Should Cancelled Fashion Weeks Follow China’s Digital Pivot?

What happened:

Anticipating the continued and devastating effects of COVID-19, fashion committees globally announced a cancellation in the upcoming men’s fashion weeks in Paris and London. Milan’s men’s fashion week has been postponed until September and will merge with women’s Ready-to-Wear. Furthermore, the federations indicated plans to explore digital alternatives to these events.

In China, some netizens on Weibo called this a “once-in-a-lifetime overturn of the industry,” while others grieved the absence of their favorite Chinese celebrities and models from the events. Despite a general disappointment, many were supportive of the safety-conscious decision. The global pandemic has hitherto impacted numerous schedules including the Met Gala and other runway shows, a mass disruption of the fashion industry unprecedented in modern fashion history. 

Our take:

Jing Daily previously covered Shanghai Fashion Week’s successful pivot to digital, which harvested the power of livestreaming, online influencers, global brand campaigns and local e-commerce collaborations. The committees helming the men’s fashion weeks have an opportunity to follow in Shanghai’s footsteps and similarly, transition to digital. By exploring online opportunities that reach wider audiences, fashion weeks can amplify their influence. This is also a more environmentally sustainable way to present fashion collections. As the instant sellouts of luxury brand collections released on social media recently attest, the ‘see now, buy now’ trend can offer great untapped commercial potential for the organizers of men’s week – provided they come up with a strategy, fast. 

The Jing Take reports on a leading piece of news while presenting our editorial team’s analysis of its key implications for the luxury industry. In this recurring column, we analyze everything from product drops and mergers to heated debates that sprout up on Chinese social media.

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How COVID-19 is affecting London’s Emerging Designers

Few in the industry can deny the role of London Fashion Week among the big four: it’s a vibrant showcase of the most creative and innovative body of designers, especially start-up brands. The British Fashion Council (BFC)’s Annual Report of 2019 acknowledged this international reputation that has been built on a broad strategy of investment chiefly in education and mentoring as well as a range of funding bursaries available to young designers.

From the globally recognized NEWGEN Scheme, to independent initiatives such as Fashion East and the Queen Elizabeth II Award, these scholarships illustrate London’s solid support structure for start-ups. Little wonder global contests such as the LVMH Prize and The Woolmark Prize are dominated with British finalists. London too has become a draw for innovative voices from China too. In recent years names like Xu Zhi, Yuhan Wang, Steven Tai, and Feng Chen Wang have all chosen to locate their brands within close access to London’s financial resources. However, when a global pandemic strikes, where does an industry partially reliant on early career backing stand?

Most young London-based designers affirm their businesses are carried largely by the retail sector abroad. Moreover, this overseas turnover through wholesale relies largely on the physical retail sector. With boutiques seeking out uniqueness and newness to offer their clients in an already saturated luxury marketplace, independent and overseas retail stores are often the first to invest in young designers. They value their fresh vision and small stock list base as attractive points of difference and exclusivity. The reputation of London as a melting pot of exciting talent furthers this desire for emerging British labels abroad. Jing Daily asks local UK experts and leading brands in London how these designers can foolproof their businesses at this time.

Challenges for emerging brands 

According to the UK Fashion & Textile organization, a key advisory board for design businesses in the UK, UK businesses are facing an unprecedented climate. Their advice circulates around sales and supply — identifying areas that could be affected and to recognize opportunities to diversify across international sources and internal resources. As start-ups, young designers in London accept they must adopt multiple streams of income to support their businesses. At this time however, the dramatic effects of COVID-19 is cutting off many of these supplementary avenues.

Phoebe English — whose design business of 9 years has been championed by Chief Vogue Critic Sarah Mower for its sustainable dedication and direction — noted the direct impact that COVID-19 has had on her company’s revenue ability: “As a small company we do not hold much buoyancy and right now our three streams of income have been deeply affected: our wholesale business; university lecturing; project consultancy. All businesses such as ours are all trying to find resolutions.” For Feng Chen Wang, this reliance on revenue streams is supremely dangerous for brands: “When one of our markets is impacted we must rely on the other. Most young brands focus on the wholesale model, but when that slows down it can damage your business, so we must look at other revenue stream like DTC.”

Another challenge facing brands is the wider global economic uncertainty. Deloitte’s ‘Retail Trends 2020’ Report from 2019 confirmed the slowest rate of spending growth since 2010 — largely driven by British doubt. Since the outbreak of COVID-19, this uncertainty has heightened, turning to an apathy for consumption as spending figures have dropped further. Therefore, as these foreign markets shut down, developing designers will feel the impact even sooner as risk averse buyers and consumers back brands they know.

For some brands at this time the possibility to even produce a collection to show buyers will be deeply hindered. Fashion PR consultant, Laura Hinson, former head of the BFC’s designer relations division, built her career on supporting designers and brands at the start of their careers. She agreed that production was an additional factor crippling young labels. “From production timings which have been delayed or even cancelled if their factories are based in China or Italy — COVID-19 is having a devastating impact on emerging designer businesses in London. Sell-through will also be affected as customers are steering clear of stores: SS20 will be a difficult season for everyone,” she said.

These challenges mentioned by Hinson, are outlined in McKinsey’s Executive Briefing on COVID-19’s implications for businesses, which predicts they will unfold in three broad economic scenarios: a quick recovery, a global slowdown, and a pandemic-driven recession. While the report suggests a more pessimistic economic outcome is being expected by the global trade industry generally, the impact on London’s niche ecosystem of young designers specifically will likely be large.

