Can Louis Vuitton Win China With its New Online/Offline Runway Concept?


On July 9, Louis Vuitton announced that it is planning to reimagine the traditional concept of fashion shows for its Spring 2021 men’s collection by launching an animated film followed by live touring runway shows to follow. Shanghai was chosen as the first stop for the runway series, which will debut on August 6 of that year. The collection, which is titled Message in a Bottle, will be showcased via physical presentations while each episode is livestreamed to global audiences.

In addition to its seasonless and itinerant innovations, the new model will also highlight more active coordination between the house’s Paris headquarters and its regional offices. As Michael Burke, the chairman and CEO of Louis Vuitton said in his Zoom interview with WWD: “[This model] is a lot more modern way of working because the Chinese team is going to find the venue, co-design the event with Virgil, produce it, and the models are going to all be Chinese.” Under the creative direction of Virgil Abloh, the house hopes to leverage digital opportunities by challenging the hierarchy structure of the fashion show and pushing it toward a more inclusive and global future.

Jing Take:

Even though Burke didn’t directly address the importance of the region during his interview with WWD, China’s market is more important than ever for Louis Vuitton in today’s post-COVID-19 climate. That is due to China being one of the few countries that have seen an early recovery from the pandemic. But this moment is also crucial because Chinese luxury shoppers now tend to invest in domestic consumption rather than international shopping trips because of prolonged travel restrictions and constraints on the market’s unique daigou business.

More importantly, the hybridization of the luxury and streetwear markets, which has blown up since Abloh took over the house’s artistic helm in 2018, resonates very well with the country’s younger generations. The recent drop of the NIGO x Virgil Abloh LV² collection sold out via the brand’s WeChat boutique, proving the approach aligns perfectly with China’s hypebeasts. As the fashion world dives into various online channels, will the newness and accessibility of this model still be able to lure in digital-savvy consumers? And what will its runway shows mean to these regional markets? The first installment of Louis Vuitton’s physical presentation in Shanghai will help answer many of these questions.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.





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How Western Brands Can Find The App in China That Reaches Their Perfect Audience


Global brands that want to succeed in China need to invest in a strong mobile strategy, but that’s easier said than done. With a growing number of Chinese apps emerging daily, it has become increasingly difficult to figure out which app will work best for your brand.

In a dynamic market like China’s, it’s no longer enough to run innovative campaigns with smart digital storytelling. Today, brands also need to stay relevant and connected to their audience base, so their selected digital marketing tools have to communicate the brand’s message engagingly and effectively. Only the perfect multi-platform digital marketing strategy can harness the power of mobile apps to thrill consumers and instill brand loyalty.

Below are some of the important benchmarks for brands when selecting an online platform.

User demographics are crucial to a brand’s success

We’ve heard it a thousand times before — knowing your target audience is crucial to a brand’s success. But far too often, marketers confuse target markets with demographics.

Simply segmenting markets won’t do the trick anymore, mainly because there are significant developments inside each market that make consumers act in diverse ways. For example, Chinese millennials are different from American millennials because of their different cultural backgrounds, political contexts, and social settings. And even the Chinese millennial group isn’t a universal demographic where all individuals have the same desires and objectives. Thus, marketers will register some differences because of age segments (older millennials versus younger millennials), social class, or geographic location (tier-1 versus small-town consumers). A limited understanding of these groups could alienate some consumers and make a brand’s digital marketing strategy pointless and ineffective.

In China, no one seems to understand the power of data and analytics better than Alibaba. Even PepsiCo chose to partner with the Chinese e-commerce giant “to leverage the latter’s data in order to enhance its customer experience and drive growth in China,” according to Forbes. And in 2018, Mars collaborated with Alibaba to create a chili-infused Snickers bar designed exclusively for Chinese consumers. Mars made the product based on the analysis of consumer data collected from Alibaba’s users.

“Via the internet, businesses can see the potential needs of customers by studying consumer behavior data and then design, market, sell, and serve in order to satisfy customers,” said Alibaba Group CEO Daniel Zhang. These types of partnerships allow global brands to use Alibaba’s data and insights to maximize their local offers.

The points of differentiation and the focus on specific audience groups

Without knowing your audience and what makes them tick, you cannot differentiate among specific consumer groups. Types of social media activity depend on age group, occupation, income, lifestyle, and even political affiliations, so knowing these points of differentiation is crucial when selecting the best mobile apps.

To give an example, in the first quarter of 2020, Tencent’s WeChat had over 1.2 billion monthly active users, according to data from Statista. That transformed WeChat into one of the leading social networks in the world. For any brand reason, this would be enough to incorporate the platform into their digital marketing strategy. However, an engaging WeChat campaign will also consider the points of differentiation within this audience.

In 2019, only 4.3 percent of WeChat users were over 46 years old, so the platform isn’t for brands that want to reach Baby Boomers. Moreover, 28.3 percent of WeChat users in China were between 25 and 30 years old (millennials), so WeChat is a great tool to reach that generation. Additionally, 76 percent of its users have a college degree, and 83 percent of WeChat users are on the app for work. This data clearly shows that brands trying to reach highly-educated, city-dwelling millennials should advertise on WeChat.

