Chinese Street Culture in Fashion Brand Business

Abstract: For Chinese fashion brands and young people, it takes more time to develop from business to hip-hop and street culture driven by strong culture.

Causeway Bay in Hong Kong, Brooklyn in New York and Harajuku in Tokyo are all local landmarks, birthing fashion brand business worth billions of dollars. In China, there is place with thriving street culture like the Changle road in Shanghai, however, there is no place of fashion brand like Harajuku.

Fashion culture has been in China for 20 years, but its carrier — fashion brand market is far from mature.

On the contrary, in China, the Internet has become the main publicizing platform of China’s fashion brand culture. Especially recently, the hip-hop culture has been brought up by the Rap of China. This variety show publicizes the hip-hop culture only known by small group to the public. Social network has promoted public awareness of “fashion brand” to a new level.

Why is so?

YOHO! is a fashion e-commerce platform born in the Shanghai. This brand has already seen the fate of the fashion brand culture in China years ago: top fashion brand could only choose online publicity as the main way. Ray, the AVP of YOHO! resource center, told Taimeiti that “one reason is that the rent of offline store is too high, which limits the development of independent stylist, especially in first-tier cities such as Shanghai”.

Eight years ago, YOHO! derived from YOHO! Fashion magazine clearly saw the trend of fashion culture in China, which is “online is stronger than offline” and thus it set up an independent e-commerce business department. Meanwhile annually, YOHO! holds offline brand activities to publicize the fashion brand culture. In September this year, the “YOHOOD fashion carnival” was held for the fifth time by YOHO!.

This time, on Sept. 2, they invited MC HOTDOG, a big name in hip hop and trendy culture. It is MC HOTDOG’s first time to participate in the YOHOOD fashion carnival, but he is also a key figure in promoting and developing fashion brand culture, and shares a close connection with YOHO!

However, perhaps ‘irritated’ by the audience crowding in the carnival to see fashion brand clothing and the show, MC HOTDOG dissed the group that only bought clothes while knew nothing about hip hop. Prior to YOHO!&FRIENDS LIVE, MC HOTDOG shouted out the truth: “don’t care about the appearance of those trendy clothes, HipHop is from the inside out. Listen to music!”

The organizers YOHO! must be both excited and resistant. After all, in the past decade, YOHO! has been focus on Chinese fashion culture and it is promoter, advocate and spreader of “express your attitude”, but YOHO! is also dissed — the fact is, more than 90% of its e-commerce revenue comes from selling fashion brand.

China’s fashion brand market is welcoming more and more global brands. How could newly-emerged domestic brands survive? Apart from the shallow “selling clothes”, what exactly can local e-commerce platforms do for China’s fashion brand?

Sell clothes and then talk about culture

Fashion brand clothing has already been a lucrative business in China.

So far, YOHO!BUY e-commerce platform has original fashion brands, such as TEEN TEAM, SHAPELESS, and other popular brands like Dickies, Vans, BOY LONDON, etc. According to the YOHO!, In 2016, fashion brand accounted for more than 95% of the group’s 2 billion annual revenue and less than 5% of revenue comes from advertising.

Relying on the young and independent designers born in 1980s, and the popular hip-hop music competition, street dance, graffiti and other popular culture activities in Shanghai Changle road, YOHO! has built its roots in the fashion brand market. With this advantage, YOHO!BUY e-commerce has actually gone further in the upstream of the fashion brand industry chain.

Besides, the fashion brands co-designed by celebrities and independent designers is another selling point on YOHO!BUY platform, such as Shawn Yue’s MADNESS, Sam Lee’s SubCrew, Frankie Han’s AKOP., and JJ Lin’s SMG, etc. Unlike other’s e-commerce channels, YOHO!BUY uses different ways to collaborate with designers and stars.

For example, the fashion brands of Yue and Lee only cooperates with YOHO! in selling. While the cooperation between Han, Lin and other stars and YOHO! is that “stars only offer ideas”. In simple terms, it is the stars and designers who are responsible for the design, and the specific production, sales and inventory are carried out by YOHO!.

Han told Taimeiti that AKOP. is operated by YOHO!. He does design work with others and the entire supply chain and inventory are not run by him.

The development of another fashion brand CLUBXXHH cooperated between YOHO!BUY and He Guanyu, a Taiwan independent designer, is more typical.

The operation of CLUBXXHH in Chinese mainland is conducted by Shanghai Lan Xi Industrial Co., Ltd. The brand now has online shops on YOHO! and TMall and has accumulated a certain amount of popularity through high-quality online channels. But the figures show that more than 95% of the revenue comes from offline stores in three or four tier cities.

Since 2015, CLUBXXHH has completed its early expansion of offline stores through the franchise model. According to its official website, the joining ways include four forms, namely, general agent, franchise store, joint operation and direct operation. Since ClUBXXHH opened its store in November 2015, it has more than 40 stores nationwide, and the location prefers large commercial real estate projects such as Wanda and Aqua City.

As is learned from people in charge, average annual sales of one store is about 2 million, and some stores can reach 7 to 8 million revenues. “The average size of the store is 80 to 100 square meters, and the area effectiveness exceeds 20, 000. Compared to the traditional counterparts (such as Holy Moly), ClUBXXHH has fair performance.”

The first-tier cities such as Beijing, Shanghai and Shenzhen are where fashion brands huddle together. But why new fashion brands lacking celebrity promotion choose to start their shops in the “third and fourth tier cities”?

