Chinese Fashion Doesn't Lack Opportunity or Speed — But We Still Have 4 Questions About What's in Style Now

Fashion is unquestionably big business in China. Whether a fashion culture can be grown just as quickly is a question no one can answer for sure.

"In today's complicated fashion world there aren't many opportunities left, but geographically, there's nowhere with bigger opportunities than here," the designer Damir Doma told QDaily in an interview last year.

As in past years, what we saw at Shanghai Fashion Week was enthusiasm and contradiction.

E-commerce was the most visible presence. Tmall showed up for the first time as an official strategic partner, working with Labelhood, the independent-designer zone, on four "see-now-buy-now" shows. JD.com, in its third straight year at Fashion Week, made less noise this time but still brought Haizhen Wang, XU ZHI and Lucien Wang to AUNN Cafe near Jing'an Temple for three static exhibitions. Secoo rented two square plots at Ontimeshow — held at the West Bund Art Center, and a Mode satellite venue since two years ago — and announced an ONTIME Designer Channel that will invite more than 200 emerging designers to join.

Commercial brands chasing a younger image were the other big camp, and most of them chose to work with young designers. To mark its 90th anniversary, Disney unveiled a collection on the first day of Fashion Week made with 15 independent designers, including Haizhen Wang, Ban Xiaoxue and C.J. Yao; two years ago, the first time it tried this, it worked with only four. Last year Disney had just opened its second store in China, at Xingye Taikoo Hui.

A year ago Shanghai Fashion Week promised to become "Asia's biggest order-placing season." To fit buyers' international sourcing calendar, this season's event moved a week earlier than usual. But the clash with Easter may still have cut the number of international buyers who came to Shanghai.

The organizing committee's data kept arguing the other way, on sheer scale: in the week of March 28 to April 3, more than 100 shows were staged, double the number two years ago; Mode, the apparel trading zone, drew 11,843 visits in total, up 18.7% from last season; and buyers from professional channels numbered 3,120, up 11%. The zone also finally signed a ten-year lease with Shanghai Mart, so it no longer has to worry about changing venues every season.

Still, most international buyers had already spent their budgets at the Big Four fashion weeks. In Shanghai their verdict tended to be some version of "surprised by the innovation and energy of Chinese design." They may still order directly at Chinese designers' overseas showrooms, but what interests them more than taking Chinese brands abroad is probably how to get into the Chinese market.

Jackie Kim, Barneys New York's deputy fashion director, made a point of mentioning in an interview that Barneys New York had just launched on Tmall: "I'm very interested in the Chinese market. I want to know how the industry works here, what Chinese consumers like to wear, and which brands they like to pair together."

On the second day of Fashion Week, Dior moved its 2018 spring/summer haute couture show from Paris to Shanghai and walked it again, livestreaming it on Weibo and Yizhibo at the same time. Artistic director Maria Grazia Chiuri came in person and designed twelve new pieces for the show in reds and pinks, inspired by the Chinese folding fan. One model carried a black-and-white checked clutch printed with the word "Shanghai" in large letters.

For this generation of young Chinese designers, more and more have already shown their 2018 fall/winter collections at the Big Four, still the best place to display design and catch the eye of buyers from around the world. Back in Shanghai, a show serves one of three more modest purposes: taking practical orders, giving a sponsor a vessel to display its own strength, or running a niche experiment for a small circle. Underneath is a certain caution: no one is sure yet whether domestic buyers and consumers are mature enough to accept bold, unconventional design, or where exactly the huge customer base defined by "consumption upgrading" actually is.

Fashion is unquestionably big business in China. Whether a fashion culture can be grown just as quickly is a question no one can answer for sure.

1. Why are e-commerce platforms fighting over designers?

"Today Tmall can do more than open you a store and give you traffic. Integrating supply chain resources, giving talented designers more outlets — we can do all of that," said Lyu Jianmei (Meng Gu), Tmall's deputy general manager for apparel, at a forum on new retail held at Mode on March 29. It sounded like a pitch to recruit merchants.

Tmall said 31% of the brands at Fashion Week had flagship stores on its platform, but the most sought-after designers were still split across three different e-commerce platforms this season. XU ZHI and Haizhen Wang did exhibitions with JD.com; Angel Chen, The Lawn, Yirantian and Wangbing Huang chose Tmall; and Chen Peng walked its New York Fashion Week show again at Ontimeshow, which had partnered with Secoo.

