Fast fashion brands under scrutiny in China; Since Zara entered China in 2006, it has been blacklisted at least 15 times

Fast fashion brands under scrutiny in China

Staff Reporter

2014-03-23

Over the past year, cheap, fast-fashion brands such as Zara and H&M have swept through the Chinese mainland market, the Chinese-language Time Weekly reports.

These fast fashion brands have an unbelievably quick product cycle of just 15 days, but their quality has been questioned in recent years. Many of the products have made it onto quality inspection “black lists,” said the report.

One Nanjing bridegroom’s 699 yuan (US$110) Zara pants ripped as he knelt before his wife down before his wife during their wedding.

“In order to maintain their cheap prices, fast fashion brands have tried to cut costs, but quality issues very easily surface,” said Xiong Xiaokun, researcher on light industry at China Investment Consulting.

Fast fashion is a contemporary term used by fashion retailers indicating the speed with which new fashion trends move from the catwalk to retail. Fast fashion clothing collections try to ride on the latest trends presented at Fashion Week in both the spring and the autumn of every year. These trends are designed and manufactured quickly and cheaply to allow mainstream consumers to take advantage of current clothing styles at a lower price.

Since Zara entered China in 2006, it has been blacklisted at least 15 times, including twice in March alone.

Due to the lack of domestic competitors, Zara has no domestic rivals, allowing it to act boldly. Chinese consumers fall for it, hoping to wear foreign brand names without breaking the bank, analysts said. This allows Zara to get away with its frequent blacklistings and still keep consumer enthusiasm, the report said.

Zara’s supply chain cycle takes only 10-15 days, compared with H&M’s 20 days, while most other apparel brands take 6-9 months or even longer.

In Europe, Zara produces most of its products from its own factories, but in Asia, it has adopted the original equipment manufacturer model.

According to H&M’s 2013 financial report, its total revenues reached 146.6 billion yuan (US$23.5 billion), of which sales in China grew 23% from a year earlier to 6.5 billion yuan (US$1 billion). Currently, H&M has 205 stores in China, ranking fourth in its global operations, but it opened 74 shops in 2013, ranking first globally.

China has become the most important overseas market for international fast fashion brands, with the top four such brands — Uniqlo, Zara, H&M and C&A — having opened 523 shops on the mainland as of June 2013, the report said.

 

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a comment