Video: Branded New China

Armani. Gucci. Louis Vuitton. China’s urban youth talk about spending nearly two months salary on a handbag – and the identity, culture and social status that come with the label – in this Mandarin Film documentary for Current TV:

Says one Shenzhen resident:

“My parents are from the countryside. They are much more conservative. We have a different way of thinking. … Especially when it comes to spending money. They just don’t get it.”

Considering this label consciousness, it will be interesting to watch American Apparel’s China play, says Danwei:

The announcement on their own web page says the following:

In the next few months American Apparel will be opening its first stores in China with locations already slated in Beijing and in Shanghai.

In a rare industry occurrence, we will be bringing Made in the USA clothing to China and we intend to pay employees there gross wages that exceed the US minimum.

Aside from the fact that the company intends to sell U.S. made clothes and pay above market rates for labor, there is a further obstacle to their success: it is not clear whether Chinese consumers will pay much for clothes that have no obvious brand and therefore no obvious status marker.

Earlier this month, Shaun Rein of the China Market Research Group noted in BusinessWeek that global companies are increasingly targeting China’s young consumers:

In 2007 China posted 17% growth in retail spending.

Much of this continued growth is fueled by Chinese under the age of 32. My firm…conducted in-depth interviews with 500 Chinese between the ages of 22 and 32 in 10 cities to gauge whether fears of a global slowdown would influence their shopping habits. The answer was a resounding no. A full 90% of interviewees said they expected to “spend considerably more” in 2008 than they did in 2007, and the vast majority was “very optimistic” about salary potential in the next two years, with the majority expecting salary increases of 10% to 25% in next year.

As selling to Chinese consumers becomes more important to multinationals’ bottom lines, the key to winning in China is to understand the needs and motivations of Chinese youth. Many multinationals find their core target market in China is much younger than in other countries. Companies, therefore, need to rethink the products they introduce to China, the sales channels they use, and the marketing-communication strategies they employ. It is no longer acceptable to take what worked elsewhere and transfer it here. China is too important a market for such lazy localization.

More from China Digital Times on China’s middle class and consumption:
China’s Classes of Haves
The New Rich in China: Why There Is No New Middle Class
Cooler Living for China’s Youth?
Chinese Students a Major Market Force

April 18, 2008 12:23 AM
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