H&M tries to regain confidence of China consumers – Arnold Ma

 

Arnold Ma

H&M tries to retain market share in China after a consumer boycott of a range of Western fashion brands – including also Nike and Burberry – on its Xinjiang stance by launching two new brands. The results with the consumers in China have been mixed, says marketing expert Arnold Ma in Jing Daily.

The Jing Daily:

“There are reports saying some consumers still turned their back to the two brands having found their link to H&M, which shows the brand still hasn’t been fully forgiven by Chinese consumers,” said Arnold Ma, founder of China-focused digital marketing agency Qumin.

“On the other hand, the latter two have challenged the image of H&M as a ‘roughly-made’ fast fashion brand by providing better quality products at a higher price,” he continued. “So, the premiumization, to some extent, helps the two win over some Chinese consumers who pay more attention to quality and design.”…

While H&M, Nike, and Burberry have all pushed ahead in China, they have done so to varying degrees of success. Burberry, which has bounced back faster than the others, has partially benefited from being a luxury brand. As Yam, who has more than a decade of Chinese digital marketing experience, said, “It’s harder to replace — you don’t have another Burberry. For Nike, [consumers] can find the China version, Li-Ning, which is popular in China now. And for H&M, there’s so much fast fashion.”

None of this is surprising, as China accounts for less than 5 percent of H&M’s global revenue, while Burberry’s China revenue accounts for almost half of their global total, Ma noted. Indeed, China is just one — albeit very important — market for these global companies. Recovery, therefore, not only entails reevaluating China tactics but also ensuring a strong global network for when a crisis eventually hits.

The Jing Daily.

Arnold Ma is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

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China's Anta takes on Nike and Adidas - Ben Cavender

Ben Cavender

China's Anta bought in 2009 the Italian sports shoe brand Fila for China and plans to take on Nike and Adidas during the 2022 Olympic Winter Games in Beijing. Branding expert Ben Cavender sees Li-Ning and other domestic brands as the first hurdle to take before Anta can really compete globally, he says in the Fair Observer. 

The Fair Observer:

“To some extent, it [FILA] is still seen as a cheaper alternative to Adidas and Nike, but Anta has been working hard to create more of an image of a first-choice brand and has been fairly aggressive with its marketing,” says Ben Cavender, principal at China Market Research Group. “It has also used brands like FILA to try and move up-market and into streetwear.” Financially, the latter strategy seems to be successful...
But the first obstacle to Anta’s global ambitions may not be Adidas and Nike but other Chinese brands, particularly Li-Ning, named after the athlete who became a gymnast star at the 1984 summer Olympics in Los Angeles...
“Li-Ning is an interesting case because going back five years, Li-Ning overexpanded its retail footprint in China and tried too hard to copy Nike,” says Cavender. “The Li-Ning of 2019 is in a much stronger place. It has embraced being a Chinese brand with unique Chinese design characteristics and has been setting the internet on fire with its streetwear.”
He notes how Li-Ning had to scale back and reevaluate before achieving a resurgence. Thanks to those efforts, the company is now booming, with profits in the first half of 2019 nearly tripling. Its rise has been reflected in Li-Ning’s share price, which has risen around 170% since June 2018, compared to just over 50% for Anta...
 Although Anta seems to have positioned itself well, there are still many hurdles ahead to achieve global success. The company is likely to benefit in the run-up to the next Winter Olympics, but it needs to be careful not to repeat the mistakes of Li-Ning and make sure it masters the mainland China market first. “Companies like Nike are effectively marketing organizations that happen to sell shoes, so it is very difficult for an outsider to break into that top position in the market,” says Cavender, noting that it may take some time for Anta to be in a position to compete globally.

More in the Fair Observer.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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How Adidas beats Nike in China - James Roy

James Roy

After the Beijing Olympic Games in 2008 Adidas lost traction in China. But it has come back, and is even beating Nike in the second-largest sports wear market. Retail analyst James Roy tells Quartz how Adidas did that.

