Japan’s High-end Retailer Takashimaya Exits China


In “Chinese Whispers,” 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:

  • Takashimaya liquidates China business
  • Chanel Beauty to sell on Alibaba’s Tmall
  • Moda Operandi’s new Managing Director of China
Takashimaya

Takashimaya’s notice in Chinese.

1. Takashimaya is the latest victim of China’s retail apocalypse – Sohu

This week, the Japanese high-end shopping mall operator Takashimaya announced that it would close down its Shanghai store in the Changning district — the only outlet it has in China — on August 25. The move also signaled the company’s permanent exit from the Chinese market after launching in 2012.

Following Carrefour China’s sale to the Chinese company Suning during the same week, Takashimaya became the latest instance of a foreign retailer who failed to keep up with the quickly-evolving new retail landscape in China. In the official notice that the Japanese brand issued to the public, it claimed that the “changing consumption structure and the stiff competition” made it impossible to sustain profitability.

Chanel

The French premium beauty brand Chanel Beauty will launch a flagship store on Alibaba’s Tmall, this July. Photo: Chanel’s official site

2. Chanel’s beauty line to debut on Alibaba’s Tmall in July – Jiemian

The French premium beauty brand Chanel Beauty will launch a flagship store on Alibaba’s B2C marketplace, Tmall, this July. The brand will utilize the platform’s “Flagship Store 2.0” model to provide an engaging and interactive shopping experience to customers. With Tmall’s “Flagship Store 2.0,” Chanel can not only customize its homepage but also offer technology like AR Beauty’s Try-on for consumers to try different colors of lipsticks via mobile phone. A great number of beauty brands including YSL Beauty, MAC, and Estee Lauder have found profound success on the Tmall platform.

Ming Yang

Ming Yang, the new Managing Director of Moda Operandi China.

3. Moda Operandi officially enters China with new MD appointment – Moda Operandi

The premium fashion retailer Moda Operandi announced the hiring of Ming Yang as Managing Director, China, this week. Ming will act as Moda Operandi’s first employee in China, growing the company’s Shanghai team and overseeing all of Moda Operandi’s business strategies and operations in mainland China. Ming’s appointment also represents Moda Operandi’s official entry into the region as it builds out China-focused strategies, operations, marketing, and personal styling programs from Shanghai.





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CEO Interview: How Shiseido Reaches Chinese Consumers


When Masahiko Uotani was chosen to help rescue iconic Japanese cosmetics brand Shiseido in 2014, he was the first outsider to run the company in its 147-year history. He quickly made his commitment clear, pledging to ensure Shiseido sustained its position as a great global company for decades to come.

Tasked with revitalizing a traditional brand that was struggling to adapt to rapid developments in the way young people, in particular, sourced and bought their skincare and makeup products, Uotani set about overhauling a rigid hierarchical structure that had impaired the company’s ability to stay in touch with consumers.

Personifying a new attitude of openness to ideas, he visited more than 10,000 of his own employees in his first year in the job, on a global tour of the company’s operations.

His subsequent corporate assessment resulted in a six-year transformation plan, known as Vision 2020, which four years on is driving remarkable success. In its last earnings call, reporting for the first nine months of 2018, Shiseido said revenue rose 10 percent year-over-year to $7.4 billion (805.8 billion yen), with sales improving across all its segments, driven by upbeat performance in Japan, China, and duty-free outlets.

Masahiko Uotani’s background in global marketing continues to help Shiseido reinforce its brand identity in the eyes of consumers as an innovation-driven cosmetics powerhouse, a position epitomized by his decision to establish new R&D centers, his decision to establish new R&D center, first in Yokohama.

Fresh from a recent trip to China, he sat down with McKinsey senior partner Daniel Zipser to discuss how Chinese consumers have become the engine of Shiseido’s growth, how the company has adapted its digital and wider marketing to engage Chinese at home and abroad, and an exciting new strategic partnership with Chinese tech titan Alibaba. This video interview was recorded in November 2018.