What London brands can do to keep afloat 

As we have already seen in China, people simply do not want to buy in times of uncertainty. Therefore, what options are available to designers in order to effectively maintain their business as product essentials become prioritized and the luxury industry takes a hit. Leanne Elliot Young, founder of CommuneEAST — a strategist for the creative industries — was clear, stating, “The globe will not be purchasing, will not be producing, but will just be concentrating on how to stay safe: the industry and the economy will pause and be gridlocked.”

If people are simply not buying, the knock on effect for retail businesses and the stocked brands will be catastrophic. Young continues, “Smart retailers have pivoted and built an omni-channel business that services both arenas in unison. If any designers are stuck in the sale or return structure then it will see an exponential rate of folding of small businesses and brands in London.”

At the start of their careers, many of London’s most exciting brands will be tapped by Stavros Karelis, owner of the independent luxury store Machine-A in Soho, London. Karelis is adamant that emerging brands now need to pivot 360 degrees to engage their business in a totally different manner. “Emerging designers are called to resolve one of the most challenging issues that the world has ever faced; how to offer that physical experience in an online and digital format. This alone will force them to rethink all existing business models. They have to figure out how to connect with their buyers, and their end-consumers, and how to make sure their digital world is able to satisfy the needs of the customers who in most cases need to see them up close.“

Hinson agrees that the opportunity offered by online for London’s creatives needs to be rethought. “I believe there is some potential in growing online sales by speaking to the consumer innovatively through social media and marketing. It is imperative to open new avenues of communication with our audience and collaborators,” she says.

This has been a focus for the likes of Chinese designer steventai, whose longtime dedication to film as a means of communication allowed for him to secure over half of his SS20 collection sales. By filming each garment on models, he was able to give a sense of fabrication and details which was shared to all the buyers who weren’t able to make it to Paris.

Other London-based Chinese designers are also attempting to bridge this gap with film. Yuhan Wang held her first standalone show in SS20 and released a fashion film to accompany the collection’s launch as an opportunity to capture the senses in an effort to drive online sales. Xu Zhi also used film to enter into the London Fashion Week schedule — introducing his brand to an audience unfamiliar with his label. The power of authentic storytelling direct to consumers has huge potential for emerging companies.

Deloitte’s Retail Trends 2020 cites purpose as the new digital. This digital purpose presents an opportunity to think global yet act local: building and investing in brand communities and fostering authentic levels of diversity and inclusivity. The power of film for Feng Chen Wang has been her ability to demystify the manufacturing process for her stockists and supporters alike, in particularly the sustainable aspects she has come to integrate. Brands that have a cause have more meaning in the eyes of consumers.

Cross collaboration will be vital in order to share resources, skills and audience, while there will be an overriding call for a spirit of innovation. If emerging brands are to bring a tighter focus on online communication opportunities as a way to ensure revenue, they need to ensure a tightened turnaround on their production. Manufacturing closer to home could present this answer.

The lack of nearshore in the UK has disadvantaged its designers for decades. By contrast China has easy access to its supply chain, with many designers in China backed by family factories, such as womenswear designer steventai. London menswear Liam Hodges who is exploring the possibility, said, “We are already looking to bring some new season sampling and development back to the UK so we can maintain some momentum and focus on our own ecommerce, offering exclusive styles to our dedicated customers supporting us through our own channels.”

In a time of crisis, relatability, clarity, and transparency become vital to a brand. The emerging designer has a peer group, a point of view, and a following that is about not just the clothes but the energy of the brand itself. This is the time when brands can bring their fans with them, through the anxiety of a crisis and beyond. Moreover, this sense of fragility can be turned to strength. Karelis points out that the more agile a brand is the faster it can adopt. For now, we can only hope and show that we are all in this together. As Karelis concluded, “When you are in the toughest place and time in history you are with everyone else. So everyone supports each other, and solidarity is the key element to rebuild and move forward.”

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Is Made-To-Order The Future of Luxury Fashion in China?

“Dior’s Haute Couture isn’t as inaccessible as you thought,” a Little Red Book user, currently in her PhD program in California, shared earlier this year about her made-to-order experience with the brand in Paris. “You used to have to have to fly to Paris at least three times from the first to final fitting, but now the brand sends their team of dressmakers and seamstresses to Beijing and Shanghai to do the fitting for you.” 

The world of haute couture, where individual pieces of high-end fashion are crafted by hand from start to finish, has only become more accessible to Chinese consumers lately. When luxury started, it was all made-to-order,” said Janice Wang, CEO of the global fashion tech company Alvanon, referring to the exclusive tailoring by a team of highly crafted seamstresses and makers behind European luxury houses. However, once largely associated with haute couture, made-to-order now also refers to a whole new world of technologically dependent customization services, from Nike sneakers to luxury handbags to personalized items on clothing, all of which have made their way to China in recent years.

This new type of made-to-order appeals to Chinese luxury consumers, as a growing number of them want to stand out from the crowd. In a March report, McKinsey pointed out that for Asia’s millennials and Gen-Z consumers, customization is no longer a nice-to-have option but “an expectation,” which might explain the ubiquitous services from Dior’s own My ABCDior and Louis Vuitton’s My LV Heritage that offer light customization on luxury items.  

Dior’s My ABCDior customization service, powered by PlatformE, is available worldwide. Photo: Screenshot of Dior’s Website

But as one’s consumption power goes up, their expectations for the range of options graduate from light customization to full bespoke services, or even customization beyond what brands offer. Customization within the brand is increasingly valued by high-net-worth-individuals, which are luxury goods’ core customers, said Dr. Zhou Ting, head of research at Shanghai-based Yaok Institute, which has surveyed more than 40,000 China’s millionaires and billionaires (in local currency). “They want to present their personality and their standard for quality; the trend is even more apparent when it comes to China’s billionaires, who want customization above the brand,” she said. 

