Forget the Designers: What Was Worth Noting at This Year's Shanghai Fashion Week, a Snapshot of the Whole Industry?

What has been happening to sustainable fashion, an ever-younger luxury market, bloggers, and department stores in transition?

Imran Amed, founder of the fashion trade publication BoF (Business of Fashion), held an industry forum in China for the second time. As last year, the guests included luxury brands, homegrown brands, e-commerce platforms, and fashion bloggers. The topics had barely changed either: what opportunities luxury brands have in the Chinese market, how to put sustainable fashion into practice, and how to make the online and offline retail experience one thing.

At the close of the forum he announced a decision much like the one Cui Dan, then GQ's fashion director, made two years ago: the BoF China Prize, which will give the winning designer $100,000 and a chance to show at London Fashion Week.

Gu Yeli, who runs the trade show ontimeshow, was at the forum too. Explaining how Shanghai Fashion Week had become "the most dynamic fashion week in the world," she said her show had grown from 48 brands in its first season to 300, with more than 1,000 others on a waiting list, while trade visitors had gone from just over 300 to more than 10,000.

Even so, an international brand agent who asked not to be named told QDaily that the hefty entrance fee had not bought them the well-qualified wholesale buyers they expected — mostly they met casual visitors there for the spectacle — and that they would have done better to approach shopping malls such as HKRI Taikoo Hui directly about a partnership.

Everything here keeps shifting: consumers who express themselves in more varied ways and ask more of the way they live; commercial brands and institutions chasing a younger image through crossover marketing; well-funded fashion groups buying their way to a fuller brand portfolio; shopping malls and department store groups in transition, hunting for brands with more varied styles; e-commerce platforms eyeing the market potential of designer labels; and a growing number of platform-style businesses whose job is to take Chinese brands out and bring international brands in.

As always, we still think careful thinking beats blind optimism.

In China, Sustainable Fashion Is Not a Question of Appearances

"The biggest change of the past two years is that I no longer have to go around convincing people why sustainable fashion matters. People have finally started discussing how to do it. In the West, the ones most interested in this topic are the brands. In China, everyone who comes to talk to me is an upstream company — manufacturers and the like. Change upstream is harder, and it matters more," Francois Souchet told QDaily.

Souchet is head of the UK's Ellen MacArthur Foundation, and his main work is bringing together the theorists who study the circular economy and the entrepreneurs who try to run on it, to work out how the theory can guide practice.

Ever since Kering said last year it would stop using real fur, barely a day has gone by without some large brand or body making a sustainability pledge: the British fashion e-commerce site ASOS said in June it would stop selling silk, mohair, and cashmere; Burberry's new creative director, Riccardo Tisci, recently announced a fur-free policy; the British Fashion Council went as far as pledging that designers using animal fur would not be allowed on the official London Fashion Week schedule. Beyond the general climate of opinion, consumers waking up to the issue has been an important push.

On this question, China looks like a country that "has the ability to achieve sustainable fashion." Whether it "has the will" is another matter. The general view is that at this stage Chinese consumers would still rather pay for cheap, good-looking design than for anything green. Put another way, the change sustainable fashion needs matters less at the level of the individual brand than at the level of the industry.

At the Copenhagen Fashion Summit in May, Robby Gu, JNBY Group's vice president of investment and innovation, told reporters: "On sustainable fashion, it isn't that Chinese consumers aren't ready — Chinese consumers take up new trends faster than anyone. What we need is clarity on the brand supply side, on exactly what brands have to do." Also at the summit were the former journalist Ye Xiaowei, Esquel Group, and Erdos Group.

It was there that Souchet met the "upstream companies keen on sustainability" he described, and Ye Xiaowei carried the discussion back to Shanghai during Shanghai Fashion Week. This year she founded an organization called yehyehyeh, set up to push discussion and cooperation on these questions.

At this forum, Caroline Chalmer, chair of the Copenhagen Fashion Summit, split the industry's sustainability efforts into four stages: scattered, one-off actions; then building a team and putting named people in charge of a brand's sustainability work; then folding sustainability requirements into every part of the business — supply chain, logistics, factory conditions; and finally building new business models and scaling them.

"Small and mid-sized companies can get stuck in the first three stages. The real force for change and innovation is still the big companies."

By Chalmer's account, at least three short-term questions run through the whole transformation — tracing products, using water and chemicals efficiently, and working conditions — along with three long-term ones: new materials, circular fashion systems, and pay systems plus automation in the supply chain.

Dai Tana, executive deputy general manager of the brand division at Erdos Cashmere Group, thinks Chinese companies can be the ones driving that innovation, and that they hold an unusual advantage: "Foreign brands don't control 90% of their supply chain. Chinese brands, because of how they grew up, have a vertically integrated one — from raw material to production to packaging, sales, and brand marketing, most of it is in their own hands."

