The demographics in China are changing and China is growing in various aspects. With over 1.3 billion people living the country, China is potentially the biggest market for clothing. And the population is still increasing very rapidly. Every person of these 1.3 billion is a potential costumer for the fashion industry. But a decade ago China was not very much a fashion consuming country but more a fashion producer for the rest of the world. Nowadays China is one of the most promising markets and a fashion-consuming nation (MovingCities, 2012). A lot of companies are (planning on) opening stores in China. But to make the most of your company, you need to fully understand your costumer, his behavior, motivations, lifestyle and the world they live in.
Their income is one of the aspects that will play a part in peoples purchasing decisions. In China, the annual income per capita is increasing. As given in figure 1, the GDP per capita in 2012 is $6,091.01, four times as high as ten years before, and still rising. That means people have more money to spend. At the same time, households in middle- and affluent-class in China will increase from 50 million in 2010 to 140 million by 2020, according to Lui et al. (2011). And “fashion is among the top ‘trading-up’ categories for such households” (p. 5). The National Bureau of Statistics of China with the figure below confirms the rise of expenditure on clothing.
The fashion industry in China has tripled in market size over the past decade and still is increasing rapidly. As research by Lui, Zhou, Hsu, Jap, Liao and Lou of the Boston Consulting Group (2011) showed, the industry was worth almost RMB 400 billion at the end of 2010. They expect the market to threefold again over the next decade and reach RMB 1.3 trillion by 2020. Researchers He, Li and Ling (2013) made an overview (figure 3) of the fashion market as it is today. They divided the market in different apparel categories with each their own estimated market size, growth forecast, development stage and characteristics. For companies it is important to know what the development stage is of a certain category and what the growth forecast is. In that way they can foresee the competition and the changes within that category. Women and men’s casual wear are both scaling up and rapidly growing. This means penetration is still possible but is becoming harder because of the increasing number of competitors. Within the category Casual Wear, two third is accounted by fashionable casual wear which is growing by 15% annually over the next three to five years according to He et al. (2013). More important for WE is the other third of the casual wear category: the casual business wears, were they are in. This subcategory is expected to grow 20% annually over the next three to five years “thanks to a larger costumer base and wider range of choices” (p. 2).
An other important remark comes from the research of Lui et all. (2011) and is the small share that global brands have in China. As Li & Fung Research Centre confirm: “in China, domestic brands dominate the mass market, especially the lower-tier cities and rural market. They generally have more extensive sales channels than their foreign counterparts” (p. 11). Listings of the top 10 domestic apparel enterprises by sales and by profits can be found in (bijlage) 1. The number of shops most of the global brands opened in China is not even 20% of the number of shops they’ve opened in their home market. For example: Zara has only 147 stores in China compared to the over a 1,000 stores they got in Europe. Although Nike and Adidas have achieved early success and each have now approximately 6,000 stores in China. But Chinese sports brands Li Ning and Anta each has 7000 stores and Metersbonwe and Semir has more than 3,000 stores each (Lui et all., 2011). Their opinion is that “to win a share of the new wave of growth, companies need to adapt their strategies on the...
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