Quartz:

Adidas can take heart in one important metric: the speed of its market share growth in the Greater China region (which includes Hong Kong, Macau, and Taiwan). There, at least, Adidas has outperformed Nike—and significantly closed the gap. From the beginning of 2011 to the start of 2015, Adidas improved from 8.5% to 13.8% of market share, compared to 11.2% to 14.3% for Nike, according to Euromonitor. 

That’s important because, after the United States, China has the world’s largest sportswear market, well ahead of Japan, Brazil, and Germany. In the first nine months of last year, Adidas’s sales in Greater China grew 18.4% compared to 2014. 

Adidas lost ground in China when it experienced oversupply problems following the 2008 Beijing Olympics, which didn’t spur market growth as much as anticipated. But the company “caught up pretty impressively over the last five years” James Roy, a retail analyst with China Market Research Group, told Quartz. It accomplished this partly, he said, by tightening links with sellers to ensure it was “resupplying the products that were really selling the best.”

More in Quartz.

James Roy is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more branding experts at the China Speakers Bureau? Do check out this list.  

Why Adidas is overtaking Nike - Ben Cavender

Ben Cavender

Adidas is gaining ground on the China market leader for sport articles. While Nike focuses on the big stars, Adidas is winning because of a marketing strategy that focuses much more on the lifestyle of ordinary users, tells retail analyst Ben Cavender in AdAge. 

AdAge:

Online, Adidas has featured female sports groups from across China. It invested heavily in TV, with an ad showing Chinese women running, dancing and doing parkour. 

It's a smart strategy, said Ben Cavender, associate principal at China Market Research Group. Featuring nontraditional activities like dance and badminton, which can be done in small groups, helps connect with less sporty consumers who may feel intimidated at a gym. 

Nike's marketing in China, meanwhile, remains driven by sports stars like LeBron James and Kobe Bryant. Messaging highlights the technical performance of Nike products, which consumers find to be cool, but "there's no emotional connection for them," Mr. Cavender said. "They're failing to grab people's interest on a more visceral level."

More in AdAge.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

China Weekly Hangout

Figuring out what China's consumers want is not always easy. On June 20, the +China Weekly Hangout asked "What do Chinese tourists want?" +Roy Graff  of +ChinaContact joined us to discuss the increasingly diversifying market of Chinese tourists. And yes, there is no longer one answer for basic questions. Moderation by +Fons Tuinstra of the China Speakers Bureau.

The China Weekly Hangout is going to resume today with an open office session where you can participate to help to set the agenda. You can join by registering here, or read our initial announcement here.

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Why China is not cheap anymore - Shaun Rein

Shaun Rein

Half a decade ago, costs for manufacturing in China started to go up, and they keep on rising. Author Shaun Rein of "The End of Cheap China: Economic and Cultural Trends that Will Disrupt the World" explains in the China Post how China's neighbor can profit.

The China Post:

In 2010, Nike began moving its shoe manufacturing operations to neighboring Vietnam. Last year, the accessories firm Coach announced it would cut back production in China — which makes 85 percent of its goods — in half by 2016 as it moves to factories in the Philippines, India and Vietnam. 

“In about 2007-2008, a lot of businesses started realizing it wasn't cheap to produce in China anymore,” says Shaun Rein, managing director of China Market Research Group and author of the 2012 book, “The End of Cheap China.” 

“Salaries are going up 20 to 30 percent a year, it's very difficult to keep talent and it's become very expensive to find property,” Rein says. “The government is also starting to worry about pollution and water usage, so high polluting, high water usage factories are having a harder time getting government permits. 

This evolution, in one sense, is good news for China — and good news for China's neighbors. 

“It's a great time for Southeast Asian nations to take away market share from China,” Rein says... 

