Magazine’s list.) Other ways companies can support Asian Americans include starting dialogue with employees and consumers, assisting Asian-owned small businesses, improving diversity within their organization, holding lawmakers and other leaders accountable, and continuing to educate themselves on the Asian American experience, which is too often erased by the model minority myth.

The #StopAsianHate movement has dismantled the notion that Asian Americans don’t experience modern-day discrimination. But the hate didn’t start with COVID-19 and won’t end with it either — not unless society collectively acts. While businesses that take a stand can potentially influence the issue and even win over the country’s socially-conscious consumers in the process, those that are complacent will be seen as complicit. And backlash in this economy is not something any brand can afford.

Beijing SKP Luxury Mall

Is Hohhot Luxury’s Next Hotspot?

What Happened: SKP has announced it will open a flagship in Hohhot, the provincial capital of Inner Mongolia. Local media outlets reported that SKP Beijing garnered $2.7 billion in sales over 2020, surpassing famed luxury destination Harrods. And according to Beijing Business Daily, the high-end mall has been China’s top department store by revenue for the last ten consecutive years. SKP’s state-owned parent company, Beijing Hualian Group (BHG), is growing its luxury retail network by building additional sites in Hangzhou, Chengdu, and the new second-tier city Kunming. BHG owns two publicly-listed companies and several holding companies primarily focused on hypermarkets, supermarkets, department stores, and commercial properties.

Jing Take: The immense spending power of high-net-worth individuals in China is no longer disputable. Even COVID-19 did little to halt it. According to Bain & Company, China’s 2020 domestic luxury goods consumption went against the trend, predicted to achieve 48 percent growth ($53 billion). So the next piece of the puzzle for luxury brands and companies is where to find these new consumers in lower-tier cities. Recently, both international names (Maison Margiela, Gentle Monster) and local players (Harmay and Shang Xia) have opened stores in Central and Western China, and Chengdu in particularly has emerged as a viable alternative to Shanghai and Beijing.

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But progress is slow, and brands are hesitant. After all, Chengdu has been tipped as a luxury hotspot for years. Hohhot, on the other hand, is less of a safe bet yet, still tantalizing.  Ten year ago, Louis Vuitton tried it out for size and failed – it opened a boutique there in 2010 and shuttered four years later. And as the city commercializes, SKP will face competition.

However, the demand for luxury goods in lower-tier markets is undeniable and its residents have seen their incomes rise. Now too, the consumption landscape is dramatically different: In 2019, Deloitte found that third- and lower-tier cities had shown strong spending growth and purchasing power. That same year, Seeco reported that these cities were highly-ranked in annual purchase frequency as well. With its latest move, the influential SKP is beating a path into these cities, hoping to be as the locals say  the first person to eat crabs. Let’s see if Hohhot is worth the risk.

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.

C-beauty Disruptor Florasis Taps Rising Boy Band TNT As New Ambassador

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 Peacebird’s latest capsule collection in collaboration with homegrown designer brands, Florasis’ new brand ambassador announcement, and Clarins’ newly launched commercial film.

Peacebird’s New Capsule Collection Redefines Originality

BRAND Peacebird
CATEGORY Fashion
PLATFORMS Weibo, WeChat
MEDIUM Short film, Image
FEATURED TALENTS Ouyang Nana (20M Weibo followers)

OVERVIEW 
Peacebird teamed up with six domestic independent fashion brands — XU ZHI, WMWM, GARÇON BY GÇOGCN, CALVIN LUO, NOMANOMAN and STAFFONLY — to extend its “SuperChina” initiative. The designers extracted iconic elements of their respective brands to create a capsule collection for dynamic Gen Z consumers, which debuted on February 22. The campaign also invited six young talents from various areas, including the musician Cacien, fashion publicist Yuri, street dancer Fiona, showroom director Xiaoxiao, fashion art director Yiniyin, and digital media artist Maming, to interpret the theme of the series via their unique personal styles.

NETIZEN REACTION
Peacebird’s brand ambassador Ouyang Nana also posted a short video introducing the capsule collection and her styling tips on Weibo, generating 46,700 views and driving online traffic of the campaign hashtag #PeacebirdDesignerReplicaCapsuleCollection. However, one Weibo user @Yaokoubaisi commented that the brand’s style tends to be weird and hard to fit into daily looks.

VERDICT
The “SuperChina” initiative, which was launched last October, continues to explore the dynamic definitions of Chinese youth culture through drawing inspiration from young talents. Given this, Peacebird’s collaboration with six representative homegrown designer brands not only can further push the boundaries of domestic youth power, but also enrich the brand DNA with originality and an avant-garde spirit. Though the reception of this capsule collection was not necessarily better received than other Peacebird collabs, such as with popular cartoon characters like TED bear, these initiatives only help to increase brand equity in the long-term.

C-Beauty Brand Florasis Adds A Rising Boy Band As Brand Ambassador

BRAND Florasis (Huaxizi)
CATEGORY Beauty
PLATFORMS Weibo, WeChat, Douyin, Kuaishou, QQ Music, Tmall
MEDIUM Short-film, Image
FEATURED TALENTS Teens in Times consists of 7 members including Ma Jiaqi, Ding Chengxin, Song Yaxuan, Liu Yaowen, Zhang Zhenyuan, Yan Haoxiang, He Junlin (47M Weibo followers in total)

OVERVIEW 
On February 23, the C-Beauty brand Florasis (named Huaxizi in Chinese) announced that the boy group Teens in Times will be its brand ambassador on its official social channels. The collaboration also marks the fourth anniversary of the brand with the unique origin of “ancient Chinese style.” As the brand noted, “Teens in Times represents the spirits of Chinese young generations from inside and outside.” To maximize the online and offline engagement, the brand will launch open-screen ads on Weibo, Douyin, Kuaishou, and QQ Music, as well as billboards and digital signage displays across over 20 cities.

NETIZEN REACTION
The campaign hashtag #TeensInTimesFlorasis has gone viral on Weibo, with over 400 million views within one day. The two-minute campaign video featuring the seven teen boys in an ancient Chinese setting received over 25.9 million views, which is a considerable number for a commercial video. The boy group’s huge fan base is fueling the online campaign traffic with organic engagement.

VERDICT
Appointing male faces as brand ambassadors is not novel for beauty brands in China. The partnership with one of the most popular Chinese boy groups helps Florasis increase its brand awareness and social influence. Though the typical “Little Fresh Meat” look has recently been looked down upon by Chinese authorities on social media, the campaign spotlights the power of youth and how this spirit complements the brand’s dedication to Chinese cultural legacy. Moreover, an endorsement by the state-run media Xinhuanet guarantees the brand’s political position and promising growth in China’s vast C-beauty market.

How Clarins Enchanted China’s Booming Female Working Class

BRAND Clarins
CATEGORY Beauty
PLATFORMS Weibo, WeChat, Tmall
MEDIUM Short-film

OVERVIEW 
The French cosmetic brand Clarins, owned by L’Oréal, collaborated with the digital media company Xinshixiang on a short film called Deep Breathing. Launched on February 22, the film promotes the brand’s Bright Plus serum, which helps revive skin dullness and targets all types of dark spots. The three episodes showed common workplace frustrations for women working within China’s hustle culture.

NETIZEN REACTION
The three-minute commercial film has received 140,000 total views on Weibo thus far. Netizens find the story highly resonant and their shared experiences about staying up late due to overwhelming workloads. They were also impressed with the film’s realistic perspective and high-quality production. Moreover, many female users confirmed their need to invest in luxury skincare products that improve skin health.

VERDICT
The so-called “womenomics” sector has been sweeping the luxury market thanks to rising female employment rates in China and the more intense pressure women face from stereotypical social expectations as compared to their male peers. But this shift is also creating women shoppers who have higher disposable income and purchasing power. Therefore, self-purchasing and impulse buying by themselves are taking over gifting in the female sector in China. Discerning players like Clarins are tapping into this trend and leveraging the rising self-awareness of female consumers in China by showing a female perspective in their campaigns instead of the male gaze.

Luxury Demand Rebound Western Consumers Tiffany

The Luxury Rebound — Brace, Brace, a New Era of Exuberance Has Started

Key Takeaways:

  • Human nature — and some favorable macro-economic factors — have led to a rebound of luxury sales growth already towards the end of last year.

  • As we lap the early impacts of the pandemic spread from February-March 2020, growth should mechanically be very high, a counterintuitive reality given the world remains broadly restricted and travel still shut down.

  • Purchases could become more mindful, more skewed to bigger brands and bestselling items with more demanding consumers but expect exuberance of growth to take you by surprise.

A surprising late 2020 rebound

A year ago, I was happily meetings friends and clients, going out to restaurants, and enjoying life in the Big Apple. And then, mid-March, everything suddenly shutdown, and I have been working from home ever since and reading articles about the great New York exodus, how the city would never be the same again, and how maybe, according to one New York Post article, it is the case that “New York City is dead forever.” 

To be sure, the city is clearly not the lively one I grew up in, as friends flying in from less restrictive states (think Florida) always remind me, commenting on how dull it now feels. So all of this grim reality should tell us luxury demand has evaporated in New York, right? Wrong! Chanel, Dior, Louis Vuitton, and Tiffany are all still bustling. Why? 

Human nature prevails, of course. Wealthy consumers, stuck at home, have come back to spend on luxury. True, they have been incentivized to do so, as they entered the pandemic being wealthy, plus a combination of favorable equity markets, secondary property markets and staycationing has enabled them to feel even more wealthy. But even before financial considerations, human nature has prevailed retailers talking to “a survival trade,” i.e., “I’ve been through this, it’s ok to reward myself.” What happened in New York with local clienteles, and in parts of Europe with locals there as well, is not too dissimilar to what happened in mainland China a lot earlier on in 2020. 

Even more surprising to the brands was the rebound of Western consumers given very few would have imagined them to be so engaged and motivated to purchase luxury goods while circumstances remain so dire. Sure, there are exceptions. The UK vaccination roll out, for instance, has been impressive. But in most of the Western world, restrictions are still painful (think France) and COVID-19 fatalities remain saddening high (think US). And yet the rebound has started.

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“Anniversarying” the shock

Go back to the pandemic timeline and you will remember that by last February, most of China’s stores were shut and by mid-March both Europe and the US as well. You don’t need to be a math guru to understand that if luxury sales for any given brand were halved in the March-May period last year, all things being equal this year, they should double. The media tends to sensationalize what otherwise should just be a logical outcome. Last April, the press was all about how an Hermès Guangzhou store beat record sales when it reopened post-pandemic. 

Well, considering Chinese citizens had bought nothing for two months and, more importantly, that most sales to Chinese nationals used to take place abroad — but now going abroad was an impossibility with all borders being shut — what was optically incredible was just plain logical. Similarly, if brands double their sales in the March-May 2021 period year-over-year, the media will likely highlight “astonishing sales,” when we will just have gone back to 2019 levels, plain and simple. And, as I just published my book, Future Luxe, discussing a strong decade of post COVID-19 growth for luxury, I could go around on a “I told you so” tour, but I won’t… 

Not just about the optics

All in, the optics will look good this year for the luxury industry. But beyond the optics, luxury has emerged as being way more important to wealthy individuals’ lives than we could have imagined. Sure, big brands with iconic ranges are outperforming, while smaller, independent companies struggle. Sure, consumers are asking more questions and greenwashing is making way to ensure a proper conscience. But beyond the 2021 rebound, I remain confident that luxury demand can thrive. The crisis has improved the quality of management and sales staff in the sector, the level of knowledge and engagement to consumers and, as I discussed last week, a shift from product to purpose will make the relationship between brands and consumers that much stronger. Luxury is by definition something you don’t need but it changes your perspective, puts a smile on your face, makes you hopeful and enthused and we still need that right now.

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). 

Margaret Zhang Vogue China Fashion Media

What Margaret Zhang’s Vogue Hire Says About Fashion Media In China

What Happened: Margaret Zhang has been appointed the new head of Vogue China, confirming previous rumors that she was in line for the role. At 27, she sits at the opposite end of the age spectrum to her experienced predecessor, Angelica Cheung, and will become the youngest-ever editor-in-chief at Vogue. The Australian-born Zhang cut her teeth at the company by producing two digital covers for the Vogue China spin-off, Vogue Me (she also models and fronted one) but hardly has any editorial experience. Instead, she has established herself as a global-facing fashion influencer and digital maven, amassing over one million followers on Instagram, thanks to her blogging and photography.

Jing Take: China certainly is a land of opportunity where, as the saying goes, “anything is possible.” Zhang’s unusual appointment also speaks to the country’s love of a polymath, which has been a key driving force behind its economic and creative rise (the ambitious Zhang also directs, wrote a film script, co-founded the consulting company Background, and worked with companies like Airbnb, YouTube, Moncler, and Mulberry.)

Vogue’s hiring news was greeted with much positivity in China. And, at a time when print publishing is struggling to maintain its relevance in a dynamic, fast-paced digital landscape, Vogue must be applauded for this inspired and aspirational choice. The bold move also indicates a changing of the guard and an acknowledgment of the way target audiences are now consuming and being exposed to media primarily through social channels. Vogue China has a print run of 1.6 million copies but has yet to become the fashion Bible in China that it is considered elsewhere in the world. Who knows if the internationally-minded Zhang can resonate with mainland audiences or has the credibility to ensure Vogue‘s reputation in the market? But, for now, she has moved from sitting front row to voicing fashion’s most valuable global market.

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.

Mytheresa Earnings 2020

Mytheresa Rides a “Record High” of First-Time Buyers

While other retailers toiled and tumbled through the holiday season, Mytheresa thrived. 

On February 25, the luxury fashion platform released its first results since debuting on the New York Stock Exchange in January, with net income more than doubling from 6.3 million euros to 15.7 million euros. Meanwhile, sales increased 32.9 percent to 158.6 million euros in the three months ending December 31.

This growth was fueled by more than 100,000 first-time buyers and over half a million active customers, up 28.2 percent from last year, as global lockdowns accelerated the shift to e-commerce.

“Mytheresa is about inspiration not aggregation,” said CEO Michael Kliger about the company’s Q2 strategy. “It is about an unrivaled, highly curated offering, a focus on high-end luxury customers, sophisticated technologies, and a first-class in-house managed service experience.” 