The scramble for Chinese designers followed straight on the heels of the platforms' scramble for luxury goods. JD.com moved first. Three years ago it reorganized, and its apparel and home unit became one of four newly created business divisions. Last June it announced an investment in Farfetch and launched a program called "JD (x) Fashion," meant to bring in internationally known designer brands, streetwear labels, and high-end collaborations with first- and second-tier international houses.

Tmall started later but moved faster. In January this year, Erding, president of Tmall's apparel business group, announced a "Designer DT Innovation Program," and in February it worked with New York Fashion Week to hold Tmall China Day, showing four brands — among them the independent designer label Chen Peng, whose retail market is mainly North America.

Fashion Week came right after New Force Week, and Tmall may have seen it as a good chance to sign up more designer brands. In all, as an official partner, it did three things at Fashion Week: it worked with Mode to run heat-map analysis of foot traffic in that zone and pull identity and behavioral data; and it worked with the Labelhood zone on "see-now-buy-now."

On top of that, from March 30 to April 1, typing "T Design" into Tmall's search box pulled up a page called "Tmall Design Week," which gathered more than a dozen designer brands that already had flagship stores on Tmall. The criteria for inclusion looked fuzzy: CROQUIS, a brand of the Hong Kong-listed JNBY Group; Mukzin, which had just announced a Series A round in February this year; Wuya, a brand of Shanghai Wuhe Industrial with 332,000 followers; and Labelhood Leihu (formerly Changzuo Dongliang), a designer-brand concept store that had only launched last October.

In the end, though, these Tmall experiments were more show than substance. "The buyer robots and the heat-map analysis were confined to a fairly small pilot, an initial trial. They didn't cover much of the zone," Zhang Jie, head of Mode, told QDaily.

The livestream on Labelhood's Tmall flagship store did only middling numbers, averaging 1,500 viewers. The camera never changed angles, so the models on screen looked distant and blurry and now and then wandered out of frame. Judging by the sales figures visible on the store page, the four designers' presale pieces had not taken a single order by the time Fashion Week ended.

Tmall may not have meant to show results at all. Xie Wei (Lu You), head of Tmall apparel brand marketing, returned again and again to the growth potential of the B2B business when he spoke with QDaily after the forum. "This time we tested one zone at Mode, but the technology and the data could be applied to any department store, to help them understand foot traffic better… Partnering with Fashion Week to put on a runway show — I could do that with my eyes closed, and I don't think there's anything new in it. What's new is that I can serve a single brand and serve the whole of Fashion Week."

None of this is new either. The "Store of the Future" Farfetch proposed last March aimed at the same thing: helping brands connect online and offline. What drew the most attention last year at Yoox Net-a-Porter, the world's largest luxury e-commerce platform, was likewise its B2B business, "Online Flagship Stores," whose clients include Armani, Valentino, Isabel Marant and Marni. Last year that unit brought in net revenue of €217.5 million, up 5.9% year on year and 10.4% of group revenue; its GMV rose 20.8%.

Tmall's stated goal is to incubate five designer apparel brands with sales above 100 million yuan each within a year. In the interview after the forum, Lu You cited third-party data putting the current commercial scale of Chinese designers at under 100 billion yuan, and said Tmall believes that is the result of a supply chain that has never been properly integrated.

"There used to be brands with five or six thousand physical stores and customers all over the country. Once you go online, you can sell to Shanghai, or sell to Tibet. Given that, I believe this industry can eventually reach 200 billion yuan — double where it is now."

Lu You also mentioned that Tmall set up an internal New Product Research Center this year. For two years they have been trying to catch trends through accumulated data and use it to guide design and production. Brands they have worked with include La Chapelle and Bestseller. One recent study tracked Pantone's 64 trend colors on Taobao and found that 8 of them had been turning over faster in the market during the previous three months. "You'll find that in today's environment trends no longer refresh every six months or every year. That's shrunk to a month, or even a week."

But that argument may miss a point: fashion and the GMV-and-speed logic e-commerce likes to talk about have always been two different logics. Supreme spent 20 years growing before it became a runaway hit, and the European fashion houses took longer still to go from founding to scale. What is more, the demands niche brands make on tone and community, and their disadvantages in supply chain and pricing, sit naturally at odds with a mass platform driven by value for money, by hits, by volume.

