Dior In Crisis In China, but Yet to Apologize on Western Social Media


Dior has become the latest major brand to inflict damage upon itself in China after it revealed a map of the nation that did not include Taiwan. Despite apologizing on Chinese social media, experts suggest that the brand must issue a global statement, or risk being boycotted by Chinese consumers.

Yesterday, Dior presented a workshop at Zhejiang Gongshang University, showing a map that did not feature Taiwan. When a student in the audience questioned the missing feature the presenter stated that Taiwan was too small to be seen on the map. However, the student then pointed out that Hainan, which is much smaller than Taiwan, was featured.

Within 12 hours a video of the episode had been viewed over 1 million times on Weibo resulting in more than 3,000 comments. The mistake by Dior caused outrage among young netizens who are growing increasingly sensitive to the escalating series of cultural and geographic faux pas committed by Western brands.

Dior posted an apology on Weibo within hours, stating they are “deeply sorry for the incident where the wrong description and wrong explanation were made by human resources staff in the campus event.” Dior also claimed that the incident was the fault of an individual employee and did not reflect the views of the company. This has not stopped the spread of the story on Chinese social media, but for the moment seems to have halted what could have become a much bigger crisis.

However, so far, Dior has not chosen to issue a global apology on Western channels, which could cause the incident to spiral if Chinese consumers deem the apology insincere. “When a crisis arises, companies must be fast and take full liability, and there should be no attempt to make excuses or hide behind a veil of legalese,” says Domenica Di Lieto, CEO of Chinese Marketing Consultancy Emerging Communications. “An apology must be broadcast on all Western social media, as well as Chinese. Not addressing the issue on global channels is viewed as disingenuous. Chinese consumers expect a sincere apology to be replicated everywhere as a sign of respect to the global Chinese community.”

Various Western brands have suffered from major losses in sales in China after making cultural or political errors. Noticeably, Dolce and Gabbana has seen its sales almost entirely wiped out in its largest market after its costly mistake involving a promotional video showing a Chinese model clumsily trying to eat pizza with chopsticks, along with a delayed, half-hearted apology to fans. Despite other brands suffering significant losses in sales due to political faux pas, those who apologize immediately tend to be offered a second chance by Chinese consumers.

Versace has also come under fire in recent weeks, after identifying Hong Kong as a separate country to China on a t-shirt. However, perhaps learning from the Dolce & Gabbana controversy last year, Versace reacted quickly, issuing an apology on Weibo roughly 12 minutes after the story broke. Nonetheless, netizens still complained about the absence of apologies on Western social media. Shortly after, the brand’s founder, Donatella Versace, also issued an apology on Versace’s various social media accounts including Facebook, Twitter, and Instagram.

So why do these faux pas keep occurring? According to Di Lieto, the answer is simple. “Companies to various degrees are still thinking with a Western mindset and expecting whatever works in other countries to be more or less suitable in China. If senior executives and anyone within companies involved in communication, design, and distribution in China cannot adopt a Chinese mindset, then they need to appointment those that can reliably oversee those processes. Without it, mistakes will happen, and they will be costly. This Dior incident highlights the real danger of not localizing assets. It is also important to get communications content right by having an intimate knowledge of the psychology of the audience. This requires the experience of living in China and speaking the language fluently, as well as being well-practiced in crisis management.”





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Inside Kering’s High-Stakes Fashion Conference on Sustainability


Sustainable fashion may sound unsexy to a lot of people, but it’s currently in vogue in the fashion industry now that it’s come to light that the clothing and textile industry is one of the largest polluters in the world.  At this year’s Shanghai Fashion Week, the luxury group Kering collaborated with the Silicon Valley-based innovation platform Plug and Play to host an in-depth discussion on just this topic, the very first “K Generation Talk & Award Ceremony” in China. For Kering, the location was a strategic choice, as Chairman and CEO of Kering, François-Henri Pinault, stressed that “there is no luxury without China, there is no sustainability without China.”

Announced at the G7 Summit and spearheaded by the CEO himself, the Fashion Pact, an industry-wide movement aimed at aligning the fashion industry with the UN Sustainable Development Goals. So far, 135 brands have signed the contract, which equals around 35 percent of the total volume of the fashion industry. But Pinault was hopeful about this number, saying that “if we can transform that part of the industry, the other two-thirds of the industry will follow, I am sure.” One of Kering’s key goals, he added, was to reduce its carbon footprint by 40 percent by 2025.

At the conference, Kering recognized three Chinese startups that were creatively addressing sustainability challenges in the textile value chain: Melephant, Heyuan, and FeiLiu Technology. They also invited pivotal thought leaders across many industries to attend, namely, Hung Huang, a writer and an influencer who is known to be China’s Oprah Winfrey and Anna Wintour; Shaway Yeh, a special advisor to the Copenhagen Fashion Summit and founder of YehYehYeh, a creative consulting agency focusing on sustainability, creativity, and innovation; Shang Yu Ying, Party Secretary and Chairwoman of Shanghai Municipal Commission of Commerce; Benoît Guidée, the consul general of France in Shanghai; Burak Cakmak, the Dean of Fashion at Parsons School of Design; and Marie-Claire Daveu, the Chief Sustainability Officer and Head of International Institutional Affairs at Kering.

Below are some key quotes from the conference on all the hot topics having to do with sustainability in China and beyond:

Kering Chairman and CEO François-Henri Pinault with Hung Huang, a American-Chinese author, blogger, and media figure.