According to Kliger, acquiring and retaining customers is about putting brand relationships at the center. As such, the Munich-based firm, which curates from over 200 global names, not only launched exclusive capsule collections and pre-launches with luxury giants such as Valentino, Moncler, and Max Mara, but also teamed up the designers of Khaite, Wardrobe NYC, Eéra and other influencers to host digital events. 

China is also on the company’s agenda, as signaled by the physical VIC event held in Shanghai last December. Guests joined Gusto Luxe’s co-founder Chloé Reuter, fashion curator Boko Rok, and Mytheresa’s fashion buying director Tiffany Hsu for a fireside chat on current fashion and art trends, while catching glimpses of the exclusive Christian Louboutin x Mytheresa and Khaite x Mytheresa capsule series. This follows the appointment of actress Cecilia Song as the first brand ambassador for Greater China in September.

Mytheresa invited Chinese fashion bloggers, media, and brand friends to chat about the industry and commemorate the release of a new capsule series in December. Photo: Weibo

Mytheresa’s market share in the mainland remains small, with only a quarter of its business coming from the Asia-Pacific region. But now with the IPO settled and extra money to spend, the German e-tailer is eyeing China for greater expansion to reach its coveted consumer base.

“It is a region where [in] the last decades so much wealth was created, and also it is a region where there is a true appreciation for true luxury products, the craftsmanship, the European heritage,” said Kliger to SCMP.

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However, with the landmark Richemont, Alibaba, and Farfetch partnership threatening to squeeze competitors out of the Chinese luxury e-tail market, the journey won’t be smooth sailing.

Gucci's Content-Commerce Marketing 2020

Why Isn’t Gucci’s Near-Flawless Content-Commerce Strategy More Successful?

All eyes were on the recent release of Gucci’s 2020 annual results to see whether the company could bounce back from the Covid-imposed fallout that swept through the luxury industry. But observers expecting the company to return to growth were disappointed as the Italian luxury giant announced a 10.4% year-on-year drop in fourth-quarter revenue, with North America and Europe recording significant declines.

Gucci reported annual revenue of 7.4 billion Euros ($9 billion) in 2020, a 22.7% drop from the previous year. Those results weren’t just bad for the brand itself, they were a drag on parent Kering, which depends on Gucci for roughly 60% of group revenue.

But looking through Kering’s 2020 financial report, it is clear that Gucci’s performance is far from uniform across global markets. While the brand saw overall sales in the Asia-Pacific region shrink by 8.1% for the full year, sales were up more than 9% in the second half of 2020, powered chiefly by strong growth starting in mid-April in China, where Gucci’s online sales doubled compared to 2019.

And, interestingly, the luxury e-commerce boom in China did not cannibalize in-store sales. Domestic retail luxury shopping was also boosted as a result of travel restrictions that prevented consumers from making their big-ticket purchases on overseas trips to Europe, Japan, and the United States.

Reviewing Gucci’s activities for 2020, it quickly becomes clear that the brand is one of the best in the world at applying content-commerce marketing and sales strategies, begging the question: why didn’t Gucci do even better in 2020?

Leveraging the “clever collaboration” trend also used by competitors like the LVMH-owned Loewe, which recently launched a collection with My Neighbor Totoro, Gucci recently unveiled a Doraemon collaboration for the Year of the Ox, which proved to be a hit in China, and has also teamed up with The North Face and Pokémon Go on global initiatives.

The brand has also been upping its digital focus in China through its ongoing tech-oriented partnership with Tencent and the debut of an official flagship store on Alibaba’s Tmall Luxury Pavilion in December 2020.

Content creation figures heavily in the equation, such as through its GucciFest online film festival in November, which featured films for Chinese designers Rui Zhou and Yueqi Qi in its global lineup, or the “FM520 Gucci radio station” and “520 Gucci Stories” campaign for last year’s May 20 Chinese Valentine’s Day.

Also savvily noting the growing spending power of China’s ACG (Anime, Comics, and Games) enthusiasts, Gucci joined Chanel Beauty as a luxury pioneer in investing in ads shown on video streamer Bilibili’s opening screen, and tapping the esports community via the aforementioned Pokémon Go collaboration. The brand also adapted the Chinese e-commerce livestreaming model globally with the rollout of personalized live video shopping, while using livestreaming to present its Epilogue collection across various Chinese platforms such as Weibo, drawing an audience of more than 16 million.

Another trend that Gucci jumped on last year was the growth of secondhand luxury, inking partnerships with third-party platforms such as The RealReal in October to offer something akin to “certified pre-owned” items. The brand even got in on the luxury food trend, opening a branch of its Gucci Osteria restaurant above its Beverly Hills flagship, with more planned for this year.

Gucci has clearly thrown everything at the wall, especially in China, to fuel hype for its new collections through slick influencer and celebrity marketing campaigns and ultimately entice consumers to shop both online and in stores. And while this clearly had an effect on year-end revenue, considering the growth seen in China, could Gucci have done better globally?

Besides the obvious blame on Covid-19 for tightening consumers’ purse-strings and dampening enthusiasm for shopping, there are indications that Gucci can and should tighten up its sales and marketing approach. As Daniel Langer recently wrote for Jing Daily, Gucci still needs to up its game in digital retail and work harder to improve its in-store experience, which does not fully dovetail with Gucci’s bold brand image.

But beyond that, it is clear that Gucci has become far dependent on Chinese shoppers to buoy global sales. According to Kering’s 2020 annual results, despite Gucci’s momentum in South Korea, overall sales in the market remained stubbornly low due to the lack of Chinese tourist-shoppers, noting the brand’s reliance on duty-free business in the country. A single-minded focus on Chinese tourists is simply unsustainable, threatening to alienate local shoppers and subject to the risks of outside forces such as the coronavirus pandemic or the occasional diplomatic spats that break out between China and South Korea.

The other issue with Gucci’s global strategy — seen most starkly in China — is that the company may be spreading itself too thin. Despite an expansive content-commerce strategy that covers virtually every base, Gucci may create a scattershot impression, in contrast to the laser-like focus shown by creative director Alessandro Michele in revamping the brand after he took over in 2015.

But a bigger question that could have a longer-term impact on the brand is whether it is seeing the early signs of consumer fatigue. While Michele’s retro-inspired, colorful looks were a breath of fresh air in 2015, it’s now 2021, and more luxury consumers are demanding minimal yet ultra-high-quality styles (commensurate with our current work-from-home lifestyles) — a point that is perhaps borne out by the 4% growth in 2020 revenue seen at fellow Kering label Bottega Veneta.

This post originally appeared on Content Commerce Insider, our sister publication on branded entertainment.

Ubras Controversy China Female Empowerment

Chinese Lingerie Brand Ubras Comes Undone

What Happened: DTC underwear brand Ubras is the latest Chinese name embroiled in a controversy over the objectification of women. The lingerie brand invited a number of stand-up comedians to create videos for a marketing campaign, including the star Si Wen. However, another comedian, Li Dan, has caused spectacular consternation online with his comments. The Chinese phrasing was ambiguous and clearly made some readers uncomfortable, particularly one comment which, when translated, referenced bras as a weapon that allows women to easily “lie-down-win” (tangying) in the workplace. This, along with Li’s claim that there are no products he can’t promote or sell — “Just believe it or not!” — has caused particular offense. 

In addition, netizens also unearthed two more brand slogans which hinged on humiliating workers and toyed with the idea of sexual harassment in the workplaces. Ubras has already apologized for the inappropriate use of words during the campaign, which included the word “boobies” to address customers on its official Weibo account.

Li Dan’s problematic post states that bras help women lie down and win in the workplace. Photo: Weibo

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Jing Take: Firstly, the practice of men promoting women’s products in China is not unusual and male celebrities endorse everything from tampons to lipstick. Companies use these ambassadors to target their followers who will often purchase the products simply based on the influencers endorsement. Comic talk shows are especially popular in China right now and what should have been a fun, good-spirited initiative has backfired dramatically for the Beijing-based brand. Incensed netizens are not holding back. 

Some choice comments include: “Banned, I will never ever purchase your brand really disgusting!” and “Is this really from a female team? Women will never write such a thing. Please keep up.” It certainly looks like the days of hiring tone-deaf KOLS are numbered, at least for Ubras, which should stick with positive female influencers such as Ouyang Nana — though even she has come under fire in the past.

As reported earlier this month, international luxury names need to take a stand for their valuable women and non-biary customers; so too must Chinese companies ensure they have safe spaces and feel protected. Especially Ubras, a brand that made an impressive $46,400 million during last year’s 11.11 from selling these products. 

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.

Puma China Earnings

Puma Sales Roar Back With China Growth

After a pandemic-served beatdown last year, Puma has clawed its way to recovery.

On February 24, the German sportswear giant reported that sales jumped 9 percent to 1.52 billion euros in the last three months of 2020 a promising upswing from the 55-percent plummet in its second quarter. Overall, sales were down 1.4 percent to 5.23 billion euros for the financial year.

This rebound was led by strong performance in the Asia Pacific, which surged 11.8 percent in the fourth quarter to 480.5 million euros, driven by mainland China. But the country alone was not enough to stop the region’s full-year sales from falling 3.2 percent compared to 2019 levels, down to 1.48 billion euros.

Given the importance of these global markets, Puma doubled down on establishing local relevance, particularly through sports, influencers, and communication platforms. This was not only reflected in the brand’s return to basketball and collaboration with grammy-winning artist J. Cole, but also its increasing partnerships with popular Chinese talents, including actors Yang Yang, Li Xian, and Liu Haoran as well as supermodel Liu Wen

The brand further grew its China footprint by leveraging the country’s biggest shopping holiday, Singles’ Day, logging 2.8 million orders and 80 million euros in revenue over the week. And already, Puma is making good on its goal to design more products specific to the market, partnering with Hong Kong-based artist Michael Lau, “The Godfather of Toy Figures,” to ring in the new year. 

That said, all Puma products did well in the fourth quarter, with apparel growing 15.7 percent, accessories up 7.3 percent, and footwear increasing 3.8 percent.

“We clearly see a running boom in the whole world,” CEO Bjorn Gulden told journalists, adding that orders for 2021 are up almost 30 percent compared to last year, especially for running products. 

This tracks with Puma’s Q3 results, which showed a strong demand for performance-related products, especially for individual sports like running or hiking. With the healthy living trend expected to persist after the pandemic, the sporting goods sector is positioned to weather the crisis better than most.

But Puma isn’t out of the storm just yet. With almost half of its retail stores in Europe still closed and other markets operating under significant restrictions, the apparel maker is bracing for impact in the first half of 2021. However, the brand is also confident that its quick Q4 recovery and strong order book — along with global efforts to combat the virus — will lead to a moderate sales bump later this year.

“I am convinced that 2021 will be a better year for us than 2020,” Gulden said. Knock on wood. 

London Fashion Week Chinese

Burberry Wins London Fashion Week

This year, the Jing Daily Fashion Week Score, which, through a range of parameters, evaluates how a designer’s collection resonates with the Chinese audience, kicks off with another packed digital schedule at London Fashion Week

Designers and fashion fans in the UK are still cooped-up and locked down, struggling with COVID-19. However, they now face the sharp aftershocks of Brexit too. Even the BFC itself faced criticism following the appointment of Clearpay, a popular flexible payment option company, as a principal sponsor, a move which faced backlash from cross-party MPs fearful of pressure on young shoppers to defer debt

This season, the digital showcases were weird and wonderful, but authentic reach to Chinese fans was disappointing. In the absence of Chinese celebrities, KOLs and buyers from the mainland, the BFC teamed up with WWD China to host a webinar exploring how British and Chinese are navigating a pandemic landscape. Insights from personalities like Stephanie Phair, Anya Hindmarch, Angelica Cheung, and the Chinese brand Pronounce were enhanced by a guest appearance from David Beckham.  

But, as the virus outbreak wears on, cracks are starting to appear on digital schedules. Yet, online connections are more important now than ever, particularly with Chinese citizens. Despite a dazzling vaccine offensive, and some light visible at the end of the tunnel, the UK is bracing itself for a bumpy number of months ahead as it prepares to transition to a new normal —whatever that may be.

For London Fashion Week Autumn 2021, Jing Daily looked at a mix of Chinese brands who are maintaining a profile at the event alongside international names with a stake in the China market. What is evident is that all designers could be doing more to bring their fans and communities on a more immersive digital journey; it’s time to get on board or be left behind. 

Yet again, Burberry was the standout, effectively leveraging local talents like Song Wei Long, Yin Fang, and Wang Yi Jun for its menswear only collection. Simone Rocha was also suitably lauded by her fans and Dunhill too deserved an honorable mention as it has certainly upped its China game recently. Finally, Xander Zhou and Pronounce are two local names that are cutting through both at home and abroad.

The Jing Daily Fashion Week Score is based on the following parameters:

  • Model representation: evaluates representation of Chinese models on the runway.

  • Digital impact: evaluates Chinese netizen reception and engagement on leading social media platforms, including Weibo, WeChat, and Little Red Book.

  • KOL & celebrity visibility: considers the star power associated with the brand through strategic KOL and celebrity partnerships.

  • Special brand efforts: considers special programs or efforts on a brand’s part to speak to the Chinese audience. Company or brand contributions toward the on-going 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.

Burberry

Riccardo Tisci men’s collection, “Escape,” imagined a countryside landscape celebrating the outdoor sprit. This inspiration echoed city residents’ aspirations for beaches and forests while under tight lockdowns. As digitalization has become a new norm, Burberry has once again proven its creativity in the social arena, especially on the heels of its impressive Chinese New Year 2021 celebration.

Despite only being directly livestreamed via Tmall, this first menswear-focused show still managed to engage local Chinese audiences effectively. Much like the season before, it leveraged celebrity power virtually through pre-show social promotion, especially from ambassador Song Wei Long and celebrities Yin Fang and Wang Yi Jun. Meanwhile, the brand is still benefiting from its social responsibility initiatives in China during the pandemic, which has been showcased via the narratives of campaigns and presentations. 

