According to the Boston Consulting Group report of 2011, the Chinese apparel sector is set to become the world’s second largest retail market by 2020 and will account for about 30 percent of the global apparel market’s growth over the next five years.
Until recent years, China has been regarded as one of the main manufacture places of western apparel companies because of its lower labor costs. Nowadays, however hand in hand with the rapidly changing economic and social situation, China has shown the world that it is also a promising consumer market. Especially, apparel retail sales have increased tremendously and therefore offer huge opportunities. Many Western clothing retailers are increasingly viewing China as a huge potential market, because of its rising middle and affluent class and Chinese consumer´s increasing call for western apparel products.
Western products are related with factors such as quality, modernity or also care for the environment. Furthermore, many of the global brands have less market presence in China than in other operating countries. For example, the fast fashion brand Zara only has got 92 stores, H&M had roughly 78 stores at the end of 2011, which is still very few in comparison to the number of stores these companies own in other markets. The US fashion chain Forever 21 has just entered the Chinese market at the end of 2011. Companies who win this market in the next few years will definitely top the global apparel market.
However, even though the potential is huge, winning this market will not be easy. To succeed, western brands need to adapt their strategies to Chinese consumers’ tastes and expectations; this includes the development of brand and company image and product tailoring to the Chinese consumer market. Any company that conducts business in China without effective methods risks a quick exit.
This study has two major purposes: the first is to demonstrate why China is the future sales market for Western apparel companies and the second one to make recommendations for Western apparel companies that want to win the Chinese market.
Research questions
Main questions
1. What are the main factors of China’s economic attractiveness?
2. What could be an effective path to take when entering the Chinese market and which strategies do western apparel companies need to capture China’s dynamic market?
Further questions
1. How could the future of the Chinese retail market look like?
2. Which are the barriers and
Table of Contents
1. Introduction
2. The business location China
2.1. Population and GDP growth since WTO entry
2.2. Development and distribution of income
2.3. Retail sales in China
3. Motivation for engaging in the Chinese apparel market
3.1. Magnitude of Chinese apparel retail market
3.1.1. Market Value
3.1.2. Market characteristics
3.1.2.1. Dualism in consumption patterns
3.1.2.2. Regional diversity
3.1.3. Market segmentation
3.1.3.1. Geographic segmentation
3.1.3.2. Category segmentation
3.2. Chinese consumers
3.2.1. Diversity of consumer groups
3.2.2. The age factor
3.2.3. Increasing purchasing activity of consumers in low-tier cities
3.2.4. The change of lifestyle
3.2.5. The role of emotional factors
3.3. Diversified distribution channels and retail formats for apparel
3.4. Competitive landscape
4. Success factors in the Chinese apparel retail market
4.1 Deciding International phase
4.2 Preparing International phase
4.2.1 Defining the right retail location and roll-out plan
4.2.2 The importance of a winning brand and communication strategy
4.2.3 Determining the right assortment
4.2.4 Choosing the right distribution channel to consumers
4.2.4.1. Traditional distribution channels
4.2.4.2. E-Commerce
4.2.5 Identifying suitable business presence
4.2.5.1. Own retail store
4.2.5.2. Franchising
4.3 Going International phase
4.4 Being International phase
4.4.1 Product and market related success factors
4.4.2 Human Resource management
5. Case studies: Examples of successful companies
5.1 Zara
5.2 HUGO BOSS Group
6. Conclusion
7. References
Objectives & Core Themes
This thesis aims to demonstrate why China represents the future key market for Western apparel companies and to provide strategic recommendations for international retailers seeking to successfully enter and capture this dynamic market. The research explores the economic evolution of China, shifts in consumer behavior, and the complexities of establishing a retail presence in a geographically and demographically diverse country.
- Economic and demographic drivers of the Chinese apparel market.
- Segmentation of Chinese consumers and their evolving preferences.
- Strategic success factors for internationalization (Deciding, Preparing, Going, Being International).
- Distribution strategies including traditional retail and e-commerce growth.
- Case studies on the adaptation strategies of Zara and HUGO BOSS.
Excerpt from the Book
4.2.4 Choosing the right distribution channel to consumers
We have learned that Chinese consumers now are more educated about fashion and shopping than in the past. They know what they want and wish to be treated according to their preferences. Companies therefore need to concentrate on how they bring their products to their customers.