Why China is at the Forefront of the Global Sustainability Movement?

“China was, for many years, the most important supplier of raw materials in this industry… but China today is not only the most important supplier of raw materials for the fashion industry — it’s also the most important market for the fashion industry for all fashion brands. So inside the country, we have altogether the consumers, the producers in the middle, and the government, which is willing to move progressively towards sustainability.” —François-Henri Pinault, Chairman and CEO of Kering

“If China can make fashion sustainable, the rest of the world would follow.” —Hung Huang, content curator, columnist

“China can innovate much more swiftly if China’s leadership prioritizes it and supports responsible innovation, and China is at the forefront, as we all know, with advanced technology and communications, AI, and creativity across so many sectors. So China’s history is about beauty and innovation, and I am betting on China.” —Susan Rockefeller, Founder and Editor-in-Chief of Musings

“I think a lot of innovation in China isn’t only happening inside the manufacturers… It’s also happening internally and it might not be so visible to us here from the outside. In China, I think they are very good at innovation in terms of social services because that’s a very obvious area people need to solve — but not so much at inventing something which hasn’t existed before.” —Katrin Ley, Managing Director of Fashion for Good

“The innovative talents in China are quite hard workers, we can do experiments over 85,000 times, with three labs doing tedious experiments every day.” —Simon Chen, General Manager of IndiDye

From left to right: Shaway Yeh, Founder of YehYehYeh, Burak Cakmak, Dean of Fashion at Parsons School of Design, Katrin Ley, Managing Director of Fashion for Good.

From left to right: Shaway Yeh, founder of YehYehYeh, Burak Cakmak, Dean of Fashion at Parsons School of Design, and Katrin Ley, Managing Director of Fashion for Good.

Why Collaboration is Essential?

“Roughly 70 percent of the total fashion industry carbon footprint is in raw materials, so it’s not actually within the brand. When a brand says ‘I’m tackling sustainability in my perimeter,’ they’re only tackling around 10 percent of [it].” —François-Henri Pinault, Chairman and CEO of Kering

“If you don’t have a partnership or collaboration, you’re not going to get to a scalable level.” —Susan Rockefeller, Founder and Editor-in-Chief of Musings

“Every entrepreneur will say access to financing is always challenging. Altogether, I think we need to further educate, bring awareness, and the financial industry should also play a role in financing this transition.” —Katrin Ley, Managing Director of Fashion for Good

Does Sustainability Hinder Design?

“80 percent of the carbon footprint in fashion starts at the design level, and the new generation of designers is completely sustainable-sensitive… For example, 32-years-old Daniel Lee is the creative director of Bottega Veneta. He is very young, [so sustainability is] natural. There is no question [now] that things have to be sustainable.” —François-Henri Pinault, Chairman and CEO of Kering

What’s the Most Difficult Part About Growing Sustainable Fashion?

“We really need innovative thinkers [that can] make [fashion] that’s both sustainable and profitable, to unite the two. It’s a new set of rules.” —François-Henri Pinault, Chairman and CEO of Kering

“There are impacts across the value chain, but the [most] important impact is clearly from raw materials. Eighty percent of the impact is coming from the raw material side, so we see entrepreneurs that have biosynthetic solutions, [like] leather from the lab, but are also going back to regenerative agriculture or natural fibers, [as with] using algae.” —Katrin Ley, Managing Director of Fashion for Good

“We often tend to focus very much on the environmental impact side but forget that there is also a social impact side, in terms of education — both legs of sustainability.” —Shaway Yeh, Founder of YehYehYeh

“We must approach sustainability from the consumer demand point of view. They need not only good design and quality goods, but also a sustainable supply chain. For example, the biggest challenge is communication: We have 40,000 staff, over 10,000 farmers, and 2 million consumers. How to communicate with them to launch a collective consciousness is hard.” —Jane Wang, President and CEO of Erdos Cashmere Group

What’s Next?

“You need to make sure you can trace your skin up to the farm, which is not the case today. It is crazy because the food industry is tracing the food, particularly in Europe, to the animal, to the farm, but we lose traceability at the house level. Leather is not traceable, so I have to put traceability into place.” —François-Henri Pinault, Chairman and CEO of Kering

“I think there will be a virtual reality that will allow us to create your own Avatars in the future. We’ll be more plugged in to create a fashion expression and a wearable dream online in addition to the smart and sustainable fashion of our day-to-day lives.” —Susan Rockefeller, Founder and Editor-in-Chief of Musings

“The fashion industry is incredibly fragmented and very complex, and consumers are unaware of what their garments are made of, who made them, and of what materials. We see a lot of technological innovation in that area that really allows us to trace back to the farm, to the cattle ranch, and to the organic cotton farm using tracers and blockchain technology to really make this connection. That’s a hugely important enabler for many of those changes that we would like to see in the fashion industry.” —Katrin Ley, Managing Director of Fashion for Good

“Ultimately, it’s about consumer behavior that we’re trying to influence, and that behavior is going to lead to providing sustainable initiatives within the industry. It will be ‘push versus pull’ from the consumer side.” —Burak Cakmak, Dean of Fashion at Parsons School of Design

Quotes are edited and condensed for clarity.





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LVMH Outperforms in Q3, Defying an Uncertain China Market


Coming after surprisingly strong results in the first half of the year, which left execs “cautiously optimistic” for 2019, luxury giant LVMH recently released a Q3 2019 earnings report that showed continued growth in the face of a tough global luxury environment. According to LVMH, the group saw a 16 percent increase in revenue in the third quarter of the year, reaching €38.4 billion (US$42.5 billion), a 17 percent rise in revenue and 11 percent increase in organic revenue compared to the same period last year.