Outside of China, some luxury brands’ made-to-order initiatives have shuttered. Burberry Bespoke, an initiative that was launched in 2011 for its iconic trench coat was quietly folded in 2015. The British brand offered light customization for trench coats in the London flagship before it was shut due to the coronavirus. And even before the COVID-19 pandemic took over the world, Jimmy Choo’s made-to-order service has been “temporarily paused”, according to its US and UK website

While made-to-order has seen mixed results in global markets, China’s vast market is ready. From young consumers to high-net-worth-individuals, shoppers’ increasing expectation presents an opportunity for brands to expand services, and moreover, to adopt the made-to-order mindset for their future with the help of technology.

Back End Help: How Tech Can Lend a Hand from Communication to Fitting

While the luxury world rolls out different levels of customization services, fashion tech entrepreneurs envision a world where the made-to-order functionality could be adopted to back end operations. Co-founder of PlatformE, the start-up that powered ABCDior, is one of them. “The inventory system, which underlines a forecast model [in which the future order is decided based on historical data], is now recognized as dysfunctional, because you are most likely above your forecast,” said Ben Demiri. Overproduction and deadstock, or the merchandise left unsold, are what contributes to fashion’s waste problem, he added. 

While fashion retailers usually discount part of the deadstock, the luxury industry frowns upon this system as it dilutes the luxury brands’ value and exclusivity. For brands and retailers, however, deadstock is a financial burden. But the real issue arises when deadstock ends up in landfills or worse — burnt. The old industry secret was brought to light by Burberry’s burning of $37 million worth of unsold bags, clothes, and cosmetics in late 2018, which backfired greatly for the brand. 


Made-to-order could be adopted to brands’ supply chain and help them avoid overproduction and deadstock, PlatformE’s Demiri said. Photo: Shutterstock

Made-to-order can also be the solution to the currently linear supply chain model, which isn’t agile to the fast-changing demand, Alvanon’s CEO Wang said. “The rise of digital media only magnifies the issue,” said Wang. “The mismatch right now is that a digital consumer is being served by an analog supply chain.” 

Unlike direct-to-consumer brands that were born in the digital era, the “analog supply chain” that Wang described were built and used by luxury brands in the last few decades, which is hard to shift overnight. As a process that glues suppliers, production, distribution, and customers, it’s usually connected with emails, calls, and spreadsheets to pass information from one link to another. Both Wang and Demiri believed that it could be more efficient with technological advancement.

Back in 2015, when Demiri partnered with co-founders Gonçalo Cruz and Farfetch‘s Jose Neves to create a new sneaker brand, but discovered, instead, the need for a just-in-time production process for the whole industry. And PlatformE offers software suites for brands to manage made-to-order production and orders to make it more agile. It has attracted investment including The Amorim Group, The Luxury Fund Management and Carmen Busquets, luxury e-tailer Net-a-Porter’s first investor. 

From a back-end perspective, the company transformed the linear supply chain model to an interconnected one, so that when a customer puts in a personalization request at the front end, the brand would automatically receive instructions for production, which then enters its supply chain.

“We use a platform approach that enables a one-to-many-type of communication, which is pivotal when it comes to scaling made-to-order,” Demiri said, adding that while traditional made-to-order is highly manual, there is a need to standardize the order information in between the brand, its manufacturer, and retailers. So far, the company has worked with Gucci, Dior, Nicholas Kirkwood, Nordstrom, and Farfetch. 

During the same period of time, however, the customer doesn’t want to  wait in the dark. “The most exciting part is that the customer can track their item in real time,” Demiri says. “Brands can upload photos of the product being made and customers can learn about the craftsmanship and share these images [on social media].” 

While PlatformE’s platform supports the interconnected communications within the supply chain, Alvanon’s technologies can fasten the process of a brands’ product development as much as eight weeks per season, its website says.

The company helps brands — Chanel, Alexander Wang, and Coach, to name a few — establish each of their own sizing schemes with its 3D scanning and data analytics technology. As a result, the legacy design process can be shifted to a 3D virtual sample creation, development and approval. “3D is the first step on the road to mass customization,” CEO Wang says. “Clients who have been working with the 3D avatars are able to make much better products. They have also been able to move faster and increase speed-to-market to remain competitive.” 

Alvanon helps retailers, brands, and manufacturers achieve 3D apparel design capability with its virtual avatar size sets technology. Photo: Courtesy of Alvanon

While technology like 3D would ease up the scaling process for brands’ made-to-order offerings, it might be able to change customers’ experiences in the future. “You used to go to the tailor and they would make one item for you. I can visualize that one day you will customize bespoke, customized, perfectly fitting items made just for you, just like a Savile Row offering, only this time it will be purchased from your smartphone,” Wang says. 

Front End Needs: Unresolved Issues and Opportunities in China

The demand for made-to-order, mostly light customization, is sprouting on China’s social media. Among the sea of brands’ offerings their own customization, there are also unofficial sellers that offer to add a personal touch to people’s luxury items with classic patterns, like Louis Vuitton’s Monogram and Goyard Chevron. On Little Red Book, the 4,000 posts under the tag “made-to-order luxury” are mostly ads from customization shops that take orders to draw anything on one’s luxury item from cartoon figures, to pets, and their loved ones. 

Samples of unofficial customization shops on Little Red Book, from which customers can request any drawings on their luxury items. Photo: Screenshots Little Red Book

And from the increasingly positive social reactions, consumers want customization services from luxury brands, and when they don’t offer these services, they’re exploring other routes to meet those needs. However, some brands are waking up to this and beginning to explore options more intently. 