Additional data like who’s into gamification elements also gives brands an important trajectory for their strategies. In 2018, China Internet Watch reported that 81 percent of WeChat users played mini-games. Consequently, brands can incorporate gamification elements in their digital marketing strategies to make the marketing experience more engaging and fun.

Metrics matter

Monitoring social media metrics like follower volume, reach, influence, and online engagement helps brands produce content that will resonate with their base. A good example is the beauty brand Perfect Diary (完美日记), which built a cult following through savvy digital marketing strategies that generated high levels of engagement.

Perfect Diary teamed up with the Discovery Channel on an eyeshadow collection that featured seven different eye palettes inspired by the eyes of cute animals, and it was an instant success. But this is hardly surprising if we consider that Perfect Diary has championed social listening. Metrics are a secret weapon that the company uses to understand consumers, promote new products, and launch recent collections. Informed decision-making is written into this brand’s DNA.

Brands that cannot interpret and verify consumer data themselves can partner with the three data analysis giants in China: Baidu, Alibaba, or Tencent. Each uses advanced analytics to capture insights that are helpful to their partners.

An example of this direction is the partnership between the French hospitality giant Accor and the Alibaba Group, which helped the brand develop apps and loyalty programs to attract Chinese consumers. According to Skift, Alibaba is helping with the official launch of Accor’s new loyalty program (Accor Live Limitless) by offering digital marketing capabilities.

With China’s booming app numbers, the process of finding the right one has become endlessly complicated. Nevertheless, metrics, user demographics, and reliable Chinese partners can help Western brands make better-informed decisions. In the end, smart tactics are what help brands dominate China’s massive social media landscape.





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Creating Community Content to Influence Chinese Customers


Commonly, the goal of brand-initiated interactions with Chinese customers is to sell something. However, this behavior runs contrary to social norms, inhibiting deeper relationships with Chinese customers and the formation of communities. Community content aims to establish or increase trust, affinity, and reciprocity, which ultimately greases the wheels of influence.

Content is king” is one of social media marketing’s favorite clichés, but there’s a reason why it’s such a familiar refrain. When it comes to community building, content specifically created for members is an indispensable tool for the marketer.

Think of content shared within member-only channels as a gift from the brand to its community. Communities are powered by the brand’s ability to drive the desire to join or remain part of an in-group. The mere existence of member-only content incentivizes those desires, but the content also has to be valuable. Quality community content fosters affinity and trust, demonstrating the brand’s values and engaging community members who share those values.

Why create community content?

When brands behave more like humans, in more nuanced ways, with appropriate intent, demonstrating mutual benefit, relevance, appropriate timing, and emotion, they develop stronger bonds with Chinese consumers. To succeed, brands must play a more active role in a variety of aspects of consumers’ lives. Content is one of the keys that opens a door to Chinese customers’ lives.

The best brands in China are delivering content that does not push Chinese customers to buy anything. The reason why brands are doing this is to build communities founded on pillars of communication and empathy. Community content allows brands to provide value beyond core products and services. 

Let’s look at the community content loop as an input-action-output cycle. At the input stage, the brand creates and shares the content within its exclusive, private traffic channels. That content should be stimulating, engaging, and perhaps even provocative (without risking damaging the brand by dividing or alienating members, of course). The consequence should be an action in the form of lively discussion among members, who should be able to engage the brand and its representatives in conversation as well as each other.

community content loop for Chinese Customers

Community content loop for Chinese Customers.

The output phase of the content loop will be a mutually reinforced sense of community among members. Fun, informative, and engaging content will be all the more powerful if it is underpinned by that sense of exclusivity. Members should be asking “Could I have got this content anywhere else?” – and the answer should be a resounding “No.”

The content creation philosophy

In terms of content design itself, brands should keep a few principles in mind. All content creation should be led by value-first thinking. Community content is not a sales pitch. The brand will drive sales via its private traffic communities in other ways—exclusive, limited-edition items, member-only deals, and early-bird launches. Members will tire—quickly—of content that is too overt in pushing the virtues of the brand’s products.

Content philosophy behind content creation

Content philosophy behind content creation.

Lululemon’s workout and yoga content is a perfect example of a brand aligning its content to be highly beneficial to its customer communities as well as chiming with the consumer’s reasons for following the brand in the first place. Value-first content means going back to that idea of content as a gift from the brand. What does the consumer need from the brand? What unique value can the brand provide its members? What values does the brand share with its community, and how can that be communicated? Lululemon gets it right on each of these tests.

Brands can lead by starting conversations and asking questions. What issues matter to the brand’s member community? A clever approach to content is to feature community members, whether by interviewing them, inviting contributions from members, or featuring other types of user-generated content. Use a variety of formats, and specifically those that can be enriched by member engagement. For example, run polls or surveys, crowd-source opinions, and publish the results. Set challenges and invite members to submit their own attempts on video.