This puts the group on track to surpass the €46.8 billion (US$51.9 billion) in revenue that it recorded in 2018. Perhaps most surprisingly for the group, revenue in Asia remained relatively strong, given the ongoing difficulties faced by LVMH brands in Hong Kong and an uncertain mainland China market.

Of LVMH’s product segments, the leading performer in the quarter was Fashion & Leather Goods, which achieved 18 percent organic growth, led by the group’s Louis Vuitton flagship brand. In particular, Louis Vuitton’s Louis Vuitton X exhibition in Los Angeles was cited as a success for the group, along with the opening of its new French workshop in September. Christian Dior, Fendi, and Celine were also pointed out as strong performers, owing to Dior’s new Champs-Elysées boutique, Fendi’s art and music partnerships, and Celine’s first haute parfumerie collection.

In terms of China, Wine & Spirits were a bright spot for LVMH, which saw organic revenue growth of 7 percent for the vertical in the third quarter. The group cited strong demand in China and the U.S as drivers, while noting a decrease in demand for Champagne and strong increase in demand for prestige vintages. Cognac, too, was a particular area of wine and spirits growth.

In the fourth quarter of the year, the group notes that, owing to an “uncertain geopolitical context,” LVMH will focus on “innovation and targeted geographic expansion in the most promising markets,” without explicitly pointing out what they mean by that.

As the year draws to a close, the question for LVMH is what kind of impact a softer Hong Kong and sensitive mainland China market will have on revenue. At this point, it looks like a safe bet that the group will surpass its 2018 revenue, but the question for the Greater China market is the type of approach LVMH should take to its expansion and marketing there in the next three months.

Presumably, LVMH Maisons’ will work hard to keep their heads down and avoid being next in the barrel to be called out by Beijing for a perceived indiscretion. To their credit, most of these LVMH-owned brands — with the notable recent exception of Givenchy — have managed to stay on the good side of the Chinese government or at least fly under the radar. But in the current environment, in which Beijing is easy to outrage, it’s anyone’s guess whether LVMH’s dozens of brands will complete the year without any further headaches.





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How Li-Ning Grew in a Gloomy Fashion Market


2019 has been a tough year so far for many fashion brands, but there are still winners to be found, and one of them is lifestyle sportswear brand Li-Ning.

In China’s homegrown sportswear segment, the brands Anta and Li-Ning are like the country’s Nike and Adidas. Li-Ning was founded by Olympic Gold medalist and hometown hero Li Ning and was, at first, the bigger Chinese brand. But Li-Ning started losing ground to Anta in 2012 and has since lost the healthy sales lead they once had over their sportswear rival.

Fashion, however, is always changing, and Li-Ning is now considered cool again. Their new streetwear-inspired look became a hit, and they found more visibility at last year’s New York Fashion Week. Some of their sneakers are even starting to become collector’s items.

Li-Ning hit 10 billion RMB (roughly 1.4 billion USD) in sales last year, and in the first half of 2019, its revenue grew by over 32 percent and profits nearly tripled. The brand’s shift toward the lifestyle and streetwear market fueled a 20 percent revenue growth in 2018, which doubled the previous year’s growth. The company’s continued cost control and inventory management also aided its strong earnings.

After an initial surge in the sportswear market leading up to the 2008 Beijing Olympics, the market quickly leveled off, and Li-Ning’s growth stalled in 2010. Since then, the brand has suffered through years of declining sales. But 2014 saw that decline end, and sales finally started to grow again as the company began to turn around. This period coincided with urban Chinese consumers finally becoming more mature and sophisticated as their spending power increased and they demanded better products.

The Big Turnaround Plan

Looking back into the history of Li-Ning’s press releases and annual reports, a key change took place in 2012 when the company brought in the private equity firm and well-known turnaround specialist Texas Pacific Group (TPG) to launch a major turnaround plan called the “Transformation Plan.” The plan included building a core Li-Ning brand, repositioning the brand value, and becoming an authentic brand that targets middle-class consumers. It also called for more direct to customer retail, a stronger supply chain and product development capability, the integration of superior performance function and design into the products, and cost and cash flow improvement and control.

In 2014, revenue started to grow again as the plan began working. The company then came up with a new operating model as part of the Transformation Plan called the “Closed Loop Retail Operation.” The loop starts with consumer and market-oriented product planning, followed by efficient product development, and aided by continuous sales data monitoring and in-store experience and service. If there are excess stocks then clearing channels are to be used, and lastly, cash collection management is laid out clearly to fund the company’s product planning and R&D back at the beginning of the loop. The loop is about creating products the consumer wants by using technology to track sales progress and recover the cash quickly, which is key to success in the always-evolving fashion business.

China’s apparel industry has been plagued by slow inventory turnover, which hurts a brand’s cash flow.  Starting in 2015, Li-Ning’s inventory movement has seen a big improvement, and by 2018, their inventory was turning over 4.5 times faster than rival Anta’s and even faster than other Chinese apparel brands such as Bosideng. And with the inventory turnover improvement, Li-Ning’s cash holdings have grown — more than tripled since the beginning of 2015.

In 2017 Li-Ning started combining sports with fashion, entertainment, cultured lifestyle, and leisure and also started working with artists and celebrities like “Rap of China” winner, GAI. This was how Li-Ning became a trendy fashion icon, but one with authentic roots from its history in the country.

