As domestic consumption continues to grow, an increasing number of international brands are looking to tap into the expansive Chinese market. When foreign brands enter China, how can they ensure sustainable growth through strategic brand development?
- From Single Offline Channels to Competing in Complex Business Ecosystems
For International fashion brands entering the Chinese market, building a comprehensive online shopping matrix is essential. In 2022, China’s online retail sales reached RMB 13.79 trillion, marketing a 4% year-on-year increase. Of this, online sales of physical goods totaled RMB 11.96 trillion, a 6.2% increase, accounting for 27.2% of total retail sales.
Online shopping platforms act like large shopping malls, but unlike traditional malls that cater to regional consumers, online platforms serve a national audience. This means online platforms only need to label products and target the right consumers for target promotion.
Source：国家统计局
In contrast, the offline market is more competitive and complex, requiring brands to excel in areas such as channel alignment, visual presentation, product accuracy, and customer service. Additionally, they must establish relationships with landlords, channel partners, and distributors. To generate a strong word-of-mouth and attract additional customers, brands must standardize and scale operations. However, this requires efficient backend systems and remote management capabilities, promoting a shift in how business operators approach the market
- Cultivating the Brand’s independent “Explosive Product” Strategy
Adapting to local business practices while maintaining original brand strengths is crucial for foreign brands entering the Chinese Market. This challenge arises from differences in culture, aesthetics, business environment, and consumer habits.
The success of “explosive products” can drive significant traffic to platforms and boost performance. As a result, in product development and operations, online platforms are consistently focused on creating premium, standout products
What defines an explosive product? There are three key criteria:
- Consumers should have expectations before making a purchase
- The product should surprise consumers at the time of purchase
- Following the purchase, consumers should be compelled to share and recommend the product on social media
However, offline stores often rely solely on individual products, which struggle to drive significant sales due to stable regional traffic, high rent, and operational costs. Therefore, factors like linkage rates and customer unit price have become crucial for the success of offline stores.
Effectively utilizing KOL and KOC marketing strategies can be highly beneficial
- Focus on the Core Advantages of Fashion Brands
For emerging foreign fashion brands, consumer purchasing decisions are often influenced by celebrity and idol endorsements. When fans make purchasing choices, the impact of fan-driven traffic can outweigh the intrinsic value of the product itself. However, for sustainable growth, brands must develop an identity anchored in both brand values and core products.
To achieve this, it is important to understand the core needs of Chinese consumers, focus product development on the proper direction, and cultivate a distinctive, personalized brand DNA before finalizing the brand’s style. Collaborations with iconic IPs can further enhance the allure of the brand and strengthen the product’s market appeal.
- Adjust Regional Market Development Strategies
In the initial stages of offline expansion, many foreign brands lack a comprehensive market entry and development strategy. As a result, store locations often span long distances, from Harbin in the north to Haikou in the south, and from Shanghai in the east to Xi’an in the west. However, widespread coverage places significant strain on company operations, from product development and ordering to operational logistics. To address these challenges, it is essential to adjust and refine the market development strategy in the early stages.
Emerging foreign brands should align their market strategy with their business goals and core strengths. This involves evaluating the growth potential and single-store performance in key cities, prioritizing those with the highest development prospects. By concentrating efforts on core cities, brands can secure high-quality retail channels, eliminate underperforming stores, and prevent resource waste from overstocking. In addition, it is vital to establish a clear personal structure and allocate adequate time to build a competent offline operations team.
- Key Categories to Prioritize for Market Entry
To begin, incremental product categories should first be tested online to gauge consumer acceptance levels. Based on the results and aligned with the company’s development and operational costs, brands should focus on solidifying mature core product categories to minimize risk with product development.
In summary, traffic represents how many people notice a product, while volume refers to the impression the brand leaves in the consumers’ minds. While traffic can generate short-term gains, it relies on constantly chasing trends, with no guarantee of staying ahead in a fast-changing market.
When traffic-driven advantages fade, brands must reflect on what lasting value they bring to the market. Building volume is a deeper process of defining identity and purpose. When a brand is confident in themselves and projects a vision for the future, it can establish a lasting presence in the consumer market.
As we enter an era of brand-driven growth, we aim to collaborate with more brands to discover unique identities and create collaborative brand value.