As the community matures, brands should foster more intimate links within the community. The community managers should get to know members and create a CRM that can be used to drive content design. By identifying what individual community members can add to the group, and tailoring content to create opportunities to engage members’ interests, skills, and knowledge, the community’s value will compound organically. Human touches like birthday messages can be incorporated into this strategy.

Activating social capital is another way a brand can set its member communities apart. This might mean providing members with valuable content they can share with their own peer group. Exclusive, quality content will raise a member’s social capital in their own circles, reinforcing the community’s value to the member. That could be “utility” content in the form of tutorials or practical recommendations, or the content could be entertaining and funny. Additionally, communities can elevate and celebrate member contributions and UGC within the community, thus allowing members to build status among each other.

The content pyramid

Community content can be visualized as a pyramid. At the base is what we think of as the “pillar” content. These pieces are the foundation of content strategy for a brand community—think rich and original deep-dives into a topic, whether presented as text or video. The pillar content can and should create opportunities to collect and share UGC.

Community Content pyramid

Community Content pyramid.

Both UGC and the original content itself can be sliced and repurposed into new content, which brings us to the next layer on the pyramid. “Micro” content uses the pillar content and UGC as a jumping-off point and helps the brand build on the momentum generated by that pillar content. Finally, the top of the pyramid is distribution—the rhythm and consistency of messaging within the brand community.

Brands should plan using a content calendar to ensure that regular slots are filled. Members should be expecting and anticipating the arrival of new content, but this routine will only become a habit for the member if the brand delivers consistently. In turn, engagement and ultimately conversions via the community will be higher if the brand keeps the content flowing. Not every content drop will be a hit, but the brand should strive to maintain quality for the benefit of the community’s long-term sustainability.

Of course, brands can also build content communities on public platforms, from traditional social media posts to the current craze for live streaming. The latter trend is worth devoting some time to, as brands like L’Oreal did during the COVID-19 lockdown. The beauty brand ran a successful series of live streams after training in-store staff to host the broadcasts, which helped to prop up sales through more than a month of store closure. Building these owned channels is a potential alternative to relying on KOL campaigns for live stream sales.

Whereas podcasts have become big business in the United States and other Western markets, audio-based communities are relatively untapped in China. User figures grew for a number of podcast apps in 2019, although Ximalaya FM dominates the category by some distance. Ximalaya FM claims its monthly active user figure has reached 135 million, and that those users listen to an average of 170 minutes of content daily.

As brands have found in other markets, podcasts are inexpensive to produce compared to some other forms of promotion. Audio is still a very new space for brands in China, but the Shanghai Pudong Development Bank has found success with an on-brand podcast about fintech. The bank’s podcast, hosted by a Chinese fintech expert, reaches an estimated 25 million listeners, ranking among Ximalaya’s top tech podcasts. This type of content is undeniably valuable to the consumer, and brands the bank as an authority in the mind of listeners.

Cases Study: Ctrip community content

Ctrip community content

Ctrip’s virtual tour manager (VTM) is a community-driven concierge service. Users can access the VTM either within the Ctrip app, as well as via dedicated WeChat groups. Ctrip takes the VTM beyond traditional customer service, grouping Chinese customers who are traveling to the same destination around the same time into their own WeChat groups. Ctrip’s travel agents manage the groups and are available to respond to questions in real-time. They can also help travelers with trip planning, from booking restaurants and tours to organizing airport pickup. However, the community aspect allows the VTM groups to take on a life of their own, with members exchanging ideas and resources, and perhaps even arrange to meet offline during their travels.

Case Study: Nike community content

Nike community content

Nike community content. Source: ParkLu

Nike has made content creation and community building a centerpiece of its strategy. The brand has become virtually synonymous with running, and it has cultivated running communities in parallel to its Run Club app and sponsorship of major events like the Shanghai Marathon. In China, as in other markets, the brand has partnered with running clubs to host offline events—tapping into existing communities rather than establishing rival groups. Linking online content creation with offline events has become Nike’s specialty. For example, before the 2019 Shanghai Marathon, the brand asked eight international running clubs to share stories, run, and party with local running club members.

Nike excelled in terms of content and community during the coronavirus lockdown in China, offering free training classes, dietary guides, and meditation advice through its WeChat Mini Program and apps. The brand hosted exclusive private WeChat and Douyin Livestream training sessions with professional coaches, as well as offering public sessions.

Community tech: Chinese customers on WeChat

WeChat personal accounts CRMS

WeChat personal accounts CRMS.

CRM tools are now widely used by China’s biggest brands to manage the brand-owned WeChat personal accounts that are used to manage private traffic communities. These allow brands to create and manage community groups segmenting Chinese customers based on a variety of demographic and preference-based categories of the brand’s choosing. Community managers can use CRMs to post within groups, post to WeChat Moments, run campaigns, and other functions.

Two of the most popular are Weiyouzhushou for Windows users and Wetool for Apple users.





