Domestic Brands: The International Expansion Of China'S Fashion Industry Is Undergoing Diversified Development

The international expansion of China's fashion industry is moving towards a more diversified 3.0 development stage.

In the past, those Chinese fashion enterprises with strong national popularity or by enriching and expanding brand branches gradually realized diversified development and young transformation, and made great achievements on the international stage; Or they will try to realize their "giant dream" through the rapid expansion of enterprise scale and global market territory.

Now, the era of "swallowing dates whole" is over. With the transformation of China's fashion industry pattern and the continuous transformation of consumption consciousness, more and more Chinese established fashion enterprises seem to be gradually developing the idea of "1 + 1 greater than 2" for international capital expansion.

From Youngor's investment in Alexander Wang to seven wolves' investment in Spanish brand desigual. On the one hand, Chinese enterprises symbolize the Enlightenment of domestic products and even the beginning of national textile industry; On the one hand, there are overseas brands with independent cultural characteristics and minority attributes, which have been established for a short time. How much market return can such a new investment portfolio and industrial pattern release?

Seven wolf's participation in Spanish fashion brand desigual is the latest and most typical case of Chinese old fashion enterprises holding hands with overseas minority brands.

Desigual was founded by Thomas Meyer in 1984 and is headquartered in Barcelona. In order to expand its online business in the Chinese market, desigual will establish a joint venture with e-shine, a seven wolf joint-stock company. It is reported that through this cooperation, desigual also hopes to expand its offline retail network with the goal of opening 60 self operated and authorized stores, and plans to open two flagship stores in Shanghai and Beijing.

Coincidentally, just a few days before the investment, Alexander Wang, a Chinese American designer with the same name, had just announced that it would acquire a minority equity investment from Youngor Group and Challenger venture capital.

Founded in 1979, Youngor gradually established a large multinational group with brand clothing as its main business and involved in real estate development and financial investment. In recent years, the acquisition of overseas minority brands has been accelerating. In 2022, it has successively completed the investment in overseas brand slashop and high-end home furnishing collection store cabana. In addition, it also announced the cooperative operation of Helly Hansen, Norway's national treasure outdoor brand, in 2021, acquired 40% of the equity of American tide brand undefeated, established a joint venture in Greater China, and invested in re Yiyi, a cycling lifestyle brand.

On the one hand, in addition to Helly Hansen, known as Norway's national treasure outdoor brand, most of the overseas brands invested by Chinese fashion enterprises in the past two years are born after the millennium, such as American fashion brand undefeated founded in 2002, Alexander Wang founded in 2005, and cabana has only three years since its establishment in 2019.

On the other hand, it has independent design style, cultural characteristics and minority community attributes, or represents the new life and social interaction that the new generation of consumer groups are keen on, namely, the circle of small groups. The volume is flexible and controllable. It is not only enthusiastic in the consumer end market, but also seems to be the "gold standard" for investment and acquisition of China's fashion industry.

Although it is not a local fashion company starting from a clothing brand, we11done, destree, holzweiler, and earlier AMI Paris, which were invested and acquired by Sequoia China this year, are also in line with the characteristics of the young minority. Recently, a cold wall, jointly operated by power rich, a Chinese brand management company, and tomorrow group, a British fashion brand incubator, has only been established for seven years since its establishment in 2015. After it announced its entry into China in May this year, it opened its first store in Greater China in Sanlitun, Beijing on July 22. Previously, the shop tenant was Victoria's secret.

From the perspective of investment, the growth space and market potential of niche brands have long been scarce, especially in the Chinese market.

The rapid rise of generation Z population base, rapid economic and cultural development of solid social environment, the growth and expansion of niche brands in China's market, in fact, has always been a fertile growth soil. According to the data of the United Nations, by 2020, the total number of people born in China from 1995 to 2009 is more than 250 million, accounting for about 19% of China's current total population.

PwC has mentioned in the brand power observation plan that with the rise and fall of generation Z and the rapid growth of the market, there is a broad space for the development of the trend consumption market. According to the relevant data, the growth rate of the total trade volume of the trend consumer goods of generation Z far exceeds that of the market. In terms of consumption contribution, the consumption proportion of generation Z exceeds 80% of the total consumption.

It is worth noting that in addition to the objective existence and comprehensive factors such as potential population base, community cohesion and cultural consumption characteristics, the multiple definitions of trends by generation Z bring more opportunities to those unfamiliar but fresh overseas brand faces. According to the observation of PwC's brand power plan, the pioneer forces of generation Z are full of curiosity about the world, have bold and fresh thinking mode and imagination, and are the main force for the excavation and dissemination of new fashion brands. They have higher value and stronger viscosity in the consumption of new brands. It is their self-control and self-defined consumption attitude that constantly promotes the evolution and innovation of the trend market.

Samuel Ross, founder and designer of a cold wall, has previously said that the brand's sales in China tripled from 2019 to 2022.

In addition, with the vast majority of international brands having completed the layout of China's market in the past 30 years, more and more homogeneous consumption choices and retail experience have made these overseas minority brands wait for the opportunity and become more and more like a new growth point with highly differentiated, socialized and card playing consumption attributes.

This can be fully reflected in both China and the global fashion consumer market. As Hollie Harding, a purchasing manager at browns, UK, has experienced, "young consumers rush to the store and they show photos from instagram on their mobile phones to buy a brand bag I've never heard of.". They also found that emerging brands such as Mansur Gavriel, staud and wandler were asked the most. In China's social media such as xiaohongshu and Weibo, overseas minority brands such as telfar, by far and tot ê me have also had a strong social influence in recent years.