Designer brands tend to create diverse fashion rather than follow the mainstream. On sales alone they can hardly compete with influencers like Xueli. During New Force Week, the Taobao influencer Xueli launched a collection with Snoopy. According to data from Tmall, the 10 collaboration pieces sold more than 80,000 units, and one bestseller sold more than 20,000 units within 30 minutes of going live.

2. What problems does going digital create for designer brands?

Designer brands growing in the domestic market always run into a paradox: consumers and buyers are mostly still not mature enough, while designers' niche work struggles to find its audience quickly. Without lower prices they can't attract a bigger customer base; without a bigger customer base they can't force the supply chain to bring prices down.

Mass-market e-commerce might manufacture an illusion that gives designer brands the traffic and sales they need, speeding up the work of cultivating a market. Precise algorithms are another phrase that comes up often. At the Mode forum, Tmall's deputy general manager for apparel, Lyu Jianmei, mentioned "a thousand faces for a thousand people" — Tmall's personalization algorithm — several times. By her account, direct visits from "My Favorite Stores" now account for 30%-40% of a store's traffic.

But the process is full of risk. Justin, one of Changzuo Dongliang's partners, raised it in a group interview after the same forum: "Something new needs a way to speak collectively on Tmall. 'A thousand faces for a thousand people' lets you see what you want to see, but a lot of the time it also narrows your field of vision."

Other questions worth thinking about: can the algorithm Lu You describes really guide design? And even if e-commerce can manufacture brands with annual sales above 100 million yuan, how do they differ from influencer brands, and can they still be called designer brands?

The boutique Changzuo Dongliang and the independent-designer zone Labelhood opened their flagship store on Tmall on November 1 last year (the two have since merged and been renamed "Labelhood Leihu"), four months after Tmall first got in touch. Changzuo Dongliang's WeChat store had already run for two or three years: the upside was that it was completely closed off and easy to control, the downside that it had to draw attention on its own while traffic kept fragmenting.

What changed co-founder Tasha Liu's mind was Babyghost and a few case studies Tmall provided. Babyghost designer Huang Qiaoran told her at a talk in February this year that after seven years with a store on Tmall, most of her sales happened online, and she moved 110,000 pieces last year. The first case Tmall sent over was the consumer goods giant Procter & Gamble, which seemed a bit beside the point; later ones about similarly priced brands like Maje and Sandro made Liu feel it was worth trying.

"Some designers at Taobao-native brands are serious about product innovation too, and their prices are fine — it's just that their originality follows trends. But those brands' customers need an upgrade as well. They used to let Taobao influencers decide what they wore; the next thing they may want is a different kind of product on offer."

The flagship store launched with a few designer brands more willing to go commercial, priced at around 3,000 yuan on average. Take YIRANTIAN and Angel Chen: the first targets white-collar women with high spending power and broad needs; the second has built a strong brand image and won a lot of exposure through marketing tie-ups, which gives it high recognition among young people.

Five months in, the store's monthly sales are growing 100%-200%, but that is only 10% of what the physical store does. Liu has drawn three lessons so far: accessories sell better than clothing — the store's best seller is a pair of UMA WANG ballet flats priced at 5,000 yuan; and when Chen Peng did see-now-buy-now at Tmall Day during New York Fashion Week, its best seller was not its signature down jacket either, but a pair of white sneakers priced at 3,000 yuan.

The average prices Tmall reported back also made designers more aware that they charge too much. The typical order on Tmall runs 1,000-2,000 yuan, while brands in the Changzuo Dongliang store often reach 3,000-4,000 yuan.

The paths customers take through an online store are also nothing like a physical one. "At first I put a lot of effort into making the homepage look nice, but Tmall has its own set of rules. The way consumers buy there has nothing to do with what you laid out in your head. They're likely to come in through some traffic entrance Tmall or Taobao gives them. So compared with a beautiful homepage, joining an event on Tmall may convert my customers at a much higher rate."

Liu also stressed that to keep designer pricing consistent, they are very cautious about discounts, or discounts bundled with coupons.

