By  on December 28, 2012

SHANGHAI — When it comes to fashion in China, the focus tends to be on foreign brands entering the market and quickly expanding here. They tend to overshadow China’s own crop of homegrown brands — some of which have thousands of stores but practically no name recognition internationally.

That is starting to change. Just this year, Bosideng, a massive Chinese outerwear brand, opened its first international store in London. Also this year, LVMH Moët Hennessy Louis Vuitton-backed fund L Capital Asia and other investors snapped up a minority stake in Chinese contemporary clothing company Trendy International Group. Earlier this month, French conglomerate PPR said it had acquired a majority stake in Chinese fine jewelry brand Qeelin. Meanwhile, Chinese fast-fashion giant Metersbonwe is considering entry into the North American and European markets.

In many cases, Chinese textile manufacturers “who cut their teeth” making apparel for Western retailers decided to start their own fashion lines for the domestic market, according to Torsten Stocker, a Greater China partner at the consulting firm Monitor Group.

These players were able to expand at breakneck speed by working with diverse networks of distributors, franchise partners and business partners. “Basically, [the brands] didn’t have to invest their own capital,” Stocker said. “That is how they managed to scale up so quickly.”

Yet many say there are signs that the initial boom for domestic retailers is coming to an end, especially as consumer tastes become more sophisticated, exposure to foreign brands in smaller cities increases and China’s economic growth slows.

Now simply opening stores and selling products does not work. “Very few have merchandisers who can put together a real look and feel for the season. There are very few people who can manage the retail shops at an operational level. There are very few people who can actually build a brand,” Stocker said. “The slowdown in demand is just exposing some of this.”

Analysts say they expect some domestic fashion brands to fail while others will close stores, streamline operations and adapt to a new, more competitive marketplace. Nevertheless, the sheer size and wealth of many of China’s big brands means they likely will be around for a while, and perhaps even become household names in markets beyond China.

Here are seven of China’s biggest fashion brands worth watching:


METERSBONWE


Metersbonwe is China’s answer to Hennes & Mauritz. Founded in the mid-Nineties by Zhou Chengjian, an entrepreneur from Zhejiang Province, the brand is listed on the Shenzhen Stock Exchange and has more than 4,500 stores on the Mainland.

Known as one of China’s most famous casualwear brands, the retailer is popular for its affordable fashion targeting young customers. The company’s revenues for the third quarter ending Sept. 30 were 2.6 billion yuan ($416.3 million at current exchange), a 13 percent decrease from the same period in 2011. Profits for the third quarter were 319.7 million yuan ($51.3 million), down from 369.2 million yuan ($59.2 million) in the third quarter of 2011.

Metersbonwe is gearing up for international expansion within the next several years, according to a company spokeswoman, who said the retailer is eyeing North American and European markets. She could not confirm any plans for specific store openings outside of China.

While Metersbonwe is the company’s main brand, parent company Metersbonwe Groupalso has a number of other smaller labels, including Me & City, which targets young white-collar workers seeking fashionable clothes, and urbanwear brand Tagline.

According to Jeff Zhou, an associate with Mandarin Capital Partners in Shanghai, Metersbonwe is beginning to struggle as it faces stronger competition from brands, like H&M and Zara, that are expanding in China. “I don’t think Metersbonwe will disappear, but in the short term, they must figure out what to do. The next decade could be very difficult for them,” he said.

 

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