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China eCommerceFashion

An introduction to Fashion & eCommerce in China

by TLG Commerce April 1, 2019
written by TLG Commerce April 1, 2019
An introduction to Fashion & eCommerce in China

Historically, fashion has been a good indicator of social and economic changes in a specific society. China is a perfect example of how technological and societal development has been, and still is, reshaping the fashion industry in terms of styles, target customers, and points of sale.

In this chapter, we’ll give an introduction to how the Chinese fashion developed and its means to reach a new pool of customers.

HISTORY OF CHINESE FASHION DEVELOPMENT

Nowadays, fashion in China uses a mix of traditional and modern ideas influenced by, and influencing, western fashion. To understand Chinese fashion, we have to begin with the history. 

ANCIENT CHINA 

In ancient times, in China fashion was an indicator of social status: different colours and patterns were used to indicate different ranks. The upper society used to flaunt their wealth by having flashy embroideries all over their garments and footwear. The association of ranks to a particular colour and pattern was known as the Regulation Attire System. The emperor’s vests always showed the colour yellow, for example, and officials serving under the emperor had strict rules regarding colours to be worn. Whenever a new dynasty took power brought its own culture and colours, enriching furtherChina’s fashion heritage. 

An interesting fact was the custom of applying tight binding to the feet of young girls, to limit their growth in order to fit “Golden Lotus” shoes. This practice deeply influenced the concept of beauty in China for centuries, considering women with small bound feet extremely attractive. 

1912-1948

With the decline of the empire in 1912, China began to modernize and emulate the outside world, whereas the cruel practice of foot binding was banned. By the 1920 supper-class women, adopted a compromise attire: the Qipao, or Cheongsam, probably the most emblematic Chinese clothing item. 

1949 -1978 

The communist revolution of 1949 brought stricter directives on fashion: styles were to be the same for everyone, whether man or woman, intellectual or manual worker. The resulting uniform was often called the “Mao suit”, a blend of peasant and military design. 

1979 – NOW 

After Mao’s death in 1976, communist directives started a gradual process of loosening. Due to massive manufacturing capacity and fast digitalization, China has become the world’s most attractive fashion market for both import and export. 

In terms of style and design, due to diversified influences both external and rooted in culture, some would say it’s also become among the most eccentric markets. 

ECOMMERCE: THE LOCOMOTIVE OF FASHION IN CHINA 

In general, the Chinese fashion industry has been flourishing in the past decade. In particular, this expansion is fuelled by eCommerce, the fastest growing sales channel for fashion products. 

According to Statista, in 2018 China became the first country in the world where online fashion sales surpassed offline: 52% vs. 48%. Fashion eCommerce revenues in China will reach almostUS$246.8 billion in 2018, accounting for 47.3% of global eCommerce fashion sales, and growing at an annual growth rate (CAGR 2018-2022) of 13.0%. This is expected to result in a market volume of almost US$403 billion in 2022. 

China’s 2018 online fashion sales have exceeded 2017’s expectations for the same year by over 27% from US$193.9 billion to US$246.8 billion. However, Statista’s 2017’s low forecasts were already predicting an interesting fact: for the first time in history in 2018 China surpassed Europe and US fashion online sales, COMBINED. The facts confirmed that this happened to an even greater extent. 

This impressive growth is mainly driven by Millennials(25-34 years), accounting for the 34.0% of total fashion sales. A huge contribution is also given by Gen X (35-44 years), representing 24.5%. Considering gender distribution, female users account for 54.2% of total sales, while males 45.8%. 

COMPETITION IN FASHION IS HEATING UP 

The fashion market in China, due to mature industrial production technology and cheap labour force, is still dominated by domestically manufactured products. Especially with regards to the mid and low tier of the market. However, as showed in the first chapter, 100% of the economic profit in fashion is created by the top 20% (so the upper tier), mostly foreign companies. As a consequence, more and more new international brands are entering the market, while Chinese companies are constantly striving to improve technologies and quality, heating up the market competition. 

In particular, domestic brands are embarking themselves on higher markets by focusing investments on innovation, equity building, and good quality sourcing. 

In general, the huge potential of the Chinese market has critically intensified competition, leading to further market segmentation. Therefore, companies in this sector will be forced to improve and customize their offer in order to target smaller market niches. 

Key Takeaway 

To succeed, fashion brands in China need to invest in eCommerce, focus their communication to millennials and women, along with targeting smaller and more dedicated market niches. 

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