The top 20 domestic Chinese brands accounted for 60 per cent of all garment market sales in 2021, up from 54 per cent the previous year, according to the most recent McKinsey report, while sales of foreign brands fell from 46 per cent to 40 per cent.
52 percent of the Chinese consumers polled preferred domestic fashion apparel labels to global ones, according to the same report. Likewise, 42 per cent of Chinese respondents stated that they favour domestic beauty brands over international skincare and cosmetics products.
Thanks to effective localised tactics that incorporate social media outreach to customers via key opinion leaders (KOLs) and key opinion consumers (KOCs), Chinese fashion and luxury businesses are now exceeding their international competitors.
Global fashion and luxury businesses will need to adjust to secure the nation’s growing middle class as a major consumer demographic as China’s urbanisation rate is predicted to jump from 50 per cent in 2010 to 70 per cent by 2030. According to the McKinsey report, more consumers will have disposable income as a result of the increased salaries of the middle class.
The report also highlights how local Chinese firms have improved their competitiveness by implementing shrewd and efficient operational strategies as well as superior supply chain management. In order to better ‘reflect local tastes and trends,’ foreign brands can localise product development and packaging while also stepping up their D2C capabilities in China.
L’Oréal’s newest smart operations hub in Suzhou, where the cosmetics giant anticipates launching its newest intelligent centre by the fourth quarter of this year, is an illustration of this strategy. To speed up the local supply chain process, the hub will handle warehousing and packaging.
Similar to how Procter & Gamble did, the American retailer of lifestyle consumer products revealed earlier this year that it will relocate its supply chain centre from Europe to Guangdong. The move will make the new facility the conglomerate’s largest production base and significantly streamline its operations in China.
