Together with its non stop developing economy, China has a significant customer mass considering the fashion and luxury sector. Thus, it has been a unique playground for the businesses from Europe and the US. However, it is also a challenging game so that not every company can penetrate this area. And that is the reason why 48% of all foreign business operations have failed within two years after arriving in China.
For the businesses, securing their position simply passes through finding new ways of reconciling cultures and business practices requiring a piece of action. That’s why, China, for a brand, can be be a sign of a success indicator as well. But cracking the China market is not simple because it is apart from anywhere in the West as well as any other Asian market player in terms of culture, linguistic and politics. This stance forms a complexity waiting to be solved.
But above all, there are other reasons for fashion and luxury market to fail in China market. Clothes imported from top luxury brands in the world, for instance, are mostly proven to be substandard in quality control tests. Moreover, fashion giants fail on digital market in China. The more difficult problem is that Chinese consumers perceive the products made in their home country as being counterfetied. And once more, it is very hard to adapt the to the needs of the Chinese consumers.
Recent news about the issue is ensampling the luxury brands Hermes, Versace, Dolce&Gabbana, Paul&Shark, Trussardi and Hugo Boss. According to the research of China Daily, 60 percentage of the overall sample was examined to be substandard. Covering a range of clothes type, from jeans to t-shirts as well as sweaters, skirts and suits are rejected to be able to cause skin rashes, allergies and even cancer due to low colour fastness, unacceptable acid amount and chemical usage.
China seems to apply and control the Product Quality Law seriously. The best thing here is that all the brands failed in the tests are simply accepting the wrongs and trying to fix them immediately. Even if they are not registered in China so that they cannot be penalized by the local authorities, there is no doubt they will be fine soon.
Moreover, two-thirds of the luxury fashion brands in China have been “feeble” when it comes to digital marketing usage. Whilst Burberry, Louis Vuitton, Chanel and Coach are mentioned to be gifted, Gucci and Armani are average and Dior, Dolce Gabbana and Hugo Boss are claimed to be challenged according to the analysis report by think tank L2. The report also mentions that overall IQ of the fashion brands in digital China was down by 12 percent compared to the previous year.
Considering the funny example that Giorgio Armani S.p.A. is competing with a locan Chinese brand called Playboy, which very simply represents a different well known brand for the West, it should also be reminded that the company has rised its marketing IQ by 23 percent year on year.
Made in China label is another reason for the failures. Asian originated products of MIU MIU, Hugo Boss and Emporio Armani, to ensample, form the drawback itself. That was the reason why Hugo Boss closed its three shops in China for instance. It is showed as the reason of slow expansion of American leather brand Coach as well. On the other hand, Salvatore Ferragamo and Louis Vuitton, which are manufacturing in their home countries, seem to maintain their explosive expansion in China.
Lastly, there is a hard fact that Chinese consumers are not mature as much as Westerns. Varying cultural and economic stances of the cities in China which have been resulting in fast changes in customer expectations and wants. So, the international brands cannot just apply a certain strategy in terms of both style and marketing. Ermenegildo Zegna is shown one of the best strategists at this point because they have achieved to supply new products three times as much as the regular seasons actually have in Western Europe and USA.
As mentioned above, China is a very tricky playground, while owning the new era opportunities of manufacturing and customer potential. The optimization plans of the western companies should consider the cheap manufactruing together with the side efffects of it as well as the quality levels to satisfy technologically and economically attentive consumers of the country. Otherwise, it would be inevitable to end up with closed stores and having unsuccesful business.