• Ellen Sun

Breaking into China as a Niche brand?

A niche market is a small subset of the market for a specific demographic, product type, a particular price point, and a certain quality. Niche may make you think of brands that couldn’t reach mass appeal and return little in terms of profit. 

Not so in China.

Here, niche isn’t anything about market size. Niche is being against the mainstream, expressive, and highly specialized. According to a McKinsey China Luxury Report, the concept of niche means exhibiting unique designs, being rarely seen on the street, or simply not available in mainland China. To be niche is to be premium and bespoke. Right now, to be niche is to be the new black.

Chinese shoppers have moved away from big logos and replacing their purchases with boutique and hard to get products as the new sign of luxury status. The market is only getting bigger. Rapidly growing middle class and burgeoning spending power is driving China to account for over 20% of global revenues in 2018, and the number is keeping growing.

Source: Statista (COVID-19 impact will be implemented Q2 2020), March 2020

Source: Statista (COVID-19 impact will be implemented Q2 2020), March 2020

What’s Changing?

A decade ago, knowing the differences between Coach and Louis Vuitton may be seen as knowing fashion. Today, this is more like common knowledge. 

Today’s consumer group has become increasingly younger and more sophisticated. This is driven by a growth of overseas education, traveling, and experiences from populations in tier one and two cities in China. The thrill of becoming trendy and unique propels this generation to seek what isn’t in mainstream China and which expresses their individuality, all the while emanating high quality, luxurious, and bespoke. Finding and wearing fashion brands that is new to their peers expresses individuality and sophistication. Niche brands are the answer. And to find them, young Chinese luxury shoppers are turning to Word-of-Mouth and Key Opinion Leaders.

This is why Word-of-Mouth and Key Opinion Leaders command such widespread influence over young Chinese luxury shoppers.

Stay Authentic and Relevant

“The smaller you are, the easier it is to have a one-to-one conversation,” Kristy Watson, Erno Laszlo’s chief marketing officer said, “as a niche brand, you have to be better than the larger brands at placing the consumer first. The more consumer-centric the better.”

Having a well-rounded understanding of the target group and the local culture is the key to win the customers from big-names. To localize effectively, brands need to holistically reconsider both their identity and branding strategies through the lens of a Chinese consumer instead of a cut-and-paste model.

In the meantime, brands still need to stay true to their original spirit. Targeting China is not simply telling a different story. It’s about providing a high-class experience, a touching story, and bringing the right opinion leaders to deconstruct fashion and localize the product in the targeted market.

Erno Laszlo, celebrating Bold Women & Bright Skin Since 1927

“I owe 50% of my beauty to my mother and the other 50% to Erno Laszlo.”

– Audrey Hepburn

Booming Demand Isn’t Without Challenges

Before making an expansion plan, brands need to be prepared and avoid common missteps that could result in disastrous outcomes which may take years to recover —— if they can be recovered.

Choosing a professional partner could multiply the result with less effort and headaches. More importantly, it's never a good idea to rush. Don't expect to land and active on every channel. Rather, it is important to carefully identify the target audience on each channel, put the right resources needed to engage with them pre-launch, and maintain the momentum to stay relevant. The Chinese market is still young and is extremely fast-moving. “Plan for stable growth and lay down a good foundation, but stay agile in targeting what consumers need,” says Ellie Wang, co-founder, and general manager of Little B, lifestyle brand The Beast.

Generally, three to five years would be a reasonable timeline for a new foreign brand to settle in.

Little B, Shanghai

This rings especially true for a digital strategy. It's well-known that Tmall and JD.com are currently the top two e-commerce players in China, but is it right for niche? For new joiners, we recommend mini-programs in WeChat and RED store as the ideal choice. They have widespread social influence and relatively low barriers to entry. Next, a local pop-up store can be an excellent marketing strategy to raise brand awareness while building momentum during pre-launch.

Source: Statista (COVID-19 impact will be implemented Q2 2020), March 2020

Start with a Good Partner

Entering the Chinese market can be extremely rewarding, if the right pieces are in place. Niche brands can play into the growing fatigue for mainstream aesthetic and the need for self-differentiation and individuality. Working with your strengths and entrenching the personal touch can be better than quoting names. 

But tread wisely. You only have one shot to be discovered in China. Finding the right partner can point you in the right direction and turn your niche into the next sought-after brand in China.

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