Social Media Explosion Gives Brands A Second Chance In China

Chinese Consumers More Aware Of Smaller, Less Visible Fashion & Luxury Brands

Paul Smith's second attempt at cracking China will launch this winter

For brands that prematurely jumped into an underdeveloped China market, worked with the wrong local partners, or simply botched their initial forays into the country, the explosion in home-grown Chinese social media is offering a new lease on life for those brave (or well-capitalized) enough to try again. Unlike the digital landscape of five years ago, which at the time was led mostly by BBS and blogging platforms, the rise of a new ecosystem of social media platforms like like Sina Weibo, Youku and Jiepang has boosted the ease and dropped the cost with which brands can reach China’s emerging young consumer. Following its withdrawal from China five years ago, one brand that feels the Chinese shopper’s social media-led education has paved the way for a successful return is Paul Smith, which is slated to open its first mainland China flagship, a 5,000 square foot (465 square meter) “megastore” in Shanghai, this December.

As Jing Daily noted this May, Paul Smith hopes to open 20 China locations within the next five years, in addition to its Shanghai anchor store. Despite consumer slowdown fears, the brand apparently is optimistic that changing demand in the country — led by shoppers with an eye on quality and style rather than logos and flash — will help it capture more of the country’s still-booming high fashion segment. By 2020, the mainland China fashion market is expected to triple in size to more than 1.3 trillion yuan (US$206 billion), up from 400 billion yuan in 2010. As Balbina Wong, chief executive officer for ImagineX Group (Paul Smith’s distributor in the Greater China region), put it, “This is the right time to join the race…Chinese consumers are becoming more sophisticated and brand-conscious. China’s overall GDP may slow, but the middle-class is growing.”

Burberry teamed up with Jiepang last year, awarding virtual "badges" to users

As Sir Paul Smith told the FT this week, the China market of 2012 is markedly different from that of 2007, when he put his initial expansion plans on hold owing to high rents and low consumer education. Whereas the high-end fashion market five years ago was fueled by status-obsessed consumers interested in plastering themselves with logos, the explosion in social media has helped potential buyers expose themselves to a wider array of brands.

Said Smith, “There is a lot more awareness of Paul Smith [in China] now than there used to be…There are a lot of people who are not necessarily looking for the obvious symbols of wealth or fashion. They are more looking to buy things that they know are interesting, or special.”

Optimism that it may be the right time to give China another chance isn’t veering into overconfidence for Smith, however, as he conceded to the FT that his company plans to make its second China push “gently” and “cautiously.” Probably a smart move, considering overt attempts at a China “second coming” like Ralph Lauren’s China-influenced Fall/Winter 2011 runway show have often fallen flat among Chinese shoppers.

Categories

Fashion, Industry Sectors, Investment & Real Estate, Marketing & Branding, Social Media, Tech

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