Daniel Zipser: Shiseido is 147 years old and has expanded from its origins in Japan into a global company, with more than half your business now coming from outside Japan. Since you’ve been appointed CEO and president, how do you see the outlook for your business outside of Japan?

Masahiko Uotani: This is by definition a traditional Japanese company, having been in the business for 147 years. Since I joined in 2014, I’ve considered myself to have two missions. One is to make a traditional company a truly global company, and the second is to help Shiseido survive for another 100 years.

My definition of a global company is not only about sales—specifically 60 percent already being ex-Japan—but more importantly, I emphasize diversity of people, organization, and ways of thinking.

We’re moving towards becoming a global company but we’re not quite there yet. I’m trying to change the mind-set and behavior, so our people reflect diversity, because I believe diversity will be a source of innovation that will drive future company growth. We’ve been changing a lot, but we’re still in the middle of the transformation.

Daniel Zipser: What role does the Chinese consumer play for Shiseido?

Masahiko Uotani: It’s very important. Our sales in China are really growing, up more than 30 percent this year, and China is our number two market now, bigger even than the US. Also, Chinese consumers are traveling. More than 130 million people went out of China last year, and 10 million of them came to Japan. Chinese consumers love to buy cosmetics and visit travel retail businesses, as well as duty-free shops at airports; they do a lot of shopping.

Actually more than 60 percent of our incremental growth in the last three years came as a result of Chinese consumers. But more than that, China is very close to Japan, it’s a part of Asia. We share a lot of values, for example, as Asians, our skin is quite similar. If a brand works in Japan, we can assume it’s going to be loved by Chinese consumers as well. Chinese people are critical for our business to succeed.

Daniel Zipser: You make an interesting point, it’s not only about the Chinese consumer in China but also the Chinese consumer traveling outside of China. You mentioned more than 100 million Chinese people are traveling overseas. What can beauty companies do to attract Chinese consumers, not just in their home market, but while they’re traveling?

Masahiko Uotani: Traveling these days is not just about visiting another country for sightseeing. A lot of people are looking for experiences. Many Chinese consumers come to Japan, initially just to go and see Mount Fuji, for example—just sightseeing. They’re coming to Ginza [in Tokyo] for shopping. These days we also see a lot of Chinese coming to Japan to visit far-flung places I’ve never even visited myself.

They’re looking for heritage and historical spots, visiting for experiences like Japanese tea ceremonies and Ikebana—the flower arranging ceremony. They’re really attracted to cultural activities. It’s good to see that mutual understanding blossom as both nations continue to rise. China and Japan should become friends, in my opinion.

When Chinese consumers come to Japan, we should be creating an environment for them to maximize their experience, while talking and connecting to them—creating a foundation for business as well.

Then, we can track whether they continue to use our brands after they try our products in Japan. Some 60 percent of Chinese consumers who buy our cosmetics brands in Japan keep using the same brand in China. There’s no boundary anymore, opening up new business opportunities for cross-border marketing.

Daniel Zipser: Are there challenges marketing to consumers who are exposed to new brands for the first time outside their home market? What does it mean for global brand positioning?

Masahiko Uotani: When consumers first experience our brands, obviously we have to demonstrate and really convince them that our brands are consistently high quality, that they’re strong products worth trying.

As China’s economy continues to grow, these returning consumers will be exposed more widely to brand experiences, so we’ll really have to double down on communicating why our products are superior, not necessarily just “Hey, come to see us and try it.” We have to really deliver an in-depth message about what the ingredients are, why it works so well, and deliver what they expect from skincare and makeup. Our communication is becoming much deeper, which requires us to do much better marketing to get those consumers connected and engaged. Our marketing is changing to reflect what Chinese consumers are looking for vis-à-vis what the Japanese consumer is looking for—it’s becoming more diverse.