Yanyang Zhai, the head of CLUBXXHH in Chinese mainland, told Taimeiti that the reason was “the cost of operating in first-tier cities is high”. CLUBXXHH tried to start shops in first-tiered cities, but failed in the end. And there are advantages for new brands to settle in third and fourth tiered cities. “For one thing, there are enough customers so fashion brands have its market; for another, people in Wuhan, Changsha, Chengdu and Chongqing have more fashionable thoughts on clothes and consumption. Although the eastern has better economic development, but the competition is very intense. Thus, the consumption power there isn’t stronger than that of Chengdu and Chongqing. The latter two cities are also very fashionable cities.”

Industry insiders told Taimeiti that the gross profit margin of fashion brands, like ClUBXXHH, was 60%, while that of Oniarai and Boy London was 200% to 300%.

The insider also said the reason for high gross margins. For Oniarai and Boy London, the reason is that “It has high brand awareness, and high volume of shipments, which leads to lower costs.” While fashion brand generally works in limited editions — for ClUBXXHH, only 16 pieces for each style, but Oniarai and EVISU have unlimited quantities.

In forecasting the size of the clothing market in 2017, Bain & Company reported that “the clothing market for young people in China is expected to exceed 500 billion”. In this way, if the new fashion brands want to win word of mouth and market, firstly, they need to make clear the “young people” they target at are who exactly.

Limited edition and stars, learn from others

Run-D.M.C. advertising with Adidas

Trace to the source. When talking about the fashion brand business, we cannot forget hip hop star, Russell Simmons.

His Run-D.M.C. band sang “My Adidas” in 1986 at Madison square garden which drew the curtain of connection between the hip-hop culture and mainstream business.

It is said that before the song, Russell. Simmons does not have any deal with Adidas. But during the performance, when the band interacted with fans, 20,000 pairs of Adidas shoes showed out, which shocked Adidas executives at the scene — big business in the history of hip hop worth $1.5 million was made.

Thus, joint design with stars becomes the choice of fashion brand.

If you know that the Supercolor, Adidas rainbow series, designed by Pharrell Williams has been sold 15 million pairs around the world and the Yeezy jointed designed by Kanye West and Adidas was out of stock the moment it was sold, which further promoted Adidas to recover, you won’t doubt the power of the stars.

Different from American fashion band business promoted by hip-hop musicians, promoters of Japanese fashion culture are more independent designers, such as Hiroshi, Tomoaki (NIGO®), Tetsu Nishiyama and others.

Bape which has NIGO® (whose parent company is Now where) was sold in 2011 to Hong Kong-invested I.T group. Its popularity in the whole world is inseparable from the limited edition and joint design. A lot of artists and stars work with Bape, such as graffiti artist KAWS, FUTURA, rapper Jay-Z, Pharrell Williams, star Haruna Kojima, Edison Chen, etc.

Rap China also launches the brand promotion by star effect. The four “star producers”, namely, MC Hot Dogs, Wilber Pan, Kris Wu and Chang, Csun Yuk, accidentally became “clothes promoting” star. T-shirts they wore in the show is quite popular among fans.

From Hong Kong to the mainland

In China, a number of trend practitioners told Taimeiti that Chen had played a bigger role in the early fashion brand promotion.

As early as in 2003, also influenced by Hiroshi, NIGO®, Chen decided to enter the fashion quickly after his trip to Harajuku. On May 20th 2003, Chen opened his first fashion brand store JUICE on the second floor of a building in Hong Kong’s causeway bay. Meanwhile, he also co-designed with big names such as “kiss of death” with Nike and jeans collaborated with LEVI’s.

After the 2008 “nude photo scandal”, Chen withdrew from the entertainment industry for good and went to the United States, where HipHop became Chen’s cause.

Currently, JUICE and JUICE STAND, the fashion brand of CLOT, has stores in Shanghai, Beijing, Chengdu and Changsha. The turnover in 2015 is as high as $60 million. In early 2017, Chen’s company accepted the 10 million HKD investment from Hoopchina. And the next step is to target at offline market of the fashion brand.

Chen wearing co-design clothes with converse

It is another characteristic of the local fashion culture, which is deeply influenced by the culture of Hong Kong and Taiwan. Edison Chen, Ashin of May Day, and the rap group “brothers”. These Hong Kong and Taiwan stars and their commercial operation entered the culture market earlier and swept the culture of fashion brand to the mainland.

The popular star at YOHOOD fashion carnival, MC Hotdog, is the spokesman of fashion brand. The fashion brand MJ Fresh, which is operated by MJ116, is MC Hotdog’s favorite. In 2015, MJ116, MC Hotdog and Chang Chen-yue formed a rap group called Brothers. They are more or less related. MJ Fresh represents the pure Taiwan street style and has great appeal.

MJ Fresh is available only on the Internet, but sells out frequently. At the end of March 2013, the first MJ Fresh store opened. On the opening day, customers selected random number and entered the shop to purchase. The long line is comparable to the current Heytea. MJ116 told Taimeiti that the designer, MJ Fresh, would combine his life and local culture to create Street Fashion.

The popularity Rap China makes people feel that China’s local Street Fashion is just around the corner. But some industry insiders told reporters, the “imported” elements in the fashion brand are deeply connected with culture. Now in the domestic, they start from doing products and basically is still in the stage of following the trend.

For Chinese fashion brands and young people, it takes more time to develop from business to hip-hop and street culture driven by strong culture.

This article originally appeared in TMTpost and was translated by Pandaily.

Click here to read the original Chinese article.

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