New leadership

One recent development which should benefit Li-Ning greatly is the announcement of a new Joint CEO coming on board from holding company Fast Retailing, best known for their Uniqlo brand that pioneered the range of LifeWear products of everyday functional yet comfortable clothing. Uniqlo is also very good at working closely with a supply chain to develop new materials and for their famous UT series, which is known for licensing t-shirts with artists, animation characters, and iconic brands.  And now, with the Chinese government’s Healthy China Initiative to further promote sports and fitness programs, Li-Ning can use their recruit’s expertise to give them a major boost at this pivotal time.

Can Li-Ning continue its success and be relevant in a quickly-changing consumer market? This remains to be seen. But the company’s focus on the customer, brand message, retail experience, data, operation, and cash efficiency all are key ingredients for a successful apparel company, giving them a strong foundation for future growth.





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Why Your Luxury Brand Needs Social Currency to Survive


We are living in a world of uncertainty and disruption. Technology shifts have never been so fast or severe, consumers have never been so demanding, and the competition has never been so intense. Business models are changing in every industry imaginable because of technological innovations.

And if that’s not enough pressure for brands, it’s now becoming clear that a majority of consumer brand preferences are created at a fairly young age. A young customer who does not build a preference for a brand early in life isn’t likely to do so in the future, so brand managers who think that young consumers will commit to their brand when they ‘mature’ are sorely mistaken.

Gen Zers and young Millennials don’t want to wear or use the same brands their mothers use, yet older consumers are quick to adopt Gen Zers’ and younger Millennials’ preferred brands. Because of this dynamic, brands can’t afford to underperform with younger consumers, because it’s also the key to attracting new older consumers. Brands around the world all face the same issue: Their brands are strong with customers above 40 but weak with Millennials and Gen Zers.

One brand I know lost 80 percent of its customers 35-and-under within just three years. Yet these brands still want to focus on older customers, which is a recipe for disaster.  So how, in the crowded and fast-moving marketplace, can luxury brands attract young consumers?

The answer is easy: build social currency. But implementing social currency can be extremely tricky. It hinges on a brand’s ability to influence and connect with a young audience and calls for a deep understanding of that cohort’s fast-changing trends, hopes, and dreams. It also requires the ability to communicate the brand’s essence in a relevant and authentic way. Young digital natives are more sensitive to authenticity than any other age group, as they are bombarded with thousands of messages per day. A brand that isn’t perceived as fully authentic quickly becomes irrelevant.

Because of this, Musicians — who young consumers see as leaders in authenticity — are now launching lifestyle brands, like Rhianna with Fenty and Pharrell Williams with his Billionaire Boys Club. These brands aren’t solely ‘luxury’ in a traditional sense, but they have found wild success because of their ability to connect to a wide audience. In other words, they create social currency.

Brand storytelling is the way a brand expresses its authenticity to consumers, which, in turn, creates social currency. Unfortunately, a lot of traditional luxury brands are weak storytellers. Brands are fantastic at proudly boasting about their capabilities, expertise, and savoir-faire, but they fail to translate those things into tangible rational and emotional benefits for their targeted customers. Most brands focus too much on design, provide vague brand stories, and have internally-focused positions that make the purpose of the brand unclear to consumers. On top of that, many brands don’t provide a consistent brand experience along all consumer touchpoints, which adds to the confusion.

One should think of a brand like a theater production. Only when all of the play’s elements are working in synch to provide a consistent story will there be a distinct, memorable, and valuable experience for the audience. But, even if one element is awkward or wrong in the production, the customers won’t appreciate it. You wouldn’t enjoy a theater show where one of the actors was telling a completely different story than the rest of the cast, would you? Brand experiences follow the same logic. They’re either great experiences or they’re not, which is why luxury brands can’t afford to be anything less than 100-percent synched at all their customer touchpoints.

To create and maintain a strong brand story, a company must generate competitor insights in real-time. Because if a competitor shows up with a more compelling story, they will gain more social currency than your brand and become more important to consumers. So it helps immensely to know these insights as soon as they happen. Consumer sentiment insights are just as urgent. Studies that are months old are not good enough these days. A.I.-supported advanced insight tools are crucial for brands, yet most managers don’t make strategic decisions based on the analysis of social media sentiment because they don’t have the tools that can give them that clarity.

In today’s world, changes happen fast. Only the brands with rigorous brand storytelling based on real-time insights that lead to optimized customer journeys can stay ahead. The rest will rapidly decline as they quickly lose social currency. For proactive and agile brands, this time of disruption will be exciting, but for the others, it will be the beginning of the end.

Daniel Langer is CEO of the luxury, lifestyle and consumer brand strategy firm Équité. He consults some of the leading luxury brands in the world, is the author of several luxury management books, a regular keynote speaker, and holds management seminars in Europe, the USA, and Asia. Follow @drlanger





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Can China Ignite the Wearable Tech Market with Smart Eyewear?


In late August, the Chinese telecom company Huawei and the fast-growing eyewear brand Gentle Monster dropped a new wearable tech collaboration called Gentle Monster x Huawei Smart Eyewear, which features a series of smart sunglasses and optical frames in Gentle Monster’s most popular unisex style. Though there’s no camera in the glasses, they can take calls via a microphone and earphones that don’t connect directly to the ears. The product sold out almost instantly upon release.