Dunhill

Mark Weston, creative director of the British fashion house, focused on “clothes rather than themes” for the Fall 2021 collection. Highlighting “utility, function, and elegance,” the presentation added a contemporary and avant-garde twist to the classic menswear label. Dunhill’s efforts for this season leaned heavily on engaging Chinese audiences on social channels — and it worked. In addition to promoting the show three days ahead, the label teamed up with GQ China to initiate a virtual interview with Weston to share his inspiration and creative outlook for the house. Moreover, the considerable following of the house’s global ambassador Yang Yang drove huge traffic, as his many, many fans showed their support and adoration. 

Simone Rocha

Since Spring 2019, the Irish designer’s recognition among Chinese audiences has been growing on our seasonal fashion week score. By embellishing leather products with staples such as embroidery, floral prints, and pearl accessories, this season presented a cooler take for the typical Simone Rocha fan. Meanwhile, the show has been shared with Chinese audiences via fashion KOLs like @Kindom Of Xiaoxiang (小象王国) and @Maissen-H. And while the brand runs a Weibo account, it barely posted its latest campaigns and initiatives, including this season’s presentation, which may hamper further market expansion.

Xander Zhou

Creative minds will not be constrained by physical restrictions, or so says Xander Zhou’s latest presentation. And away from its theatrical show setting, the designer delivered his inspiration via his lookbook — or a “manual” as he called it — in which detailed descriptions and prototypes of each garment were listed for readers. 

Approaching the collection as a technical product that reorganizes previous details and shapes means the collection relies on Zhou’s fascination for virtuality and futurism. The fantasy of cyberpunk was well received by young Chinese audiences; the 16-second preview video received 34,600 views on his Weibo account. 

PRONOUNCE

Chinese menswear duo Pronounce’s Fall 2021 collection under the theme of “Fragments” explored the concept of Chinese porcelain. Sourcing inspiration from the porcelain making process, the pair collaborated with the illustrator Chenxi Li to visualize elements like embroidery, fragmented pieces, and line painting, which was applied to garments of various textures. On the day of the LFW presentation, Pronounce also announced the launch of a collection with H&M inspired by Dunhuang’s Crescent Lake, showcasing the brand’s idealism for redefining Chinese fashion and taking it to a wider audience.

Susan Fang

This is only the second LFW outing for Chinese designer Fang, who opted for an early photographic process elaborately titled, “Collodion Wet Plate Process,” to showcase her latest collection. In addition to fresh new looks, the presentation documented the freedom of time and the filming process of the ancient method via a two-minute short video. In keeping with the label’s “air” DNA, this season played on the theme and challenged chronological narratives by way of an ancient fairytale. While still a young label, it has created greater awareness thanks to its signature bubble shoulder bag, over 800 relevant posts on Little Red Book and endorsements from female celebrities such as Yang Chao Yue and Lei Wan Ying. 

Molly Goddard

This season marked a special one for British designer Molly Goddard, not only due to the restrictions amid lockdown, but also her pregnancy. Disapointingly, her label has a large following yet is failing to make a dent in China’s social media landscape. Still, it is definitely niche, evidenced in little over 300 related mentions on Little Red Book with introductions and posts that share looks. The good news is that this season, the addition of practical details to the designer’s signature tulle dress, floral prints, and conspicuous bow ties resonated well with Chinese shoppers fascinated by these overtly feminine styles

Yuhan Wang

Since her debut at Shanghai Fashion Week last October, the Chinese designer has received a much broader awareness among Chinese fashionistas; this latest outing has attracted even more attention. This season’s floral and romantic portrayal of femininity went down well with fans. One Weibo user commented: “It was a harmonious and complicated manifesto of femininity that blends Eastern and Western representations.” However, the brand’s social traffic has been mostly driven by its collaboration with the local retailer Labelhood. As more Chinese consumers look to discover the designer’s aesthetic and inspirations, a more active and dedicated communication strategy will help better engage home audiences.

Bianca Saunders

The emerging menswear designer’s Fall 2021 collection was inspired by Man Ray and Erwin Wurm’s photographs, as well as Jean Cocteau’s experimental film, The Blood of a Poet. While the black-and-white short film took a surreal approach, the looks showcased a balance between masculinity and femininity, which catered to the growing demand of inclusivity for today’s menswear. However, awareness on China’s social arena is underperforming with low exposure and traffic. 

Reported by Wenzhuo Wu and Gemma A. Williams.

Asian Hate Crimes Fashion

Why Hasn’t Luxury Taken A Stance Against Asian Hate?

Key Takeaways:

  • Donald Trump’s “adoption of race-baiting labels” such as “China virus” or “Kung flu,” have amplified racism and Sinophobia.

  • According to data released by Stop AAPI Hate, between March 19 and December 31 of 2020, the coalition received over 2808 firsthand accounts of anti-Asian hate from 47 states and DC.

  • The creative industries depend on Asian talent. Just in the US, 48 of the 477 members in the Council of Fashion Designers of America identify themselves as Asian, according to Los Angeles Times.

One of Donald Trump’s most dangerous legacies is America’s heightened anti-Asian sentiment. His contempt for China and “adoption of race-baiting labels” like the “China virus” or “Kung flu” have amplified racism and Sinophobia across the country. Unfortunately, the arrival of a new administration in Washington DC didn’t bring an overdue solution to racism in America.

While President Joe Biden did sign an executive order condemning attacks against Asian-Americans, it was merely a sign of goodwill. The order states that COVID-19 responses from federal health authorities must demonstrate “cultural competency, language access, and sensitivity towards AAPIs,” said the Huffington Post.

But endorsements and recommendations do not have real power if they are not supported by federal policies. And the recent surge of hate crimes against Asian Americans requires solutions.

Policymakers, law enforcement agencies, community leaders, and civil rights organizations have to work together to adopt suitable solutions and promote racial equity. But until this finally occurs, leaders from the fashion community have come together to fight injustices and hate.

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These high-profile figures are trying to raise awareness about violent attacks against Asians and Asian Americans through social media posts. Meanwhile, social media users are encouraged to talk about their own experiences with harassment and abuse while using the hashtag #StopAsianHate.    

Designers Prabal Gurung, Phillip Lim, and Kimora Lee Simmons — alongside Allure magazine’s editor-in-chief, Michelle Lee, and influencers Tina Leung, Chriselle Lim, Bryan Boy, and Tina Craig — have already taken a stance by creating social media posts that discuss harassment and racism.

The situation is dire, and the wave of violence against Asians and Asian Americans is growing. According to data released by Stop AAPI Hate, between March 19 (when Stop AAPI Hate began collecting reports) and December 31 of 2020, it received over 2808 firsthand accounts of anti-Asian hate from 47 states (including DC). Moreover, 7.3 percent of those total incidents involved Asian Americans over the age of 60, and many of those attacks featured elevated levels of aggression and violence.  

In San Francisco, 84-years old Vichar Ratanapakdee died after a man violently shoved him to the ground. While in Oakland’s Chinatown, a suspect attacked a 91-year-old man, a 60-year-old man, and a 55-year-old woman. Meanwhile, in San Diego, an elderly Filipino woman was punched, an elementary school worker, who was assaulted at a bus stop in Rosemead, California, lost his finger, and a man pushed an elderly woman in Queens.

Unfortunately, this new wave of violence has even been exported to Europe. Next Shark reports that a Japanese citizen was attacked in Paris by an aggressor who tried to injure him with a bottle of acid. “The COVID-19 pandemic triggered an increase in racist and xenophobic incidents against people (perceived to be) of Chinese or Asian origin, including verbal insults, harassment, physical aggression, and online hate speech,” the European Union’s Agency for Fundamental Rights (FRA) said in a report published on 8 April 2020.

Considering that policymakers don’t understand the hostility and violence against Asians and don’t seem capable of detecting, preventing, or responding to hate crimes, initiatives like the #StopAsianHate should be encouraged.

The creative industries depend on Asian talent. Just in the US, 48 of the 477 members on the Council of Fashion Designers of America identify themselves as Asian, according to Los Angeles Times.

In the coming weeks, we foresee more voices joining the fight to condemn and denounce these brutal crimes. Disappointingly, key players in the retail and luxury industries that boosted their brand image by encouraging their audiences to discuss social issues are now silent.

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China is on track to become the biggest luxury market by 2025. So, the future of the luxury industry depends on China and the Asia-Pacific region. But despite its reliance on the Asian consumer, the industry seems incapable of overcoming its own bias against Asians.

Luxury brands that want to survive and thrive in a post-pandemic world should prioritize a culture of inclusion and diversity. In other words, they should develop strategies to tackle and combat hate against Asians.

At the time of writing, Valentino is the only major luxury brand that took a stand and expressed its solidarity with the Asian community. Other major brands who responded to this racial injustice include Nike, adidas, Converse, Tommy Hilfiger, Benefit Cosmetics, and U Beauty. However, questions remains regarding the real power players — luxury conglomerates LVMH, Richemont and Kering — who bet big on China and the Asian continent. Is their “woke” message and fight for social justice simply a branding tool — or is it something more?

Retail Hacks 2021 China

Retail Hacks Luxury Stores Must Know For 2021

Key Takeaways: 

  • China is set to hit a milestone as the first country in history to carry out most of its retail sales online instead of through physical retail stores. This puts added pressure on retailers to entice shoppers back in person post-pandemic, but means they must push the boundaries of brick-and-mortar.

  • Consumers’ growing expectations means that now all of a brand’s digital media should be completely shoppable supported  by technologies like AR, and AI which will create an even better buying experience in stores.

  • Finally, retail is now considered a journey, whether metaphysical or geographical. This will see stores becoming fully-realized independent lifestyle destinations as a way to strengthen their differentiation. Livestreaming too is a necessary way to engage your luxury community.

Since 2020 began, most brick-and-mortar stores have spent more time closed than open. Now, China is set to hit a milestone as the first country in history to carry out most of its retail sales online instead of through physical retail stores. So now, the question retailers need to ask is: What is the point of a store post-pandemic?

Curbside pick-ups, available e-commerce, and increased delivery speeds have offered unimaginable convenience and choice — not to mention safety — to shoppers during the pandemic. It’s being predicted that one in every four purchases will be made online by 2024, when e-commerce sales will hit $3.9 trillion, according to the media investment company Group M.

Although three of four sales will still be in person, COVID-19 has shown us that a retail store isn’t necessary. During 2020 — but even before  — many companies were forced to recalibrate their business models, reduce footprints, and rethink the roles of their stores in today’s omnichannel landscape. Many companies are now moving away from physical retail to digital-first or digital-only platforms, incorporating automated offerings and we have even seen the advent of augmented-reality stores.

But China is still the anomaly. Countless brands from Boucheron to Tom Ford have opened stores in China during the pandemic. But how can they keep sophisticated consumers across various tiers interested and engaged? Bain & Company has suggested that more stores will start operating as “showrooms or hubs for order pick-ups or click-and-collect services, with increasing levels of automation.”

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The likes of Chanel and Tommy Hilfiger have upped their digital game post pandemic. Much of this innovation has been through the introduction of smart fitting rooms which recognise items though RFID tracking and can enable orders on e-commerce sites and recommend new products.

Rent now is no longer a cost of distribution. Doug Stephens, the founder of the retail consultancy Retail Prophet, explained how that is the cost of customer acquisition. “[Before the pandemic,] brands that understand this [in-store value] were investing disproportionately in creating outstanding experiential playgrounds with which to acquire new customers,” he stated.

Whether it’s embedding the store experience with sustainable interventions (such as L’occitane’s sustainable pop-up), reimagining your store as a livestream studio (which many brands attempted during the pandemic), or even the unlikely act of handing out products through a hole in the wall while wearing a bear claw, there are several lively ways brands can reinvigorate their store formats in 2021 and beyond.

Now, as the retail world braces itself once again to take tentative steps towards reopening post-pandemic, Jing Daily asks what the role of stores might be in our ‘new normal’ and how that will play out in China.

The store as media

First, Stephens thinks that omnichannel is a dead concept, particularly in the Asian market. In fact, what’s happening in retail today is far more profound, and the way he prefers to think of what we’re seeing is that, essentially, all forms of media have become the store. And, conversely, physical stores are evolving to become “powerful and measurable media channels.”

“As consumers, our base expectation is rapidly becoming that media, across all channels and devices, is no longer simply a call-out to go to the point of purchase… We are no longer consciously ‘going online’ to shop, [as] we live in a constant semi-digital state,” Stephens explained, adding that physical stores are transitioning into “media channels so brands can engage customers with physical content, drawing them into the brand ecosystem.”

That means consumers’ growing expectations are now that all of a brand’s digital media should be “completely shoppable.” Stephens continued by saying that the cost of digital media will continue to skyrocket post-pandemic, making it “untenable for many brands to even use as a means of customer acquisition.” In effect, digital media must be held to a higher standard to be effective.

“We can expect to see media across channels and devices become far more shoppable and supported with technologies like livestreaming, AR, and AI, while working to create an even better buying experience than a customer used to enjoy in a store,” explained Stephens, offering Nike stores as an example. The goal is to create “highly experiential stores, fully-shoppable digital media, and excellent technology that connects every customer touchpoint.”

At the Nike Rise store in Guangzhou, shoppers can get their feet scanned by a store athlete to find the best fit for any footwear. Photo: Courtesy of Nike

As a consequence of this monumental shift, Stephens said physical stores will be measured on three key figures — “four-wall sales, online sales from inside a store’s catchment area, and the store’s media value (the number of consumers that visit the store multiplied by a base dollar value per consumer impression, modified by the store’s net promoter score.)” For Stephens, these three figures form the essential equation for valuing the productivity of a physical store.

Retail as a nomadic journey 

With consumer purchasing power on the rise and attention spans getting shorter, the pressure is on brands to keep customers coming back for more — especially in China, where consumers are spoiled by a bevy of online choices. That can play out in two ways, says Gregory Cole, the director of CDGL Strategic Communications.

The first technique is to immerse consumers in the brand’s lifestyle proposition. It creates a positive way to “refresh” consumers’ understanding and appreciation of the brand but makes more sense in cities with mature consumer bases. “Traditionally, we’ve seen this approach from shopping malls, using their architecture as part of the experience, like their atriums as community spaces for hosting events such as fashion shows, talks, etc.”

