For anyone who is familiar with the approach successful Chinese brands take these days, this strategy would sound fairly normal: Constantly launch a slew of new products, and see what sticks. Heavily market these products through KOLs and social media, and continually analyse consumer data, swiftly adapting to the insights.
As these increasingly savvy Chinese brands spread their wings, we are starting to see this strategy effectively used in markets outside of China. Whereas many Chinese brands’ overseas ambitions have been focused on nearby markets in Asia, it’s likely that we’ll see more of them become legitimate competitors in our home markets in the West.
A good example is the mysterious online retailer Shein (pronounced She-in) – a brand that most over-30s have never heard of. Whilst China hasn’t traditionally been known as a fashion-powerhouse, it is making a massive impact with Gen-Z apparel buyers in markets such as the US. Shein counts 120 million as registered users of its app, of whom over 30 million are active daily. In May this year, it overtook Amazon as the most-downloaded shopping app in America. Most amazingly, it grew from 13% of the US fast fashion market in January to 28% by mid-June, flying past H&M (20%), Zara (11%) and Forever 21 (10%) to lead in sales.
Shein’s impact is representative of the structural differences that Chinese businesses have versus those from other countries. For a start, Chinese brands focus on growing revenue and customer acquisition – largely fuelled by venture capital – rather than the profit-based approach that most western brands take. As a result, they invest a much larger share of revenue in marketing, and focus on hot platforms and KOLs. Shein has engaged Instagram influencers and celebrities like Katy Perry and Lil Nas X.
As China has become the world’s factory, brands see what is being made early on and can quickly imitate and improve. The enormous amount of competition has driven factories to be leaner and faster to stay alive. As many of them grow, they are utilising China’s digital ecosystem to launch their own Consumer-to-Manufacture (C2M) model businesses.
Because most Chinese companies don’t have heritage brands to protect, they are much less risk averse than established western brands, and are prepared to try a lot more things. This lean startup, easy-come-easy-go approach has now become part of many Chinese brand’s DNA. Everyone who has grown up in China has only ever known constant change, which has made them very adaptable and quick thinking, particularly in the way they run their business.
These common characteristics of China have contributed to Chinese brands increasingly muscling their way onto international business tables. 11 more mainland Chinese and Hong Kong businesses joined the Global Fortune 500 list this year, taking the total to 135 – well ahead of the 122 US companies on the list. 18 Chinese brands rank on the Kantar BrandZ 100 Most Valuable Global Brands list. Chinese companies will become increasingly visible, as we saw with their four brands – Hisense, Alipay, Vivo and TikTok – among the 12 sponsors at this year’s postponed Euro Championship.
For brands in China, understanding the way Chinese competitors operate is vital to success. But with Chinese brands like Shein increasingly likely to contest western markets, understanding the way they do things is also important for marketeers and strategists focusing on other countries, even their own domestic markets. As a starting point, we’d suggest subscribing to our very own Weekly Skinny newsletter, but for a deep and tailored understanding of these strategies and how best to counter them, please get in touch to see how China Skinny can assist.
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