The collaboration has sparked positive conversations from netizens on Chinese social media, and the trending topic #GentleMonsterHuaweiSmartEyewear received 120 million views on Weibo on the product’s launch day (a number that’s grown to 190 million at the time of publishing). This isn’t the first attempt to launch wearable tech in China. In 2015, the Apple Watch x Hermès was expected to lead a new wearable tech market boom in China. But since then, there have been no other major advancements in the market. In China, like in Western markets, the future of wearable tech has remained murky. 

Although Apple was once booming in China thanks to its luxury marketing, the company’s market share in the country has continued to drop throughout 2019, mostly because of the China-US trade war. But Apple’s decline and Google’s absence is leaving an opportunity for Chinese tech giants to control the wearable tech market, and both Huawei and Xiaomi are attempting just that. But the upward trajectory of these local tech companies wouldn’t be possible without patriotic Chinese consumers. According to the latest “China Brand Relevance Index” announced by the consulting agency Prophet, Huawei now ranks second in relevance with Apple dropping from 11th to 24th. The report also unveils an “amplified national pride” among Chinese consumers who are willing to support local brands that show strong power and influence on the global stage.

“When it comes to mobile phones, the Chinese players benefited from the increased attention that the China-US trade war brought to the category,” says Jay Milliken, Senior Partner and Asia Regional Lead of Prophet. “When the US government singled out Huawei for a potential ban, it led to more Chinese consumers shifting their purchases to domestic mobile phone brands.” And the competition among smartphones companies naturally extends to the wearables market.

Smart Eyewear

The series features speakers and microphones that allow users to answer phone calls, listen to music, and interact with a virtual assistant. It is also paired with built-in AI Bluetooth noise reduction technology to improve the audio quality.

Gentle Monster x Huawei Smart Eyewear is a good example of how local smartphones, wearables, and operation systems are connecting in today’s market. Though the eyewear can be attached to various smartphone models, not limited to Huawei, customers can gain exclusive experiences by pairing with Huawei smartphones.

Thus far, the wearables market has failed to fully gain steam, but China’s domestic tech giants are preparing for a new wearables tech movement. The success of Gentle Monster x Huawei marks an important shift, as the market transitions from once-favored smartwatches and bands to “hearables,” which have recently been cited in a report by IDC as the next big thing in wearable tech and are projected to capture 46.9% of the overall market in 2019.

While highly successful, Gentle Monster x Huawei Smart Eyewear is not the pioneer of hearable eyewear. Bose released a similar product called the “Bose Frame” earlier this year, and while the Bose product works similarly to the Gentle Monster x Huawei Smart Eyewear, Bose’s glasses failed to generate the same fanfare. Chinese customers have shown a huge preference to Gentle Monster x Huawei Smart Eyewear thanks to Gentle Monster’s stylish look, even though Bose is widely known to have exceptionally high audio quality.

The power of ‘looking cool’ has been confirmed ever since HUAWEI’s press conference in March when Kankook Kim, the founder and CEO of Gentle Monster, stated, “Eyewear comes first, smart comes later.”, Kim differentiated smart eyewear from smartphones and smartwatches by saying that consumers would only be willing to wear the tech on their faces if the product is good-looking.

Both Richard Yu, CEO of Huawei’s Consumer Business Group, and Kim declared that it was this shared understanding of the wearables tech that facilitated their collaboration. It’s never easy for tech companies to find a suitable collaborator. There have been some awkward moments, including Google Glass strutting down the runway with Diane von Furstenberg in 2012. Tech companies should always keep in mind that consumers expect more than technology-plus-fashion with a wearable fashion tech product. In Huawei’s case, Gentle Monster was the perfect choice for creating their smart eyewear.

That’s because Gentle Monster has seen rapid expansion inside China, and the key to it retaining customer loyalty is to deliver new products that are ahead of the curve. The brand’s collaborations with fashion’s biggest names — Fendi, Ambush, and Alexander Wang — happened in quick succession, and Huawei’s smart eyewear extends the brand’s personality of freshness and innovation while also letting Gentle Monster stand out in a sea of fashion partnerships.

Now that more and more Chinese celebrities such as Li Yifeng and Kris Wu have become Gentle Monster fans, the brand has seen a swell of awareness and reputation among Chinese consumers. That appeal is attributed to the brand’s extensive marketing, including its dedication to creating unique experiences. To introduce their new smart eyewear to more potential consumers, Gentle Monster widened its marketing reach by collaborating with KOLs who are active across various arenas, from fashion and beauty to technology.

Meanwhile, the brand also chose to engage and interact with its customers through different channels. Two weeks in advance of the official release of the smart eyewear, Gentle Monster launched a WeChat Mini Program for users to sign up product samples for free and activated the pre-book channel in the Gentle Monster Tmall flagship store.

“In the globalizing market, we favor omnichannel marketing and blur the boundary between online and offline,” Gentle Monster said to Jing Daily. “We hope to integrate various channels organically and bring unique experiences to our customers so as to cultivate and consolidate our long-term relationship with customers.”

Indeed, Gentle Monster has mastered branding in China, making the eyewear company a smart match for Huawei as they try to tap into high fashion. In the end, the marriage between tech companies and fashion labels is reciprocal, and both sides appear to come out on top. “Huawei benefits from this partnership by being seen as younger and more modern through its association with a hip brand,” Milliken comments on the eyewear, “while Gentle Monster’s alliance with Huawei will introduce the brand to a larger audience.” Whether the product is seen as a fashion statement or social currency, it offers an impressive buzz that’s beneficial to both parties.