Gucci, for example, is expanding its customization offerings categorically and geographically. Upon launching customization services in Beijing’s SKP flagship store in 2016 for handbags, Gucci is also offering made-to-order menswear services in tier-one cities like Beijing and Shanghai, as well as in tier-two cities like Shenyang and Chengdu, Yaok Institute’s Dr. Zhou said. A regular Dior customer from Jiangsu Province also told Jing Daily that the brand has invited her to a few private customization handbag events in Shanghai.  

To Dr. Zhou, the majority of the light customization is not a real made-to-order item. “We call this ‘fake customization’ because a customer’s choices are restricted,” Dr. Zhou said. There are different types made-to-order for customers: one is the customization “under the brand,” which aligns with the public perception of made-to-order luxury. The second type is “above the brand,” meaning that the customers still want something specific from the brand that’s outside its current offerings. The highest level is free customization, for example, when someone “may want the Hermès to design an outfit with Zegna’s materials,” Dr. Zhou says. 

What used to be an additional service for luxury brands has grown with the Chinese market. Some brands’ made-to-order services have become a driving force for their China area’s double-digit growth. For others, made-to-order accounts for as much as 70% of the companies’ sales, according to Yaok’s research. 

Along with made-to-order expansion in China, issues have surfaced. “Chinese people have different body types compared to Europeans, so when European luxury brands use their sampling for Chinese customers, it doesn’t fit,” Dr. Zhou says, adding that one loyal Hermès customer told Yaok Institute that he once had to look at other brands’ gloves instead of a pair from Hermès because they didn’t fit perfectly. Although she already started seeing brands tackling the issue with infrared technology, it hasn’t been widely adopted. 

The industry’s inclination for a sense of rarity may also be a potential problem. While brands like Chanel and Celine reportedly need six months or longer to ship a bespoke order, some newcomers in the West, like the leatherwear producer 1Atelier have built their business model on made-to-order, promising to deliver their customized bags (cost between $300 and $8,000) in three weeks. Ermenegildo Zegna is also promising a similar delivery time for their made-to-measure suits and shirts in China, according to its website, but it would still take most other brands more than three months. 


Zegna promises a 21-day delivery time for their made-to-measure offerings in China, according to its website, but it would take most other brands much longer. Photo: Zegna’s Website

Such sentiment is agreed by Demiri. “In China, personalization or customization is not done with a Chinese lens; it’s done with Western lens,” he says. “But I think China is ready, and brands should cater to what the Chinese consumers demand.”

Over the past few years, certain brands might have already learned their lessons from offering made-to-order services in different parts of the world. Now, they could take their past experiences to go further with the help of technology, especially in China’s vast market, where there is a growing demand from high-net-worth-individuals to show their taste and personality.

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Chinese Manufacturer Could “Shut Anytime” as Fossil Halts Production & More

In “Headlines from China,” we share the biggest news stories about the luxury industry in China that have yet to make it into the English language. In this week’s edition, we discuss:

  • Chinese Manufacturer Could “Shut Anytime” as Fossil Halts Production
  • China’s Top Livestreamer Viya to Enter Real Estate
  • WeChat Third-Party Service Providers Boost Connected E-Commerce

Chinese Manufacturer Could “Shut Anytime” as Fossil Halts Production —  Jiemian  

American watch brand Fossil has halted production in China, which could lead the Chinese manufacturer to close. In a recent statement to its employees, Goodwill Watch Case in Dongguan, Guangzhou Province, announced that it could “shut anytime” now that Fossil has canceled its current and future orders. “Our most important client, American brand Fossil, has stopped all of its orders and requested to cancel or pause previous orders. Our operation is in crisis,” the company said in the statement.

Fossil temporarily closed all of its North American stores and the majority of its European stores due to the pandemic. The brand belongs to Fossil Group, which also owns BMW and Skagen Denmark, among other brands, and it also makes licensed accessories for brands such as Emporio Armani, Michael Kors, and DKNY. The group was struggling with its sales performance even before the pandemic took place, Jiemian added.


Top livestreamer Viya (left) has announced that she will start livestreaming apartments in early April. Photo: Viya’s Weibo

China’s Top Livestreamer Viya to Enter Real Estate Xincainet 

In a surprising but sensible move, China’s top livestreamer Viya announced plans to enter the real estate business as soon as next month. To make this monumental leap from being an influencer, Viya partnered with the Fosun group’s real estate arm to sell apartments that cost one to two million yuan (around $140,000 to $280,000) in Hangzhou’s city center, which she will feature on her livestream. 

As China recovers from the COVID-19 pandemic, many businesses are now leveraging e-commerce and livestreaming to help drive sales. The fashion investment group Fosun, which owns French luxury brand Lanvin, also plans to have Viya introduce its electronics and furniture brands to her viewers. Viewers cannot put in their orders directly during the livestream, but they could reserve purchase slots, which guarantees availability if they decided to buy later, Viya said.

Proya has benefitted from Weimob’s feature to take consumers from WeChat friends’ circle ads to its livestreaming channel, Weimob says. Photo: Screenshot of Proya Video Campaign

WeChat Third-Party Service Providers Boost Connected E-Commerce — 36Kr

In addition to being a top app for Chinese consumers, WeChat is now a platform where third-party service providers can promote their features to brands. One of the first brands to use the WeChat service provider Weimob’s built-in feature, the Chinese beauty brand Proya, got great engagement results from its recent livestream event this past Saturday. With a single click on ads in WeChat friends circle (similar to Facebook’s news feeds), WeChat users can now go directly to a brand’s livestreaming channel. Proya’s two-hour livestream event attracted over one million views and more than 550,000 comments — partially thanks to the new feature’s easy access, Weimob says.

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Will Digital Vouchers Heal China’s Economy?

What Happened

To encourage people to spend, Chinese cities and e-commerce platforms are giving away millions of dollars worth of digital vouchers. 

