with contributions from Casey Hall
 on August 4, 2017

HONG KONG — Chinese domestic spending is once again going full throttle. National retail sales data in the second quarter of the year revved up 11 percent, stunning analysts, and if there was any skepticism about those government statistics, international fashion houses from Kering to Hermès and LVMH Moët Hennessy Louis Vuitton have reported stronger bottom lines, boosted by a rejuvenated China market.The impact isn't being felt in the same way among Chinese fashion brands and retailers, however.RELATED: China Q2 GDP, Retail Sales Beat Expectations >> Growth in the luxury space for Chinese labels seems slow or even stagnant. Little has been heard about Qeelin, the high-end jewelry brand Kering bought in 2013, or Shang Xia, the luxe apparel and home goods venture from Hermès started in 2010.Shanghai Tang epitomizes the latter problem. Acquired in 1998 by Compagnie Financière Richemont SA, the brand failed to find a larger audience or innovate much past its signature qipao dresses, and eventually was sold off to a new Italian owner last month.On the other end of the spectrum, some of China's biggest fashion chains are closing stores en masse. For instance, Bosideng at its peak counted over 7,000 doors, but has closed around 3,000 of them in the last decade — roughly the equivalent of Gap disappearing in its entirety. Metersbonwe's network has contracted from over 5,200 stores in 2012 to 3,700 units in 2015, while Semir has shuttered 300 stores annually over the past four years.Segment by segment, here's what is going on in each space.LUXURY PLAYERSSome took Richemont's disposal of Shanghai Tang as a sign that Chinese shoppers are unwilling to pay luxury prices for something from their own country, but a report this week from consulting firm OC&C Strategy found that attitudes toward homegrown brands have changed dramatically in a short period of time.International brands are disproportionately popular in China, but the number of shoppers who said they like Chinese brands has more than doubled in the span of two years to 46 percent. The survey, carried out between March and April and covering 2,450 people across China, also showed that negative opinions toward homegrown labels dropped to a low of 10 percent from 24 percent."We asked them what would be the number one reason why you would not buy a Chinese brand," OC&C partner Pascal Martin said. "The number-one answer by far — 47 percent of respondents  — said poor design. Not quality, they are fine with quality. If we had done that survey 10 years ago, quality would be one of the top criteria." Moreover, "too expensive" only came in fifth as a reason not to purchase, indicating that Chinese shoppers are happy to open their wallets if they like the design. When asked why they shopped domestic labels, "Chinese elements" were chosen by 39 percent of the respondents, the second most-popular answer. Frank Cintamani, founder of the Asian Couture Federation, said in his experience, Chinese consumers aren't ultimately swayed by a brand's origins. "[They] are looking for quality, they are looking for innovative design and they are looking for value, rather than where a designer is from," he said. brands, at least in the case of Shanghai Tang, aren't able to convey an authentically Chinese message. Its most recent creative team was headed up by Europeans, who commuted between France and Hong Kong, which probably did it no favors."[Chinese shoppers] don't want to continue to look at designs of so-called Chinese-style fashion through the perspective of the Westerner and the romantic vision of Chinese culture," said Joanne Ooi, who once served as creative director of the brand. "That has always been the problem."That stands in contrast to the success of Chinese haute couturiers Guo Pei and Yiqing Yin — both have been invited to the Chambre Syndicale de la Haute Couture. Guo said in February that she would begin designing a ready-to-wear line too.For Qeelin and Shang Xia, it could come down to more of an issue of time to establish oneself.Louis Houdart, the founder of China-based brand agency Creative Capital, said, "In luxury, either you have 100 years of history and expertise in something — Hermès, for example, is known for leather, horses — with a fully owned supply chain, or a star designer like Christian Dior, Marc Jacobs, or eventually the combination of both."

Shang Xia offers high-quality Chinese craftsmanship in apparel and home goods; however, its workforce is not exclusive to them. "This is very different from Hermès, where all the craftsmen work exclusively for Hermès in their own atelier," Houdart said. "It would probably have been easier, faster and cheaper for Hermès to purchase an older silk factory in Suzhou and relaunch it."

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