Daniel Zipser: And there’s no country in the world more digital than China.

Masahiko Uotani: Oh yes. I got in a taxi in Shanghai last week, and they don’t accept any cash anymore. In Japan they still prefer cash.

Daniel Zipser: It’s also the home of many of the large ecosystem players, like Alibaba and Tencent, which are among the largest tech companies in the world. What does that mean for the beauty industry?

Masahiko Uotani: It means a lot. It’s a great opportunity to leverage their e-commerce business of course. We’re talking to Alibaba about having a collaborative strategic partnership, where we can make use of all the consumer data they’re collecting around beauty products, events, and content.

People are buying our brands from their ecommerce sites, and telling them about their impressions and feedback. So we can get a lot of consumer data and perform segmentation analysis. Then we can offer them, for example, personalized products. We’re expanding our R&D in Shanghai so that we can quickly react to what we learn by working with them, and come up with new products and promotions, and then test them straight away. Their platform is ideal for testing new, innovative ideas.

Under the traditional retail model, you can’t easily test your products. You have to produce a lot, put them on the shelves, do advertising, and see how consumers are coming to the stores. It costs a lot of money. But by working with them we can come up with a lot of ideas together and test them and keep doing it, or quit if it doesn’t work.

It’s more of a collaboration, where collaboration means brainstorming—rolling up our sleeves and working together. When I first met Jack Ma in Hangzhou, at the end of the meeting he said, “That’s great that we’re going to be working together, but let’s make sure we work…” The Japanese concept is called “PDCA”—Plan, Do, Check, and Action. That means let’s try it out, look at all the data, see if it’s working or not, and then review and come up with revised actions. And then keep going. That’s the way we work with Alibaba.

I’m very excited about this opportunity. We recently created a dedicated team of 20 people who will be relocating to Hangzhou.

Daniel Zipser: Sounds like a great example of China and Japan collaborating, and a great thing for the beauty industry as well as China’s technology companies.

Masahiko Uotani: And this model is not just going to apply in China. We’re going to take it out of China because we’re expanding to Asia, India, the Middle East, and Europe.

Daniel Zipser: Ten years from now, getting out my crystal ball, how do you see the role of China, and the Chinese consumer developing for the beauty industry?

Masahiko Uotani: In the last 40 years, after the country was opened up, first, China became the factory of the world. Then it evolved into the market of the world. That’s where they are now. On top of that, I’m foreseeing they’re going to become a real source of innovation.

I met a lot of entrepreneurs and start-up companies in China. In Hangzhou, for example, they’re becoming like Silicon Valley. We are setting up our business innovation group in Shanghai, reporting to me—I have an office there. This new team will be talking to people and start-ups with innovative ideas. Chinese medicine is a great background for us to think about new products. There are so many values we can find and leverage out of China for future innovations.

 

Masahiko Uotani is the CEO of Shiseido. This interview was conducted by Daniel Zipser, a senior partner in McKinsey’s Shenzhen office. This article originally appeared on McKinsey & Company’s website





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Kering Wants to End Violence Against Women


In Francis Fukuyama’s Trust: The Social Virtues and The Creation of Prosperity, the author explains the correlation between social trust and economic success. Fukuyama asserts that societies with rampant individualism and mistrust undermine economic progress. Broadly, Western societies have entered a dark age of skepticism, where individuals have become suspicious of good deeds and positive values.

Luxury consumers, in particular, experience growing distrust when analyzing the corporate social responsibility programs of premium fashion brands. But given the supply chain scandals of the past years, this attitude is not surprising. Slavery, dire working conditions, child labor, pollution, and violence against workers have blemished the reputation of the luxury world. However, there are certain luxury houses which employ greater transparency. These brands breed and promote a culture of empowerment while prioritizing dignity and mutual respect. The French luxury group Kering is a great example in this direction, being not only a global leader but also a real corporate social responsibility (CSR) trailblazer. For the past decade, through the Kering Foundation, the group has supported programs and initiatives that address problems such as toxic masculinity and violence against women.