The changes she describes so far include making recycled cashmere by collecting cashmere from partner brands and reprocessing it; offering customers centralized cleaning and care and centralized alteration; and reading online sales data to judge inventory more accurately and reorder quickly.

JNBY launched its eighth sub-brand in June, an eco-minded casual sportswear line for men called REVERB by JNBY, with the German designer Tillman Lauterbach as creative director. Lauterbach started working on sustainable design 15 years ago, but one problem kept coming back: he was too small. "We only work with first-rate suppliers, but once you work with them they turn out not to be as first-rate as you imagined. A small company can't meet the minimum order quantity, so we may not get the materials we need, or the cost goes so high the thing isn't commercially viable."

"A few years ago I decided I only wanted to work with companies that think about the whole picture. In the '90s and around 2000, margins in the apparel industry got thinner and thinner, and plenty of companies gave no technical thought at all to sustainability or the environment. After we teamed up with JNBY, we spent a full year and a half preparing the supply chain," Lauterbach said. "Five years ago that would have been impossible."

In China, What Does an Extremely Young Luxury Customer Mean?

"A Chinese household spends more than 70,000 yuan a year on luxury goods. By 2025, Chinese consumers' direct and indirect luxury spending worldwide will rise from 32% to 44%, and will account for three-quarters of global luxury growth." At a conference for fashion bloggers and new media hosted by Look, Farfetch's Greater China president, Judy Liu, used these numbers to argue how much the Chinese market matters to luxury.

By Liu's figures, the average age of Farfetch's Chinese users is just 31. Data released by Tencent points the same way: the average Chinese luxury shopper is 28, far below the global average, and 18- to 25-year-olds make up as much as 36%.

Second, they are spread very widely across the country. Sort China's 2,000-plus cities into seven tiers and 50% of luxury shoppers live in Beijing, Shanghai, Guangzhou, and Shenzhen plus 11 other first-tier cities; the other 50% come from everywhere else.

Luxury has gone digital faster here than in other markets. In 2012, when Chinese e-commerce was only starting out, luxury had not yet been pulled in; by 2017 more than 50% of luxury searches had moved online, 70% to 80% of those entirely on phones. Sixty percent of shoppers search online and buy in stores, and 12% buy online directly. According to Wang Jiaqian, partner and managing director at Boston Consulting Group, China has built a highly concentrated system: talking to friends, buying, paying, after-sales service — every function can meet at a single point of contact.

Which means luxury brands in China have to run a market strategy almost entirely unlike the one they run everywhere else.

At the BoF forum, Gucci CEO Marco Bizzarri mentioned the importance of "flexibility" five times in 20 minutes. He and Ermenegildo Zegna, CEO of the Zegna Group, who spoke after him, arrived at the same point independently: "With our local team in China, we don't tell them what to do — they tell us what we should do. In this process we need to give the local team more autonomy. As we grow, people may assume we want more control, but that really isn't so." "In the past things flowed more from West to East; now they flow more from East to West, especially from China to the West. That is a very fundamental change."

Weng Yixi, Bulgari's Greater China brand communications director, defended the value of the brand's ambassador Kris Wu: "It is precisely because we signed Kris Wu that we can reach a new generation of consumers born in the 1990s."

Zegna said at the forum that to keep up with a changing market, his company had been extending its product lines since 1991 from menswear into made-to-measure, sportswear, and footwear, among others. To vertically integrate Zegna's own wool mills with its retail arm in China, the company had also just bought Thom Browne — because that brand was growing fast in this market and looked young.

Zegna's other preoccupation was mobile payments: "The Chinese market is four to five years ahead of Western markets. If we don't study it, we fall behind. We were among the first merchants to take UnionPay, Alipay, and WeChat Pay, and we have kept watching how it affects our business so we can carry it back to our Western markets."

In China, Department Stores in Transition Open a Door for Foreign Brands

For a while before Fashion Week began, photos of Li Ning's show at New York Fashion Week went round on social media.

Next to real design innovation, what made Li Ning's clothes look disruptive was how dated people's picture of the brand had been — but getting that stage at all came down to Fang Tao, CEO of Xunchi Fashion.

Last year Xunchi signed a five-year exclusive strategic partnership with the CFDA, which organizes New York Fashion Week, to take Chinese designers to New York and bring CFDA member brands into China. Over the past two seasons Fang and his team picked Peacebird, Li Ning, Chenpeng, and Clot, then Particle Fever, Angel Chen, and JNBY — domestic brands made up nearly half.

