After a decade of a premium and fast-fashion boost, we’re entering an era where the premium fashion category is losing ground as consumers are continuing their migration toward new beauty, luxury and travel/experience segments.
Looking back at 2019, the fashion industry specifically in the fast and premium category has taken a big hit in recent years. This is due to a more mature market, changing needs and expectations of a demanding social consumer. As a result, premium-fashion-focused agencies are experiencing much smaller budgets than even just two years ago, compacting and merging services together. Due to the current pandemic, this is now more relevant than ever before.
We need to understand how to adapt to the market needs from a social media perspective and how to create content for different platforms and angles to be more flexible. In China, social media and e-commerce are very monopolized, and there’s no change that seems to be forecasted for the near future.
For a fashion and lifestyle brand interested in entering the Chinese marketplace, a piece of key advice I’d give is to trust your local partners for content. It’s really important, as what may work in Western countries as a unique selling point won’t necessarily work in China. Moreover, if your brand decides to enter on Chinese platforms such as Tmall, they will usually also require you to have specific content that matches their shopping festivals, such as 5.20, 6.18, 11.11, etc. The same logic applies for social media here, so it’s hard to just copy and paste or replicate content from other global markets. This is why we create local content for most of our clients.
As key social platforms — such as Little Red Book and Douyin — become more powerful with stronger bargaining power, they also enforce their own monopolistic policies, starting from what type of brands can enter their platform through ad buys to the type of content brands and influencers can showcase, all the way to the type of influencers brands are allowed to collaborate with for “soft” ad buys. If this isn’t respected, penalties or fines will be conducted.
These key platforms are also implementing their own talent agency as a strategy to have more control over the content released, where you can only go with the platform’s official talent partner agency if you want to officially work with bloggers. Many brands have been placing their bids on Little Red Book recently, forecasting it to even become the new SEO for Gen Z before Baidu’s search engine, so it’s not a platform to ignore.
Hence, it’s important to understand the actual reality, opportunity and limitations of using these platforms. Social censorship and control have also become more important than ever since the recent political events.
The e-commerce space, however, is probably one of the most monopolistic platforms of all by its nature. Alibaba, amongst other local platform conglomerates, is so strong that new entry competitors, in general, are not able to compete. Alibaba owns over 55% market share (B2B and B2C) and JD.com owns almost 20%. It’s natural to note that this market power will significantly affect both the e-commerce ecosystem and the social environment.
Recent highlights this last year include Yoox closing its China website and shifting its Net-a-Porter brand to now being an Alibaba joint venture. Fast-fashion giants Forever 21 and New Look both shut down their mainland presence. And in 2018, Topshop was not able to insert and adapt itself into the local marketplace, positioning itself on price point.
To conclude, a patient approach is needed in turbulent times. Finding the right partners and leveraging on the right angle of communication, embracing the monopoly and understanding how to work with it is what’s key to leverage your business further in China. Avoiding it would be a mistake.