Céline Bonnaire, Executive Director of the Kering Foundation told Jing Daily that “François-Henri Pinault founded the Kering Foundation in 2008 to end violence against women after becoming aware of a staggering statistic: one in three women around the world is a victim of abuse.” Indeed, the stats are horrifying, and Céline Bonnaire is right when she says that this “is a universal issue whatever the country, the culture or the social class.”

According to Kering Foundation, on a global level, a third of women become victims of violence during their lifetime. 50 percent of sexual assault victims are underage. In the US, 20 percent of women are sexually assaulted during their college years. In France, every 7 minutes a woman is the victim of penetrative sexual violence, and in China, between 25-30 percent of women become victims of domestic violence.

As reported by the World Health Organization, violence against women has become “a health problem of epidemic proportions,” thus addressing the underlying causes should become a global priority. And that’s exactly what Kering Foundation does through partnerships with non- governmental organizations, social disruptors, and public institutions. Bonnaire says that “60% of Kering employees are women and 80% of its customers as well,” hence, it shouldn’t come as a surprise that ending violence against women is prioritized.

Bonnaire told Jing Daily that the foundation works “hand in hand with a limited number of local partners in the three main regions where the Group operates: the American continent, Western Europe and Asia.” Furthermore, it supports “local survivor-centered organizations that provide comprehensive services to women.” And since 2018 the Kering Foundation is also engaged in “prevention programs,” which target younger men like those belonging to the Gen Z demographic.

Through the White Ribbon For Women campaign and the #ICouldHaveBeen initiative, youngsters are educated to identify the risks of violence against women and “understand the victims’ experience.” The #ICouldHaveBeen campaign starts from the idea that expecting parents select both a female and a male name for their unborn child. The concept is further expanded by notifying social media users that every man could have been a young woman, thus a victim of violence.

Apart from social media campaigns, the Kering Foundation also works with civil organizations and NGOs such as U.S. based survivor advocacy organization End Rape on Campus (EROC), The New York City Alliance Against Sexual Assault with which it partners on Project DOT, HER Fund in Hong Kong, and various institutions that develop programs targeting the wellbeing of refugee and migrant women.

Additionally, the Foundation promotes projects that raise awareness about detrimental cultural practices such as female genital mutilation, child marriage, and the so-called honor killings. As stated on Kering’s website “across 29 countries in Africa and the Middle East, over 200 million women and girls have been subjected to some form of genital mutilation,” and in the next decade, 30 million more are in danger of undergoing some form of female genital mutilation.

In China, the Foundation is committed to ending violence against women and it rewarded the Starfish Project with the 2015 Social Entrepreneur Award for its pioneering social work. Starfish Project is a fair-trade, ethical artisan jewelry business which helps vulnerable groups of women through a wide range of personalized services. Moreover, by endorsing The Maple Women’s Psychological Counseling Center (MWPCCB) in Beijing, the Foundation reinforces its support for projects which safeguard the integrity of domestic violence victims.

This hands-on approach to philanthropy is quite unique in the luxury retail world. At the end of the day, this is an industry that has great results when it comes to employing women but fails at advocating for their rights. But Kering has a genuine interest in women’s empowerment and we can see this in the establishment of a positive workplace environment and the formalization of good HR practices. By integrating gender equality into corporate strategy, Kering has proved that the company aims to create an inclusive and diverse workforce.





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Will Anti-American Sentiment from the Trade War Hurt Luxury Brands?


The hardships endured by South Korean corporations Hyundai Motors and Lotte Group in China following the 2017 THAAD debacle is an old, clichéd example of Chinese nationalism at work. But the results of the Brunswick Group’s recent consumer-focused report could offer a fresh warning to U.S. companies — including luxury brands — about the perils of operating in China during a dragged-out trade dispute.

