Sat, October 06, 2012
Business > Industries

H&M: China is the fastest growing market

2012-10-06 03:52:28 GMT2012-10-06 11:52:28(Beijing Time)  China Daily

H&M's 100th Chinese store opens in Nanning, capital of the Guangxi Zhuang autonomous region, Sept 20, 2012. [Photo / China Daily]

Karl-Johan Persson says H&M's concept of fashion caters to all styles and has huge potential in China. [Photo / China Daily]

Sept 20 was a big day for, H&M,the Swedish multinational retail-clothing company.

While celebrating the opening of its 100th Chinese store in Nanning, capital of the Guangxi Zhuang autonomous region, it opened its first store in Kuala Lumpur, Malaysia.

Established in 1947, H & M Hennes & Mauritz AB (operating as H&M) is known for its range of clothing.

In terms of revenue it ranks second globally behind Spain-based Inditex, parent company of the clothing brand Zara. It is followed by US clothing brand Gap.

As of the end of August, the company operated in 45 countries with more than 2,629 stores.

According to its interim report, released in July, during the first half of the financial year revenue generated by H&M increased by 12 percent year-on-year.

The Swedish brand has been expanding quickly since its entry into China in 2007. It is not able to release its Asian sales figures, due to company regulations, but Karl-Johan Persson, CEO of H&M, indicated that China is the fastest growing market in terms of store numbers.

Persson is the son of chairman Stefan Persson and grandson of Erling Persson, the founder of H&M.

Persson founded H&M in 1947 after visiting the US where he was inspired by a store selling low-priced clothes.

Unlike the famous European brands which usually belong to the premium group, H&M sells a philosophy, as Persson puts it. He terms this "democratic fashion".

"We create democratic fashion, and we want to sell to all," he said.

This principle is reflected in the design and style of the garments - from basics to exaggerating designer series, and from plain shirts to colorful dresses.

Although loose and oversized garments often give Chinese shoppers the illusion that this is a typical "European style", Persson said that "European element" is not the selling point of H&M, at least it is not what the company intended.

"The company is founded in Sweden, so there is certain amount of 'Swedishness' in this brand, but we don't want to stress our nationality to customers," he said.

The brand does some local adaptation from time to time, but generally, 80 percent of products are the same globally.

"Take the new Malaysian store for example. Of course we refer to our experiences in other hot countries like Singapore, and as you can see, there are not as many thick clothes or down coats in these places as in Sweden," Persson said. "But in terms of other adaptations, we make them along the way as we operate the store."

Climates differ from country to country, but in terms of fashion, there is no major difference between customers from different countries, he added.

The "democratic fashion" is reflected in the price as well. While there is a small variation due to the exchange rate among countries, the price is the same the world over.

"Many years of experience gives us knowledge of logistics, materials, supply chains, buying in huge volume while not using any middle men, which all help to keep costs low," Persson said. "And compared to the premium brands, we don't charge the enormous margin as well."

H&M, together with Spanish brand Zara, Japanese brand Uniqlo and US brand Gap, are often categorized as the "fast fashion" brands which stress quick turnover of stocks and reasonable prices. These brands have new arrivals every week, or at least every month.

"The international brands have not only seized the premium market, but they are winning over the local brands gradually," said Wang Yao from the Nation Commercial Information Center of China.

According to Japanese clothing company Uniqlo, the target customers of these fast fashion brands are generally between 20 to 35.

The Japanese competitor is also ahead of H&M in terms of the number of stores in China. At the end of August, there were 145 Uniqlo stores in China, and the number is increasing by 100 every year. The company aims for 1,000 stores in China.

Persson said it is difficult to define a "typical customer" of H&M.

"We cater to all styles, as long as you are interested in fashion, and want great value for money.

"If you combine fashion, quality and price, I think we have the best offerings in the market. We have huge variety with so many styles, allowing everyone to dress to their personality."

While keeping the H&M brand accessible to the public, the company is developing different customer segments.

Persson said H&M is also a design company, with 150 designers in Sweden.

"We want to have our own designs. We don't take fashion so seriously, we have fun with it, so we constantly surprise the customers."

Currently, H&M has more than 700 suppliers both in China and Europe.

Although it doesn't face serious counterfeit problems in Asia, like some premium brands do, copies of H&M designs are constantly seen.

"This is something that good brands have to live with. If we do something well, there will be people that want to copy, but at the end, if we do the right thing, customers will want the right thing rather than the copy.

"I think there is still huge potential in China, as there are many shopping malls to open and there is still much for us to do."


Add Your Comments:

Your Name:
Your Country:
(English Only)
Please read our Terms of Service. Messages that harass, abuse or threaten others; have obscene or otherwise objectionable content; have spam, commercial or advertising content or links may be removed.