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What Brands in China Should Take Away From Harper’s Bazaar’s Big Mistake


In a Weibo post on July 7, Harper’s Bazaar China provoked Chinese netizens by appropriating a derogatory term from the Japanese invasion of Manchuria. Unfortunately, the global media outlet also happened to do this on the anniversary of the Lugou Bridge Incident, which marked the beginning of the full-scale war between China and Japan. In describing the digital health code system during COVID-19, the post quoted the term liangmin zheng (translated as “good-citizen certificate”), which is a phrase that refers to the identification papers given to Chinese citizens living in areas controlled by Japanese forces during World War II.

The magazine responded to criticism by apologizing, stating that it will “engrave patriotism and love for the Party in mind and further improve historical and political education.” The Weibo hashtag “Harper’s Bazaar apologies” received 570 million views within 12 hours, but netizens said the mistake was unforgivable because of the cultural insensitivity behind the use of this term, especially coming from a Chinese team.

Jing Take:

There have been many brand controversies over the years on topics ranging from cultural appropriation to insensitivity towards the Chinese government’s authority, but Harper’s Bazaar China did not learn from these past mistakes or the consequences they brought. In China’s current social media environment, any cultural faux pas is sure to go viral and find intense scrutiny from netizens. Therefore, media outlets, brands, and other fashion players must work diligently to remove any inappropriate social content from their messaging before it goes live. Chinese consumers’ patriotism and political sensitivity have reached new heights post-COVID-19, so market players should make sure to be even more historically, culturally, and politically correct than in the past when operating in the country.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.





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App Watch: Why Should Luxury Consider Kuaishou To Reach China’s Mass Audience


Kuaishou wasn’t made for luxury. The majority of viewers on this short video platform are not millennials and Gen-Zers from first-tier cities like on Douyin. Instead, the app is known as a window into China’s lower-tier cities and the rural population. A montage from Kuaishou’s latest promotional video called “See” says it all: a teenage boy dancing in front of a mountain backdrop, his clothes made of leaves; a girl singing and playing guitar while herding cows. The video’s voice-over narrator, who’s also a fellow Kuaishou content creator, sums Kuaishou up perfectly: “Don’t go into strangers’ lives with apathy, those who call here ‘not hip enough’ without giving much thought should come here and see it for oneself.” 

Kuaishou

Kuaishou’s new promotional video about users’ everyday life went viral in June. Photo: Kuaishou’s Weibo

Kuaishou was born as a GIF-making app in 2011 and pivoted to a short video model a year later. It currently boasts 300 million daily active users, according to the company this February. The Tencent-backed start-up finished its Series-F round of funding last December, which boosted its valuation to $28.6 billion, more than Twitter’s market value of $25 billion as of publishing. Most recently, as the trend of livestreaming e-commerce sweeps over China, Kuaishou has started showing its ambition through heavy investment in this sector, which presents an opportunity for luxury brands.

Kuaishou entered the e-commerce space in 2018 with a helpful feature that allows users to directly shop within the app. Riding on the wave of content e-commerce and livestreaming, the platform has given rise to Luo Jia, the self-proclaimed “luxury livestreaming king,” who hosted sessions for Emporio Armani and Versace. Chinese luxury e-tailer Secoo also launched a 24-hour livestreaming channel on its new Kuaishou account during the platform’s inaugural 616 Shopping Festival this June, which sold over 105 million yuan ($14.8 million) in luxury goods from the likes of Louis Vuitton, Armani, and Gucci during the first five hours, as Jing Daily previously wrote

Kuaishou

Kuaishou has recently collaborated with celebrities including Huang Shengyi and Zhang Yuqi from the popular TV reality show “Sisters Who Make Waves” on livestreaming e-commerce. Photo: Kuaishou’s Weibo

Luxury brands should also keep an eye on its moves behind the scenes from its partnership with JD.com to building infrastructure for livestreaming e-commerce. For the past 618 Shopping Festival, which was created by Alibaba’s rival JD.com, Kuaishou’s strategic role was of paramount importance. The marriage of the content and e-commerce giant in supply chain, brand marketing, and data capabilities will become more visible in the next few years. In late June, the Beijing-based unicorn announced an investment of three billion yuan ($440 million) for a new e-commerce headquarter in Chengdu. It also plans to build China’s first “5G+ Short Video Industry Foundation” that includes an incubator for short video content creators and Multi-Channel Networks (MCN) agencies

However, no platform is perfect. Like many other competitors, Kuaishou has been under scrutiny by the Cyberspace Administration of China for some accounts’ vulgar and suggestive content, and it has purged some 3,000 such accounts over the last few months. This is one of the very few caveats that luxury brands should keep in mind before linking their brands with this platform. 

Today, Kuaishou is facing an increasingly crowded landscape in the short video and livestreaming space. In addition to the established contenders like Douyin and Xigua, newcomers like Weibo have started testing its short video platform internally, and Tencent’s own livestreaming is also on the horizon. But with such a precise niche that no others can claim its own, Kuaishou presents itself as a strong option from luxury brands to connect with China’s  massive and lucrative audience. 

While leading Chinese social media platforms like Weibo, Little Red Book, and WeChat are key to connecting with Chinese consumers, Western brands would be wise to keep abreast of any new digital platforms if they want to retain a competitive edge in China’s ever-changing consumer landscape. Our series, App Watch, examines rising applications and digital platforms relevant to the fashion, beauty, and general luxury space in China. 