The ‘U.S.-China Trade Tracker’ surveyed 1,000 Chinese and 1,000 American consumers in early June across areas that included the perception of companies by nationality, factors affecting consumer trust, and consumer sentiment surrounding trade negotiations. And the reason American companies should be concerned? The unfavorability of U.S. companies amongst the surveyed Chinese consumers reached 42 percent — a high number that’s similar to Chinese sentiment towards Japanese (43 percent) and South Korean (47 percent) companies. Japan and South Korea have turbulent geopolitical relationships to China that have ultimately manifested in economic pushback from the world’s largest consumer market.

“Chinese consumer sentiment toward U.S. companies has taken a turn for the worse,” says Peter Zysk, Director of Brunswick Insight’s China practice. “The fact that American companies are now ranked in a similar tier [to Japanese and Korean companies] should worry U.S. businesses.”

While the intensely adversarial nature of the U.S.-China economic relationship is hardly new or surprising, the hardening of anti-American sentiments is a more recent development. Indeed, 68 percent of consumers acknowledged that increasing trade tensions had negatively impacted their perception of U.S. companies. For American luxury brands already engaged in stiff competition with their European counterparts, the shift in public opinion, in addition to the likely loss of price advantages, could prove costly.

These changes are the product of a Trump-Xi standoff that has deepened in recent months with both leaders announcing tit-for-tat tariffs. Analysts looking to understand the potential ramifications of such hostilities have largely focused on market fluctuations, government announcements, and the fortunes of key affected industries. As such, Brunswick Group’s report is a timely indicator of Chinese consumer sentiment and one of the first to have been conducted since the trade dispute began in July last year.

“This is a challenging time for American companies,” says Zysk. “[However] Chinese consumers hold a substantially more positive image of American companies than of the US government… US firms must carefully consider the role they play in trade tensions.”

Stirred by patriotic sentiment, and hawkish national media — exemplified by Kang Hui’s viral anti-American tirade on state television in mid-May — 56 percent of Chinese consumers admitted they’d avoided buying a product made in the U.S. “to support my country’s position in the trade war.” In addition, 41 percent claimed to have veered away from US products on account of tariff increases. For American luxury brands, this could prove significant in pushing expensive goods beyond the reach of aspirational Chinese consumers.

When viewed alongside the 77 percent of Chinese consumers who admit to regularly buying American goods, there is a long way for U.S. companies to fall and a substantial bottom-line risk in what has long been considered a major growth market. A boycott may have yet to arrive, but it remains a sincere possibility, and U.S. companies must hope a negotiation happens sooner rather than later.

“There is broad support for bilateral trade in both countries,” says Zysk. “Few believe a trade agreement will be signed in the next three months, but majorities [on both sides] believe a deal will be reached within the next year.”





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What This Gen-Z Celebrity’s Smoking ‘Scandal’ Says about Public Persona in China: R3 May List


The May list of the Jing Daily x R3 Celebrity Index — a monthly ranking of China’s most influential celebrities on the country’s most important social media platforms, from Weibo and WeChat to Toutiao and Baidu — shows the popularity of Cai Xukun, who recently became the Chinese spokesperson of Prada, persisted, while Yang Mi, who was just named as the Chinese spokesperson of Versace, remained in the third position. However, a case that is worth a closer look is Wang Yuan (Roy Wang), an 18-year-old Chinese celebrity, who jumped to the second spot the past month largely due to his “smoking scandal.”

So, who is Wang Yuan and why did his smoking habit evoke such a strong anti-sentiment on Chinese social media? In 2013, Wang first rose to fame at the age of 14 as a member of the teenager boyband TFBoys. The band quickly became a household name in China, attracting a massive amount of mostly female fans.  Today, Wang’s official Weibo account has garnered over 73 million followers. He also has a close working relationship with premium brands like Chopard and L’Oréal.

