China 'the promised land' for western fashion

Asia and primarily China are seen by western fashion companies as the ‘promised land’. Not for production, rising wage costs and the appreciation of the Yuan means production in China is not as cheap as it once was, but as an export market.

That was the sentiment held by foreign exhibitors at the HKTDC Hong Kong Fashion Week that took place mid-January. The Chinese consumers hunger for expensive designer clothes and a growing number of rich Chinese can afford them. During the fashion fair, on the eve of the Chinese New Year, people queued in front of the Hermès, Chanel and Louis Vuitton fashion palaces on the Canton Road (Kowloon). Not to look but to buy.

It is not only the luxury brands which profit from consumer spending. In recent years there has been a growth in the number of clothes chains in the lower segment. Most recently Gap and Forever 21 opened their doors in Hong Kong. The city is seen as the gateway to the Chinese mainland. The market potential there is enormous: 18 per cent of the country’s total clothing consumption comes from the 54 per cent of the population still living in the deprived, rural areas. Areas which the Chinese government wants to rapidly develop. Consultancy agency A.T. Kearney has labelled China as the most attractive market for retail expansion, followed by the United Arab Emirates, Kuwait and Russia. The Boston Consulting Group predicts that revenue from the fashion market in China will triple in the coming ten years to more than 204 billion (US) dollars (about Rs 1,007crores).

"Everyone is looking to China. Now that the economic crisis holds the world in its grip, China is seen as the saviour” says Vincent Fang, director at the HKTDC Hong Kong Fashion Week. Although the value of exports is still greater than imports, the latter is growing faster. Figures from the HKTDC show that the export of clothing and accessories from Hong Kong rose by 2 per cent in the first 11 months of 2011 to 22.4 billion US dollars (about Rs 1,106 crores). The value of the imports rose by 4 per cent to 15.7 billion (Rs 775 crores).

As well as the consumerism, the investment potential is also an interesting aspect within this market. Amedeo Moretti from the Italian shoe brand Alberto Moretti came to Hong Kong to attract retail customers. "This is the time to expand into Asia," says Moretti and indeed his luxury moccasins with studs and glitters are popular. Not that Moretti is selling them one by one, in Hong Kong he found parties that primarily wanted to open stores for his brand. "The Chinese prefer to do business with the Chinese," he says. That is why the Italian family business, that does business globally and sells to department stores such as Barney's, Harrods and Beams (Japan), is now going into sea with a local, Chinese partner. The first Moretti store will open in Hong Kong in July.

The five year plan for the textile industry recently published by the Chinese government demonstrates that local competition shouldn’t be underestimated. The development of successful Chinese clothing brands is one of the plan’s main targets. The aim is to establish five to ten Chinese fashion labels that attain ‘international success’ and a minimum of a hundred, recognised, national clothing brands for the domestic market. During the last edition of the Hong Kong Fashion Week organisers shifted the focus from production to design in order to stimulate the creative industry. During more than twenty fashion shows both local and foreign designers, like the British Craig Lawrence and Risto Bimbiloski from Paris, took the stage.

For Mette Birk Jensen, owner of the Danish, luxury label 'Birk', China is not the labels’ saviour but the starting ground for the brand she began with her sister. Birk produces typical, Scandinavian knit wear and jewellery with Danish amber which she sells in Hong Kong. The brand participated in the Hong Kong Fashion Week for the first time this season. "It is the biggest fashion event in Asia,” says Jensen, “the trade fair is an ideal platform to reach buyers from the entire region”. Yet Birk focuses on China. “The Chinese economy is growing and growing. In contrast to Europe there are increasing numbers of consumers willing to spend their money on quality products. That’s why we are concentrating primarily on the Chinese market."

From our correspondent

Photo: Hidy Ng (Hong Kong)