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Western Apparel Firms Enter the Chinese Market, Business and Industry Trends Analysis

While China’s exports grew significantly for years, many Western apparel firms are opening retail locations in China, hoping to tap into the country’s growing upper and middle class. Highly regarded foreign brands, luxury items and logos are very much in demand from newly affluent Chinese consumers.

Hennes & Mauritz AB, which owns the H&M chain of clothing stores, had 353 stores in China as of November 2015.  Coach, Inc. has added large numbers of stores in China.  Nike is a major presence in the Chinese retail market also. Towering multi-story ads featuring American NBA athletes are prominently displayed in downtown Shanghai and Beijing.  Gap, Inc. opened its first Chinese store in late 2010.  Many major apparel retailers look upon China as an important long-term market.  In particular, luxury fashion and accessories firms have been enjoying brisk sales in both mainland China and Hong Kong, and many chains have been expanding there rapidly.  Vast new malls have been opening in China on a regular basis, giving apparel store operators plenty of opportunities to create new stores.  Many of these malls are within walking distance of new luxury hotels and major office complexes.

However, beginning in mid-2013, China’s growth began to slow, and the entire nation was going through a new focus on reducing corruption among public officials as well as conspicuous consumption in general.  The volume of luxury items being purchased to be used as gifts to government officials is down considerably.

One issue that Western retailers must face is a general difference in Chinese body shapes and sizes.  When compared to Westerners, most Chinese people have narrower hips which pose a problem when it comes to fit.  Retailers could, of course, design separate lines for the Chinese market.  However, doing so would incur great expense and complicate the production process.  The booming market in China for goods of all kinds poses an economic potential of huge proportions.  Global retailers and manufacturers cannot afford to overlook it.



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