Post date: Oct 01, 2012 3:56:12 PM
SHANGHAI, CHINA (REUTERS) - While luxury retail sales continue to dive in the Eurozone due to the ongoing financial crisis, China has emerged as a huge market for fashion.
Chinese buyers and commentators are flocking to Paris Fashion Week in ever-increasing numbers, but are now searching out niche designers and boutique brands as much as the big names that once reigned supreme in the world' most populous nation.
Due to the emergence of middle- and affluent-class consumers in China, China's fashion market will triple over the next decade, to more than RMB 1.3 trillion by 2020, according to a recent report by The Boston Consulting Group. The latest Hurun wealth report, released in August 2012, counted 1,020,000 millionaires (possessing more than RMB 10 million) in China - the highest national average- and 63,500 "super-rich" (possessing more than RMB 100 million) Chinese.
Yet profits from this gold mine of a potential retail market are no longer guaranteed for European labels solely on the basis of their cachet. In the past, Chinese shoppers typically went for big name brands like Louis Vuitton, Dior and Chanel, preferring clothes bearing flashy logos over more discreet designs that emphasized craftsmanship. Chinese consumers are generally less style-conscious than their Western counterparts since they never truly experienced a significant fashion movement. For example, during the Cultural Revolution when every trace of individualism, including personal style and fashion sense, was stamped out, London was experienced the Swinging Sixties and the avant-garde fashion of Mary Quant and the Beatles.
However, Chinese clients' tastes are quickly evolving. The fact that a brand is simply "Made in France" doesn't cut it anymore says Vogue China Fashion Editor Yoyo Yao.
"Perhaps at the very beginning Chinese consumers were more about wanting to make a statement like, 'I'm wearing Dior, I'm wearing this and that label,' but now it's become more refined. Women's tastes are becoming more discerning. They'll seek very young labels, not just chase after the big name labels," she told Reuters
Smaller, up-and-coming French labels with lower price points like Carven and Damir Doma are catching the eye of younger Chinese clientele says Chen Qing, a former buyer in Paris who now works as a journalist for the Hong Kong-based fashion TV channel EMG. "These days, Chinese clients like more unique designs and more refined construction, so I think that Carven is a brand that will have a big market in China," she said.
The noticeable decline in conspicuous consumption on the Mainland may explain why certain European labels that previously performed so well in China has suffered in recent months. The latest victim was British luxury goods maker Burberry whose sales plunged more than 20 percent this past September after publicly declaring that its same-store sales had flat-lined in the last quarter. "China is a significant contributor to the decline," Burberry CFO Stacey Catwright had announced at the time.
However, Burberry's highly-publicized woes haven't scared off other European fashion labels from staking their claim in China. Though wealthy Chinese shoppers may not be showing off as much, they are still spending and for this reason, the Asia-Pacific region remains a top source of growth.
At the Mugler show in Paris, the president of Clarins Fragrance Group and the Thierry Mugler Brand Joel Palix told Reuters: "We have a very good business partner in Hong Kong, the company Joyce, that helps us with our development in Hong Kong and in Greater China. China is one of our priorities because it's a very important market for fashion."