The Gentle Monster x Huawei Smart Eyewear series is priced at $285 (1,999 RMB) and $357 (2,499 RMB), approximately $100 higher than the same style without the smart package. While they are positioned as high-end eyewear, it’s a fairly good deal for an eyeglasses/headphones combination. And the prices are friendlier than some upscale collaborations like Apple Watch x Hermès.

Chinese customers always seem ready to experiment with newness and are on the lookout for the next “badge of hipness.” The Gentle Monster x Huawei Smart Eyewear collaboration reminds us that what works even better than the coolest appearance or the most cutting-edge technology is the collision between the two, and sophisticated customers are proving that they want fashionable wearable at the right price.





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What Luxury Brands Need to Know About Their Future Cash Cow


It’s a familiar story. A sales associate from a luxury boutique in Beijing adds a new client’s information on WeChat. The client is from Hohhot, a third-tier city in Northern China, a one and a half hour flight from Beijing. The sales associate notes her preference and assures her that he will update her on the latest collections, and more importantly, notify her via WeChat when the bag she longs for arrives in the store.

This is a familiar scene for a large portion of affluent shoppers from lower-tier Chinese cities, who are forced to travel to Beijing or Shanghai or another first- or second-tier city to do a bit of old fashion, in store luxury shopping. For residents of Hohhot, or other lower-tier Chinese cities, it’s either this or some impersonal e-commerce shopping, as most of their hometowns lack even the most basics of luxury shopping possibilities. What’s more, this underserved, lucrative consumer base shares the same desire for luxury good and pleasure of shopping for them as their first-and-second tier cities’ counterparts. They just lack the luxury infrastructure — malls, stores, and boutique

Lower-tier residents represent 35% of total true luxury consumers in China and make up 27% of total true luxury consumption in China. However, they are largely underserved compared to the affluent residents in top tier cities, where major brands have more than one location in the same city. In China, luxury brands’ combined current store footprints only captures less than half of the country’s affluent households whose annual earning is over 300,000 RMB (roughly $42,000 USD).

As lower-tier city residents continue to experience a surge in the disposable income from local economic growth, and combined with a more inexpensive cost of living, there is an opening for luxury brands to connect with these consumers in waiting on their own turf. As the growth momentum for luxury consumption in first-and-second-tier cities continues to slow down, understanding how lower-tier city consumers differ from their higher-tier city counterparts will become crucial to better target, engage, and serve this emerging consumer group. Here, Jing Daily provides three key takeaways.

  1. Lower tier residents have higher growth rates

The luxury category sees an especially greater growth and higher adoption rate for online shopping among lower-tier residents. For example, Tmall’s 618 Mid-Year Shopping Festival saw a 40% growth rate from lower-tier cities — an 18% surplus compared to higher-tier cities. Given this, there is an opportunity to reach these affluent online consumers in these smaller cities, as close to half of consumers there indicating that they would be willing to shop online in the next year, compared with less than a quarter of those in larger cities.

  1. Lower tier city resident rely more heavily on both word-of-mouth and KOLs

Lower-tier city consumers are more inclined to gather information about luxury goods through offline word-of-mouth and KOLs across entertainment-related social media platforms compared to their higher-tier city counterparts. According to the report on lower-tier city residents’ online habits from Tencent’s user research center, consumers in third- and fourth-tier cities live a less stressful life and have more free time. They interact offline with friends and family more frequently than people in higher-tier cities, prompting more offline word-of-mouth information.

Apart from the normal, day-to-day usage of Weibo and WeChat, like anywhere else in China, lower-tier city residents also prefer more entertainment-oriented social media platforms and humorous content, including short videos and live streams. For example, 65 percent of the short video app Kuaishou’s users are from 3rd-tier-and below cities — 20 percent more than Douyin, a similar short-video product that banks more users from higher-tier cities. Compared with Douyin, Kuaishou’s content is easier to consume (“接地气”) and more entertaining.

Also, as they lack immediate access to retail stores for initial shopping experiences, lower-tier city residents develop their knowledge about brands instead from KOLs, influencers, and friends for recommendations when it comes to purchases, and put more value on social engagements than higher-tier city consumers. In fact, social engagement outplays price discounts during Double 11 as the top factor that influences purchases for 3rd-tier and below residents.

  1. The social reward to show off luxury purchases plays for lower-tier residents

While luxury in every part of China is a signifier of wealth and status, the social context in top-tier cities is different from that in lower-tier cities. In top-tier cities, purchasing a luxury product is more about fitting into a group that shares the same values. In smaller cities, however, purchasing a luxury product is more about showing off in front of friends, family, and colleagues. It’s not about fitting into an existing group. It’s about speaking of one’s elevated lifestyle. In lower-tier cities, consumers tend to value the price of a product compared to top-tier city consumers. For them, luxury purchases are, therefore, still highly driven by the psychological pleasure of showing off within their own circle (“面子”).





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Are Virtual Influencers the Future of Luxury Retail?


Oscar Wilde famously said, “One should either be a work of art or wear a work of art.” According to Fashion and Imagination: About Clothes and Art, since the 1960s, we have obscured the boundaries between the two. Imagination and fantasy are components of any art form, so it shouldn’t come as a surprise that the retail world is moving further away from realism, while it embraces the realm of imagination. And today, modern technology is transforming the luxury world as we know it, bringing consumers closer to brands through the use of retail intelligence and analytics, Artificial Intelligence-powered software, gamification reality, augmented reality, and even virtual influencers (VI).