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Can COVID-19 Cool Off China’s Scalding Sneaker Market?


Two popular Chinese marketplaces specializing in the resale of sneakers, Nice and Poizon, both list the price for a pair of Dior x Air Jordan 1 High OG sneakers at a whopping $14,123 (RMB 99,999). That is quite a jump from the Dior WeChat boutique’s initial price of $2,563 (RMB 18,000). Unsurprisingly, this sneaker drop quickly earned one of the highest resale values on the Chinese market to date.

As it is in the rest of the world, the sneaker business is booming in China, where streetwear culture has won over Chinese millennials and Gen Zers alike. In addition to desirable limited-edition drops from sportswear brands, luxury-streetwear crossovers have brought even more hype to this booming market.

On China’s resale market, hyped kicks have become hard currency capable of fetching major markups. Meanwhile, venture capital firms have cosigned the financial potential of this market by betting hard on start-up resale platforms. Poizon and Nice each raised $1 billion (RMB 6.9 billion) in Series A funding and “tens of millions” of dollars in Series D rounds, as reported by the local media outlet 36Kr. According to the local data-mining company iiMedia Research, the sneaker resale market in China officially surpassed one billion dollars in 2019.

But even the flourishing sneaker market couldn’t escape the grip of the COVID-19 crisis, which has thrown a series of obstacles at China’s streetwear companies. Overstock inventories, canceled sporting events, and wavering consumer sentiment all took a toll on this promising business. And with products marked down in primary markets around the world, the secondary market became vulnerable to price slumps.

But as China’s market moves beyond the apex of the pandemic, there is once again promise for the secondary sneaker market. From the debut of the most significant sneaker exhibition this past May, Sneaker Con Museum in Chengdu, to the recent drop of the “Air Jordan 1 OG Dior” sneaker, a few standout moments have pointed to a growing market potential for carefully curated streetwear products.

But how will China’s market hype respond to this changing sneaker market? Has the power dynamic between sellers and sneakerheads shifted? To unravel the complexity of this mania, we talked to local streetwear insiders, KOLs, and sneakerheads about the post-pandemic sneaker market.

A bit of turbulence during the COVID-19 outbreak 

Secondhand sneaker trading has blossomed in China, and the country has quickly become one of the biggest sneaker resale markets in the world. Yet, at the apex of the pandemic in February and March, resale prices of certain top-sellers slumped, and some even fell lower than the original retail prices, indicating shrinking market speculation.

Fluctuations have been tied up in the dynamic relationship between supply and demand, and surging prices usually occur during a marketing push. However, the pandemic and lockdowns have clearly dampened consumer sentiment and financial confidence in this arena, so buyers tend to act more rationally when investing in appreciating production.

On the supply side of this secondary market, sellers have struggled with their stock. Some chose to sell out their shoes at reduced prices while others waited to gear up for a post-pandemic rebound. Many smaller brokers are younger and are hesitant to sell when prices are down, yet they’re desperate for cash flow.

Unlike Western markets, global sportswear distribution channels in China prefer to lean on franchise models rather than wholesale. This mutually dependent relationship between brands and regional sportswear franchisees has helped both get through a period of impacted offline sales due to COVID-19. Brands allow franchisees to pay orders in arrears as a way of relieving their cash flow problems while franchisees help brands better distribute stock.

Elsewhere, Alibaba’s Tmall and JD.com have helped athletic brands cope with their overstock inventories via online direct-selling flagship stores. These have worked particularly well during the Double Five Shopping Festival in May and the 618 Mid-year Shopping Festival. Those platforms’ digital coupons have also helped brands by serving as alternatives to discounts and encourage consumer spending.

Yet while offline and online retail partners have, to some extent, mitigated sales pressures for brands, many of their frequent discounts have diluted the primary market. According to Himm Wonn, co-founder of the local streetwear multi-brand shop DOE, one of the most unfavorable impacts of this pandemic is that “discounted sneakers flood the market while the sell-through rate of full-priced ones has decreased.”

Resilience with a deflated bubble

As the pandemic in China reached its turning point, the gloomy sneaker market climate gradually eased. Resale prices for the most hyped kicks dropped at the end of 2019, including the Travis Scott x Air Jordan 1 High OG. But the kick has seen progressive rebound and stability since March. Prices of other March releases, such as those for the Stussy x Nike Air Zoom, have continued to see growth. Shock, a resale transaction tracking tool for sneakers, proves this point, showing that the value of most hype products haven’t depreciated since the pandemic started receding in China.

Sneake

The resale prices of the Travis Scott x Air Jordan 1 High OG and the Stussy x Nike Air Zoom in StockX, Poizon, and Nice shed light on the sneaker market under the pandemic crisis. Photo: Shock.