During the first two months of 2020 — the worst period of the pandemic in China — the country’s net sales of consumer goods dropped 20.5 percent, according to the National Bureau of Statistics. As a driving force of China’s economy, consumption has quickly become the top area of focus for local governments. 

Jiangsu’s provincial capital of Nanjing issued 318 million yuan ($44.8 million) worth of digital vouchers on March 15 and saw instant results. From last Wednesday through Sunday, Nanjing locals with vouchers had spent nearly 10 million yuan ($1.4 million). Guangxi Province, Hangzhou and Qingdao all followed suit. 

While local governments focus on food, culture, and tourism, e-commerce platforms are doing the heavy lifting for the retail sector. Recently, electronics giant Guomei teamed up with the e-commerce platform Pinduoduo to give away discounts and vouchers for Super Brand Day: an idea popularized by Tmall to showcase different brands on particular days. Meanwhile, Taobao, Tmall, and are all promoting brands’ discounts on their main pages.

Jing Take

China is the world’s first country to recover from COVID-19, but consumer confidence in the country isn’t going to change overnight. As Jing Daily wrote recently, the “revenge spending” that brands crave has yet to arrive.

Like many distressed companies in China, local fashion companies Baoxiniao and Ribo Fashion Group received 13.5 million yuan and 5.4 million yuan of government compensation, respectively, according to Jiemian. 

Various financial analysts believe that a short-term stimulus for companies and individuals might work for now, but what about the rest of the year? As the global COVID-19 crisis worsens, decreased retail demand is going to have a butterfly effect on China’s import/export and manufacturing industries. American watchmaker Fossil’s manufacturer could “shut anytime” because of canceled orders. 

Like any collective crisis, it will take time for fear to dissipate. But before then, brands should watch every step China is taking on the road to recovery.

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The Rise of the Chinese Celebrities Fighting COVID-19

For our latest celebrity installment, the singer Han Hong unexpectedly rose to the number-one ranking in February. She grabbed the social media spotlight in China thanks to her charity foundation, which responded swiftly to the COVID-19 crisis.

When the heavily-impacted city of Wuhan suffered from a severe lack of medical supplies, official charity organizations like the Hubei chapter of the Red Cross were unable to bring in supplies quickly amid reports that the charity had instead been hoarding supplies at its warehouse. And while this was unfortunate, many private donors like Han Hong with her Love Charity Foundation stepped in to help and gain a new public trust.

It’s been reported that the foundation had already raised over $19 million (140 million yuan) for medical supplies by January 31. Han Hong’s foundation posted all its donations transparently via social media, and she even helped deliver supplies to Wuhan herself. This prompted netizens to look into Hong’s background in charity work, and they soon realized that she had a long history of helping the needy. Yet, some still questioned whether she had an ulterior motive.

Despite doubts, Hong has built an overwhelmingly positive public image, and she later shared a list of celebrities who contributed to her foundation (though this triggered a wave of netizen discussions comparing celebrities’ commercial values to the amounts of money they donated).

Aside from Han Hong, the other names atop February’s celebrity list were the usual commercial stars. For example, “little fresh meat” male celebs Xiao Zhan and Wang Yibo were listed second and third on the R3’s February list, respectively. And as previously mentioned, the fans of these top-ranked celebrities played a major role during the epidemic. Xiao Zhan generated a larger fan donation than most, and Wang Yibo’s fans also donated money for medical equipment. Since the outbreak began, many celebrity fan groups followed suit by either promoting their idols’ charity activities or donating materials directly in their idol’s name.

The initial scrutiny surrounding Han Hong’s charity work, however, shows that celebrity charity activities can come with a downside. Some have been scolded by the public for attempting activities outside their areas of expertise. And in an age when Chinese netizens examine a star’s every move, missteps can quickly be broadcasted to the public. Therefore, when a foreign brand considers working with a celebrity, past charity events are likely to weigh heavily in their selection process.

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Marketing Rules For A Recession

In years past, consumers in China were encouraged to spend to help boost the country’s growth. As a result, younger luxury buyers were happy to react to stimulus plans and engage in excessive materialism. But the consumer habits of Chinese Gen Zers were soon making headlines — but not necessarily for the right reasons. The generation’s lighthearted attitudes were instrumental in promoting a “live beyond one’s means” trend.

A recent HSBC survey shows the debt-to-income ratio of China’s post-90s generation has reached a staggering 1,850 percent. The Star also highlights that the average debt China’s Gen. Z owes to a variety of lending and credit-issuing institutions comes to over 120,000 yuan (72,393 RMB). Meanwhile, data released by US-listed Chinese financial lending platform Rong360 reveals that around 85 percent of applicants for consumer lending in China were born after 1980. As such, the spending habits of this generation are jeopardizing China’s savings rate.

The power of this consumer bracket shouldn’t be underestimated since they represent 170 million “free-spenders” that could change China’s trajectory as a top-ranked country in national savings rates. According to CEIC Data, China’s national savings rate was 46 percent in 2018, while the world average stood at 26.5 percent. But China’s shrinking saver class isn’t the only thing pushing the country’s economy off course. There’s also rising inflation.

China’s overall consumer price index (CPI) rose by 5.2 percent YoY during February of 2020. And as Vogue Business in China stated, “The era of increased consumer spending and high confidence, which powered the luxury consumption in China in recent years, is coming to an end.” The current economic stall and a recent inflation hike seem to be making a recession inevitable.

Consumers have different priorities during economic booms than they do during recessions. In downturn periods, consumer spending is reduced, debts balloon, and personal savings decline. Consequently, sales revenues and profits also see a sharp decline, and businesses are forced to reduce expenditures and eliminate investments. Most companies move forward by curtailing their marketing budgets while cutting costs associated with promotional activities. But this could backfire, turning into a costly mistake that alienates the core audience and pushes away prospective customers.