Still, the transition away from China isn't always easy. Rein tells of a U.S. furniture maker who moved manufacturing to China in the 1990s, then moved production to Vietnam and Indonesia five years ago. The company, a client of Rein's, then moved production back to China a couple years ago after the cheaper wages were offset by higher transportation costs and lower productivity. 

“Even though its cheaper labor, anything highly skilled needs the right management oversight and supervisors,” Rein says. 

Although labor costs are rising, China still has the advantage of offering a complete “ecosystem” — infrastructure, clusters of supporting industries and highly skilled labor — to be worth the cost for some manufacturers, especially products on the higher end of the value chain. 

“You have scales of economy in China; the ports and rail system are world class,” Rein says. “It takes hours to get from the airport to the center of Saigon.”

More in the China Post.

Shaun Rein is a speakers at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers request form.

More on Shaun Rein and "The End of Cheap China" at Storify.

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Why global brands fail in China - Shaun Rein

Shaun Rein

While some brands like Nike and Intel make neat profits in China, the country has become a corporate graveyard for many other global brands. Why do global brands fail in China, wonders business analyst Shaun Rein in CNBC. They should focus on China.

Shaun Rein

Best Buy  and Home Depot shut their stores in 2011. Google, eBay and Amazon have been trounced by local competition. Walmart  faces dwindling market share. These great firms, which dominate their home markets and are widely successful internationally failed to grab profits in China... 

In China, revenue and profit per square feet of retail space is too low to justify giant stores selling low margin products. Brands need to think whether their traditional business models fit China and, if not, either skip entering the market or adjust accordingly. 

The second theme that emerged was that senior executives sitting in foreign headquarters often ignore what local country heads, who are more attuned to local conditions, have to say. Or they hire the wrong country heads in the first place. One eBay executive, for example, told me that his seniors ignored the advice of local employees to run servers out of China and switched hosting to America. 

“The day they switched to the US servers despite our protests, traffic dropped 50 percent because access speeds were too slow. We never recovered. It is a myth that local auction site Taobao won because they don’t charge fees. We lost because headquarters tried to implement what worked in the US, from interface design to customer service help," the executive said. 

Businesses need to hire senior executives who understand how to operate under local market conditions and delegate decision-making authority to them... 

China has become the must win market, so billions of dollars a year are being invested in the country. The reality is that many companies will end up failing there, or missing expectations, because they don’t localize their business models and management teams enough to compete with fast emerging domestic players.

More in CNBC

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch, or fill in our speakers' request form.

Shaun Rein is the author of the upcoming book The End of Cheap China: Economic and Cultural Trends that will Disrupt the World. Read more about Shaun Rein and his book at Storify.

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Li Ning: a winner in sports apparel - Shaun Rein

Image by cafemama via Flickr

Despite disappointing sales figures in the short term, Shaun Rein explains at CNBC why China's sport apparel firm Li Ning is going to be a winner - together with Nike - in this industry. Li Ning is all set for a long-term success, he claims.

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Shaun Rein is a speaker at the China Speakers Bureau. When you need his insights at your meeting or conference, do get in touch.

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Nike shifts focus to China for sales - Shaun Rein

Image via CrunchBase

Nike, the world's largest manufacturer of athletic shoes, is shifting its attention for sales to Asia and especially China. With success, tells Shaun Rein BusinessWeek:

Chief Executive Officer Mark Parker is counting on China and emerging markets to provide the most growth over the next five years as Nike gets 65 percent of sales outside North America. The company has widened its lead in China over Adidas AG by expanding in cities beyond Beijing and Shanghai, said analyst Shaun Rein.

“As consumers are getting whttp://www.china-speakers-bureau.com/profiles/940592.htmlealthier here they are buying special items for the gym, for the weekend, for going out,” Rein, managing director of China Market Research Group in Shanghai, said in a phone interview today. “Nike are doing the best because they have the best brand loyalty.”

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Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or 

Shaun Rein by Fantake via Flickr

conference? Do get in touch. 

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