Much like the Starbucks “third-space” flagship in Shanghai, Cole expects to see more luxury brands enhancing their boutiques to become “fully-realized independent lifestyle destinations as a way to strengthen their differentiation.”

Starbucks’ flagship in Tianjin reimagines the third place by rejuvenating a centuries-old heritage building and adding new features like the Starbucks Bar Mixato. Photo: Courtesy of Starbucks

The second twist is immersing the brand in its consumers’ lifestyles via nomadic retail, pop-ups, or mini shopping mall stores across the country. Cole noted that these initiatives would increase shopping convenience and brand relevance with local consumers who are just discovering the brand. Otherwise, those consumers would have had to travel to Shanghai, Beijing, or Guangzhou to reach a brand’s nearest store.

“An interesting aspect of this nomadic retail is that cities across China have strong local cultures and traditions,” he added. “Instead of replicating the same store concept around the country, brands will stand a better chance of resonating with consumers by reflecting local culture, and more importantly by transforming regularly to match the accelerating consumer journey that we are seeing.”

The store as a temporary creative cohort  

Opening doors is especially challenging for emerging brands given the vast commercial overheads; being stocked by destinations like Selfridges or Lane Crawford can raise seasonal inventory difficulties. Muaz Notiar, Co-founder of Revstance, states his philosophy is based on temporary installations with a clear ROI.

In a move away from permanence, designers can control their parallel visions of the prestigious multi-brand retailer that still brings people into the brand story. “Working with a specific retailer becomes quite difficult. So now we see a designer asking, why do I need to do that? I’d rather a temporary installation for say two months in a specific location,” Notiar stated.

And, what is different post-pandemic is how, in this shrunken timeframe, “before even six months, it was considered a pop-up” with scenarios based on connecting like-minded designers that “follow similar brand themes and basing pop-ups on these values.”

According to Notiar, “That is one of the trigger points we see in the back end. We are experimenting with what would drive a specific person to a location. And, how do you line up the Rubix cube to make the journey worth it? Creating cohorts means overlapping customer pools, and that allows individuals to know that, when they go, it is a broader experience. So it is worth making that journey.”

Retail as a customer interaction or community event

How the store interacts with the consumer is another key metric for brands to determine and measure. Of course, the level to which brands want to engage will depend on the brand position. But it will be wide-ranging, either with fully-automated experiences with technology or human salespeople. The former can work for convenience retailers. But what about luxury, which is said to hinge on the personal touch and face-to-face sales?

Stephens thinks it might lie in a hybrid of the two. “Higher touch brands and luxury retailers will focus on automating low-value tasks and using technology to empower their staff and stores to deliver exceptional experiences,” he said.

He also added that, beyond customer acquisition, these stores also act as “brand clubhouses, building community among new customers.”Natural beauty brand L’Occitane en Provence’s sustainability concept store in Hong Kong has the dual-appeal of being green and also cultivating a community through rewards and interactive activities.

L’Occitane’s sustainability concept store encourages the public to participate in its eco-friendly programs through rewards and interactive activities. Photo: Courtesy of L’Occitane

For Stephens, other iterations of this trend will be powering retail. “Sustainability, across the entire consumer journey, will become table-stakes for all brands.  Energy-efficient stores, electrified delivery vehicles, circular manufacturing processes, supply chain resilience, and sustainably constructed goods will be de rigueur, particularly among luxury brands.”

This spring, when Bain & Company surveyed 4,700 consumers in China, they found that customers were now more likely to use livestreams and short-form videos as research and purchasing tools than they were before the outbreak. Luxury brands cannot afford to miss this boat in China. We saw the medium’s value during the pandemic after shops transformed into broadcast studios. As such, in-store livestreaming is sure to further embed brands in consumer psyches.

In China, the need for physical stores remains. But the in-store experience has always been sacrificed by the proliferation of digital innovation. As citizens have shown by forming lines around the block, they still crave the physicality of ‘going to the store.’ But now, the reason why is less obvious.

That puts even more pressure on stores and their luxury owners to keep evolving. They will need to excite and entice safely but also ensure quality and have differentiation through assorted products. But this change can be seen as an opportunity to rethink stores for this post-pandemic moment while ensuring shoppers do not experience life without them. Whatever the reason for their existence, they must be justified.

Outer Space Advertising

Is Space the Final Frontier for Brand Marketing?

This post originally appeared on Content Commerce Insider, our sister publication on branded entertainment.

In 2008, an article in the New York Times predicted that a “moonvertising” movement would emerge within a decade, with brands projecting their logos onto the surface of the moon using lasers capable of covering “about half the land size of Africa.” Now, thirteen years later, we haven’t come close to advertising on the moon, but outer space continues to serve as a source of inspiration for marketers.

With its escapist and futuristic appeal that draws universal fascination, outer space can be an ideal tool for brands to provoke awe through advertising. As far back as 1990, the Tokyo Broadcasting System celebrated its 40th anniversary by sending journalist Toyohiro Akiyama to Russia’s space station, at a cost of around $12 million. Other companies have utilized the cosmos to create excitement around their products, from Pepsi sending a replica of its flagship beverage to float outside the Russian space station in 1996 to Israeli dairy firm Tnuva, which filmed an ad on the Mir space station in 1997, the first commercial to be shot in space.

Fast forward to 2021, 60 years since the first human was sent to outer space, and now just about every brand wants to launch itself into the great beyond. According to a 2017 report by Bank of America Merrill Lynch, the space industry could be valued at $2.7 trillion by 2030.

In 2019, NASA announced that it was opening the International Space Station for business opportunities, ultimately allowing private missions for commercial purposes. American beauty brand Estée Lauder was an early adopter, paying $128,000 last year to have NASA astronauts take pictures of ten bottles of its Advanced Night Repair serum in the heavily-windowed Cupola observatory on the International Space Station.

Although Estée Lauder’s expenditure was a lot smaller than the millions spent on space advertising in the past, working in outer space remains a wildly expensive endeavor — it would run in the tens of millions to organize an independent trip.

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Companies are having more and more conversations about public space tourism in orbit, with the well-known start-up Axiom Space selling $55 million tickets for a stay on a SpaceX capsule last year. For now, space remains an ultra-pricey realm, one that the vast majority of consumers can only afford to experience vicariously, for example, by sporting a NASA logo on their clothing.

Bert Ultrich, a multimedia liaison at NASA, told the Los Angeles Times in 2019 that he received more than one request per day to use the organization’s logo, which has become commonplace on the streetwear scene thanks to collaborations with brands such as NikeVans, and Alpha Industries.

Chinese outdoor clothing label Bosideng celebrated the 50th anniversary of the first moon landing in 2020 with a NASA collection, offering logoed jackets that took their aesthetic and structural inspiration from spacesuits.

Bosideng x NASA 50th Anniversary Collection. Photo: Courtesy of Bosideng

China’s foray into intergalactic collaborations is notable because of the country’s fairly recent plans to dominate space. In 2014, the Chinese government designated civil space development as a key area of innovation, striving to take the place of the United States. It now ranks second to the United States in the number of operational satellites in orbit, and the focus on commercial opportunities is increasing as well, with 78 commercial space companies operating in China, according to the Institute for Defense Analysis.

It’s therefore not surprising that Chinese brands have also been motivated to tap into this new source of national pride. C-beauty brand Perfect Diary collaborated with the China Aerospace Science and Technology Corporation on a moon-themed eyeshadow palette to celebrate the 2020 Mid-Autumn Festival, while sportswear brand Anta hosted a livestream on Bilibili in November 2020 in partnership with Space China that featured a set crafted to look like a space station, where they showed that their down jackets were warm enough to hatch chickens.

There is another, more defined trend emerging of space companies collaborating for marketing purposes, rather than just producing space-inspired products. Boutique fragrance house Byredo’s latest Travis Scott collaboration, “Space Rage,” aims to simulate the smell of outer space — the beauty of it is that nobody really knows what it’s supposed to be.

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The Travis Scott x Byredo Space Rage fragrance is made with notes of “cosmic dust,” “anti-matter particles,” “starlight,” and “the scent of Supernova.” Photo: Courtesy

Brands are ultimately chasing outer space as an infinite source of adventure and mystery. Trend Forecaster Emily Segal wrote in The Guardian that the global uncertainty of the coronavirus pandemic will lead to a boom of escapism over the next decade — and if there was ever an era for space to be the next big thing in marketing, it’s now.

H&M Pronounce China Streetwear

H&M Has Just Done What?

What Happened: H&M has announced it will release a collection with the independent Chinese brand Pronounce on April 8. The collaboration is part of its premium streetwear collection, Blank Staples, which will be available at some physical stores around the world, as well as, H&M’s Chinese website and app, WeChat store, and official flagship store on Tmall boutique. Pronounce, helmed by duo Yushan Li and Jun Zhou, have used saturated color blocks and embroidery to showcase the inspiration behind the collection, namely, Dunhuang’s Crescent Lake and traditional Chinese fairy tales. 

Jing Take: In the wake of COVID-19, H&M has been doubling down on the mainland, no doubt following reports of dramatic sales declines in the country during 2020. Plus, the rise of local competitors like Shein and international companies such as UNIQLO have been cutting into H&M’s market share as well. So what better way to reengage this important market than with the flavor of the month — a Chinese designer brand collaboration? 

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For nearly two decades, the fast-fashion giant has democratized designer fashion by bringing iterations from big stars to the high street. Engineering high profile partnerships, for example, with the Irish designer Simone Rocha, has boosted its credibility among young consumers – she especially benefits from the halo effect on the mainland. And it’s the second time H&M has chosen to pair up with a designer from China: In 2019, it tapped local Gen Z hero Angel Chen for a 45 piece capsule available in Asia and Canada. 

On the other hand, Pronounce has a proven international track record: two partnering’s with Diesel, numerous outings at London Fashion Week, and a combined European education (London and Italy). An endorsement such as this not only confirms the importance of China’s consumer market, but also screams the screams the viability of Chinese design to win fans around the world.

Pronounce x Diesel unisex capsule collection. Photo: Courtesy of Diesel

Luxury brands who are still mining Chinese heritage for authentic connections (or more likely quick gains) should take note too: if you want insights into how to combine cultural motifs for a streetwear audience look no further. This is what young consumers in China and beyond are buying. 

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.

Cash for Creators and the Battle for Short Video Dominance in China

Although far from new in China, short video is shaping up to become a bigger battleground for platforms in 2021, with implications for brands and content creators as well. Douyin, the Chinese version of TikTok, recently gave away a record RMB 1.2 billion ($185 million) as the red envelope sponsor of CCTV’s Spring Festival Gala (by far the world’s most-watched TV program), while Kuaishou is hot off the heels of a $5.3 billion Hong Kong IPOWeChat launched a short video channel in 2020, and Bilibili reported a 74% increase in net revenues in its third-quarter 2020 financial results.

All of these platforms are cashed-up and intent on spending heavily on incentivizing high-quality content creation to keep viewers engaged and spending via integrated e-commerce functionality.

Netease is the latest to join the fray with its recent announcement of plans to invest RMB 1 billion ($155 million) to support video creators across existing Netease apps for news, social media, e-commerce, music, and education. Founded in 1997, Netease is one of the country’s oldest internet companies, but it hasn’t yet been able to capture the video zeitgeist. Now, it clearly thinks incentivizing creators could give it an edge.

But simply throwing cash at influencers and hoping the audience follows may not be enough to dethrone Douyin and Kuaishou, which together account for an estimated 60% of China’s short video market and aim to spend heavily as they fight to come out on top. In September, Douyin said it would invest $1.5 billion over the next 12 months to help double revenue for creators and diversify their income streams. Kuaishou announced a similar incentivization plan aimed at incubating 100,000 businesses and helping each of them achieve $146,000 in annual sales, while cultivating some 10,000 livestreamers and hosting a million e-commerce broadcasts over the same period.

These platforms are employing multi-pronged strategies to win over audiences with five key pillars: sponsorships of popular events around local holidays; support for the production of higher-quality user-generated content; exclusive agreements with celebrities, influencers, and top creators; expansion into longer-form content such as movies and series; and e-commerce integration, especially through livestreaming

Kuaishou’s efforts over the past year reflected this approach. The firm gave away RMB 1 billion ($155 million) as the exclusive sponsor of last year’s CCTV Spring Festival Gala, convinced Mandopop legend Jay Chou to launch his first mainland Chinese social media account and grant rights to his music, partnered with JD.com to promote e-commerce livestreaming, and even branched into arthouse cinema with the exclusive distribution of indie director Zhang Wei’s “The Empty Nest” (空巢) last May.

Competition for top creators has grown increasingly heated. Last summer, one of Bilibili’s most popular “uploaders,” Necromancer Financial, was poached by Bytedance’s Xigua Video in a deal rumored to be worth RMB 100 million ($15 million), and the business vlogger stated that his dependence on Bilibili fans for revenue was unsustainable. Later in the year, it was Bilibili’s turn to nab talent from Xigua Video, with popular esports commentator Ao Changzhang jumping ship from Xigua to Bilibili under an exclusive five-year contract.

In 2021, the key for platforms contending for greater market share will be smart spending — not just on quality, but on niche content in areas with the most potential for growth. In the case of Netease, education could prove to be a cornerstone.

CCI recently reported on Netease’s announcement of a new knowledge-based short video platform called Netease Knowledge Highway (网易知识公路) and plans to expand video on other NetEase properties such as Netease News, Netease Cloud Music, fanfic platform Lofter, and online education subsidiary Netease Youdao. If the company can succeed in using video to merge its disparate content streams (whether knowledge-based or not) and attract creators through exclusive deals, it may stand a chance of making inroads against Douyin and Kuaishou.

That said, building market share won’t be easy (or cheap), and luring top creators away from rivals is likely to be an uphill battle for the far less edgy and relatively long-in-the-tooth Netease.

Social Apps China 2021 Keep

3 Chinese Social Apps To Bet On in 2021

Key Takeaways:

  • Stuck at home, China’s internet users have skyrocketed to just shy of one billion, with many social apps seeing a record number of active users.

  • Poizon, which functions as both a resale app and online fashion community, is a good starting point for brands testing the China market.

  • Lifestyle apps like Soul and Keep offer brands the opportunity to reach China’s Gen Zers through co-sponsored offline and online activities.