Some fashion aficionados will argue that VI sounds like an unreal and implausible reality. Interestingly enough, viewers offered the same critic in 2002 for Simone. In the movie, Al Pacino plays a disenchanted producer who creates “the first totally believable synthetic actress.” Back in 2002, the movie didn’t impress critics and movie goers branded it a flop, arguing that the “plot isn’t believable enough to feel relevant.” Fast forward 17 years and today we live in a world where digital creations are proposed by social media and luxury brands as personalized testimonials. Evidently, artificial intelligence and digital talents have come a long way from Max Headroom and other cartoonish characters. In fact, today’s virtual characters look and act like real humans. Furthermore, the content creation behind them is equally impressive.

These virtual influencers act like cool Gen Zers, have captivating, aspirational life stories, take part in the right events, hang out with the right celebrities, and they even engage with the In-crowd on social media. Basically, they are a flawless response to society’s need of an Insta-perfect lifestyle. Plus, they work 24/7 and are easily controlled. Thus, luxury retailers won’t have to overcome PR disasters and abnormal communication strategies that could tarnish the carefully curated brand image. Moreover, VI don’t age, have radical look changes, or get sick.

Additionally, there are also financial considerations. According to estimates by WalktheChat and Jing Daily, “WeChat influencer After Party, with 550,000 followers and about 32,000 average views charges RMB 40,000 (roughly $5,500) for one post. WeChat KOL blogger手账 with 70,000 average views charges RMB 33,000 (roughly $4,600) for one post.” And in the West, top influencers and celebrities like Selena Gomez and Kylie Jenner can make up to $1 million per Instagram post. By contrast, creating a virtual influencer from scratch and using him as a brand ambassador would come cheaper.

There’s also a level of authority that we associate with VI. As end-consumers we are merely followers of trends and fashions, tracking every move of celebrities and KOLs. But virtual influencers transform us from spectators into creators. It’s us and our feedback that dictates what outfit the VI should wear, where they’ll go, what social causes they’ll follow or with whom to engage. This character manipulation is empowering and responds to current trends that see a shift from KOLs (key opinion leaders) to KOCs (key opinion consumers).

Given the ongoing benefits of partnering with VI, it shouldn’t come as a surprise that luxury brands like Prada, Dior, and Balmain used them in their marketing campaigns. Olivier Rousteing, Balmain’s Creative Director, intergrated Margot, Shudu and Zhi, three computer-generated models, in the Balmain virtual army, showing that the ranks are open to everyone who has status, looks and a strong social media presence. But despite clear advantages for using computer-generated personas, there are even some challenges.

  1. Identity problems

According to Incitrio, Vanitha Swaminathan, a marketing professor at the University of Pittsburgh believes “these virtual influencers might just be so real that consumers might not even realize the difference, which can potentially harm consumer-brand relationships over time.” This could raise not only serious ethical issues but also legal challenges.

  1. Legal challenges

According to Heather Nolan from the Adweek, “Shudu’s creator is a white male whose digital creation was inspired by real-life African American models.” Nolan points out that the brand is already “facing cries of cultural appropriation” because a white male gains serious financial benefits by exploiting the image of a black woman. Obviously, a communication crisis might imply hundreds of thousands of dollars in legal fees.

  1. Controversies

Calvin Klein came under fire after promoting their “Get Surreal” ad featuring Bella Hadid and Lil Miquela. Fans were outraged seeing the passionate kiss between the virtual model and Hadid because they felt that Calvin Klein is “queerbaiting.” Shortly after the event came the brand’s apology saying that “the specific campaign was created to challenge conventional norms and stereotypes in advertising.” The uproar calmed down, but the misstep shows that luxury brands can have serious PR disasters even while using virtual models.

  1. Moral Issues

In an interview with Yahoo Finance, Bryan Gold, CEO of creator media platform #Paid, said that the situation is “getting kind of scary.” Since “brands are partnering with virtual influencers who don’t have any defined values or belief systems,” Gold believes authenticity is stolen from the process. He raises a valid argument by mentioning that the end consumer doesn’t even know if the computer-generated persona enjoys the product because he cannot test it. And what if the advertised product is flawed? As a consumer, you can’t rely on a virtual model to tell you how a moisturizer or a cream feels on your skin. This could raise serious moral issues.

Luxury retailers are becoming increasingly desperate to connect with a generation of digital savvy buyers, we (the consumers) force them to turn to personalized solutions that prove that their brands can remain relevant even in a high-tech world. Moreover, the market seems saturated with KOLs and v-loggers, so luxury brands turn to media targeting by using avant-garde solutions that secure them great media coverage and good PR.

It’s too early to acknowledge the success of virtual influencers but according to Kolsquare, at the very least they will pressure real influencers “to offer better quality content and to build loyalty among their subscribers.”





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Why This NYC-Based Label Uses Fashion to Promote Social Change


This post originally appeared on Radii China, our content partner.

Gender equality. Freedom of speech. The unchecked, society-altering growth of social media and influencer culture. No matter where you’re from, there are plenty of things to be mad — or at least, moderately irritated — about in today’s society. Designers Shao Yuner and Zhou “Stef” Puzhen took to fashion as their way of saying “no” to it all.

Born in Chongqing — a municipality of more than 30 million people bordering Sichuan province — the two New York City-based designers behind indie label Refuse Club weave a dash of social commentary in with their lace and Lycra. The brand takes its name from Salon des Refusés, a famous 1863 exhibition culling artworks that had been rejected by the prestigious (and notoriously stuffy) Paris Salon.