Fang is a practical man. He has more than a decade of consulting experience in the fashion business and has surveyed over 300 prefecture-level cities and more than 600 county-level ones. His reading is that the gap between retail channels in those markets and in first- and second-tier cities is closing, while the middle class keeps growing. Given that, he believes hooking up department stores that need to reinvent themselves, foreign brands that want into China, and domestic brands that need to change holds more potential than the fashion news business itself. Besides the CFDA deal, his earlier attempts included a crossover between Opening Ceremony and Daphne — and sending Li Ning to New York was, of course, part of the same thinking.

At Shanghai Fashion Week, two American designer brands under the CFDA, Ovadia & Sons and Colovos, showed at a Chinese trade show for the first time. The two are positioned as luxury streetwear and eco-friendly denim, with retail prices from $200 to $1,200 and $200 to $600 respectively.

Shimon, the designer behind Ovadia & Sons, sounded like a foreigner meeting China for the first time, declaring with great enthusiasm how much inspiration he had drawn from the old people doing tai chi in Fuxing Park, in white silk robes, green beaded necklaces, and sunglasses. Fang Tao put it more plainly: "We picked him to show not because of any Chinese elements, but because few domestic brands make streetwear for slightly older men, and his positioning fits exactly."

Fang's plan may well work. Every crossover he has tried has managed to stir up the media and social networks. More to the point, he has a sharp sense of what each side is good at: foreign brands that can supply mature design and product, and Chinese channels that understand how Chinese shoppers behave.

He is not the only one who knows it, of course. The Lebanese couture label Mikael D had just opened a flagship store in Beijing, and Shanghai Fashion Week was its third show in two weeks. In interviews the designer said again and again how important the Chinese market is and how he insists on meeting clients himself to design them "romantic, dreamlike, fairy-tale gowns," while SIFS, the agency handling his promotion, came up with a blunter line: "This is the designer who made the custom wedding dress for Hannah Quinlivan and Jay Chou's wedding."

In China, the Point of a Blogger Is Selling Product

Zhang Wei, one of the founders of the fashion blog Shiliupo, said: "Around 2014, when the luxury brands first came to us — Dior, Cartier, that sort — what they wanted wasn't to sell product; the point was brand promotion. By 2017 they had put their own e-commerce online and started pushing all kinds of limited editions, and what they wanted from bloggers turned into selling: every post now has to carry a purchase link."

Zhang Wei's wife, Shiliupo, was among the first bloggers to do fashion on WeChat, and even now the studio has only five people. They publish two items a day: the lead post is original, the second is promotion. Last year they opened a "Shiliupo Corner Store" with Look, and last year's Black Friday brought in 1.41 million yuan, at an average order of 2,800 yuan.

Becky Li is the clearest example of a blogger who took outside investment and grew along the familiar path — a star-style operation like that of the Italian fashion blogger Chiara Ferragni. Besides deals with brands such as MINI, she has launched her own label, dropping limited runs of new pieces on a WeChat mini program at regular intervals, and she turns up in person at fashion and lifestyle events.

But on the whole this logic always ends up at the same words: traffic, IP, hit products, selling, monetizing. As Look's founder Yan Ming said when he explained what mini-program e-commerce is for: "The first advantage of independent media accounts is traffic — they have very good users. The second is strong content. The third is that they need a supply chain, product and technical capability, and service capability. The last is outsourced operations. Put all of it together and it becomes a closed loop."

For the fashion industry, though, a healthier blogger ecosystem would be a varied one: top bloggers, and also small and mid-sized ones each with a character of their own. Not everyone has to take the product-catalog route — the good-looking ones can become stars, the ones who can plan can do creative work, the ones with an eye for merchandise can open their own shops.

And this selling approach is no longer confined to bloggers at all. Shi Saifei, sales director of the fast-moving consumer goods center in the industry business department of Tencent's Online Media Group, spoke with relish at the BoF forum about the business model behind Produce 101: "Eleven young women, and we had them try lipstick shades — fans would buy out a shade to support their favorite. Behind this is young people's real need for a new youth culture. These young women may be where those young people project their heroic dreams, and we can absolutely turn that into buying power. Right now the attention that premium IP generates can make the path to purchase very short, and it fits how young people consume today, and at what pace."

Everything comes back to consumption. Only consumption, it seems, can make words, taste, and sentiment feel solid. It is the business model fashion bloggers cannot escape — Shiliupo appears to want out of it, by refusing investment, say, and repeating that the trust between her and her readers is the one thing she cannot do without — but that will not change what fashion is in the commercial world, a fragile thing: manufacturing desire, consuming desire.

Thanks to big companies, the entertainment business, and social networks, all of it is now moving faster and faster.

Cover image: Susan Fang 2019 SS. Photographer: Lin Weiqi.