Over the last few weeks, Clubhouse has taken the internet by storm, touted as the hottest social app out of Silicon Valley since Snapchat. The hype even reached China despite the audio-based platform requiring an iOS device, an overseas Apple ID, and an invitation.

After Elon Musk joined the site to host a virtual talk show with Robinhood’s CEO, invitation codes trended on Weibo and even sold on China’s secondhand marketplace Xianyu for up to $60. Users were not only enticed by the app’s exclusivity but the rare chance to talk freely in real-time.

But that didn’t last long. With Chinese users congregating online to discuss sensitive topics like Xinjiang and Hong Kong, Beijing quickly put an end to Clubhouse use. However, the ban did not kill the country’s growing interest in audio platforms or its increasing desire for virtual socialization. Local designers are already talking about how to recreate Clubhouse for the market while existing podcast sites like Lizhi have seen their shares surge.


With some of China’s population stuck at home once again, the demand for social and lifestyle apps has skyrocketed. By the end of 2020, China’s internet users jumped to almost 1 billion, and major apps like Douyin and Bilibili hit record numbers of active users.

But beyond the big names, where else are netizens spending their time? Whether your brand wants to reach a younger demographic or simply track the latest trends, here are three lesser-known local apps they should have on their radar in 2021.

Poizon (得物): The resale app riding China’s sneaker craze

Poizon launched an AR try-on feature in April 2020. Photo: Screenshots/Xinhua

What it is: Created as a sneaker-resale platform in 2015, Poizon is currently ranked among the top-five free apps on China’s App Store and is valued at three times the price of its American counterpart, StockX, at one billion dollars. A one-stop marketplace for streetwear and luxury accessories, Poizon also supports interactive fashion communities by providing its style-conscious Gen-Z audience with curated looks from fashion experts.

How it works: When a seller posts a pair of shoes, interested buyers can bid on it or pay a fixed price to purchase immediately. Once the customer pays, the seller sends it to Poizon for authentication, and if it passes it will be issued a certificate of authenticity before being delivered. All the items sold on Poizon are deadstock products, meaning they’re new, unused, and come with the original packaging box and tags.

Why brands should care: A few years ago, luxury brands steered clear of consignment, wary of counterfeits. But with the secondhand market now expected to grow to $64 billion globally and gaining momentum in China, this trend should not be ignored.

What sets Poizon apart from its resale counterparts Xianyu and Isheyipai is its focus on streetwear. The athletic footwear market in China is expected to reach $10 billion by 2025, which will account for ten percent of the global market. With its authentication services and 1.4 million monthly active users, Poizon is a good starting point for global brands interested in gauging the Mainland market before making a full commitment. In the way Gucci teamed up with The Realreal, partnering with resale platforms such as Poizon could also help companies better create a circular, end-to-end brand experience. But neglecting the resale market would mean leaving this lucrative field to third parties, who may not respect the brand identity.

Keep: The at-home fitness app keeping pounds at bay

Keep users can share their fitness journeys and purchase equipment on the app. Photo: Screenshots

What it is: “Self-discipline gives me freedom” is the slogan of China’s top exercise app. With over 300 million registered users and 10 million paying members (mostly tier-1 and tier-2 urbanites under 25), Keep has evolved into a fitness powerhouse by providing training lessons, an Instagram-like social network, branded products, and offline gyms, known as “Keepland.” In January, Keep announced it had completed $360 million in Series F financing, doubling the company’s valuation to $2 billion, thanks to a pandemic-boosted demand for at-home workouts.

How it works: Like other exercise apps, Keep offers a range of instructional videos, from yoga and stretching to HIIT and strength training. Paying members get access to premium services, such as customized workout plans and professional diet advice. An online store is also built into the app to offer the same equipment and apparel that the trainers use. To motivate users to keep active, Keep organizes activities and incentives throughout the year, including prizes in cooperation with brands like Volvo.

Why brands should care: Online fitness apps in China saw user numbers jump 12 percent year-on-year in the first quarter of 2020. But Keep was ahead of the curve, boasting a 23-percent user surge during that same period. According to Iresearch, 18.1 million devices accessed Keep each month for an average of 20 minutes per day.

Given Keep’s diverse product offerings, there are several ways brands could jump on the social fitness train. For one, Keep has already featured several KOLs in its workout videos, such as Youtuber Pamela Reif, model Karlie Kloss, and Chinese actor Lixian, which raises the option of using brand ambassadors. The app has also advertised with brands like adidas and Sketchers, created a Marvel-themed superhero class, and started a discussion forum for Victoria’s Secret Angels. Offline, Keep’s line of apparel, treadmills, smart wristbands, and healthy food all present co-branding opportunities.

Soul: The AI-driven dating app that goes deeper

On Soul, strangers can chat and video call without knowing each other’s appearance. Photo: soulapp.cn

What it is: Unlike competitors Momo and Tantan, Soul offers an alternative to superficial swipe culture. By taking profile pictures out of the equation, the Chinese dating app helps its Gen Z users find matches based on common interests and emotional connections. And youths are taking the bait: since launching in 2015, Soul has hit 100 million registered users and over 30 million monthly active users. The platform currently tops the Social category in the Mainland App Store and has a tailored version for Japan, Korea, and North America.

How it works: Committed to fostering meaningful relationships, Soul relies on personality tests to sort and recommend users based on similar values and hobbies. Once the quiz is completed, members have full access to the app, including functions like Soul Cam, Audio Call, and one-on-one chat. There’s also an explore page where people can share pictures, short videos, and status updates with the entire Soul community. Yet, users cannot see any personal information aside from their test match score and the public posts; Soul employs photo filters and voice changers to shield identities. While this feature comes across as somewhat catfish-y, the platform claims it is encouraging Gen Zers to freely express themselves.

Why brands should care: China is no stranger to online dating. In 2019, more than 622 million people used dating apps in China, and the market is set to hit $290 million in revenues by 2024, according to Statista.com. The pandemic has only accelerated this trend, as reflected by the 200 percent surge in Soul users last year. With an average daily usage rate of over 60 minutes and an interaction ratio among MAU of over 95 percent, Soul is a promising platform for consumer brands targeting China’s young consumers.

That said, Soul has been slow to monetize, rolling out Soul Tokens (used to purchase additional services) and premium memberships in 2019. In fact, the app appears cautious in pushing commercials and partnering with influencers – the latter going against its premise of prioritizing quality content over popularity contests.

One way brands can partner with the app, then, is through activities. Take Soul’s recent collaboration with Tim Hortons as an example. For the concept, the platform created the trending topic “100 Moments Where Coffee Saved Your Day” to encourage users to share coffee-related stories, offering them a chance to win free drinks. Another example is how the app invited 10,000 Soulers, whittled down from a competition of tens of millions to an offline showing of the Disney film “Soul” last December. That same day, Soul also jointly set up a special charity event with WABC Yitu Charity Foundation, inviting nearly a hundred children with autism and their families to watch the movie. Ultimately, brands that want to tap this app and China’s burgeoning dating market must prioritize emotional connections and tell meaningful stories – showcasing their own “soul.”

Burberry Trademark Infrigement Baneberry China

The Bane of Burberry

What Happened: Burberry is riding high. Today, it showed its Fall 21 menswear collection at London Fashion Week after being granted a preliminary injunction against Xinboli Trading (Shanghai) Co., Ltd, the owner of the Chinese brand Baneberry. In an unusual move, the court in the eastern Chinese city Suzhou accelerated this injunction, even though the trial is still underway.

The court said that since both companies are selling through similar channels, Baneberry, which now owns at least 40 physical stores, is lowering Burberry’s market share and “weakening the distinctiveness and recognizability of its well-known trademark.” The Chinese company has registered trademarks for a similar logo to Burberry’s and the associated font. It also makes use of check patterns, which is a widely-known staple of Burberry’s design heritage.

The court found that Xinboli had likely infringed when Baneberry declared that it “originated in Jermyn Street, England” and marketed its “British lattice” pattern. Photo: Weibo

Jing Take: The fact that an interim ruling has already been announced is a rare, bold move by the Suzhou Intermediate People’s Court for Trademark Infringement — one that sends out the message that the country is attempting to clamp down on counterfeits. And, given China’s nebulous reputation when it comes to fake goods and trademarks, this is precisely what the luxury fashion industry needs to see.

Earlier in the year, Shanghai Huangpu District Court ordered Chinese sportswear company New Barlun Co. Ltd and Shanghai Shiyi Trade Co. Ltd to pay damages of $3.85 million to New Balance. In May 2020, Supreme finally secured its trademark in China after a lengthy legal battle — another high-profile win for a foreign company operating on the Mainland.

One can surmise from this action that Burberry is on track for a victory, which would further demonstrate China’s commitment to creating a sophisticated IP system that matches global standards. And not soon enough.

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

Nostalgia Marketing Perfumes China

How Brands Can Use Nostalgia To Win China’s Wide-Open Fragrance Market

Key Takeaways:

  • Nostalgia marketing is very successful in China for multiple reasons, including the increasing loneliness of young adults and the importance of collective memories.

  • Due to physiological reasons, smells are a powerful nostalgia trigger, offering users the mental health benefit of improved mood and emotional resilience.

  • In-depth interview research on nostalgia triggers among Chinese millennials and Gen Zers found that sweet scents are strongly associated with first crushes. Osmanthus, cedar, chili-peppers, and fruit are also powerful nostalgia triggers in various regions.

Research shows that the brain’s feel-good chemicals, dopamine, serotonin, and oxytocin, are activated at higher levels between the ages of 12 and 22, which is why we often feel a nostalgic yearning for our teenage and early adulthood years. As such, a successful nostalgia marketing campaign successfully returns consumers to their cherished youthful years.

Nostalgia marketing is particularly effective on young Chinese because, due to China’s historically collective culture, Chinese tend to value collective memories and form collective identities. Therefore, when a nostalgia campaign targets shared memories, the return has the potential to be many times larger than in an individualistic society.

But another reason nostalgia marketing works well among young Chinese adults is the emerging loneliness epidemic gripping this age group, as they often work far from home and have a hard time managing the stress of an increasingly fast-paced society. Yet this loneliness is often a nostalgia trigger, making the group a perfect target for nostalgia campaigns.

So, we already know that nostalgia marketing in China is highly effective, but to tap into this market, we must ask ourselves: What are the unique nostalgia triggers for Chinese consumers?

Recently, the perfume industry has begun to leverage the physiological relationship between scent and memory with great success. However, perfume is a relatively new market in China. According to China Daily, less than one percent of the Chinese population uses fragrances daily. However, this number is growing quickly.

Recommended ReadingThe Smell of Success: How Niche Perfumes Perform in ChinaBy Gemma A. Williams
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To capture the potential of China’s budding perfume market, brands must figure out which scents most agree with consumers. That is where nostalgia comes into play. Although nostalgia is often associated with sadness, it has been shown to offer the mental health benefit of improving mood and is associated with emotional resilience. As such, nostalgia-inducing scents make their users happier.

So what are the most powerful nostalgia-inducing scents among Chinese young adults? According to in-depth interview research from Daxue consulting, these were the smells that the 19 to 26-year-old participants remembered when asked about different phases in life:

  • Home cooking, including rice, fried pork, braised beef, and soup

  • Some participants recalled the smells of cleaning products and laundry detergent

  • Cedar, firecrackers, and grilled meat were popular in the Northeast region

  • Osmanthus, fresh-cut grass, and chicken soup were popular in the Eastern region

  • Mangos, bananas, fresh juice, and pool water were favored in the Southern region

  • Hot pots, Chili-peppers, and sweet and sour soup were recognized in the Southwest region

  • Fried meat and snacks from mini-shops

  • Fresh air

  • Hot pots in dorms

  • The smell of books in the library

  • Mosquito spray and rainy days

  • Natural smells like fresh-cut grass and the smell of food like hamburgers made female participants remember their first crushes

  • Sweet and fruity smells caused male participants to think of their first loves

Perfume product reviews confirm the correlation between sweet and fruity scents and first love.

A caramel-scented perfume from Les Petits Plaisirs received a comment stating that “[the perfume] represents the smell of first love. It’s a sweet, soft, and light feminine smell. I see a girl wearing a long white dress, running on the field.” Meanwhile, Jo Malone’s Orange Blossom Cologne triggers similar nostalgic memories among Chinese netizens.

On the other hand, perfume brands in China promote natural scents to men to conjure a woman’s ‘first love’ thoughts. For example, Bvlgari’s cologne, described as a natural “wooden tea smell,” is marketed in Sephora China as a ‘first love’ scent as is Burberry’s sweet floral perfume for women is on Chinese e-commerce sites. Yet, neither of these items are considered ‘first love’ scents in their native markets.

But perfumes aren’t just limited to first-love scents, as fragrances like osmanthus and mung bean bring Chinese perfume users a different whirlwind of memories. For example, product reviews on the Osmanthus oolong scent from the Shanghai flower shop THE BEAST brought some Chinese netizens back to their childhood, “Every time I smell something like Osmanthus, I automatically think of my childhood — a memory so great that I can never forget,” said one user. Additionally, a gender-neutral mung-bean fragrance by the domestic brand Young Beast has been recognized as a ‘scent of nostalgia.’

Young Beast’s perfume set features six nostalgic scents, including mung bean, orange soda, and popsicle.

And finally, the iconic candy brand White Rabbit, which is no stranger to nostalgia marketing, converted its sweet-milky flavor to perfume in its collaboration with Scent Library, which is a Chinese retailer that focuses on niche fragrances. In response to this collaboration, netizens responded with great enthusiasm. “My favorite, White Rabbit, finally has perfume,” said one user excitedly. “I am so happy. [It’s] the best memory in my childhood.”

Scent Library partnered with White Rabbit to create a fragrance based on the candy’s distinct milky flavor. Photo: Tmall

Chinese fragrance preferences differ from Western ones, as users in China prefer light, floral scents that don’t stand out, as strong perfume can be considered indecent. In fact, the most common complaint about perfumes in China is that they’re too strong, which is why the sweet spot for fragrances there are natural scents like osmanthus, oolong, cedar, and mango, which are light and mood-brightening, thanks to nostalgia.