Zhang Da opened a Taobao store called "Meibian Boundless" only this month; it had 327 followers as of publication. Before that, Meibian also ran a Weidian store, which it has lately used to clear old inventory and sell a cheaper, more everyday "daily use" line.

He has nothing against opening a store on a mass e-commerce platform, since it makes things convenient for consumers in cities boutiques can't reach. But how people use what technology brings takes more judgment — algorithm-driven design, for instance: "The good thing about technology entering fashion is democratization. High fashion used to sit in a very pampered position, and the spread of smartphones and social media turned that upside down. But one bad thing about democratization is that the good comes mixed with the bad. Mass taste is, on the whole, not as good as professionals'. Letting it drive design, with no view of your own and no judgment, is a very bad thing."

That is also why Zhang Da chose a Taobao store instead of a Tmall store. Several designer friends of his with Tmall stores are struggling with the "seven-day no-questions-asked return" rule. "It creates a lot of extra work for merchants. An item leaves inventory when it's bought and goes back in when it's returned. You might sell a lot this week and get a lot back next week, which makes revenue hard to count."

Zhang Da thinks a rule like that spoils customers, and spoiling customers means spoiling traffic.

"Letting someone take no responsibility at all for their own decisions is what a nation of giant babies does when it only wants short-term gain. It does lower the burden of shopping online, and it does bring the platform more traffic. But under these conditions a lot of customers develop the habit of buying casually and returning casually. In practice, the benefits of that traffic point mostly to the platform."

3. Where do boutiques perform best?

Cote&Ciel, a high-end Parisian bag brand, was one of the best sellers this season at IGFD, an Italian showroom. More than 20 department stores placed orders, including department store buyers from Changsha, Wuhan and Guiyang, for a total of €2 million.

IGFD's booth at Mode this season covered 1,000 square meters, the largest of any showroom. Gu Shixuan, chairman of IGFD's board, reasons that any international brand landing in China has to come in strong and build a high-end image, and that usually means a big booth.

Because Shanghai Fashion Week used to fall too late, past Europe's order cutoff, Gu Shixuan's first three trips to Mode were for exhibiting and advertising only, not orders. He quoted a line from 《消费》 (Consumption) to describe that earlier goal: "Brands need to find conspicuous consumers, people who influence those on the margins of consumption, creating a ripple effect."

With Mode moving earlier this time, IGFD opened for orders for the first time. Customers get the same prices as ordering in Europe, plus follow-up services covering size and color adjustments, production scheduling, customs clearance, logistics and payment. To attract smaller buyers, Gu Shixuan lowered the minimum order to 10 styles. He has also worked out a formula for attracting Chinese buyers: the brand needs some recognition in Europe and some sales numbers in Japan and South Korea, to prove it already has an Asian market; average product prices need to sit between 1,000 and 3,000 yuan, close to domestic designer brands; and this season streetwear made up 30%-40% of the mix.

Even so, the buyers surprised him. An ordinary buyer would order 200 units of a single style, and orders from smaller buyers added up to more than €1 million. These buyers are also more willing to wait. "Domestic buyers used to demand delivery within two weeks. That's impossible for an international brand — we need at least six months. This time more than 10 buyers told me straight out that they wanted more international brands in their stores."

Gu Shixuan also believes there is now almost no gap between what buyers in first-tier and second-tier cities want. Guiyang's Xingli Group placed orders worth more than 30 million yuan this season, and there is a boutique in Guiyang with annual sales above 100 million yuan. Because competition there is less fierce than in first-tier cities, their growth rate is actually higher.

Next to the €150 million in orders Italy generates each season, what IGFD took away from Shanghai Fashion Week is still small change. But Gu Shixuan feels this market's speed is pushing technical change back at headquarters in Italy.

The clearest example: starting last season, IGFD became the only showroom in Italy to work with clients through an app, using one called "Moda Link" to manage store portals and track sales and inventory. A Chinese team built the app — "because all the showrooms in China were doing this already, we had to keep up."

Xiao Chen, agent for the menswear brand Feng Chen Wang, sees it much as Gu Shixuan does. In the brand's first season, overseas orders outnumbered domestic ones; after that the two ran about even. By the fifth season, 2018 spring/summer, domestic orders were half again as large as overseas ones. Xiao Chen thinks that is mainly because, at home, beyond big boutiques like Lane Crawford, they put their effort into reaching more high-end boutiques in other cities. A third of buyers reorder more than they originally ordered.

