China’s homegrown brands take center stage

December 19, 2018 / By  

Domestic brands in China, especially those who have produced for global retailers, have become sophisticated in their operations as they seek to target more specific consumer segments. From supply chain efficiency to tying up with e-commerce giants for e-tailing, some of the rising stars in homegrown brands are attracting interest from venture capitalist.

Fashion retailer Erdos Group has expanded from its original Erdos label to include new brands 1436 and Blue Erdos, that aims to entice more premium and value-minded consumer segments respectively. Fellow clothing brand JNBY has branched out from women’s fashion to launch new sub-brands selling menswear, children’s fashion, and home goods. Such strategies have allowed brands to expand beyond their traditional markets, leveraging reputation for quality to build loyalty with new groups.

As Chinese brands seek to expand their consumer segments, building up of efficient supply chains has become imperative as seen with rising domestic fast fashion players like Urban Revivo who design products and bring them to market as fast or faster than foreign pace setters like H&M and Uniqlo. Many brands are vaulting forward in terms of establishing automated warehouses and self-operated production facilities to give themselves greater autonomy and flexibility. In some cases, Chinese brands’ operating prowess stems from fortuitous earlier experience working with foreign brands, from whom they learn best practices in sourcing, distribution, and more. For example, women’s wear maker Bouthentique has its origins as a producer of clothes for Italian label Max Mara. The recent trend of foreign brands relocating production capacity to cheaper countries may be an opportunity for their former Chinese contractors, the savviest of whom can build on their valuable experience to form their own brands.

Having come of age amid China’s e-commerce revolution, many homegrown brands have been nimble in adopting online-to-offline (O2O) strategies, often by cooperating with China’s own internet giants. This is reflected in the case of lingerie retailer Neiwai, whose roots on Alibaba’s Tmall platform gave it a trove of data on consumer location and preferences to help determine appropriate sites and product mixes for its eventual physical stores, and to later conduct targeted marketing through social media and other channels.

Some rising local brands are supercharging their expansion plans with generous dollops of venture capital. Café chain Luckin Coffee and Northern European-style lifestyle retailer Nome are just two examples of young firms whose store networks have surged with help from investor capital. Domestic brands that are increasingly successful and/or flush with cash in turn have become a force in leasing in many retail properties around the country. With their combined strengths and growing competitiveness in China, it’s entirely possible that we may see more and more brands turning to overseas markets going forward. Shopping mall operators outside of China would do well to make ready for the rise of Chinese brands.

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