10 Oct 2016

The Korean Brands Succeeding in China

South Korean cultural influence is felt across the wider Asian region.

This effect’s known as Hallyu (‘Korean wave’) and it’s especially big in China, where South Korean influence often informs consumer trends.

This cultural impact has helped South Korean brands achieve considerable success in China. Several clothing chains from Korea have managed to conquer the Chinese apparel market and other South Korean brands have seen strong growth in markets such as cosmetics.

China’s citizens avidly consume South Korean media and pop music, and they are visiting the country on holiday in ever-increasing numbers.

With Koreans clearly knowing how to capture the heart of the Chinese consumer, perhaps it’s no surprise that Korean clothing brands are successfully penetrating PRC’s retail market.

Western brands can learn from the Korean approach. Brands attempting to crack the Chinese market might use Korean influence as a route into PRC, for example by using approaches such as Korean celebrities in their marketing.

Riding a wave

Despite an overall slowing in economic growth, PwC has identified that China’s clothing market is growing at around 12% annually. According to the Korean Times, China’s demand for imported cosmetics grew over 30% just in the first half of 2015.

Korean brands are essentially riding a market wave in these areas. With consumers fairly new to buying fashion and beauty and expressing themselves through personal style and grooming, they are particularly open to influencers who can guide them through these consumer choices.

Media and celebrities from Korea have been instrumental in showing Chinese consumers the way when it comes to these new areas of style and beauty. There’s also a perception in China that Korean beauty products are high quality, something that Korean brands are obviously keen to encourage. The effect can be compared to the reputation of Italy on many other countries as the authority on taste and style.

South Korean clothing brands such as Basic House, E-Land, and Avista have all made ventures into PRC. E-land has grown its Teenie Weenie casual clothes brand to over 1500 outlets across China, reporting annual growth rates of up to 30%. Basic House performs even better in PRC than it does at home in Korea. Avista has approached the PRC market through partnerships and JVs and have launched a brand specifically for the Chinese market. All have enjoyed growth in the huge PRC market.

Key influences from Korea include the preppy look, which is comparable to brands such as Ralph Lauren or Tommy Hilfinger, championed by Korean brands such as Bean Pole, Crux or Ask. Korean apparel brands also offer a cute, youthful style of dress that is led by brands such as Banc and Teenie Weenie, the latter offering bear-themed, luxurious-style clothing such as hoodies with teddie bears on.

Teenie Weenie’s success in China

Teenie Weenie’s had a Chinese presence since 2004 and has been very popular with Chinese consumers. It’s added several hundred stores in PRC in just the last year or two. Although initially popular with teens and young adults, it has expanded its appeal across a wider age group by adding new lines including household products. The chain is also adding jewellery to its range, and plans to add another 40 flagships stores.

Teddy bears are popular in China, and the brand has also chosen a colour palette heavy with gold and yellow – both colours that appeal to a Chinese audience. But this isn’t the extent of the company’s localisation strategy. Korean parent company E-land sent its top employees to work with its subsidiary in China in the mid nineties, allegedly instructing them to ‘become Chinese’. Initially their street stores failed to take off but once the company changed its approach and opened concessions inside department stores, they began to do well.

Most of the designs are localised for China’s market, including the teddy logos that are a core part of the brand’s identity.

E-land believes the fact that the prominent logo easily identifies their clothing makes it popular with Chinese consumes, who like to show off their branded items.

It also keeps tracks on trends in the stylish and influential Shanghai area to feed back to the parent company about local consumer trends.

Success for Korean beauty brands

South Korean cosmetics are also overtaking European brands in PRC, with Korean Times reporting a 250% increase last year. Innisfree, a natural line of beauty based on organic ingredients, performs strongly in China. Last year it announced plans to build a huge cosmetics superstore in Shanghai, which would be China’s biggest cosmetics store.

Some items have been localised for the PRC market, and have locally-manufactured ingredients. Others are adapted to meet China’s rigorous consumer marketing rules. Both Koreans and Chinese value paler skin so products often tend to have spf included. PRC considers a product with spf of over 30 to be sunscreen, which it considers to be a specialty cosmetic product. Because it’s so difficult to bring a new sunscreen to market in PRC under the rules for this type of product, products that have spf35 in other markets have spf30 in China.

Innisfree has used a blend of aggressive marketing, often making good use of carefully-chosen celebrities – and a wide range of beauty products tailored to Chinese consumers.

It’s also made use of product placement, dropping references to its products into smash hit Korean TV series My Love From the Star. This approach has really helped establish the brand in China.

South Korea’s also a major tourist destination for Chinese travellers, with a year on year increase in volume of more than 15% recently reported. At a time when Hong Kong is less able to rely on a steady influx of Chinese visitors, South Korea and Japan are seeing increasing numbers of tourists from China. For the many million residents of Beijing and Shanghai, Seoul has a shorter flight time than Hong Kong. Regional infectious disease concerns (such as SARS and MERS) have recently affected tourism but it soon bounces back.

South Korea as a holiday destination

Duty free shopping is a big draw for Chinese visitors to the Korean peninsula. Here shoppers are able to snap up clothing, accessories and beauty products in shopping centres designed specifically to cater to their needs. It’s just one of the ways Korea has managed to give Chinese consumers what they need. It’s an approach that western brands would do well to learn from.



 
 

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