Local sneaker insiders agree that there has not been an overall crash in the secondary market, despite fluctuations. As the sneaker influencer Ricki Dai explained to the local media outlet Jiemian News, “the resale price of exclusive editions like rare patterns of Air Jordan 1 are still resilient with high appreciation space despite being a bit lower than pre-COVID.” Proof of this assertion can be found in the recovering turnover numbers on Nice and Poizon beginning in April. And as online platform verification and shipping services have rebounded, so too has resale trading.

While the sneaker market experienced a bumpy ride during the pandemic, sneaker mania hasn’t cooled down. If anything, the slight drop in resale prices encourages consumers to purchase those wanted items at more reasonable prices. In China’s largest online sneaker community, Flightclub’s WeChat account, followers commented on how “the prices are finally back to reasonable, and it’s a perfect time to buy in.” Therefore, demand amongst “shoe dogs” (a term referring to veterans of the footwear industry) remains strong despite the pandemic.

But what about the consumer perception of luxury sneakers? One of the most anticipated collaborations of the year — the “Air Jordan 1 OG Dior” sneaker — sold out online immediately after becoming available on June 25. According to the users who won a draw to get a chance to buy these shoes at Dior’s WeChat boutique, they’re betting on the resale performance of these limited-edition shoes, despite their hefty retail price.

Weibo user @adamgeri commented that “I will definitely sell it out if I can win the draw,” while other netizens claimed they were interested in the shoe’s promising resale returns rather than the sneakers themselves. But one experienced sneaker consumer, Nate Li, told us that he wouldn’t pay $2500 for this pair, let alone for its even higher sticker price, even though he frequently shops for luxury brands. “It’s not for the real sneakerheads,” he said. “There’s not any street culture or hip hop origin in Dior.”

Sneaker brokers, who are one of the biggest drivers in China’s sneaker market, aren’t necessarily the type of sneakerheads who are obsessed with the culture. As Wang said, players in the domestic market attach greater importance to prices than the culture or story behind the shoe, which leads to a darker side of the market: price manipulations. “It was an open secret that certain brokers controlled a large number of hype kicks and took over the pricing power in the secondary market,” Wang explained, saying this was one of the reasons why the sneaker bubble has blown up in China over the past few years.

Thanks to the efforts of thousands of sneaker KOLs in the social domain, China’s sneaker frenzy continues to grow in the post-COVID-19 era. Limited editions or collaborations are still hyped and desirable to local youngsters, while high resale performances continue to encourage primary market sales. This sneaker market has massive potential to brush off the remains of the pandemic as long as brands can impress their savvy consumers with continued exclusivity and newness.





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What Happens If Sina Delists From Nasdaq?


Sina, one of China’s internet conglomerates, is considering delisting from the Nasdaq Stock Market. The company, which went public in the US in 2000, could now be worth $2.7 billion as a result of a take-private offer from New Wave, an entity helmed by Sina’s CEO, Charles Chao. This move would likely see Sina re-enlist at a much higher valuation in Hong Kong or Mainland China — a trend which is growing among its listed contemporaries in the US.

The Jing Take: 

As we enter the worst period of US-China relations in recent history, Chinese companies’ shares on the Nasdaq are soaring. On the plus side, it has been estimated that a calling back of previously US-listed companies would yield almost $600 billion to China. But, legislation passed by the US Senate recently prohibits trading by any company that goes three consecutive years without inspection from the Public Company Accounting Oversight Board; China is unlikely to comply. While many entities have been privy to undervaluation in the US for years, this move could hamper companies seeking world capital. Given current tensions, this reverse globalization and pull to IPO domestically is expected to continue, drawing it’s prized tech companies back home to China.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.





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Luxury Market Recoveries: South Korea Versus China


China and South Korea are the two countries that recovered from COVID-19 the fastest, but their luxury market rebounds look quite different. Even though South Korea’s market and appetite for luxury are both smaller than China’s, understanding the similarities and unique differences between them can help brands with their regional post-COVID-19 merchandising plans. Below are some key takeaways from recent industry reports.

Differences: 

Recovery timelines

Because the virus was identified in China about half a month earlier than it was in South Korea, recovery speeds were different, according to the China and Korea Rebound 2020 report produced by the consulting and research firm Agility Insights. Offices reopened in China around March 1, whereas the government lifted restrictions on public facilities in South Korea around April 22.

The speed of China’s recovery was much faster, and many luxury brands returned to 60-70 percent of their 2019 levels in March and saw weekly increases into April. With the help of the government, shopping malls and e-commerce platforms employed a series of stimulus packages designed to boost consumption. However, some brands remained more concerned about recovering sales over the next half year.

South Korea never imposed as strict a lockdown as China did, and by mid-March, Koreans were advised to stay home when not going to work or visiting health care providers. Traffic in large malls and department stores began to rebound in April, and the focus was on premium-priced goods.

Speed of digital adoption 

Because of its dominant e-commerce giants and mobile-first culture, China had already employed online shopping as the norm, even in the COVID-19 outbreak. In South Korea, consumers are still warming up to online shopping, and its public was only used to going online for necessities. Buying luxury goods still wasn’t common, so luxury brands needed to become early adopters there. For example, the Hyundai department store held the industry’s first online fashion show, which was broadcasted live on the Hyundai Department Store’s official YouTube channel.

