Why More Chinese Fashion Brands Are Entering Overseas Markets

As economic deflation, sluggish demand, aging populations and declining birth rates impact China's luxury and fashion market, domestic companies are stepping up their efforts to go global.

The strategy represents a transformation from solely relying on foreign trade for growth to strengthening brand building and leveraging technology and services exports to capture larger markets. In the mainstream narrative of Chinese business, there is a saying: "If you don't go global, you're out of the game."

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The significance of September for the Chinese fashion industry is similar to that of the Spring Festival. During the current period, known in the fashion industry as Golden September and Silver October, Chinese fashion brands have aggressively expanded abroad.

First, overseas fashion weeks and clothing exhibitions have attracted a large number of Chinese-funded brands. There was The One Milano clothing exhibition in Milan, where the China National Garment Association led a delegation of 25 companies in the Chinese exhibition group Moda China@TheOneMilano. London Fashion Week saw the participation of 11 Chinese designers and there was also a strong presence of Chinese brands - JD.com's clothing division, with the theme 'Encountering Red', joined forces with brands such as Hazzys, Ellassay, Marisfrolg and Pure Tea to appear.

Brand expansion to foreign stores is accelerating. Following the entry of Heilan Home into markets such as the Maldives and Kenya in the first half of the year, and the official launch of 361°'s independent overseas e-commerce website, Semir recently ventured into Vietnam and opened its first store in the central city opened. of Hue in the Aeon Mall, with children's clothing, youth, men's and women's clothing. The store emphasizes on the 'Family Concept', which caters to the one-stop shopping needs of family members of different age groups. At the same time, Semir officially unveiled plans to open a 5,380-square-meter flagship in Hanoi, the capital of Vietnam, by the end of 2024 to accelerate its presence in the Vietnamese market.

An increasing number of Chinese-funded enterprises are participating in overseas exhibitions to learn from European experiences and understand overseas demand, further driving the trend of group exploration of the overseas market. In addition, more and more Chinese brands are entering new territories abroad, opening stores and intensifying efforts to optimize and even reform their brand image.

From supply chain exports to brand exports

It is clear that this round of globalization is unlike any other era. Sun Pan, consulting partner at PwC China, said in an interview with WWD China: "Chinese enterprises' global approach is in a phase of transformation and modernization, with a greater focus on local operations, brand building and long-term strategic planning. ."

In China, the overseas expansion of the 1980s was marked by the export of labor from coastal cities such as Wenzhou and Fujian; in the 1990s, the main effort to go global was through state-owned enterprises, which focused on building infrastructure, and some technology companies attempted overseas expansion.

With China's entry into the World Trade Organization, the focus shifted to foreign trade, with the total export volume of textiles and clothing ranking first in the world for thirty years in a row. In recent years, domestic and cross-border e-commerce have taken the lead, with unicorns such as Shein, Pinduoduo's Temu, Alibaba's AliExpress and TikTok Shop forming the 'Four Little Dragons of cross-border e-commerce', fiercely competing with each other abroad . markets in recent years.

In terms of product categories, clothing, furniture and home appliances were the three traditional export items after China became the factory of the world. With NEVs, lithium batteries and solar panels becoming the 'three new products for export', opening up markets, exporting technology and services has become the core of the new overseas expansion.

But apparel is still a large part of the total, even as the apparel industry's overseas expansion has moved from merely a supply chain to expanded exports of brands, technology and services.

"The teams of the new generation brands have broader international perspectives and can better adapt to the needs of global development, achieving a multi-faceted integration of culture, management and values," said Sun Pan.

The new generation of brands exploring the overseas market are generally adept at increasing brand visibility and appeal through story-driven communications and innovative marketing strategies, utilizing various channels such as social media, KOL collaborations and content marketing. Moreover, they are more proactive in leveraging digital tools and platforms, allowing them to improve the efficiency of team collaboration and decision-making, ensuring flexible operations and rapid response to foreign demand.

Regarding the original design of Chinese brands, she believes: "Currently, some emerging brands have already shown impressive achievements in design and expression. In the future, more and more Chinese designer brands will appear on the international stage. Going global is not just about expanding the retail channels for these brands, but also about gaining widespread co-branding collaborations across international Fashion Week platforms, leading to a steady increase in visibility and reputation."

From cost-performance ratio to a quality-price ratio

In their development, Chinese-funded apparel companies will inevitably face the challenges of branding and internationalization.

In the domestic market, they are trapped in a red ocean of homogenized competition, hoping to use brands and IPs as a moat to find a way out. In the international market, where Chinese-funded brands once won with a high 'cost-performance ratio', they are now opening overseas markets with a high 'quality-price ratio', aiming to boost demand in the domestic market in return.

In recent years, Chinese clothing companies have continuously increased their investment in research and development, promoting the application of new technologies and processes, such as the use of sustainable materials and the development of functional fabrics, to enhance the added value and competitiveness of their products increase in the market. products.

Taking the Chinese delegation that attended The One Milano clothing fair in Milan as an example, the exhibiting companies were all the cream of the crop in various categories of mid to high-end Chinese clothing products. For example, Heaven Deer, a leading manufacturer of Chinese double-sided wool overcoats, has been working with high-quality European brands for many years and has launched four types of products, including camel hair, camel hair blends and sports style overcoats. test the market. Designer brand BenZhaoRi, which mainly uses black, white and gray as primary colors, also chose Milan as its first stop to go global and discovered that the European market has high demands on fabrics and a preference for environmentally friendly materials. immediately indicates a directional adjustment.

Sun Pan believes that China has a complete apparel industry pipeline, starting from raw materials and passing through production processing, logistics distribution and terminal sales, allowing the entire process from design to finished product to be completed in a relatively short time. This allows Chinese brands to attract consumers by quickly responding to market changes and offering products with a high price-performance ratio. At the same time, upgrading through digitalization and intelligence to improve production efficiency and product quality is an important competitive advantage in the international market. In addition, with the implementation of the Regional Comprehensive Economic Partnership Agreement (RCEP), the trade mobility and activities of Chinese textile and clothing companies in the region have been increased, which will help companies optimize resource allocation, integrate and strengthen the supply chain and the value chain.

For Chinese brands, opportunities also come with challenges and bottlenecks. There is no denying that Chinese clothing companies have shortcomings in terms of design and brand proposition compared to international brands, and they also face challenges in the international market such as cultural differences, legal compliance and localization.

There is a lot of uncertainty in terms of trade protectionism, geopolitical risks and the unpredictability of going global, but one thing is certain: for any company, going global is an opportunity to give a new image to the brand. You could even say that any brand can redefine itself through 'localization' in new markets, positioning itself in a completely different market landscape.

Editor's Note: China Insight is a monthly column from WWD's sister publication WWD China that examines the key trends in that important market. The best of WWD