A smart marketing strategy could guarantee market relevance, emphasize the brand’s unique value proposition (UVP), and engage the audience at a time when consumers need diversion and sympathy. In other words, a recession might become the perfect time to grow a market share since most other brands will be stagnating.

We looked into some marketing rules for luxury brands to follow during the recession:

Focus on self-indulgence and become a woman-centric brand

It’s very important to remember that in an economic downturn, the middle-market consumer may be tempted to eliminate unnecessary spending, and their shopping patterns will be greatly changed. This consumer segment becomes even more value-oriented and is constantly on the lookout for the next deal or promotion.

Just to put things into perspective, CNBC notes that “the financial crisis of 2008 left an indelible mark on consumer behaviors that still affect how Americans spend today.” Rod Sides, vice-chairman of Deloitte LLP, shares this belief, stating, “We’ve conditioned consumers to wait for the deal.”

Luxury retailers seemingly want to ride out this recession without cheapening their brand or using aggressive discount strategies. And if they understand the psychology of how consumers react to a downturn, they can achieve that.

The first thing retailers need to consider is that a recession is a time of general psychological distress. But occasionally, distress can provoke comforting behaviors like impulse buying or self-soothing consumption.

Since consumers feel stressed every day, they turn to retail shopping to escape reality. Consequently, fashion becomes an emotional treat that creates excitement and anticipation, pushing emotional ordeals to the sidelines. Considering that the luxury industry is all about indulgence and extravagance, this development is favorable for the fashion world. And since women are often portrayed as self-indulgent consumers, advertising directly to them could also prove to be a gold mine.

For instance, the diamond industry was one of the first to acknowledge the power of the SHEconomy, and they designed ads in line with this “Treat Yo’ Self” trend — a smart move considering that female self-purchasing is on the rise, especially among 25-to-39-year-olds, according to De Beers. The “self-purchasing woman” trend has taken the jewelry world by storm, and even more traditional brands like Tiffany & Co. are now embracing it.

“The contemporary woman doesn’t need to wait for her boyfriend or her husband to buy her a jewelry piece,” said Manuel Carrera, founder of the Spanish jewelry firm Carrera y Carrera, to the Observer.

Invest in discreet luxury lines

Already in 2018, the Business Insider noted that “discreet wealth is the new status symbol.

Since the Great Recession, inconspicuous consumption has been on the rise, and a global economic downturn should only exacerbate that trend. The elite is no longer interested in status symbols; they prefer to invest in intangible items like health and education rather than designer accessories or branded outfits.

Getting high-net-worth individuals (HNWI) to consume luxury again means prioritizing craftsmanship, mastery, and personalization. In other words: a return to the essence of luxury and a departure from the democratization trend.

According to the Asia Pacific Millionaires 2020 Report from Agility Research and Strategy, millionaires in China are more resilient and will continue to spend again after the COVID-19 outbreak. However, Agility has recorded a shift in priorities and mindset where sustainability, health, wellness, and philanthropy are key focus areas along with kids’ education.

A discreet luxury line should integrate elements of wellness into the retail experience, and luxury brands should consider partnering with holistic luxury resorts like Le Blanc Spa Resort or Ananda to bond health and recreation with luxury.

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Louis Vuitton’s Debut Livestream on Little Red Book

What happened: 

“Welcome to the Louis Vuitton summer hour livestream!” This was fashion blogger Yvonne Ching’s introduction to excited viewers this Thursday, March 26. She was hosting the brand’s debut livestream on the popular Chinese social e-commerce platform Little Red Book — while dressed head-to-toe in the newest LV summer collection, of course.

The one-hour-long livestream was split into different sections, including a demonstration of the host’s outfit and an interview session with guest celebrity Zhong Cuxi, who answered questions from viewers about topics like how to best wear your scarf. Throughout the livestream, Ching reminded viewers where they could purchase new LV items, which were easily accessible via the site.


Livestream host Yvonne Ching (left) with guest celebrity Zhong Chuxi (right).

The livestream saw positive engagement from viewers, garnering over 152,000 pageviews and overflowed with many different comments — from sales associates encouraging consumers to contact them or visit certain offline stores to Yvonne’s fans praising her look. Yet some cynically referred to the livestream as a dangerous lure to move products, while other critics complained that the setting was too low-end for the luxury brand.

Jing Take: 

Louis Vuitton’s livestream debut on Little Red Book was further proof of the brand’s strategy to invest deeply in the platform while also trying out a new type of shopping experience to suit the virus crisis. Little Red Book is known as a community where people candidly share shopping tips, prices, and styling advice, so this informative session — with two influencers sharing their favorite items and styling tips — seemed appropriate. Within the hour-long session, consumers gleaned a wealth of information about LV products, which put them in a better position to buy those products later.

Louis Vuitton was the first luxury brand to launch an official account on Little Red Book, and it ranks atop its fellow brands with a total of 130,000 followers.

Livestream is now an irreversible trend that will only become more and more mainstream for shoppers. However, it remains a double-edged sword for luxury brands because it can draw consumers closer, but it also risks exposing unforeseen problems — logistical or otherwise. Yet LV’s first try appears to have been a rousing success. The host engaged consumers naturally — as a friend would — and the experience was informative. While many are still experimenting with livestream tools as a way to interact with consumers and promote the brand image, this daring approach by Louis Vuitton went further by organically monetizing the event.

The Jing Take reports on a leading piece of news while presenting our editorial team’s analysis of its key implications for the luxury industry. In this recurring column, we analyze everything from product drops and mergers to heated debates that sprout up on Chinese social media.

