Can Children's Wear Win These Chinese Brands Back the Hearts of Young Shoppers?

For the first time, children's clothing puts China's "fashion brands" on the same stage as the international fast-fashion chains. It is a miniature of the upgrading of Chinese garment manufacturing.

In an office building in Ningbo's high-tech zone, the children's-wear operation of Mini Peace takes up an entire floor, spacious and bright. The e-commerce division one floor away is far more crowded: rack after rack of clothes, some of them children's. Mini Peace runs on many styles in small quantities, the manager there explained, so what it sells online is mostly leftover stock and re-ordered out-of-season goods.

Mini Peace is the children's-wear brand of Peacebird. Peacebird has built its own e-commerce arm, but most of its clothes still reach shoppers through traditional distributors. For a company like Peacebird, e-commerce is still something to be weighed carefully: too many new styles at low prices online can eat into what the distributors sell, but neglecting it means giving up the long tail and staying trapped inside the distributors' limited networks.

Peacebird sounds much more confident about where it places its children's-wear brand than about its e-commerce plans. Shi Chaoqi, general manager of the company's children's-wear division, flatly calls the players in this market "rich-kid brands" — the "rich kid" is not the shopper but a joke at the industry's own expense, told from a position of superiority: next to the crudeness of the older children's-wear brands, "rich" means "grown up."

Around 2011, Peacebird, JNBY, Trendy International Group and Metersbonwe launched children's lines one after another. These companies had spent years mass-producing and selling adult clothes. Their arrival, alongside the children's lines of fast-fashion chains such as Zara, Gap and Uniqlo, squeezed the market share of the old children's-wear brands and gave shoppers more to choose from.

What the newcomers make is more "adult" than children's clothing used to be. Gone are the babyish cartoon prints; in their place are shrunken versions of adult hits — hot pants, denim jackets, fur jackets, white sneakers, little shoulder bags — and even the promotional posters look like scenes from the way people live now. Some shoppers joke that you can tell at a glance whether a child's outfit was bought by the grandparents or by the parents.

Young mothers are the main buyers of children's clothing. Their own idea of fashion parts ways with their parents' generation, and so does their idea of what a child should wear. A global children's-wear survey published by the consultancy Technavio in April 2016 found that people are spending more and more on children's clothes, and that what they want has moved past comfort: shoppers now ask for more variety than before. One of the clearest signs of this is how much adults enjoy buying their children shrunken adult clothes.

Online information, the spread of fast fashion, and the example set by celebrities and celebrities' children are all at work on these young parents.

"I like to pick cuts that look fashionable and colors that are pretty, but no cartoon prints," said one shopper, Pan Tingting, whose daughter is now three and a half. "I don't like [clothes] that make a child look babyish."

Yao Qingtao, a mother born in the 1990s, told us that parents today all know the "caterpillar shoes" from Nike, Zara's girls' tights and Uniqlo's pure-cotton jeans — the "hit items."

These brands also charge more. Pan Tingting says she spends roughly 20,000 to 30,000 yuan a year on her daughter's clothes, about 70 items. Within the range an ordinary young mother can choose from, a single Zara summer piece runs 40 to 160 yuan and a pair of Uniqlo trousers about 150 yuan, while Mini Peace T-shirts mostly sit between 168 and 300 yuan and its down jackets around 1,000 yuan; JNBY T-shirts run 138 to 300 yuan, and its long-sleeved cotton tops 500 to 600 yuan.

All of these brands may sit on the same young mother's shopping list, but when she shops for herself the list shifts a little: fast fashion, possibly; Peacebird and Metersbonwe, far less likely. Children's wear, for the first time, puts China's "fashion brands" on the same stage as the international fast-fashion chains.

Seen from inside the industry, children's wear is a miniature of the upgrading of Chinese garment manufacturing.

Peacebird, Metersbonwe and Semir have each been in clothing for more than 20 years. Their parent brands hold little fashion appeal for young people, "but those 20 years trained a lot of people, and everyone got much more professional. From around 2010, the new children's-wear brands — the names, the trademark design, the store displays, the design logic — stopped being so crude," Zhou Long, CEO of the menswear brand AK Club, told QDaily. He was previously CMO of Metersbonwe and ran the Me&City Kids children's line.

The first mover in this field was Semir.

Semir launched Balabala in 2002. By 2015 Balabala's annual sales had reached 7 billion yuan and its store count had passed 4,000, while Semir Group's sales for the year were 21.5 billion yuan, more than 32% of that from children's wear. For comparison: Annil, a traditional children's-wear brand reported in 2015 to be preparing an IPO, disclosed in its prospectus operating revenue of 553 million yuan, 706 million yuan and 793 million yuan for 2012, 2013 and 2014.

In a China Children's Wear Market Report published by Euromonitor in 2015, Balabala ranked first with nearly 5% of the market. "Most children's-wear brands used to turn over 200 million to 800 million yuan a year. Only Balabala got to 4 or 5 billion," Zhou Long said.

Children's wear is an extremely fragmented market. In 2015 the country's 10 largest children's-wear brands together accounted for 10.74% of total retail sales, only slightly above the 10% of 2012; the top three companies together took 5.85%.

The old children's-wear brands are strong at manufacturing and weak at reading the market and building channels. Most of them cluster in places with developed export and manufacturing industries, such as Zhejiang and Guangdong.

"The core competence is retail. These local children's-wear brands [the ones originally from Ningbo] were all weak at retail. They only did wholesale, and their products were extremely alike," Shi Chaoqi told QDaily.