Interestingly, big stores like Lane Crawford are slower to reorder than smaller independent boutiques. Wenshi in Changsha, Juhewu in Zhengzhou and Jun Shan in Wenzhou don't necessarily reorder the largest quantities, and their orders are relatively scattered, but since Feng Chen Wang formally introduced a reorder system for 2018 spring/summer, these boutiques have emailed to reorder at least once a week, almost without fail.

To fit the domestic market, Feng Chen Wang has adjusted prices twice. The high-end line held steady, while mid-range prices came down 10% this season. Xiao Chen explains that most male customers and some high-end buyers are not very price-sensitive, but half of customers say they would buy more if prices came down a little further.

Female consumers can afford less, but some womenswear boutiques outside the first-tier cities are key clients for Feng Chen Wang, because they understand design and can push more of their VIP customers to buy.

4. Is streetwear really what makes young people's trends?

Starting in 2008, Wang Yiyang's Zuczug picked designers out of its in-house team one by one and set up four sub-brands: the eco-friendly Klee Klee, the sportswear label An Ko Rau, the womenswear label WHM and the bag and accessories label extra one.

Last year Klee Klee and An Ko Rau opened standalone stores on Anfu Road and at Xingye Taikoo Hui in Shanghai. WHM and extra one tried taking orders at not showroom and tube showroom.

WHM designer Wang Haoming and extra one's two designers told QDaily that Zuczug will also open a multi-brand store called "Park" this year, putting all these sub-brands in one space.

Huang Zhifeng, Wang Yiyang's business partner, told BoF that the sense of crisis behind the group's shift comes from the fact that "the post-80s generation has already reached middle age — how do we find new customers?"

More finely segmented sub-brands and new ways of retailing are seen as the main answer. "The data shows that a fair share of the customers who walk into the Anfu Road street store don't know Zuczug, which both serves the goal of a new brand finding customers and confirms our judgment that there is a sizable new consumer group outside the mainstream department stores and malls… We also feel that with more lifestyle-oriented brands we can reach customers with a higher tolerance for price, whom Zuczug's existing channels never fully reached."

The other subject you can't avoid when talking about getting younger is streetwear. Two days before Fashion Week opened, LVMH had just announced that Virgil Abloh, founder of the high-end streetwear label Off-White, would be Louis Vuitton's next artistic director.

"Rewind thirty years and luxury wouldn't have given brands like this a second look. But high fashion is in decline, and new spending comes mainly from China and the United States, where the money was made in technology. These consumers are usually young, and they have no tradition of wearing or using high fashion, so brands need people with more traffic to bring that traffic over," Zhang Da said.

The fashion e-commerce platform Micheng and Nielsen released a joint market report at Mode calling streetwear "the fastest-growing brand segment in the world from 2011 to 2017." In that market, the core 10% of users take 48% of market share, and Off-White and Supreme were the fastest-growing and most popular streetwear brands of the past year.

Wang Xi, an investor at China Media Capital, gave a different figure at another forum: Chinese streetwear brands account for only 2-3% of the global market, "guochao" — the national-trend movement — is still at an early stage, and total streetwear spending comes to only 30 to 50 billion yuan.

The streetwear brands at Fashion Week were all over the map, and it is hard to say which were seriously trying to grow the guochao pie and which were riding the wave for attention. Judging at least by the most-watched shows, the heat came not from the brands but from variety shows and celebrities.

Angel Chen brought in several contestants from Street Dance of China to battle on the runway. MISHKA, a New York streetwear label that entered China in 2009, put the rapper GAI in the front row and closed the show with hotpot base.

Celebrity endorsement works on every group, but as the Nielsen report put it, the mainstream in China is still mid-tier and mass-market customers. Mid-tier customers care more about which brand a celebrity is wearing; mass-market streetwear customers care more about how it looks on the celebrity. If an influencer wears something and the whole look works, they will probably go buy the same item. Yang Mi, Kris Wu, Lu Han and G-Dragon are the sales drivers streetwear brands rate most highly.

It sounds as though what is really entering the public eye is still not street culture, but what celebrities are wearing.

Cover image by MOTOGUO