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8 Pitfalls of Social Selling via Live Streaming in China

A good portion of social selling energy is now focused on live streaming in China. Brands are lining up to collaborate with top live streamers like Viya (Huang Wei) and Austin Li (Li Jiaqi). Those endorsements come with a heavy price tag, so are these expensive campaigns worth it? The informed marketer can help themselves make that decision by being clear-eyed about the potential pain points of social selling via live streaming in China.

Is it worth the money?
Common wisdom says that paying to work with a live streamer who will review your product, use it in a demo or actively sell it on their show is just the cost of live commerce in China. There’s some truth in that, but brands should proceed with caution. For a start, top live streamers charge thousands of dollars for just a few minutes of exposure. They’ll also demand that brands offer significant discounts on the featured products. Then on top fees and discounts, there are still sales commissions.

PARKLU’s CMO, Elijah Whaley says many brands can struggle to break even—and many will end up disappointed. “They [live streamers] don’t give you any guarantee of sales, they give you a projection,” he explains. In one campaign he worked on, Whaley said a brand was given a proposal of $20,000 USD base fee and 30% commissions for a five-minute slot on a top live streamer’s show. The live streamers team also required that the product be discounted by 75 percent. The brand was told the sales projection was “anywhere from 8000 units to 20,000 units,” Whaley said. “The problem was, for the brand to breakeven the live streamer would have to sell 17,000 units. So, the only way to ever reasonably see positive ROI would be to retain a high percentage of the customers that purchased the product. The risk is that the 75% discount price would create value perception dissonance in the eyes of these new customers.”

“You’re paying for five minutes of airtime in a show that lasts hours, and you’re paying $20,000 upfront,” Whaley said. If the campaign doesn’t stick its landing, the brand could end up significantly out of pocket with very little upside. Brands should weigh up these risks, considering where the break-even point falls within the projected sales figures, and consider the damage a failed campaign could do to the brand.

Discounts can undermine the brand
Livestreamers will dictate that brands offer extremely steep discounts on their products. That’s fine for the KOL and great for the viewers, but brands can undermine their own pricing strategy and perceived value by compromising too much on discounts. Misguided targeting can compound this effect and lead brands to draw the wrong conclusions from an apparently successful campaign. For example, a brand works with a KOL on a heavily discounted live-streamed sale. The item sells out in minutes, and everybody goes home happy, right?

Not necessarily. The brand may bask in the short-term illusion of having secured access to a new audience, but do these apparent new fans become repeat customers? Whaley said in the case of the campaign he described, the relatively high break-even point left the brand relying on a high retention rate for the campaign to bring in net profit. “The fewer units we sold the more important retention would become,” he said. “But the steeply discounted products will likely damage repeat purchase rates.”

Agreeing to discounts can seem like it comes with the social selling territory when working with live-streamers. However, the unintended consequence can be that the discount sets a price point in the minds of the live-streaming audience. “You have essentially damaged the brand by saying that it’s possible to buy it at this price,” Whaley said.

Don’t sacrifice your hero products
The other risk with discounting products for sales while doing live streaming in China is that they could be snapped up and resold at a profit. While the brand struggles to recoup its investment in the campaign, somebody is making a fast buck on the back of the brand’s discount. This happens, and Whaley believes that in some cases, live streamers themselves may even be directing the resale operations. “I think it’s probably part of the dark arts of what goes on in this business. I mean, Xueli was caught redhanded during a live stream last year discussing the details of inflating sales numbers with a crew member,” he said. “I wouldn’t be surprised if it’s somehow in collaboration with the liver streamers’ business itself and that they run some sort of Tmall or Taobao store on the side that resells the products for a slightly increased price.”

Whaley said some brands have gotten savvy about this risk. The key is to create limited-edition offerings for live stream sales. “What they’re doing when they do these collaborations, especially the bigger premium brands, is they’re making a brand new SKU for the live stream,” Whaley said. “Some sort of special Chinese New Year collection or a package deal, something that doesn’t damage the price point of hero products. That mitigates the risk that you’re going to have some sort of mass buying situation where someone’s just going to go out and resell it.” Hero products are the core of a brand’s profitability: don’t sacrifice them for the sake of a live stream campaign.

Is the audience right for the brand?
It’s tempting to get excited by a live streamer’s astronomical follower numbers or viewing figures. But an important consideration is who those thousands or millions of viewers are. Does their profile align with the brand’s target customer? If not, think twice.

In some cases, Whaley says the audience might only be tuning in to snap up heavily discounted bargains. For brands who aim to build loyalty around higher-priced products and whose target customer is not price-sensitive, there’s little point expending energy and offering deep price cuts in a bid to woo live-stream audiences who are only there for the discounts. “Live stream retailtainment is China’s ‘Ready Player One’ social selling equivalent of hanging out at the mall,” Whaley said. “What percentage of people that hang out at the mall go to luxury stores or buy premium products? Not many.” The solution for brands is to do due diligence on the audience of the live streamers they’re considering working with—try to establish what drives audiences to their content.

Live streaming in China has limited virality
There’s a lot of lore surrounding social selling and live streaming in China. Impressive tales of influencers selling out thousands of products in record time may wow marketers at a conference, but the average consumer hear about these campaigns nor do they care. Livestream content is ephemeral by definition. While the occasional moment might be memorable or entertaining enough to go truly viral, the vast majority of live stream content will only be seen by the people who were watching live. “People don’t watch old live streams, and in most cases, if you did watch an old live stream, you can’t even buy the discount products,” Whaley said. “You’re not going to be able to buy them for the discount because it’s always time-sensitive, so it wouldn’t matter anyway.”

