The onslaught of foreign fast-fashion giants such as Zara, H&M, Topshop, and Uniqlo has been fast and furious in China. At the same time, it has put many local mid-to-low-market Chinese brands in a quagmire: they’re now facing challenges such as loss of market share, overstocking, cash flow problems, and the need to restructure. According to Chinese-language reports, industry experts believe local apparel brands need to set up clearer brand positioning and marketing strategies in order to stay afloat in this new environment.
Earlier this month, Xinhua published an article discussing what might have led to Chinese homegrown clothing brands flopping on their own turf. They’re facing big challenges: for example, Hong Kong clothing brand Baleno (Chinese: 班尼路), closed 388 mainland locations—or one-tenth of its total stores—as of March 2014, according to the first-quarter earnings report released by parent company Texwinca (Chinese: 德永佳) Holdings.
Baleno is not the only local brand shuttering its doors. According to Xinhua, in 2013, China’s casualwear giant Meters/bonwe (Chinese: 美特斯邦威) closed more than 200 stores, while another popular brand Semir (Chinese: 森马) closed more than 700 stores nationwide. Both were leading homegrown clothing giants established in the late 1990s. Hong Kong-based retailer Giordano (Chinese: 佐丹奴) closed 75 of its stores, of which 54 were on the mainland. This year in May, another well-known apparel brand FEEL 100% (Chinese: 柏仙多格) shut down its factory in the Pearl River Delta and closed approximately 400 mainland stores after 18 years of operations. Earnings reports of the brands above suggested that they have been facing challenges such as “horizontal competition, overstock, rising distribution costs, and closing down loss-making stores,” according to Xinhua.
In the meantime, successful international fast-fashion brands such as Uniqlo, Zara, and H&M are expanding rapidly in mainland China, consolidating achievements in first-tier cities and continuing to grab a foothold in second- and third-tier markets.
According to the Xinhua article, when facing the new environment and e-commerce challenges, fast-fashion brands demonstrate quicker digestion of inventories, faster new releases, and more style choices in response to consumers’ demand for newness, trendiness, and “coolness.” The “fast” label is no understatement: their highly efficient cycles can be as quick as two weeks, with as many as 20 large collections per year. As a result, Chinese consumers become frequent visitors and buyers, overlooking local brands in the process.
The article says, “struck by affordable luxury’s growth and fast fashion’s low price and diverse styles, China’s homegrown casualwear labels are inevitably put in an awkward situation, and horizontal competition is the main reason causing them to end up in disarray.” Homogeneity and vague positioning have become local brands’ constraints, experts believe, meaning that quick adaptation will be required for them to stay afloat.