What sets Wang’s following apart from other Chinese male celebrities’ fans (who typically see their idols as virtual boyfriends) is that the emotional connection between Wang and his fans goes far beyond the romantic feeling. Many people see Wang as their little brother or even son that they want to take care of,  owing to the age difference and Wang’s innocent and youthful look. Therefore, when he was spotted smoking inside of a restaurant when having dinner with friends in Beijing, a great number of his fans were disappointed by this behavior from an adult’s perspective. Some said he set a bad example for teenagers who liked him, and some just could not accept that he smoked. Wang ended up coming out to Weibo to apologize for his behavior.


Chinese celebrities’ public persona and why it matters to luxury brands

What is truly behind Wang’s smoking scandal is a question on the authenticity of Chinese celebrities’ public persona, or renshe (人设) in Chinese pinyin. From a publicly-known “good boy” to a “bad boy”, Wang’s public persona collapsed when he was spotted smoking. That upset some fans who like him for his public persona.

In the past decade, China’s entertainment industry has evolved at a rapid pace and talent managers are increasingly adept in understanding ordinary people’s emotional needs and mentality — thus, creating stars and idols that fit their needs. Consequently, a mismatch of a celebrity’s true personality and his or her public persona will bring inherent risks to luxury brands who work with them. Thorough research to really get to know the celebrity before signing is always needed.


Methodology:

The following ranking of 20 top celebrity influencers in March is calculated using data from Weibo’s Fan Base (calculating Activity, Adorable, and Social Influence Indexes), Toutiao, Baidu, and WeChat.

Weibo assumes the most weight, as it’s the platform where fan engagement can be traced. The Baidu, Toutiao, and Wechat indexes are more based on search behavior. The data from Weibo helps indicate the commercial value for each celebrity, especially for the Adorable index where fans actually use a pay function to express their admiration for a celebrity.

  • Activity Index: The Activity Index counts the number of interactions on Weibo, which is a statistical indicator of interactions (including forwarding, commenting, likes, replying to comments, and comment likes on Weibo) generated by the content posted by the star over the past 30 days (including posts, comments).
  • Adorable Index: This refers to the contribution of fans to the celebrity. Weibo has a mechanism where fans can contribute their admiration to the celebrity by giving virtual flowers which aren’t free. The adorable index is generated from the number of flowers the celebrity receives monthly.
  • Social Influence Index: There’s a large number of users publishing microblogs daily that mention celebrities. These microblogs are read by other users, and the number of readings reflects the recent popularity of a celebrity. In addition, a large number of users search for celebrities on Weibo every day, and the search volume generated also reflects the recent popularity of those celebrities. This data adds up to the social influence index of the celebrity.





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Fendi Blends Star Power and Fashion in the Latest WeChat Mini Game


Imagine you are Mario from Nintendo’s wildly popular Mario Bros. video game. Now, instead of defeating sewer creatures, you are cruising around Rome, jumping up to bump the FF logo coins and small black Fendi Baguette bags as the reward. This is what players can expect from Fendi’s new WeChat Mini Game, Fendi Ways to Rome, which was launched yesterday. Collaborated directly with WeChat for a month, this is the very first WeChat game in the luxury industry, according to the brand.

Mini Games on WeChat are a lucrative business. The platform has grown to over 400 million monthly active users, and some Mini Games have over 10 million monthly revenue from in-app-purchases in the Android system. But luxury brands have been tardy to take advantage of this lucrative feature, though Fendi is taking the first step.

Photo: screenshot from the game

Photo: screenshot from the game

And it is a remarkably solid first step, combining Fendi’s DNA with a visually exciting Rome adventure. The details of the game are impressive. For example, players can choose their own avatar to play. The male version is Xu Weizhou, the Chinese actor, singer-songwriter and brand ambassador for the Fendi Peekaboo bag in China (his own music scores the background of the game). Players can follow Xu Weizhou through the different levels of the game: Discover, Tracing, and Pursuit of Dreams in the journey through Rome, and then unlock the “hidden” level to complete the experience.