Beware of repetitive content and audience fatigue
Brands should also be wary of their campaign getting lost in the ocean of live-stream content that’s out there. This is more of a concern for brands who are considering collaborations with live streamers who fall short of the top bracket of influencers in their category. There is so much social selling content out there, distributed across an array of platforms—and much of it lacks distinction. According to the 2019 Q3 China Online Live Streaming Market Research Report from iiMedia Research, the audience for live-streamed content has grown to over 500 million, but growth in the market is slowing down. Of course, this is still a huge audience, but brands should consider whether live streaming content itself—and what type of live-streamed content—is the best outlet for them to achieve their campaign goals.

Live streamers control the social selling traffic
With over 500 million viewers, brands might think that’s plenty of audience share to divide up across the thousands of live streamers active across platforms from Yizhibo to YY Live and Huajiao. However, marketers should be under no illusions—much of China’s live-streaming traffic flows through the highest-ranked live streamers. Livestreamers who are new to the scene have to struggle to build an audience, and as the field grows ever more crowded, the competition for eyeballs only grows fiercer. There are certainly pros and cons of working with the top tier stars of live streaming in China, but in terms of traffic, the gulf between the big names and everyone else is huge.

Copyright infringement
Finally, brands who rely on copyright protection laws to protect their own IP may be uneasy about associating themselves with live-streamed content that features unauthorized use of copyrighted music, movie and video content, games and more. Unfortunately, copyright infringements are rife when doing live streaming in China. There are examples of intentional copyright violations, but in many cases, the infringement arises from live streamers having inadequate knowledge of the rules around copyright.

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How Will China’s Luxury Fashion Market Bounce Back?

The impact of COVID-19’s effect is starting to take shape as we enter the second financial quarter of 2020. While the majority of the world is struggling to contain this out-of-control disease, fashion companies big and small are also fighting to soften the economic blow they’ll take during this troubling time.

Nearly 40 percent of global fashion consumers kept their wallets shut during the peak outbreak months, a time when sales normally surge thanks to China’s Spring Festival. The country’s travel shoppers, which make up 38 percent of the global fashion market, traditionally save most of their consumption for these winter months. And now, as more people in China begin to go back to work after a required quarantine period, many are looking at reduced salaries, which has led to more conservative spending.

Struggles on both sides of the equation

But the economic downturn is not only the fault of consumers. Most brand stores and retail outlets haven’t even resumed full operations in many parts of the country and are slowly closing doors abroad, as well. Those who remain open have seen few customers. Meanwhile, stocking new inventory has been an issue because factories that are critical to the global fashion supply-chain are struggling to resume normal operations, thanks to a lack of workers.

All these factors have led to an 80-percent drop in first-quarter sales revenue for some brands as well as less drastic decreases for others. In the stock market, shares of some fashion giants have seen moderate drops, although some have remained surprisingly resilient during the crisis. Still, most executives are expecting an average 5-percent decrease in annual sales. Product launches, promotional campaigns, and other previously planned marketing efforts have been brought to a halt.

Even firms that had initially planned on redirecting their focus to markets outside of China are aware of the massive gap in revenue an absence of Chinese consumers is leaving — not to mention sluggish production from China’s manufacturing lines. These companies are still critical to fashion brands that make garments and accessories abroad because a lot of production is still heavily exported from China. The bottleneck this is creating in logistics is only going to worsen over the coming months when cargo shipments (both inbound and outbound) to major markets are faced with more cancellations. And when normal shipments do resume, the fight between companies to ship out goods will create a huge increase in shipping rates.

General optimism from within

While these facts and figures are naturally worrying, many market experts are not too panicked. In fact, the COVID-19 outbreak is not the first disaster of its kind to unleash turmoil in the retail fashion world, and previous outbreaks show comforting resolutions. After 2002-03’s SARS outbreak, for example, a related economic slump was followed by a steep V-shaped rebound due to pent-up consumer demand, and sales surged after the dip. Although China is quite different than it was in 2003, most analysts believe a similar trajectory will follow, and they point to many other examples around the world as proof.

But the questions on every mind are: When can companies expect this to occur and how can they prepare accordingly? More importantly, if a surge in sales does occur in the third or fourth quarter, leading to even greater sales than before the epidemic, how can the luxury fashion sector cope with an increased demand against its crippled supply? As many brands have already accepted that Q1 and maybe Q2 sales are lost causes, many are looking to readjust marketing approaches for the remainder of the year — with some interesting solutions.

Mitigating losses and contingency plans can lead to opportunity

This less-than-ideal market situation is forcing brands to quickly develop a better understanding of consumer expectations on pricing and products during this time (and over the coming months), so they can reform their marketing strategies and approaches accordingly.

One such approach is focusing on online retail, something that fashion brands like Uniqlo and cosmetic brands like L’Oréal have already effectively done to help to soften the blow to in-store sales. For these brands and many others, this sudden loss can become a major opportunity if they can boost the digitalization of their activities and increase investments in emerging retail technologies.

Tech developments won’t just help maintain sales via online e-commerce platforms; they’ll also minimize disruptions to supply-chain activities by shifting toward the more direct and efficient B2C processes that are gaining favor, thanks to familiar platforms like Tmall.

This shift in power is also presenting an enormous opportunity for emerging Chinese fashion labels that previously struggled to compete with foreign giants but now have a more level playing field and home-field advantage.

It’s still too early to say just how severe 2020 will be for global fashion brands, but as many early-movers have already proven, there’s no time to waste when adapting to a new environment. Brands must fully explore innovative approaches to help ensure a steady sales flow via previously untested methods. This ‘new norm’ for the fashion retail industry could push mature brands to redefine their conventional methods by transitioning to digitalized sales processes, yet it could also open doors for emerging brands that need a greater market presence.

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