4.2.4.1. Traditional distribution channels
Currently, department and mono-brand stores dominate the Chinese apparel market, they account for more than 95 per cent of retail sales. Department stores are comprised of shop-in-shops and are mostly run by partners or the brand itself. Mono-brand stores are relatively popular. They are predominant in shopping malls and largely adopted by foreign well-known brands such as Louis Vuitton or Giorgio Armani. This concept allows companies to determine marketing activities on specific retail locations and to transmit a unified picture and image to the outside. In contrast multi-label stores are comparably not common, but are forecasted to win in numbers in the near future. Western companies should look at the Hong Kong company I.T, as it is an example of successfully implementing a multi-label approach. Recently, it has gained more than 300 outlets in Greater China and the future looks very bright. Its strength is merchandising – this company now manages more than 300 brands in four different formats, and each of them focuses on a clearly defined target group. Their offers contain an “upmarket cutting-edge” format, managing established international brands such as Alexander McQueen; a “street-style unisex” format; and a “youth-oriented” format.
Summary of Chapters
1. Introduction: Outlines the research purpose, methodology, and the significant potential of the Chinese apparel market as predicted by industry analysts.
2. The business location China: Details the economic context, including GDP growth, urbanization trends, and rising household incomes that fuel consumer spending.
3. Motivation for engaging in the Chinese apparel market: Analyzes the market magnitude, consumer diversity, emotional factors influencing fashion, and the critical role of distribution channels.
4. Success factors in the Chinese apparel retail market: Provides a comprehensive framework for market entry, covering strategic phases, brand positioning, assortment management, and business presence models.
5. Case studies: Examples of successful companies: Examines how global brands Zara and HUGO BOSS navigated the Chinese market through specific, tailored strategies.
6. Conclusion: Synthesizes the thesis findings, emphasizing that patience and adaptation are essential for foreign companies to overcome local barriers and thrive.
Keywords
China, Apparel Retail, Market Entry, Western Brands, Consumer Behavior, E-Commerce, Internationalization Strategy, Zara, HUGO BOSS, Brand Positioning, Emerging Markets, Retail Formats, Middle Class, Urbanization, Market Segmentation
Frequently Asked Questions
What is the core focus of this thesis?
The thesis examines the potential of the Chinese apparel market for Western companies and identifies the critical success factors and strategic steps required to enter and expand within this competitive environment.
What are the primary themes discussed in the paper?
The core themes include Chinese economic development, shifts in consumer demographics and preferences, the importance of emotional branding, effective distribution channel strategies, and the specific case studies of successful global players.
What is the primary goal of this research?
The goal is to provide a roadmap for Western apparel retailers, demonstrating why China is a vital growth market and how to formulate an effective strategy to capture its dynamic demand.
Which scientific methodology is employed?
The research utilizes secondary data, including statistics from the National Bureau of Statistics of China, academic literature, annual corporate reports, and financial news, complemented by primary data through case studies of Zara and HUGO BOSS.
What topics are covered in the main section?
The main section covers the four phases of internationalization (Deciding, Preparing, Going, and Being International), addressing topics such as site selection, assortment, e-commerce, and human resource management.
Which keywords define this research?
The key concepts include apparel retail, China as a business location, market entry, consumer behavior, and brand strategy, among others.
How does China's regional diversity impact market entry?
The thesis highlights that China is not a homogeneous market. Differences in purchasing power, climate, and fashion preferences between tier-one cities and lower-tier cities require companies to adapt their assortments and roll-out strategies accordingly.
What role does E-commerce play for apparel brands in China?
E-commerce is identified as a critical sales channel, especially for reaching consumers in cities where physical store presence is limited. Success in this channel requires localization of websites, trust-building via local certifications, and integration with local payment systems like Alipay.
Why is the "face-factor" important for human resources?
In Chinese culture, "Mianzi" (face) is crucial. The thesis notes that management must transmit criticism personally and provide motivation through specific incentives to retain loyal staff and maintain professional relationships.
- Citar trabajo
- Dieu Linh Le (Autor), 2013, The rising market for Western apparel enterprises in China, Múnich, GRIN Verlag, https://www.grin.com/document/349704