The game unveils the bricks and tiles of ancient Rome, which players can learn about Fendi’s history, such as the Mouth of Truth to test faith, the Palazzo Della Civiltà Italiana, Fendi’s headquarters, known as the “Square Colosseum,” the Spanish Steps, the Trevi Fountain, which was the location for the Fendi Fall/Winter 2016-17 Couture Show, as well as the Piazza Navona, the Pantheon, and the Fendi flagship store in Largo Goldoni, in the heart of the city.

Fendi has also added substantial rewards for their fans who play the game. They will choose three people out of the top 1,000 players and give them a round trip ticket from Shanghai to Rome, three free nights at a hotel, and a guided tour of Rome. And for those players who leave comments regarding hidden details of the game they’ve discovered; they can also win a small gift. On July 5th, players can anticipate a host of surprises as a new level of the game will be unlocked.

The brand has upped its expansion in China. This past May, Fendi held a co-gender fashion show at the Powerlong Museum in Shanghai, with Xu Weizhou not only walking the runway but also opening and closing the show. Fendi has continued to utilize the star power of Xu’s and his immerse fanbase. In a previous interview, Fendi CEO Pietro Beccari emphasized the importance of such and stated, “If you have done it right, I believe you can communicate your branding to millions of fans via one influencer.”

Star power took effect, and his fans responded overwhelmingly positively: “I’d like to play for my idol Xu,” or “This such a delicate Mini Game.” Many fans hope to travel with Xu, if they are selected for the trip. Moreover, within one day, the post garnered over 11,000 pageviews and received 141 likes. Game on — all roads lead to Rome.





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Nike Withdraws Products After Brand Partner Vexed China for Supporting HK


The high-end sneakers business is heating up among China’s Millennial and Gen-Z generations as the country embraces the Western streetwear trend. However, a direct beneficiary — Nike — is risking to lose a bit of ground after its latest brand partner, the Japanese sneaker brand Undercover by Jun Takahashi, openly supported Hong Kong’s anti extradition bill movement on an Instagram post.

Nike

The now-deleted Instagram post by Undercover that supported Hong Kong’s anti extradition bill movement.

On June 21, Nike and Undercover co-released the “Daybreaker” sneakers in black and green, which aroused a wide range of interest among sneakerheads in China. But Jun Takahashi’s political support for Hong Kong on Undercover’s official Instagram account (see the image above) caused negative sentiment from Chinese consumers, who took to Instagram to defend their country. There are also discussions on Chinese social media platform Weibo, with users claiming they would not buy this edition and Undercover going forward.

Since early June, over a million people in Hong Kong came to streets to protest against the local government’s decision to pass the extradition bill, which theoretically will grant Beijing the power to extradite individuals in the territory of Hong Kong to the mainland. Amnesty International, a human rights non-governmental organization (NGO), said the bill “would extend the power of the mainland authorities to target critics, human rights defenders, journalists, NGO workers and anyone else in Hong Kong.”

In reaction to Undercover’s controversial Instagram post, Nike urgently withdrew the collaboration from the Chinese market to alleviate any potential negative impact on the brand. In a WeChat post by YYSports, which is under Nike’s Chinese partner, Pou Sheng International, the distributor wrote that they would no longer sell the collection as requested by Nike.

It seems to be a necessary move for Nike, as the brand is experiencing lackluster sales around the world except for in China. The brand’s revenue in the Chinese market jumped 19 percent last quarter. Moreover, Nike is going to release its latest earnings tomorrow.





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Stefano Ricci on Serving China’s Uber Rich


Founded in 1786, in Florence, Italy, the Antico Setificio Fiorentino showcases a vast history of silk weaving and Italian textiles from the Renaissance forward. It even includes a famous warping machine (an ancient device that turns the thread into fabric) based on the design by none other than Leonardo da Vinci that is still in use today. The Antico Setificio Fiorentino is now under the helm of the Stefano Ricci family, which it purchased from the Emilio Pucci family in 2010.