Both countries experimented with livestreaming, but its entertainment value is greater in South Korea. According to the report, virtual socializing and entertainment are trends that should continue to become a part of consumers’ lives in Korea. Meanwhile, in China, beauty is the best-positioned category for livestreams, and many luxury brands have already seen strong sales results from livestreaming on different platforms like Tmall, JD.com, and Little Red Book.

Consumer Sentiment

While Chinese Gen Zers are more aware of their health, South Koreans place more emphasis on financial success. However, the country has recently seen a shift regarding luxury’s real benefits, and social factors are declining in importance for South Koreans. For them, luxury is increasingly becoming about rewarding oneself, quality of life, enjoyment, and self-expression.

Similarities: 

Revenge shopping

Korea’s consumers are eager to shop as a release after quarantining, just like in China. In Korea, this is called bobok sobi, and in both markets, retail therapy has emerged as a way to reclaim a sense of normalcy during March and April. In both markets, big brands were able to weather the storm, and lines could be found outside luxury brand boutiques like Chanel since HNWIs have been the most resilient during this crisis.

The domestic travel rebound

In Korea, domestic travel and tourism picked up during May, while an uptick in air travel in China started at the end of February. Both countries saw an increase in tourism and travel during the Golden Week holiday, and China’s Ministry of Culture and Tourism reported that hotel occupancy exceeded 60 percent capacity. Local resorts in Jeju are now seeing an occupancy rate of up to 70 percent. Korean Air added back domestic flights in May and planned to reopen 19 international routes in June.

However, according to Wendy Choi, COO of the predictive analytics firm Chain of Demand, the Korean luxury market has yet to recover fully as its Chinese tourism still has not rebounded. As most of Korea’s luxury shops and duty-free stores relied on Chinese consumers, they were hit hard during the coronavirus. There are still strict rules in place for Chinese travelers, and it appears many have yet to return to Korea.

Where are both market headed?

“Based on our predictions, we believe that [Korea] will be safe to begin reopening between July and August,” Choi said, “and luxury shoppers in China will continue to spend on luxury items as they can afford to.”

For other retail segments, spending will gradually rise in both countries, but Korea should see more dramatic shifts towards e-commerce similar to China’s 618 Shopping Festival. Also, as Korea’s younger consumers become more health-aware, they will shift to buying essential items such as health-related and wellness products.





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Why Is TikTok Cutting Ties With 150,000 Hong Kong Users?


What Happened

TikTok, which is owned by the Chinese social media giant ByteDance, decided to end its service for Hong Kong users, a spokesperson confirmed with Jing Daily today. The TikTok app will cease operations in Hong Kong, but Douyin will remain available in the market, the spokesperson added.

The move comes in response to China’s national security law regarding the special autonomous region, which was passed on June 30, as part of an effort to suppress the on-going protests that the Chinese mainstream media has labeled “riots.” At the same time, US social media peers, including Facebook and Twitter, said on Monday that they are suspending compliance with Hong Kong law enforcement agencies following the law, the Wall Street Journal reported.

User data protection has been of paramount importance to these tech companies, but for Chinese companies, the new law holds political ramifications. It’s not the first time that the Beijing-based company fell victim to geopolitical issues. Last week, India banned TikTok, Helo, and Vigo Video — all owned by ByteDance — following border disputes between the two countries. The question this begs is how many more markets can ByteDance afford to lose?

Jing Take: 

To not offend Beijing or hurt its overseas business, TikTok rightly decided to forfeit its 150,000 Hong Kong-based users. 

On the one hand, it cannot comply with the government’s requests to hand over user data because that would be used against the company in overseas markets. And the US is already considering limiting the TikTok’s US-based users, said Secretary of State Mike Pompeo to Fox News.

But on the other hand, TikTok cannot have a presence in the Hong Kong market without obeying the government as a Chinese company. According to detailed rules under the new law, a newly-established national security agency must “collect and analyze intelligence and information relevant to national security.” And in a separate article, the law requires “publishers or service providers of information to provide assistance or remove such information.” That may seem mundane for Tencent’s WeChat and Sina’s Weibo, which have to comply with censorship rules, but it’s problematic in Western democracies, where TikTok has been thriving of late. 

The effects for advertisers have rarely been discussed following this move, but what is TikTok doing with its advertising contracts with local or overseas brands that were looking to connect with Hong Kong’s users? It’s certainly not as simple as transferring them over to Douyin. 

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.





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Why Beauty Brick-And-Mortar Is Thriving In China


Chinese cosmetic industry insiders are busy this year, even though COVID-19 has disrupted business as usual. Among them, offline beauty retailers have seen an unexpected peak, as online buyers have started pouring back into brick-and-mortar chain stores to experience hands-on shopping journeys.

According to a Morgan Stanley 2019 China beauty products growth report, China’s share of the global beauty market will increase by as much as 66 percent over the next five years, representing a sales jump of approximately $38 billion. That’s nearly half of all global beauty growth. And with new international retail cosmetics chains popping up all over China, local brick-and-mortar retailers are now looking for their own moment.

