Market entry in China for Apparel manufacturers

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The Chinese E-commerce Market – International Players Want to enter China’s market

After seeing impressive performance of the domestic brands that have gained so much through Internet Retailing, International apparel manufacturers also want a piece of the action.

Indeed, with over 100 new stores, opened in China in 2011, 30 of which were Zara,  and an annual profit of 2.6 billion USD in 2011, the foreign apparel manufacturer market showed a figure of 11% up compared to the previous year. Generally speaking, they expanded online business in China in 2011. Nike and Levi Strauss, by launching different product line for online sales channels, reduced priced competition between online and store-based retailers. But how these brands can be insured of a successful market entry in China?

Macy’s Online Strategy – an example of Successful Move in China

Macy’s, although offers international shipping on Macys.com to Chinese consumers, understood that the English-based website set up a hurdle for customers in China, even with the competitive advantage of being able to ship goods to consumers from warehouses in China and hence without duties or tariffs. Therefore, to met the success in their market entry in China, Macy’s invested 15 million USD in the VIPStore, one of Chinese foremost online retailers selling luxury brands founded in 2009. Macy’s also began selling private label merchandise in China on Omei.com, a website operated by VIPStore selling western luxury and fashion commodities.

Being Online Without Physical Presence – Not a Good Idea in China

Led by the wise move of going online in the market entry in China, whether it is necessary to set up physical stores becomes a problem. But according to a recently conducted market research in China, the idea of having no physical presence may not be an advisable choice for apparel retailers. One reason is that for many Chinese young consumers, who are the main force online, the brand popularity and awareness is a great factor when they are looking to buy clothes. Without physical existence, it is not easy to establish recognition of the brand. Moreover, plenty of Chinese consumers tended not to believe in websites as a result of online shopping scandals. Not to mention the inconvenience of not being able to try on clothes when shopping online.

However, the Social Network can help the brand to avoid these difficulties, by reinforcing consumer trust and being a tools to develop a great Branding strategy.

Possible Consolidation and Future Prospects of Apparel Internet Retailing in China

As international players entering the internet retailing market in China, a growingly more competitive market can be expected and the collision will be inevitable. Consolidation will be intensified by the competition between distribution channels. It seems that with the will of international brands to expand, local players do not have competitive advantages like advanced logistics systems and extraordinary consumer service.

As e-commerce further develops in China, international style-savvy brands that fluidly integrate their online and in-store platforms seems to be able to find the rewards far outweigh any investment. For apparel manufacturers over the world, the potential of the Chinese e-commerce apparel market is currently a once in a lifetime opportunity.

Amy Wang
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marketing research china
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