After graduating from Parsons in 2017, Shao and Zhou set up their label to reject not only the traditional “rules” of setting up a label in the first place, but also the bigger societal problems they felt plagued their generation.

Their first collection for AW19 addressed the administrative crackdown on China’s #MeToo movement — which like the West’s took social media by storm, but was later forced to use puns and workarounds to evade censorship.

In the collection, screen-printed messages replicating a 404 error are superimposed over qipao dresses and blazers made from traditional Chinese jacquard. “We chose to discuss #MeToo because many Asian people we know think that feminism has become merely ‘overcorrection,’ without really understanding it,” says Shao. “But these abuses are also happening in China. We don’t want the next generation to be afraid to speak out.”

Zhou told Teen Vogue this year that their main goal with Refuse Club is to address Chinese social problems, going so far as to open their own WeChat account to discuss these issues in their native Chinese.

Their second, more whimsical collection — mixing loose, feminine fabrics with workwear silhouettes, and adorning choice pieces with hand-drawn prints — trains its eye on Chinese influencer, or wanghong (网红) culture. The two designers criticize mainstream beauty by celebrating its “antithesis,” gleaning inspiration from a video app called Kwai (Kuaishou) that is commonly used in rural China.

“Each print this season is inspired by something on the internet this season that we thought is fun,” says Shao. She references one viral video that featured two people dancing and pointing at their watches, which became a much-repeated style of dance on Kwai. “People think watches show their social status, and transform that into a dance, which is interesting.”

“We found that nowadays, people tend towards one type of beauty and fashion,” says Shao, referring to China’s notoriously monolithic beauty standards, a frequent source of debate on social media.

In contrast, the designers felt that users on Kwai — considered a more niche platform than TikTok (Douyin in Chinese) — were more fun, free, and diverse in their thinking and aesthetics. “Influencers on Kwai often have their own unique imagination of what ‘fashion’ or ‘city culture’ is,” says Shao, “which we find more interesting.”

Shao says that the positive reception of their work in China has actually surprised her, noting that young followers are particularly “obsessed with our qipao dress” and how Refuse Club reworks the garment into daily wear. She attributes this to a growing interest among younger generations in all things “made in China.”

Shao and Zhao with their SS20 models.

Shao and Zhao with their SS20 models.

“Fashion has been dominated by Western society for so many years,” says Shao. “Now I think young generations are open and curious about Chinese design, and also more appreciative of traditional styles. And we are excited about that.”





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Chinese Designers Try Predictive Trend Analysis On For Size


For years, brands have looked to localize products for the China market using a mix of data on what has traditionally sold, plus some measure of gut instinct and — more often — a “stick a zodiac animal on it” mentality that really doesn’t work. Now, some designers and brands in China are getting more sophisticated and taking a data-driven approach to trend identification and product development.

A new collaborative report by Promostyl and Youthology, generated by Alibaba’s Tmall Trend Center, recently looked to prove out whether machine learning-driven research can help predict fashion trends through the middle of next year. According to the researchers, the goal of the report was to help designers “create more on-trend items to reduce end-of-season markdowns and improve their business performance.” For potential customers, the goal is to help them plan purchases ahead of time and “pre-style” for the months to come.

According to the report, we can expect to see four style trends heat up in China over the course of the next nine months. They are:

Poetry

The report predicts that a “fairytale-like and poetic aesthetic” will continue to trend among urban women, a counterpoint to the “monotony of busy urban life.”  The look is exemplified by “romantic pinks and earthy neutrals” and includes ruffled tops, chiffon dresses, tasseled mini totes, and men’s linen jackets.

Tech Forward

Very similar to the “techwear” trend that has peaked in the West over the past couple of years, this trend incorporates high-tech materials over natural fibers, and is heavy on “metallic purple-blue colors matched with reflective gray and neon greens.”

Heritage

Not quite taking it as far as “Hanfu” enthusiasm, this trend incorporates somewhat traditional Chinese elements ranging from the old standby, dragon embroidery, and mines nostalgia for popular Chinese candy from the 1980s and ‘90s, ancient poems and Chinese philosophy.

Impact

The final trend identified in the report is one of greater interest in sustainability and a muted “back to nature” vibe. Customers interested in this trend are eco-friendlier and more interested in a “throwback rural aesthetic” that’s more California bohemian.

According to Alibaba, some designers have already put these trends out onto the runway to see how they fare. Olivia Zhu, creative director of the brand Elfini — which was taken to Paris by Alibaba to take part in Tmall’s China Cool event — said she incorporated some of the trends in her choice of colors and silhouettes. Said Zhu, the brand mixed yellow candy-colored suits with green puffy skirts in a nod to the “poetry” trend and reported a good response by brand ambassadors.

Predictive trend-spotting is already a fast-growing area of investment for many major brands and e-commerce retailers, but the fact remains that it is a young area and one that should still be taken with a grain of salt. Simply put, we’d need to see more about the methodology of the report before it’s clear that this report actually identified new trends rather than simply filtering out the four that are being most talked about online anyway.

The question is, does this report really predict a trend, or by ranking these four newish trends and putting the weight of Alibaba’s massive and ubiquitous marketing infrastructure behind them, make them gradually more popular by the middle of next year, thus fulfilling their prediction?

This very well may be the case. But whether it’s the tail wagging the dog or the other way around, it’s clear that predictive analytics are becoming a hot commodity in China’s fashion market, and regardless of the methodology, we’ll definitely be hearing more about it from Tmall and others.





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