Therefore, for Chinese fashion enterprises as investors and overseas minority brands that have obtained investment, the potential market prospect and expected profit scale are inevitable for the two.

So from the perspective of enterprises, especially for the old enterprises which witnessed the birth and development of national textile industry, and even played a leading role, and have gradually expanded the industrial structure to finance and real estate, what kind of transformation and upgrading significance can the label of overseas minority brands bring to enterprises themselves and even China's fashion industry? Relying on the mature experience and leading role of China's local culture and market, what else can overseas minority brands get besides capital?

Take desigual as an example, the brand name means "unusual" in Spanish. The founder Thomas Meyer has always adhered to the design concept of "unusual wear route", has a strong product style, and is well known in the market for its colorful design, bright color splicing and optimistic attitude. In terms of brand image, desigual was once synonymous with happiness, freshness and rebellion. This is obviously different from the main brand of septenaeus or the brand positioning that Karl Lagerfeld has participated in investment in the past. However, this is just in line with the strategic thinking of enriching and expanding the corporate fashion map.

In the semi annual report of 2022, seven wolf once pointed out that the company has determined the development strategy of "industry + investment". While transforming the main brand, it is trying to build a fashion group by means of investment and merger. "Seven wolf has not stopped investment in fashion industry, we will work with excellent team to adopt flexible and diverse cooperation mode to expand the investment of fashion brand," Dong Secretary of seven wolves said

From Alexander Wang to undefeated, from Helly Hansen to cabana, for Youngor, the clear purpose of investment direction reveals the future strategic direction. In the 2021 financial report of Youngor, it was mentioned that the future strategic investment will focus on the main business and the surrounding new consumption areas.

With the diversified investment and acquisition of more and more overseas minority brands, in addition to the following diversified and younger industrial pattern, and the improvement of overall profitability and stability behind it, the global incremental market brought by the integration of overseas emerging brand resources can also bring broader and longer-term market value to various industries under the enterprise. However, whether it is risk or input-output ratio, it is obviously more worthwhile to invest than to re create a local sub brand.

As for the overseas minority brands that have obtained capital to enter the Chinese market, compared with "fighting" alone or bringing foreign capital into the Chinese market, in addition to capital, local investors with more goal-oriented culture and market proximity, are the key considerations for their stable growth and expansion.

As Alberto ojinaga, chief executive of desigual, said, "this cooperation is in line with our strategy to continue to expand our business in Asia, and promote growth in China, Japan and other relevant countries including South Korea." In the next five years, desigual plans to boost sales in China to 40 million euros, 50% of which will come from physical retail business and 50% from online business.

Alexander Wang regarded the investment from Youngor Group and Challenger venture capital as an important milestone, and said: "at present, the retail expansion plan of the brand in North America and the world has been launched. I am looking forward to the future of the brand and the support from Challenger venture capital and Youngor Group."

In addition, China's leading e-commerce market size in the world and Youngor Group's advantages in online platform operation may also be the focus of Alexander Wang. He said that the brand will continue to expand its global business with the help of Challenger venture capital and Youngor Group's investment, focusing on global retail stores, and promoting e-commerce, e-commerce and Youngor Group's investment Continuous investment in marketing and innovation.

Since the establishment of Kuafu Technology Co., Ltd. by Youngor in July 2021, it has converged the advantages of online multi platform operation, integrated and matched public domain and private domain traffic. In 2021, online global Gmv (total amount of commercial transactions) exceeded 1 billion yuan. In April 2022, Youngor announced that it had decided to increase the investment of Kuafu technology by 2.5 billion yuan. Meanwhile, Youngor explored the mode of fashion experience Museum, practiced the deep integration of "online promotion, offline experience", "online sales and offline service", and built a new retail mode of all customers, all channels, all time, all links and all data. During the reporting period, the number of active members of Youngor was 1.9 million, a year-on-year increase of 23%; The proportion of member sales increased by 12 percentage points to 67%.

Earlier this month, Sheng Qiuping, Vice Minister of the Ministry of Commerce, said at the "China e-commerce conference" of the 2022 service trade fair that China's e-commerce ranked first in the world in terms of online retail market, number of online shoppers, digital express business and mobile payment scale, and has become an important force to smooth the domestic and international dual circulation. Since 2021, China's e-commerce has shown great resilience despite many factors beyond expectations. The national online retail sales amount reaches 13.1 trillion yuan, the cross-border e-commerce import and export volume reaches 1.92 trillion yuan, and the number of e-commerce employees exceeds 67 million.

Although it has not cooperated with Chinese fashion companies and other investors, Ganni, a Nordic brand founded in 2000 and controlled by L catterton, an investment institution of LVMH group, has been committed to global expansion in the past few years, and has been expanding its various layouts in the Chinese market in recent years, Andrea Baldo, the Global CEO of Ganni, also said: "if anything needs to be changed in the future, it is to become more localized. There are advantages and disadvantages for small brands to expand internationally, and the cluster strategy enables us to establish a value relationship with the local community."

In the future, with more and more small overseas brands entering the Chinese market through investment and cooperation with Chinese fashion enterprises, it is not only the diversified transformation of China's old fashion enterprises, but also a sign that the Chinese fashion industry really runs through and even takes root at home and abroad, and its influence on the global market industry is further enhanced.

From the past national enterprises, domestic brands, to China's new generation of designers... As a "new member" of China's fashion industry, overseas minority brands may be expected to become a new bridge between China's fashion industry and the global market.