This analysis was based on Daxue Consulting’s qualitative nostalgia research which can be downloaded here.

Gucci's 2020 Performance Digital Young Consumers

Does Gucci Need a Reset?

Key Takeaways:

  • Instead of the Q4 growth that many analysts expected, due to strong Chinese luxury consumer demand and a massive appeal with Chinese millennials, Gucci reported a 10.4-percent decline year-on-year.

  • Gucci went through phases when its story was boldly and successfully executed, like in the Tom Ford era. But other periods, like when Frida Giannini was creative director, sales plummeted — despite praise for Gianni’s collections.

  • Given its expansive China footprint and young audience, Gucci should have at least a 20-percent digital share of sales. But that number only stands at around 13 percent.

When Kering presented their annual results for 2020, Gucci’s financial performance was disappointing. Instead of the Q4 growth that many analysts expected, due to strong Chinese luxury consumer demand and Gucci’s massive appeal with Chinese millennials, the brand reported a 10.3-percent decline year-on-year. These numbers indicate that important regions like Europe and North America are dramatically down, accelerated by lockdowns in Italy, France, and parts of the US.

Shortly after presenting the results, the number of experts who criticized Gucci’s strategy as too narrowly focused on young customers emerged like mushrooms in a forest after a rainy day. Some were suggesting that the brand needs a dramatic reset.

Recommended ReadingKering’s Earnings Weren’t All Gucci For 2020By Sadie Bargeron
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I tend to disagree. Looking at the brand from an outside-in view, many of the fundamentals are spot on. First, it is a brand with excellent storytelling. Gucci promotes that their customers can unapologetically live their lives the way they want — bold and free. It is a very inspiring story: emotional, personal, relatable, and identifiable to all generations.

Over the decades, Gucci went through phases where its story was boldly and successfully executed, such as in the era of Tom Ford, who, as creative director, gave the brand its then signature “overtly sexual” style. Since taking the helm as creative director of Gucci in January 2015, Alessandro Michele has been interpreted the brand story in his own way: more playful, theatric, and with a 1970s retro vibe. These bold executions of the brand story were rewarded with strong, long-term compound growth rates.

In phases when the brand story was not expressed well enough, as in the period when Frida Giannini was the creative director, sales plummeted — despite the praise Gianni got for the quality and style of her collections.

Gucci presents a lesson for other luxury brands: The brand story always matters most. And frankly, Gucci has been incredibly strong in this dimension in the past few years and is better positioned for the future than most other luxury brands. As a result, younger consumers — who are not only the future of luxury brands but also the most discerning customers — have fallen in love with the brand. And that is a strong starting point for post-pandemic brand development in the future.

Therefore, I believe the brand issues aren’t fundamental but are with executing its story. One indicator is the brand’s low share of digital sales, which, according to Yahoo Money, stands at around 13 percent despite strong growth. Given its expansive footprint in China and the young audience, I would have expected Gucci to have at least a 20-percent digital share of sales. While some digital growth is encouraging, it was just in line with the entire market’s move toward digital, which the pandemic accelerated. Gucci can do better and must do better in this department.

As such, digital sales should become a point of attention for other luxury brands. The game of luxury has morphed into a digital game, where more than 90 percent of purchase decisions are made through the digital journey. If a brand like Gucci is lagging in digital, other brands should be alarmed. In digital, it is not sufficient to still be growing anymore. Now it is necessary to generate a digital competitive advantage, which means a brand needs more than just a beautiful webstore.

In many projects, I saw some of the best luxury brands in the world not put enough resources toward digital leadership, including the use of sophisticated AI-based consumer insight technologies that can monitor sentiment shifts around the globe in real-time. With preferences changing rapidly at ever-accelerating rates, digital infrastructures have become a game-changer and a critical success factor.

Another issue Gucci must address is its in-store experience. I never experienced the boldness, excitement, and creativity of its collections and creative content in the Gucci stores I visited. And I was never impressed by any of its sales associates, its follow-up, or its relationship building, all of which were dramatically inferior to what I experienced at some other top luxury brand stores, whether in Asia, Europe, or the US.

I am convinced that a more meticulous focus on brand storytelling through the in-store experience, along with stronger digital execution, would yield much better results, given that Gucci’s fundamentals are exceptional. Consider that a warning and wake-up call for other luxury brands.

In our brand audits, more than 90 percent of brands lack clarity and focus in their storytelling. If this issue is combined with weak digital and in-store execution, consumers will only be confused by their sub-par experiences. If a smart and creatively expressed brand like Gucci, which has an incredibly strong story and one of the highest appeal rates with the most difficult target groups to reach (Gen Zers and Millennials), is underperforming, brands without quality storytelling should listen very carefully.

I believe Gucci will address these pain points and continue its strong appeal with young consumers, in China and elsewhere, with investors and consumers alike. But for brands that lack brand fundamentals, it is time to rethink your entire approach. That’s because luxury value can only be created when a brand executes its story — across all touchpoints — better than the competitors.

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

Sustainability Eco-Products Sales China

Why Conscientious Consumption Will (Eventually) Drive Sales In China

Key Takeaways:

  • According to research by AliResearch, sixty-six million customers (16.2 percent) on Alibaba’s China retail marketplaces bought five or more green products in 2015, and they were open to paying an average of 33-percent more for green products.

  • Yet, out of a variety of products, non-luxury sales of household appliances took the largest share of eco-products, followed by maternity/childcare products and food.

  • But Gen Zers in China are more concerned by environmentally-friendly consumption than any other Gen-Z group in the world (25 percent versus 13 percent for Gen Zers across the globe), making them a top target for future green luxury.

We have heard it before: Luxury brands need to make a difference and show a genuine interest in sustainability if they want to connect with younger demographics. But is this a successful strategy in China? Younger demographics are indeed embracing ethical consumerism in China. However, consumer behaviors are still often at odds.

According to research by AliResearch, sixty-six million customers (16.2 percent) on Alibaba’s China retail marketplaces bought five or more green products in 2015, and they were open to paying an average of 33-percent more for green products. But despite these encouraging reports, some contradictions should be addressed.

Take, for example, data from The Report on Consumer Awareness and Behavior Change in Sustainable Consumption, which shows that the domestic market for eco-products is “currently not competitive, and is limited to niche consumers.” According to the report, 50 percent of Chinese consumers are willing to pay a premium of up to ten percent for eco-products. But here’s where the situation gets tricky because the driving forces behind green consumption are “food safety and health, environmental protection, and reducing overall costs.”

Unfortunately, the luxury industry cannot satisfy these needs. And the same determination of priorities is reinforced by Alibaba’s own data of online purchasing from 2015, which showed that, out of a variety of products, total retail sales for household appliances took the largest share of eco-products, followed by maternity and childcare products, and, finally, food. Fashion and apparel did not occupy top positions on the list.

An alternative study quoted by China Sustainable Consumption Research Program highlights that even though intentions to buy eco-friendly products do exist, consumers are not willing to pay a significant premium for green products. From 2011 to 2015, CCFA and the Department of Environment of RUC conducted studies on consumer willingness to pay a price premium for eco-friendly products in Beijing, Shanghai, Wuhan, and Shenzhen. The surveys showed that 46.1 percent of the consumers are willing to pay a five-percent premium for eco-products, and 25.1 percent are willing to pay a five-to-ten percent premium.

While the data might seem encouraging, it also reflects consumer behavior for tier-1 cities and doesn’t necessarily reflect it in lower-tier cities. Disparities in income levels and differences in consumer sophistication create a diverse sustainability landscape, so luxury executives need to be prepared for an environment where sustainability might not be profitable for their business.

Concerning the future, we foresee that younger “green consumers” will push the country in a sustainable direction. The core values, beliefs, and attitudes of Chinese Gen Zers are affiliated with those of their Western counterparts. But this is hardly surprising if we consider that this is a generation that has directly seen various environmental crises and the health impact of global warming.

In 2019, global strategy consulting firm OC&C conducted an in-depth survey of 15,500 respondents from nine countries and assessed that Gen Zers in China “are more concerned by environmentally-friendly consumption” (25 percent versus 13 percent for Gen Zers across the globe).

“Chinese millennials and Generation-Z consumers are driving these demands for sustainable brands, as they are more enticed by purpose-driven brands that advocate sustainability and have a green heart,” says Jessie Lee, a senior strategy consultant at OrgHive. “This shift towards conscious consumerism is mainly driven by their health concerns with safe, natural, and/or organic materials due to China’s plethora of counterfeit scandals in previous years.”

Recommended ReadingWhy Health Is The New Luxury In ChinaBy Erwan Rambourg
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In an article that is part of the World Economic Forum Annual Meeting, Philipp Rickenbacher, chief executive officer at Bank Julius Baer, echoed the idea that citizens from developing economies experience the fallout of an environmental crisis more directly, making them “more sensitive” to green policies.

Meanwhile, the COVID-19 crisis has only sped up the green trend among younger demographics. And according to GlobalData’s research, the demand for healthy and authentic food and drinks has reached an apogee in China.

On the whole, it’s hard to imagine a future in which luxury brands won’t adhere to the highest sustainability standards so they can satisfy the needs of their core consumers. But analyzed from a short-run perspective, sustainable branding comes with high, direct costs that can’t deliver an instant payoff. Yet, a green brand image may boost brand equity, which represents a long-standing benefit.

US-China decoupling Biden Luxury

Biden’s Next Moves Could Be Costly For Luxury

What Happened: As the nation looks to the new administration for a fresh start, President Joe Biden’s determination to maintain Trump’s tough stance on China could come at a hefty price — for Americans. 

On February 17, the US Chamber of Commerce and the Rhodium Group released a report estimating that American companies could lose hundreds of billions in potential growth over the decade from a US-China split. If Biden expands 25 percent tariffs to all two-way trade, the US could forgo $190 billion in GDP annually by 2025. Additionally, if Chinese tourism and education spending fall to half of what it was before the pandemic, this could slash $15 billion to $30 billion a year in exported services trade.

Jing Take: With the US unwilling to relent on Beijing, American companies should brace themselves for the backlash. Although luxury goods were minimally affected by the first phases of the trade sanctions — being predominantly manufactured in Europe or stateside — sweeping tariffs threaten to hike costs for the broader retail industry and reduce global competitiveness. Already, we’re seeing companies like Steve Madden, Calvin Klein, and Tommy Hilfiger migrate out of China to avoid tariffs and supply chain uncertainties.

While luxury is not the primary target of the trade war, companies will be impacted by the subsequent anti-US sentiment. A survey from the American Chamber of Commerce in China showed greater scrutiny on US shipments, preferential treatment to non-US businesses and an increase in regulations in retaliation to previous Trump measures. Another study of Chinese shoppers by consulting firm AlixPartners found that 57 percent were planning to spend less on American products amid rising nationalism. As Chinese shoppers are set to account for almost half of all luxury spending in the coming years, this is not a consumer base American luxury brands can afford to lose. 

Similarly, these are not tourists luxury wants to miss out on either. Before COVID-19, Chinese shoppers made up one-third of global spending on luxury goods, with nearly all of the $119 billion worth of spending occurring outside the mainland. According to the US Travel Association, Chinese tourists spent an average of $6,700 per trip in the US, exceeding the average international visitor by 50 percent. Luxury houses have already seen the effects of reduced tourist footfall on their bottom lines; if the trend of repatriated spending persists post-pandemic or Chinese consumers do their revenge shopping outside of the US, American luxury will lag further behind its European counterparts.

Naturally, Biden does not want to look like he’s going soft on China, especially in his first 100 days. But with the country outperforming every major world economy — closing out 2020 with a record $535 billion in trade surplus —  and strengthening ties with the rest of the world, it’s clear who’s winning the breakup. 

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.

An Anta-Owned Reebok Could Be Big for Fitness in China

Adidas has confirmed plans to sell off U.S. fitness brand Reebok, which it purchased in 2006, as part of the German sportswear giant’s new five-year strategy (to be released in full on March 10). The Reebok acquisition was intended to expand the Adidas footprint in North America and boost its ability to compete against Nike, but it’s been a losing proposition —  According to CNN, Reebok currently accounts for just 7% of Adidas’ sales, down from roughly 18% in 2010.

Despite improvements in recent years marked by endorsement deals with mega-celebrities Cardi B and Ariana Grande, Reebok was hit hard by the Covid-19 pandemic, closing stores and failing to leverage rising demand for athletic and athleisure apparel as rival Nike did by doubling down on digital content to reach housebound consumers. The brand reported a 7% year-on-year drop in revenue in the third quarter of 2020, compared to a 2% decline for Adidas. For its part, Adidas says its current primary focus is on its core brand.

Potential buyers for Reebok reportedly include VF Corp (owner of Vans, The North Face, and Supreme) and Authentic Brands Group, but China’s Anta Sports could emerge as a likely frontrunner.

Anta Sports has been on a roll in recent years, and in 2019 it became the world’s third-largest sportswear company by revenue. In a notable deal, a consortium led by Anta acquired Finland-based Amer Sports, owner of an impressive portfolio of premium outdoors and winter sports brands that include Salomon and Arc’teryx, and recently installed Anta executive James Zheng as CEO, which can help to boost the profile of Amer brand’s in China.

While Anta has moved to position itself in professional sports with sponsorships of athletes like Rajon Rondo and Klay Thompson, and has a clear presence in outdoor and winter sports gear via Amer Sports, it has yet to make major strides in the trendy sportswear and athleisure markets. With China experiencing an explosion of interest in fitness that was accelerated by the coronavirus pandemic, an Anta purchase of Reebok would make complete sense (although it wouldn’t be cheap).

For Reebok, an Anta buyout would offer benefits such as investment by Anta into expanding the company’s retail footprint in China and a beefed-up e-commerce infrastructure. While still a longshot, an Anta-owned Reebok could very well chip away at the fitness and sports dominance of Nike and even Adidas, which would be an interesting turn of events.

Patagonia Sustainability Purpose Values

The Patagonia Paradox & How Luxury Can Learn About Purpose

Key Takeaways:

  • Ten years ago, Patagonia ran a counterintuitive ad to tell consumers to buy their product less and be reasonable — benefitting its business greatly.