Xu Bo, who runs Balabala, says much the same. "The older children's-wear brands never took off because all they did was wholesale. Balabala could expand fast because it went into retail chains," he said. Balabala, he added, now has more stores than Semir has in shopping malls.

Semir's success showed Chinese clothing companies that the children's-wear market could be made big. In 2011 JNBY launched the children's brand jnby by JNBY, whose sales passed 10 million yuan within two years. The same year Metersbonwe launched Me&City Kids and Peacebird launched Mini Peace. Mini Peace's sales reached 400 million yuan in 2014 and were expected to double this year. Prospectus figures show that in 2015 the parent, Peacebird, had menswear retail sales of 2.66 billion yuan and womenswear retail sales of 3.5 billion yuan.

"Start another adult casual brand now, or another adult sportswear brand, and the competition is brutal, and most adult clothing isn't growing fast enough on its own. Children's wear has no number one yet. Going into children's wear follows the big trend, and it's the best choice," Zhou Long said. AK Club's children's line arrives next spring, carrying over the military look of its adult menswear.

As long as the industry has not produced six or seven mature brands, Zhou Long believes, a new brand still has a chance. Both he and Shi Chaoqi said in interviews that Balabala's main market is lower-tier cities and towns, and that their own brands sit higher up.

"At the same 1,000-yuan price point, children's wear pulls a higher grade of customer than adult clothing does," the China channel head of the children's-wear brand Sarabanda told QDaily. Sarabanda aims at parents with a combined monthly income above 50,000 yuan. It has two stores in China so far, one in Jiuguang Department Store in Shanghai, the other in Hang Lung Plaza in Wuxi.

Ask who really competes with the Chinese children's-wear brands, and the answer is fast fashion. These companies give away nothing on product, marketing or channels, least of all in the first-tier cities where the fighting is hardest.

In the summer of 2016 Uniqlo extended its Lego and Marvel UT collaborations into children's wear; it had begun a plan in the autumn of 2014 to add 50% more styles to its children's range. Gap has been bolder still in its children's crossovers: last year it worked with Ellen DeGeneres, host of the American talk show The Ellen DeGeneres Show, on a "GapKids x ED" line.

Gap is one of the biggest winners from the shift in Chinese children's-wear spending. The company entered China in 2010, and while its adult business faces enormous trouble worldwide, its children's business has done so well that when Gap's Tmall store opened in 2014 it was even filed under children's wear.

"The data shows children's products are growing the fastest. We believe that moving into this particular category has helped Gap build awareness and recognition," Abinta Malik, senior vice president and general manager of Gap Greater China, said by email, returning again and again to numbers to show how strategically important children's wear is to Gap in China: China is the world's largest children's-wear market; the number of children under 14 in the country has reached 220 million; more than 10 million babies are born there every year. By 2017 the Chinese children's-clothing market will be worth 150 billion yuan.

The same Euromonitor report shows Gap's share of the Chinese children's-wear market rising from 0.1% in 2010 to 0.6% in 2014, seventh that year, and the only foreign fast-fashion brand in the top 10. In Tmall's most recent summer sale, Gap sold more children's wear than any other brand.

At Gap's headquarters in New York a dedicated children's and baby team designs new products on a monthly cycle, following the latest trends. "But we see young parents' understanding of fashion growing more sophisticated. They ask for more than quality and safety now; they want distinctive, fashionable design," Abinta Malik told QDaily.

"So what we have to watch all the time is what young women are wearing. A lot of Mini Peace's design elements come from adult clothes," Shi Chaoqi said. "Athletic style is popular right now, for instance... and Gucci's florals and full, saturated colors are popular too, so we take those as references."

As Objects of Desire: Design and Society Since 1750 tells it, the clothing trade had no category called children's wear to begin with. Merchants invented it to sell more clothes, "designing" children into a new species: innocent and adorable.

But when adult-style children's clothing caught on, manufacturers could not simply take an adult design and scale it down. The product structure of children's wear is nothing like adult clothing, and safety makes the demands on detail different too.

Shi Chaoqi stresses that Mini Peace took plenty of wrong turns as it felt its way from 2011 to 2013. At first it chased the look of a garment and neglected comfort. Copying adult retail, it made its fitting rooms beautiful — and children refused to go in, while parents wanted to keep them in sight. "Shirts are a big share of menswear, but a boy won't wear a shirt as properly as a man does... and with cutout details in girls' wear, mothers wonder whether their child will catch a chill."

Children's wear is not more profitable than adult clothing. "You don't really save much on fabric. The workmanship for children's wear is exactly the same as for menswear, harder even. Take this armhole: with adult clothing you can reach in and turn it inside out, but a worker making children's wear has to be very skilled, and can't have hands that are too big. The processing cost is actually the same as for adult clothing," Shi Chaoqi said.

Even so, children's wear has become a strategic priority for these companies. On May 21, at the Shanghai Minsheng Art Museum, Peacebird Fashion held a 20th-anniversary launch and gave most of the time to the Mini Peace children's show.

The museum was dressed as a garden, flowers set against red earth, children walking through beds of white blooms. The runway garden was arranged by the florist Thierry Boutemy, and the red earth was all imported from France. The show itself was built by APAX, a runway consultancy whose past clients include Louis Vuitton and Burberry. Boutemy works regularly with Lanvin, Dries Van Noten, Viktor & Rolf and Dior.

The show cost nearly 10 million yuan.

"We want to get across a sense of fashion and professionalism," Shi Chaoqi said. "The shopper doesn't care whether you're called Peacebird or Birdpeace. What he really cares about is your product... that's what matters." Xu Sisi, a Peacebird press officer, said: "Just as we'd never say we're off to buy a foreign label, we don't shy away from being a Chinese brand either."