On a sunny morning in mid-June, Jing Daily caught up with Filippo Ricci, the creative director at the luxury menswear brand Stefano Ricci at the Antico Setificio Fiorentino. While the meeting venue speaks a lot about the brand’s commitment in preserving its Florentine fabric tradition and craftsmanship, our conversation revealed how the brand works to continue its appeal to the next generation of customers, especially those in China, the largest luxury market of the world.

In China, the name of Stefano Ricci may not be a household name yet, but it is well-known enough among the country’s ultra-rich class, who are intrigued with the brand’s magnificent “Made in Italy” roots, craftsmanship, and heritage. The brand now has been in the Chinese market for over 25 years and is accelerating its reach to the next generation. “I saw so much energy in the new generation that China will be to us the biggest market. They have dreams. They want to express. The new generation is going so fast,” said Ricci, who fully understands the importance of the brand to conquer China.

How important is the Chinese market for your brand?

We have a strong connection to China since we opened our first shop in 1993, in Shanghai. So it was really at the very beginning of the luxury industry over there and is still one of our most important markets in the world. The Chinese community, not only in China but all over the world, loves our products. We’re very much recognized with the eagle symbol, which is our iconic logo.

How is the business doing there?

We went from a drastic growth, which over 30 to 40 percent every year to more organic and very healthy growth. We are happy with the Chinese market performance for this year from last year.

Do you worry about the impact of the trade war?

We have not seen it yet with our brand. I always say, there is no crisis for luxury, real luxury goods. And quality always wins. Because people like to buy quality, it’s like you’re investing your money in something that lasts and looks good and makes you feel good.

Stefano Ricci

Stefano Ricci Hong Kong. Photo: Stefano Ricci S.p.A.

What’s your retail strategy in China?

We love to partner with hotels, and we do it all around the world. We have a good mix of presenting stores on the street, but also I like this whole idea because it is reserved, it’s private, it’s luxury. You get privacy, you get security. You get a lot of things to do and people like just go there. They have all kinds of services that I think are great, and are great places to meet up, have a meeting, go to the store, or go to lunch. It’s been really working very well. That’s why we have great partnerships with most of the big hotels. In Macao, we are now at the New Wynn hotel; we are in the Arc de Triomphe; we are at the Venetian and the Four Seasons. In Hong Kong at the Peninsula. And we just opened in Sanya, China.

How do you reach Chinese consumers?

It basically started word to mouth by friends. We like to respect the privacy of our customers. We don’t do publicity. We also offer a unique service that we do, traveling the world with our tailors to make these extremely wealthy powerful gentlemen happy. We’re keen on social media, but my kind of customer is really focusing on what his friends, what his team is telling him, and how he likes to build it that way and so we create like it’s a sort of a club.

What’s your digital and e-commerce strategy?

We are working on WeChat, which has been demanded by our customers. We are also working on an e-commerce platform in China before the end of the year. I still believe, personally, that I like to have my clients come to the stores or us to go to them because of the concept of exclusivity that you can give especially in clothing, but I believe it’s a great service that you have to give. China’s such a big country, you cannot have stores in every city yet, but it’s a great opportunity for a customer to see something online, see it on WeChat, sell it, get the pictures, and order it over there.

Stefano Ricci

Stefano Ricci Bespoke. Photo: by EgonIpse

How do you maintain a luxury brand image online?

I think with the right images and the right experience you can do the perfect website. It’s a service that you do. For example, our tailor and the manager of the store can go and visit the client after the product has been delivered. We also, of course, offer a strong digital service, where you can order anything online and we’ll have it delivered in a proper way, with just the right packaging.

This interview was condensed and edited.





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