  • Luxury items should be built to last, get repaired, and handed down to the next generation. It’s time luxury brands lived up to these expectations.
  • Patagonia serves as a textbook example of how brands can win when product and purpose go hand in hand.

Patagonia, a California-based outdoor clothing brand founded in 1973 by colorful entrepreneur Yvon Chouinard — who started as a rock climber and turned into one of the most vocal environmentalists in the business world — is a poster child for buying less, protecting the planet, and giving back. Chouinard starts his book “Let My People Go Surfing: The Education of a Reluctant Businessman” by stating, “I’ve been a businessman for almost sixty years. It’s as difficult for me to say those words as it is for someone to admit being an alcoholic or a lawyer. I’ve never respected the profession.” 

In a similarly provocative quote, he writes, “We believe the accepted model of capitalism that necessitates endless growth and deserves the blame for the destruction of nature must be displaced.” Starting in 1985, Patagonia has been giving 1 percent of its annual sales to projects related to protecting the planet. And in late 2018, Patagonia’s mission was even changed to state that the company is “in the business to save our home planet” — nothing less. What about making consumers comfortable when they go out or protecting them from the elements? Sure, but that’s a given. The company has a purpose at a much higher level.

In November 2011, Patagonia ran an ad in the New York Times that still serves as a case study in branding. The ad, showing a Patagonia jacket, simply read: “Don’t buy this jacket.” The environmental cost of everything we make is astonishing.” It ran on Black Friday, a day during which consumers in the US hunt down deals, spend beyond reason, and likely waste a lot. The ad also encouraged Patagonia customers to take a pledge, the Common Threads Initiative, which is essentially a deal between the brand and the public to consume goods more responsibly. It includes the five following commitments:

  1. Reduce

We make useful gear that lasts a long time

You don’t buy what you don’t need

That in itself is anti–“fast fashion.”

  1. Repair

We help you repair your Patagonia gear

You pledge to fix what’s broken

That in itself is common sense or at least anti-waste.

  1. Reuse

We help you find a home for Patagonia gear you no longer need

You sell or pass it on (eBay is a great place to start)

That in itself is the definition of a circular economy, with the following pledge.

  1. Recycle

We will take back your Patagonia gear that is worn out

You pledge to keep your stuff out of the landfill and incinerator

  1. Reimagine

Together we reimagine a world where we take only what nature can replace

Call this naive or suicidal, but the so-called Patagonia paradox — the theoretical contradiction between profits and purpose — can be resolved if consumers share the company’s values.

Patagonia has increased its bond with its consumers. And yes: It has counterintuitively increased its sales because many consumers would rather go to a brand with convictions and values than one that is just about making money. Chouinard is critical of entrepreneurs who grow a company and make money, only to give some back after they retire. In his view, you have the responsibility to give back all along. He also accuses many companies of “greenwashing” or pretending to be environmentally friendly to placate consumers, when in reality, the companies are simply obsessed with pursuing growth.

I am not saying luxury brands should embrace the Patagonia way, but embracing the idea of “buying less but better” and having a genuine purpose — something that is not gimmicky or made up — will go a long way.

Stella McCartney, a successful advocate for sustainability in the fashion world, looks at the industry with some cold common sense. Fashion is likely to generate up to 25 percent of global emissions if nothing is changed. Yet McCartney believes consumers will force the fashion industry to change because consumers are aware of these issues

In the meantime, she announced the launch of a UN charter for sustainable fashion in late 2018. In an interview following that announcement, she told Business of Fashion that, for her, luxury is living in a world with fresh air and clean water (she has a point.) Luxury does not have to be about flashy colors or logos. A “New Luxury” could be about knowledge, respect, and values.

With time, knowledge, and money, consumers will ascend Maslow’s pyramid of hierarchical needs. But more importantly, they should move on from the “look at me — I’ve arrived” mentality to one where purchases are more for themselves and align with their values. In the old luxury paradigm, consumers flocked to brands first and then bought products from brands that may or may not have held values. But, in the future, customer needs will start with values, followed by the products, and then end with brands.

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). 

Moncler New Luxury China

Moncler Looks to ‘New Luxury’ in 2021

After an uphill climb, Moncler S.p.A recorded a significant recovery in the second half of 2020. On February 18, the luxury puffer jacket maker posted revenues of 1.44 billion euros for the financial year ended December 31. This was down 11 percent at constant exchange rates, compared to 1.63 billion euros in 2019. 

Despite rising COVID-19 cases and store shutdowns during the holiday season, the last few weeks of 2020 proved crucial for the Milan-based company. In the fourth quarter, revenue jumped 8 percent to 675.3 million euros —beating analyst expectations and bringing a welcome change from the 15 percent tumble in Q3.

This upswing was, unsurprisingly, driven by expansion in China. While Moncler’s home market Italy saw year-on-year revenue slip 34 percent, mainland China held its own with double-digit acceleration. Overall, the Asia region surged 26 percent in revenue in the final quarter of 2020.

It’s no wonder that Moncler has increased its focus on the world’s largest luxury market. Last October, the luxury outerwear brand launched its China-exclusive Young Icons collection and unveiled a pop-up installation in Shanghai, which resonated well with the country’s many Gen Zers. A few weeks later, it announced plans to move Moncler Genius, an event where designers reinvent its signature pieces, from Milan to China, set to present in September 2021.

Besides ramping up activations in the mainland, Moncler made its first acquisition last December with the purchase of Stone Island, an Italian high-end streetwear brand for 1.15 billion euros, which it expects will also play a key role in staking a greater claim on the market.  

“With Stone Island, the Moncler Group strengthens its presence in the growing new luxury segment, which is about community, experientiality and cross-fertilization,” said CEO Remo Ruffini.

By delving into “new luxury,” Moncler hopes to meld the lines between arts, culture, music, and sports. This innovative approach could better position the Italian house to reach with younger generations, particularly in China, who are enthusiastic about collaborations across industries. Moreover, this new focus could help Moncler differentiate itself from both legacy powerhouses like LVMH as well as sportswear giants like adidas as it grows internationally.

While the future remains rocky, the synergy of these two companies could be exactly what Moncler needs to reinvigorate its brand, expand its luxury footprint, and set its China success in stone. 

Valentine's Day Luxury Chinese New Year

Luxury Brands Missed A Valentine’s Day Opportunity

What Happened: This year, Western Valentine’s Day date fell during China’s Lunar New Year Festival. Despite the clashing celebrations, citizens dug deep to show their love. As you would expect, jewelry, beauty, watches, and flowers were all popular Valentine’s Day gifts this year, as were food delivery orders, which were up significantly. The post-95s generation has become the most romantic group.

Recommended ReadingThe Best C-Beauty Campaigns for CNYBy Wenzhuo Wu
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Shoppers were out in person, too, despite the risks: Long lines formed outside the doors of Chanel, Louis Vuitton, and Gucci. On February 14, Beijing SKP launched a ten-times points event, which once caused some brand stores to sell out, and Xi’an SKP reported that sales exceeded 100 million yuan on the day — a three-year high.

Jing Take: While some luxury names released dedicated Valentine’s Day products and campaigns (Prada, Saint Laurent, Michael Kors and others), most brands felt the overlapping dates of CNY and Valentine’s Day were too confusing for shoppers. But, as sales indicated, this was a missed opportunity. By not localizing products, brands missed out on cementing connections with their fans on a day that has powerful emotional resonance.

Prada promoted is CANDY Eau de Parfum on Weibo for Valentine’s day. Photo: Prada’s Weibo

Gold was a top choice. According to JD.com, the number of gold bead necklaces (believed to bring good luck) and silver necklaces bought by female consumers for male counterparts saw an increase of 3.5 times compared with the same period last year. Additionally, the number of women’s karat gold necklaces and yellow gold pendants bought by male shoppers between the last week before the New Year and Valentine’s Day was also up 6.2 times.

But to fully understand this opportunity requires a closer look at the ‘who’ and ‘where.’ When it came to consumers of Valentine’s Day-related products like cosmetics, skincare, jewelry, and underwear, Guangdong, Beijing, Jiangsu, Sichuan, and Shandong were the top-five provinces and cities in terms of purchase volume. Meanwhile, Hubei Province had the highest sales increase, reaching 9.9 times the amount over the same period last year. Consumers who preferred jewelry mostly came from Tianjin, Inner Mongolia, and Shandong. Hunan joined Beijing and Shanghai as the top luxury purchasing areas, while underwear lovers primarily came from Fujian, Zhejiang, and Hainan.

But the good news is there are six different Valentine’s Day celebrations a year in China. So if you missed this one, 2021 still has five more opportunities to put a ring on it.

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.

Sustainability-linked loans Finance Prada Re-Nylon

Can Luxury’s Turn To Sustainable Finance Make A Difference?

Key Takeaways:

  • Sustainability-linked loans (SLLs), created in 2017, and sustainability-linked bonds (SLBs), started in 2020, belong to a broader spectrum of financing tools that have recently been rising.

  • Though the sustainable finance trend hasn’t attracted the same media attention as green marketing campaigns, it speaks to a growing need for companies to make Environmental, Social, and Corporate Governance (ESG) investments.
  • Compared to green bonds (bond issuances where the proceeds must be applied to green projects in part or full), proceeds from sustainable-linked loans or bonds can be used in a general corporate setting, such as daily operations.

Sustainability, a buzzword that has bounced around the fashion world for years, now touches every aspect of the industry, from design and supply chains to marketing and consumer awareness. Yet, there is one area that is rarely talked about: sustainable finance.

Facing an international goal of capping global warming at the 1.5°C danger line, companies — including luxury players — have created a new approach to finance that will contribute to this cause. And smaller luxury entities like Prada, Ferragamo, Moncler, and Chanel have been quick to tie environmental goals together with financial instruments.

Recommended ReadingHow Can Fashion Fix Its Sustainability Disconnect?By Yaling Jiang
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Sustainability-linked loans (SLLs) and sustainability-linked bonds (SLBs) belong to a broader spectrum of financing tools that have recently been rising. While the former instrument was created in 2017, the latter category saw the Sustainability-Linked Bond Principles issued by the International Capital Market Association (ICMA) in June 2020. But why are brands eager to launch these nascent financial instruments? And how does it benefit the participating companies?

Here, Jing Daily looks at recent examples of companies that have chosen to go down this path and what it means to tie environmental goals to finance.

The ascent of sustainable finance 

In the last couple of years, the luxury industry began to see a trend of sustainable finance come out of Europe. Though this trend hasn’t attracted the same media attention as green marketing campaigns, it speaks to the growing needs of institutional and retail investors that want to make Environmental, Social, and Corporate Governance (ESG) investments, amplified by COVID-19.

In November 2019, Prada SpA signed the first sustainability-linked loan in the luxury goods industry with an Italian bank and signed another similar loan two months later with the Japanese bank Mizuho. Ferragamo got a 250 million-euro sustainability loan for its ESG target in June of 2020, while Moncler got a 400 million-euro loan commitment in July of 2020. Then, in September of 2020, Chanel announced that it raised 600 million euros of SLB.

Compared to green bonds (bond issuances where the proceeds must be applied to green projects in part or full), proceeds from sustainable-linked loans or bonds can be used in a general corporate setting such as daily operations.

Also, SLBs and SLLs are tied to certain key performance indicators. For instance, Prada’s SLL is issued by Italy-based Crédit Agricole Group on a five-year basis, and the interest rate can be reduced following the achievement of Prada’s three-part sustainability targets, such as the number of stores assigned a LEED Gold or Platinum Certification (the most well-known green building rating program by the US Green Building Council), the number of training hours given to employees, or the use of Prada Re-Nylon (regenerated nylon) in the production of goods.

The development of SLLs, born a few years earlier than SLBs, inspired the creation of the latter. “The KPI-linked mechanism in SLLs has been applied to the bond market in the form of sustainability-linked bonds, helping drive forward the move to embed transparent and credible sustainability targets into a company’s financing,” said Agnès Gourc, co-head of sustainable finance markets at BNP Paribas, during a public conversation last September. Headquartered in France, BNP Paribas has helped Prada and Chanel launch their sustainable financing instruments.

Most recently, Hong Kong-based New World Development, owner of the popular art mall concept K11, has become the world’s first real estate developer to launch a 10-year, $200 million SLBs. The group is committed to achieve 100-percent renewable energy for its rental properties (primarily K11 malls) in 11 cities in South China by 2026.

“Businesses must take timely action to combat climate change, and NWD will contribute to a cleaner future for the next generations as we expand in the [Guangdong-Hong Kong-Macau] Greater Bay Area of China,” said Adrian Cheng, executive vice-chairman & chief executive officer of NWD. He added that he was looking forward to other real estate peers taking similar steps.

In addition to meeting green building certifications, the K11 MUSEA in Hong Kong also has a sustainability-themed education park. Photo: K11

Part of the process

The fairly new concept of sustainable finance does not only represent part of the development of ESG investing, but it also plays an integral role in a participating company’s sustainability plan. “ESG loans are now an established part of Prada Group’s financing strategy, which is closely integrated with its sustainability agenda,” a Prada spokesperson said.

One key metric for Prada relies on its Re-Nylon series, which first debuted in 2019 as a capsule bag collection for a ready-to-wear collection for both men and women in 2020. And, according to Lorenzo Bertello, the brand’s head of marketing and CSR, the ultimate goal is “to convert all Prada virgin nylon into Re-Nylon by the end of 2021.” Prada is on track to realize these targets for its loans, both of which are certified on an annual basis by an independent third party, said to a Prada spokesperson.

The Prada Re-Nylon 2020 collection fuses sportswear and luxury elements while using 100% sustainable regenerated nylon. Photo: Courtesy of Prada

Meanwhile, in NWD’s case, most K11 malls will be using solar panels and wind turbines to generate power for their buildings, which could benefit the brands that commit to sustainability in their operations, such as Moncler, Prada, and many others. “Our SLB was six times oversubscribed at its peak, with 80 percent of final investors being ESG-focused ones,” said Ellie Tang, head of sustainability at NWD, to Jing Daily. “ESG integration is not only important to us but also other developers and business sectors as well. What gets measured gets done, and tying financial goals to sustainability goals helps companies drive impact more efficiently and effectively.”

