China Insight: How Can Fashion Enterprises in China Consolidate Their Moat Three Years Into Pandemic?

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As Shanghai and other Chinese cities continue their weeks-long lockdowns, fashion and beauty brands are having to adapt the way they do business.

In the 1990s, attracted by Hong Kong’s developed market economy and the huge potential of the mainland, foreign fashion and luxury companies that initiated globalization dropped their “anchor of development” in Hong Kong. The city became the pilot window for international fashion brands to test the Chinese market and communicate with local consumers.and the fifth largest financial center in the world as the first special economic zone.

• Department store group Lane Crawford provided free outdoor electronic advertising screens for charity promotion, prepared fresh vegetable gift packs for Shanghai customers who are self-quarantining at home, provided gift boxes for customers containing Protector Daily masks with professional-level filtration and elegant designs and protective spray sets from Bondi Wash, an antibacterial plant brand from Australia.

There are numerous estimates as to the economic impact of the citywide lockdowns. Public data shows that Wuhan, which was closed for 2.5 months in the first quarter of 2020, saw gross domestic product drop from 360 billion yuan, or $55.3 billion, to 200 billion yuan, or $30.7 billion, an average loss of 2.1 billion yuan, or $32.3 million, a day.

Lets Group , the brand management company behind Into You, following Perfect Diary and Florasis, is representative of new consumer brands in the beauty industry, and is focusing on channel development in Europe, America and Southeast Asia after completing its expansion in the Japanese and Korean markets. At the beginning of this year, Lets Group received an angel round of financing of 30 million renminbi, or about $4.6 million, from GSR Ventures and Fosun RZ Capital.

At the same time, research and development into 3D technologies saw explosive development. For example, Kashion and Kimhaie, as the two leading ODM enterprises in China, have established a large digital style library and a digital fabric library of 40,000-plus varieties, respectively, giving them a competitive advantage.

Another example is the Thai Ho Group, which established a factory in Kaohsiung, Taiwan of China in 1980 and moved to the Shanghai area in 1992 to set up a production base. The beauty company has set up branches in the Taiwan as well as the Shanghai and Hangzhou regions of China and has also collaborated with its branches in Japan and North America as it continues to implement its mid- to long-term plans despite COVID-19.

 

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