After three years of Covid restrictions, which fueled protests following a deadly fire in a locked apartment, China lifted some draconian measures this month. The Chinese public may finally see an end in sight, which is good news for both physical sales and consumer confidence.
However, with no official dates for a full reopening, the coming months are crucial for fashion and beauty brands in China to stay agile, digitally connected with consumers and prepared for different scenarios, according to experts. Those who spoke to Glossy predicted reopening timelines ranging from spring to late 2023.
“There is now great enthusiasm for a quick reopening, but it will be important to consider different potential timelines,” said Daniel Zipser, a senior partner at McKinsey & Company who leads the Asia Consumer & Retail Practice. “Agility will be key to avoid investing ahead of the curve.”
Uncertainty is still expected ahead, especially as general consumer confidence approached early 2020 levels last month, according to US intelligence platform Morning Consult.
“I didn’t have a strong material desire to begin with, and it dropped after Covid. She hit a new low this year, with the [various] restrictions,” said Timi Tian, a 30-year-old marketing professional who suffered a two-month lockdown in Shanghai earlier this year. He added that there have been few opportunities to wear new clothes.
China has been on a very different covid recovery curve than most other countries, thanks to its zero covid policy, which restricts consumers’ physical mobility and travel plans. It has led to store closures, as well as production and supply chain problems between brands. On its latest earnings call, the Estée Lauder Companies Inc. reported a 7% year-over-year revenue loss in the Asia-Pacific region, citing Covid restrictions on physical sales in Greater China.
The tricky thing about today’s Chinese market is that foreign brands are facing political, commercial and cultural changes at the same time.
One trend with strong momentum, especially during Covid, has been the rise of national brands. “Local production and consumption have gained more and more attention in recent years as a way to support the national economy and local culture,” said Joss Roulet, general manager of sales for Chinese airports at global outdoor advertising company JCDecaux. .
In the apparel category, the market share of foreign brands among the top 20 brands in China dropped from 47% to 40% between 2013 and 2021, according to a 2023 China Consumer report released by McKinsey earlier this month. . Data from market research firm Euromonitor was cited.
Chinese consumers have increasingly favored domestic cosmetics brands, said Kadri Karolin Kõuts, co-founder of Chinese digital consultancy Projekt 86. She listed her favorite domestic brands, including skincare brand Proya, Chinese brand of fragrances To Summer and the Florasis color cosmetics brand. . Facing skepticism around its research and development capabilities in its early days, Hangzhou-based Florasis has gone to its knees in the space, launching a five-year investment plan of 1 billion yuan (158 million dollars) this year.
Just as American brands have flocked to TikTok to engage with trend-frantic young consumers, brands in China have increasingly realized the benefits of maintaining a presence on TikTok’s sister app Douyin. They are also increasing their focus on other short video platforms that support live streaming e-commerce. During the last Double 11 shopping festival on November 11, traditional e-commerce websites including Taobao and JD.com saw collective sales growth of 2.9% to 934 billion yuan. Meanwhile, sales at companies including Douyin and Kuaishou soared 146% to 181.4 billion yuan, according to national intelligence firm Syntun.
“Livestreaming is leading the new consumer trends [in China]said Simon Cai, founder and CEO of e-commerce agency Triple Digit.
It is also important to keep an eye on the fast-growing Chinese sector in deciding when to enter the region. Despite seeing an overall decline in sales in Asia in the last quarter, the Estée Lauder Companies expanded Aveda into mainland China over the summer, to mark ELC’s entry into the country’s prestigious hair care market.
“As people’s daily lives gradually recover, there will be more gatherings with friends… and hair is very important to girls,” Cai said. She noted that one of her clients, Swedish hair care brand Maria Nila, is currently doing well in China.
Asked if she will spend more of her budget on fashion and beauty once the country reopens, Tian, the Shanghai-based consumer, was unsure. “I’m more interested in spending on travel, but maybe I want to look better for my trips,” she said.
As for brands, in the future, Kõuts de Projekt 86 recommended working with more local people or partners in China, in order to “react quickly and efficiently to whatever comes next”.
“A lot has changed in the last 12 months. What worked before may no longer be relevant,” she said.
Source: news.google.com