The financial market, in general, has made slow but marked progress in sustainable finance. Given that official principles by ICMA only launched last June, there is still a long way to go in terms of educating investors and getting more stakeholders involved. BNP Paribas reported that $488 billion in SLBs and $240 billion in SLLs had been issued as of last December.

NWD, which has raised about HK$12 billion ($1.55 billion) in sustainable financing, is already eyeing a broader application of these vehicles that result in a win-win situation. “Given the proceeds of sustainability-linked bonds or loans can fund general corporate initiatives rather than pre-selected green projects only,” said Tang. “We will explore further opportunities for these transactions to support NWD & K11’s broader initiatives across Greater China.”

Alibaba Seeks to Open a Path Into the European Market

China’s e-commerce giants are making gradual progress in established markets like Europe, expanding westward via targeted deals and consumer-led marketing that could threaten the dominance of Amazon and local players. While Alibaba is better known in Europe for the low-priced items offered on the AliExpress marketplace (rather than the official brand storefronts found on Tmall and its Luxury Pavillion in China, or the full-featured e-commerce livestreaming opportunities available on Taobao Live), the company is making a concerted effort to establish a permanent foothold in the market.

Since 2018, Alibaba has been growing its base in Liège, Belgium’s third-largest city, and the Covid-19 pandemic fueled greater efforts in the regions. According to The Guardian, Alibaba’s logistics subsidiary Cainiao is building a 355,000-square-foot cargo facility in southeast Belgium as part of a $361 million investment, and Alibaba previously partnered with Chinese state-owned enterprise ZIH to establish a 5,600-mile rail link between Liège and Zhengzhou in central China.

Alibaba’s choice of Belgium as a hub for its European expansion got its start on a personal note, with the country’s king actively courting Jack Ma. The Belgium connection fits with the company’s plan to both tap consumers in wealthier countries and provide, as The Guardian put it, “a whole new array of services not offered by Alibaba’s U.S. rival.”

The move also aids in the creation of a two-way street to give AliExpress merchants greater (and quicker) access to European consumers while encouraging more European merchants to take advantage of Alibaba platforms to reach and sell to Chinese consumers.

Yet for all of the potential, challenges remain — including protests from locals concerned over increased air pollution, road congestion, and overnight air traffic. For Alibaba, market access is one part of the equation, but the other, and more important part is drawing market share from the likes of Amazon.

In addition to building a Belgian logistics hub, Alibaba is using Spain as a sort of testbed to compete with its American rival and make its AliExpress marketplace a household name in Europe. The company launched a localized version of AliExpress in 2019, and amped up its promotion of the platform last year greater with a major plan to get tens of thousands of Spanish retailers on board. However, the platform still remains best known in Spain as a place to scour for low-priced items, indicating Alibaba faces an uphill battle if it wants AliExpress to go upmarket in Spain.

More broadly, Alibaba has its work cut out for it throughout Europe when it comes to changing perceptions of the platform and competing with Amazon. At the moment, according to Ecommerce Europe, AliExpress accounts for just 2% to 5% of Europe’s e-commerce traffic. Considering AliExpress is the best-known Alibaba platform among European consumers, this indicates either that Alibaba’s commitment to the market can only go up from here, or that it could end up being a very expensive PR campaign that steals only a bit of symbolic market share from its rivals.

That said, if Alibaba manages to import some of the innovative technologies and features from its platforms in China to AliExpress or another localized platform in Europe, it may have a fighting chance. For example, e-commerce livestreaming is one potential route that is still in its infancy in Europe. Last May, the company incorporated social commerce via “AliExpress Connect” with support in Italian, Spanish, Russian, and Turkish, giving Chinese sellers on the marketplace a new way to work with international influencers to promote their products.

The platform also opened the feature up to Western retailers. France’s Auchan experimented with the format to promote its Qilive brand via AliExpress Connect, while H&M, Monki, and Sephora also gave it a spin. But if Amazon and other platforms start to roll out similar features that could fend off the competition from Alibaba for at least the next few years. If so, the road ahead for Alibaba in Europe could get a lot rockier (and more expensive).

Net-a-porter Chinese female artists Art021

NET-A-PORTER & ART021 Launch the Incredible Female Artist Award

This post originally appeared on Jing Culture & Commerce, our sister publication in the cultural sphere.

The world’s largest multi-brand luxury retailer NET-A-PORTER has teamed up with Shanghai art fair ART021 to launch the “Incredible Female Artist Award,” an art competition aimed at elevating the profile of contemporary female Chinese artists.

The announcement revealed Chinese actress Tan Zhuo would serve as a project ambassador and judge for the project. A group of 10 emerging female artists have been nominated to submit work responding to the prompt “She Says” (她说). Submissions will be presented in a group exhibition at JINGART, the annual Beijing art fair run by ART021, where a panel of five art industry professionals and Tan will judge. The winner will be exhibited at NET-A-PORTER’s booth at the 2021 ART021 fair in November.

There’s an e-commerce element to the project with NET-A-PORTER selecting elements from the 10 artistic responses to “She Says” and creating tote bags which will be sold on its official Tmall flagship store. All profits will be donated to a Shanghai foundation geared towards supporting female artists.

Some of the artists nominated for ART021 and NET-A-PORTER’s “Incredible Female Artist Award” include (clockwise from top left) Lei Ziyi, Liu Qinmin, Zhang Fengyuan, Zhong Diming, and Chen Dandizi. Photo: NET-A-PORTER on Weibo

The JCC Angle: First off, ART021 and NET-A-PORTER serve a similar well-educated consumer base with large disposable incomes. For ART021, the collaboration raises its awareness beyond a circle of informed art goers, while NET-A-PORTER benefits from being associated with a cultural brand and engaging with issues that concern art and broader society.

That said, there’s nothing new to contemporary art, high-end fashion, and celebrity sharing space in China. Prada’s Rong Zhai mansion in Shanghai regularly hosts cultural events, the likes of Gucci and Chanel have launched pop-up exhibitions at major Chinese museums, and collaborations between fashion houses and artists, and brands and cultural institutions are commonplace.

Where NET-A-PORTER’s initiative differs is in its socially conscious approach, an effort mirrored internationally by the company’s Vanguard and Net Sustain programs focused on emerging designers and sustainability issues respectively. Concentrating on female empowerment is a timely move given the unprecedented attention women’s issues received in China’s public square throughout 2020. Gender equality now ranks as a top social concern for Chinese youth, with luxury brands increasingly tailoring their campaigns to embody female independence against patriarchal stereotypes. In this context, NET-A-PORTER’s “Incredible Female Artist Award” is smart means of speaking to women’s issues, art, and fashion, and in doing so, better connect with a group that is the driving force of the global luxury industry.

Additional reporting by Wenzhuo Wu

China tier-3 Cities Marketing Strategy

What Luxury’s Next Big Market Wants

Key Takeaways:

  • In 2019, the overall spending of consumers from tier-3 cities and below represented 44 percent of China’s total luxury sales.

  • Around 45 percent of middle-class consumers in tier-2 and tier-3 cities in China are interested in purchasing luxury goods versus 37 percent in tier-1 cities.

  • Luxury brands hate trimming their prices, but incentive marketing is a reasonable strategy for lower-tier cities.

In 2017, Morgan Stanley estimated that lower-tier cities in China might become “engines for spending” that could fuel economic growth. “While investors perceive larger cities as offering the most important consumer base, we believe that lower-tier cities will be bigger, wealthier, and more eager to spend and could contribute two-thirds of incremental growth in national private consumption toward 2030,” said Robin Xing, Morgan Stanley’s chief China economist.

And in regards to luxury spending, these emerging luxury consumers now produce a major share of consumption. For one, the Deloitte-SECOO CIIE Blue Paper 2019 emphasizes the importance of lower-tier cities. According to Secoo platform data between September 2018 and September 2019, tier-3 cities and below led in annual purchase frequency with 27 of the top 30 cities (approximately 90 percent). These lower-tier cities are also ahead in the repeat buying category (29 of the top 30 cities are 3rd-tier cities or below) and also lead in the three-purchases-or-more category (30 out of 30 top cities).

Overall spending by consumers from tier-3-and-under cities represented a whopping 44 percent of China’s total luxury sales in 2019. As such, the media platform Created in China recently highlighted why tier-4 and tier-5 cities are driving luxury consumption growth, while Luxe Digital documented how 45 percent of middle-class consumers in tier-2 and tier-3 cities are interested in purchasing luxury goods (versus 37 percent in tier-1 cities).

Considering the incredible potential of this market, let’s take a look at some successful marketing strategies that will reach these affluent consumers:

It’s all about the experiences

Experiential marketing is trending globally. But in lower-tier cities, this trend is still scarcely visible. Luxury shoppers in places like Beijing, Wuhan, Hangzhou, and Hong Kong are engaging in sophisticated forms of “retailtainment.” Interactive displays, voice-activated and AR-enabled mirrors, and smart dressing rooms are just a few of the new technologies used to create unique interactive experiences.

Apart from that route, luxury brands also sponsor and co-create artistic experiences that engage consumers and build an immersive environment. But art exhibitions, gallery openings, and museum events are largely missing from lower-tier cities. Therefore, smart luxury brands would be wise to counterbalance that arts deficit through services exclusively available in lower-tier cities.

Considering how luxury brands already have an abundance of structured data at their disposal, they have the leverage to come up with personalized solutions via customized products and in-store services. Moreover, luxury brands should consider expanding their already unique features. For example, Burberry could grow its network of “social retail stores,” while Tiffany & Co, Louis Vuitton, and Gucci could open more eateries and chic cafés.

Last February, Louis Vuitton opened its first café and restaurant in its new Osaka, Japan maison. Photo: Courtesy of Louis Vuitton

Additionally, a hybridization with fashion and music represents a unique opportunity because it transforms a physical store into a music venue, allowing smart luxury brands to envision multisensory experiences like concerts and pop-up events. Livestreaming sessions moderated by local KOLs or gaming competitions also have potential since they bring the brand closer to younger demographics.

As always, Louis Vuitton is ahead of the curve here, having understood the massive potential of esports. The French luxury brand has partnered with Riot Games to design the Trophy Travel Case, which holds its championship Summoner’s Cup.

Incentive marketing

Luxury brands hate trimming their prices or being associated with discounts, but incentive marketing is a reasonable strategy in lower-tier cities. In fact, there’s one particular feature that’s specific to lower-tier cities: community group buying.

“Neighborhood communities tend to be more prevalent in lower-tier cities, as multiple generations live under one roof and within close proximity to each other,” says Feifei Xu, Prophet’s former associate partner. “Pinduoduo uses this to its advantage, and its growth is built around offering huge economic incentives [deeper discounts and sweeter deals if users buy in groups and share purchases through messaging apps] This encourages users to promote the platform to their friends, families, and neighbors.”

But Pinduoduo’s model shouldn’t be brushed off as antagonistic to everything luxury should represent. Group-buying events create a sense of community that brings people together. And Gen Zers are all about community-building and creating borderless tribes of like-minded individuals.

The “mini-me” mania

China’s matching mother/daughter style is not a groundbreaking trend. But, surprisingly, luxury brands have yet to see the marketing potential in the “mini-me” trend that’s now sweeping through lower-tier cities. “Fertility rates tend to be higher in lower-tier cities, as the relaxation of the one-child policy and affordable cost of living are increasing the willingness of people to have larger families, giving lower-tier cities the needed momentum to expand their consumer bases,” says Invesco Investment Insights. Economic growth is also faster in lower-tier cities, according to Invesco.

These affluent consumers have the time, means, and right attitudes, so brands must attempt to understand and respond to their needs. Beauty brands can offer experiences that pamper “mommy and me,” while retailers can promote trunk shows and special events that feature “mommy & me” designer collections.

Likewise, heritage brands can expand their VIP perks and incorporate additional personalized gifts for their “mini luxury customers.” Dior already features collections of stuffed animals, and Louis Vuitton has beautiful music boxes.

Dior partnered with KAWS to create its limited-edition BFF plush, retailing for $7,500. Photo: Courtesy of Kim Jones

For years, upscale hotels have organized luxurious play dates and kid-friendly events, spoiling a generation of privileged “Little Emperors.” Heritage brands could learn from them by taking advantage of this unique opportunity.

Adidas Divest Reebok

Adidas Is Selling Reebok. Will Chinese Buyers Swoop In?

What Happened: On February 16, German sportswear maker adidas announced plans to sell or spin-off its Reebok brand. According to Reuters, adidas said that it will report the underperforming label as a discontinued operation from the first quarter of 2021. CEO Kasper Rørsted said in a statement that “Reebok and adidas will be able to significantly better realize their growth potential independently of each other.” However, he emphasized that Reebok possesses “highly attractive” long-term growth opportunities in the sportswear market, opening it up to potential buyers globally. 

Jing Take: Rumors that Reebok was on the chopping block first surfaced at end of 2020, so this comes as no surprise. According to the previous financial report of the Adidas Group, Reebok’s revenue in the second quarter of 2020 fell a whooping 42 percent due to the COVID-19 pandemic. But despite Reebok’s less than ideal financial results, the brand’s recent collaborations with celebrities like Cardi B and focus on women’s apparel helped maintain the struggling brand in a solid marketing position. Additionally, its Weibo video staring the former American basketball player Shaquille O’Neal, as well as its newly released Chinese New Year collection, received positive feedback from users. 

Reebok’s Chinese New Year 2021 collection featured auspicious imagery such as a crane soaring among the clouds. Photo: Reebok’s Weibo

CNN previously reported that aside from the VF Corporation (the parent company of Vans and The North Face) and Authentic Brands Group (ABG), China’s Anta Sports could be a strong potential suitor for Reebok. Considering Reebok’s solid reputation in China, it’s not unreasonable to imagine Anta scooping it up, especially with its history of acquiring Fila’s Greater China business in 2009, Sprandi in 2015, and the outdoor brand Arc’teryx in 2019. 

While China has managed to seemingly overcome the vast economic devastation brought on by COVID-19, much of the rest of the world — including most foreign brands — continue to suffer from the ongoing pandemic. Perhaps this gives the edge to Anta, if it is indeed interested in adding another sports apparel brand with global prestige to its ever-increasing roster. It’s a buyer’s market.

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.