China's Retail Landscape

What needs in your industry are begging to be served?

Tuesday, July 21, 2015

Li Fung

 

Chanel. Dolce & Gabbana. Calvin Klein. Adidas. Nike

On my recent JBU International Practicum trip to China, it was hard not to notice the luxury brands that dominated row after row of storefronts in Hong Kong, Shanghai, and Beijing.

Channel. Dolce & Banana. Calvim Klain. Adidos. Nire.

Wait a second.

While high-end brands seemed widespread in brick-and-mortar locations, cheaply-made goods (okay, knock-offs) were just as prevalent in street markets. New Balance imitations for $15 USD. Burberry plaid for a comparable price point. Hermès scarves for just a few bucks.

Now, not all were cheap imitations like the brand names mentioned above (those are extreme examples), but the majority were low-end goods, subject to price haggling.

I wasn’t necessarily surprised by the disparity in the retail landscape. As part of our coursework leading up to the trip, we read about and discussed at length the Chinese consumer’s taste in either luxury or ultra-cheap goods.

This is what surprised me: there seemed to be no middle ground.

The vast majority of apparel and accessory offerings represented the two extremes, with little left for the middle class. There seemed to be a void in product offerings.

Just a couple of short weeks after my return to the U.S., Li & Fung (the Hong Kong based sourcing giant we visited) announced plans to bridge the gap between costly and counterfeit. The company formed a joint venture with two Chinese retailers in order to develop a portfolio of new, globally sourced private label and licensed brands. While it remains to be seen how the labels will be received, a rising middle class and continued popularity of foreign brands point to success.

My takeaway: Li & Fung saw opportunity to fill a hole in the market with more attractive private label options. Even with a highly fragmented, challenging retail environment, they identified a need and they have the resources to answer. It can be tough to compete in a market like China’s, but Li & Fung identified a sliver of opportunity…and they’re busting it wide open.

What needs in your industry are begging to be served?

Where could you enter or expand market share where your competitors are not?

And, finally, have you thought about JBU’s International Business Practicums? If not, you should. I found the China trip to be immensely valuable, and even if your program of study is not focused on International Business, an in-depth, experiential look into China’s business sector and culture will be useful, no matter your career aspirations.

Ann Simmons

Ann Simmons
MBA, International Business ('16)

 

 

 

For more information about JBU's International Business Practicum, contact Connor Phillips at phillipscl@jbu.edu

 

Blog HomePosted By: Ann Simmons - 7/21/15 9:30 AM

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