Who’s in the game

Will there be a promising future for these newcomers to the Chinese beauty market? The lengthy lines and crowds outside Harmay Beijing and The Colorist in Guangzhou confirm that there most likely will be.

These two are currently the most popular beauty chain stores in China. Harmay, which started in 2010 as an e-sales company on Taobao.com, unveiled its third location in 2019 — a massive well-designed store in Beijing — after previously launching a Shanghai and a Hong Kong store. Since its opening, Harmay Beijing has been rated the top beauty retail store in the city, both on social media and on the e-commerce platforms Xiaohongshu and Douyin.

The other star is The Colorist, which is run by KK Group (Guangdong Kuaike E-Commerce) and opened its first two stores simultaneously in Guangzhou and Shenzhen in October of 2019. Since then, these stores have consistently been crowded with over 15,000 visitors daily. This incredible level of popularity has extended across China to Beijing, Changsha, and elsewhere. By April of 2020, The Colorist had expanded to over 60 stores in 20 cities nationwide.

Other offline domestic players like WOW COLOUR, Perfect Dairy, G Beauty, and Parkson PLAY UP have also been riding the current beauty industry wave in China by changing their business models. Some popular techniques involve making more brand collections available in-store as well as copying “fast fashion” by changing in-store merchandising more often. So far, these chains, which are heavily backed by famous Chinese tycoons, have made all the right moves in China’s new “beauty-driven economy.”

On the other side, traditional retail chains that have been hit hard by COVID-19 are feeling pressure from these new local players. Sephora, which has operated in China for 14 years and owns 230 stores across the country, saw a 25-percent sales decrease over the first quarter of 2020. SaSa, the renowned chain of Hong Kong beauty specialty stores, had to close 20 percent of its Hong Kong stores to fund its Mainland expansion. Another established drug store brand, Watson, only saw a 2-percent increase last year after losing much of its younger customers to hipper brands. Meanwhile, Japanese cosmetic retailer Isetan Beauty closed its physical store in Shanghai, and the UK beauty chain Space NK failed to survive the pandemic, announcing its exit from China in April.

Seize the momentum

“I started to realize that the cost of operating Harmay online had actually been increasing since 2015, especially in China, where social media marketing plays a key role if you want to make profits,” said Jason Ju, the co-founder of Harmay. “The competition in the beauty industry is fierce, so Harmay had to create something new.”

By transferring what Harmay created online — quality store design, customer services, limited collections, and omnichannel retailing — to its offline locations, the brand garnered massive social buzz along with sales. Since social media KOL/KOC marketing dominates the Chinese market, Harmay’s offline sites now offer refreshing hands-on shopping experiences to its customers. When it comes to skincare and color cosmetics, young customers want to personally experience them by trying on, smelling, and feeling the products. They aren’t a generation that just obeys big stars and brand slogans; they want to decide how to be stylish on their own.

As a way to distinguish themselves from online sellers, brands are designing their physical beauty stores to encourage virality on social media and initiate word-of-mouth tactics via real consumers. For example, The Colorist, with a stock of over 6,000 SKUs, has adopted a more open floor plan with bright interiors at its stores. Its rainbow-colored decor has become a selfie spot for customers, who then post such photos on Weibo, WeChat, or other Chinese social media platforms. Harmay, according to its creative team, is designed to look like a behind-the-scenes view of its online store, as the products and the distribution/delivery processing areas are out where the consumers can engage with them. The bare concrete ceiling, steel shelves, and fluorescent lamps mimic the atmosphere of a beauty factory, leaving customers feeling like their shopping time was both active and creative.

“The routine” stays but expands

After visiting several cosmetic stores across Beijing, Jing Daily found that around two-thirds of customers said they wouldn’t cut their beauty routines, even during a pandemic. Global growth may face a devastating slowdown during this time, but the Chinese beauty market continues to show surprising resilience. Thanks to Chinese demographic changes, younger consumers (age 17-25) are spending more money at an earlier age. They have different consumption habits compared to older cosmetics enthusiasts, including earlier introductions to skincare shopping, added steps to skincare and cosmetics routines, and an attitude that makeup is essential for social interactions.

According to Joyce Chen, who has been helping Western brands market in China for over five years, “around 75 percent of Gen-Z customers are proactively trying new, niche beauty brands, and even very junior customers are bold [enough] to buy something luxurious.” She confirmed that social media is the most powerful influence on consumer purchasing decisions, and offline cosmetic transaction data shows that young people are, indeed, guided by virtual marketing campaigns.

After traditional department stores and the e-commerce craze, it’s safe to say that offline retail chains are now filling a role as the beauty market’s “third stop.” This is a trend that has been shaped by the times and China’s new economy.

Beauty consumers in China are better off financially than they were in the past and have more disposable income, so now they buy luxury beauty brands right away rather than start by buying domestic, entry-level products. That has led many retailers to display their most luxurious brands in prominent shifts instead of playing it safe. And since China’s middle class is expected to double in population over the not-to-distant future, the country’s luxury beauty consumption should only continue to expand.





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