Why is there no luxury brand in China?

Where is the difference between Chinese manufacturing and Italian big names?

Let me talk about the two days in Italy: Alumni of the China Europe International Business School went to Italy and Germany to learn how to grow fashion brands. At this stop in Milan, these successful Chinese entrepreneurs asked Umberto Angeloni, an Italian fashion legend, to ask the secrets of the Italian fashion industry.

Angeloni answered this question with an Italian-style romantic. He took his alumni to the Italian town of Soragna near the factory, visited the centuries-old castle of Solana, and chatted with the Prince of Solnia in the old castle; Sample the Parma ham veal rolls, Culatello dried ham and Parmesan cheese in the Michelin restaurant in the country, and enjoy a refreshing white wine from northern Italy.

Angeloni believes that all of the above-mentioned seemingly incompatible with the fashion industry are the core competitiveness of “Made in Italy”.

"This small town, looking at the inconspicuous, only 4,000 residents. But the town has a history of thousands of years, the achievements in art and architecture are hard to imagine. This is why the people in the town do tailoring carefully, Not casually perfunctory. The production environment is directly related to the way the craftsmen work," Angeloni said.

“For an Italian brand, the 'root' is more important than ever. Generations are a wonderful thing, and these Italian manufacturing can't be replaced or moved to other countries and regions.” He explained Italy. Competitiveness.

Wang Gao, a professor of marketing at CEIBS, said more straightforwardly: China made a knife, but it did not create a Vickers saber brand. More often, Chinese companies are paying attention to tangible products and have not reached the invisible height. In other words, “persistence” is a story in itself, it needs to be made, and it takes time and effort to get through it.

After the ebb tide, the real product tears

The decade before 2013 is known as the golden decade of the global luxury and fashion industry. During this period, China's rapid economic growth and strong consumer demand contributed. But China’s economic growth will not be the same as before: everywhere is an opportunity.

After the stage of fighting low prices, the competition between Chinese manufacturing and European manufacturing began to become the competition of the entire industrial chain. Before talking about the brand, first look at the quality of the product is not too good. Just like the four most important elements listed by Swiss Vickers for the product itself, quality is the first to bear the brunt, followed by other elements such as functionality and design.

“The era of making money in China is gone forever. The consumption upgrade determines that the fashion industry must make products in a down-to-earth manner.” The founder of Shenzhen Weiyan (VIEIN) Clothing Co., Ltd., a Chinese alumnus Ye Lin told Sina Finance "From the perspective of hand-made, there is no gap in technology between Chinese manufacturing and Italian manufacturing. In this regard, Sun Qingfeng, founder and CEO of the Chinese silk scarf brand "WOO妩", also said the same point with Sina Finance. That is, no matter from silk, cashmere selection or weaving technology, Chinese companies are no worse than Hermes. His motto is "to fight for the Chinese nation's luxury brand for life", for this reason, he limited the embroidered mothers to work 2 hours a day, In order to achieve the best results.

Another leader of a large domestic small-scale home appliance manufacturer has also admitted to Sina Finance that after the past 20 years of market-oriented development, the Chinese companies that have survived will have certain competitiveness, and there is little difference in manufacturing, research and design capabilities. "Every time I went to Europe to see all kinds of products more than ten years ago, I was shocked. Today is not as exciting as it used to be."

In this case, what is the difference between Chinese manufacturing and top European manufacturing?

The EIN women's brand founded by Ye Lin is the old-fashioned high-end brand of China's new generation. After 20 years of fashion industry, Ye Lin believes that to achieve the global standards, Chinese companies still need to settle, and it takes time to slowly hone.

“In the past, Chinese women’s wear brands bought some big-name goods for simple style reproduction and production and sales. This barbaric reproduction has been going on for many years. Many years ago, I also traveled to Europe and Japan and South Korea to buy a lot of women’s clothes. And then research and production. But that era has passed, China's manufacturing must create a competitive own brand, we must control the upstream and downstream industry chain, from fabric development and production to design must be independent. Italy's successful clothing companies are This is the foundation laid down." Ye Lin told Sina Finance.

“Because China has always had excellent fabric manufacturers, but these fabrics are only used for export, they are generally not easily sold to Chinese customers. After a lot of efforts, we have persuaded some export-oriented high-end fabric manufacturers to become our suppliers. This upstream integration took 10 years."

Because of the troubles caused by the upstream industrial chain, Ye Lin began to develop fabrics herself in 2005. There are 170 to 180 people in the company's 300-person team for product development. Nowadays, many emerging Chinese clothing brands are also aware of the importance of homemade fabrics, which makes fabric engineers and the “masters” of the manufacturing industry expensive, with annual salary of over one million and very popular. This is hard to imagine in the Chinese fashion world 10 years ago.

Even so, Ye Lin found that Chinese companies still have product bottlenecks on some raw materials. For example, she uses a high-end yarn that can be directly used for braided sweaters. Compared with domestic similar products, it is still imported from Italy. The color and material are even better, and the product gap is obvious. Of course, the prices of these products are also double the domestic price.

A Chinese entrepreneur has summed up Sina Finance: For the R&D of manufacturing industry, Chinese companies are not able to make it, and more importantly, they are willing to do it. The company's R&D and improvement of the same new product usually takes three years, but to completely develop the same new product, the development cycle may not be as long as 10 years. Of course, the final facts prove that investment always has a return, and the market response is also very good. However, if you want to invest in research and development, you should not be too concerned about the short-term return on investment, but be prepared for strategic investment.

For example, Hanspeter Pieth, managing director of the watchmaking business of the Swiss family business of the House of Gübelin, which has more than 160 years of history, says, “Innovation is not a mere imitation, because imitation will never succeed.”

China's high-end brands can only fight international mid-end brands?

“It must be acknowledged that Chinese companies have not yet seen any first-line luxury brands. Therefore, international first-line luxury brands do not compete with Chinese manufacturing, whether they play product brands or cultural cards. Due to the previous market inertia, China’s high-end products are now only Can get the mid-end products of international brands." Wang Gao believes that international brands will be high-selling when they enter the Chinese market decades ago, and the price of products is high. This has made it possible for Chinese companies to focus on the low-end market and achieve misalignment with international brands. Now that China's manufacturing cost advantage has disappeared, the price and the mid-end brand products are getting closer and closer, and there is still a big gap from product quality to service – this is the biggest challenge in China.

A Chinese entrepreneur also agrees with Wang Gao. He said to Sina Finance: Indeed, the positioning of Chinese brands is dominated by the mid-end, which in itself is different from the luxury positioning of many European brands. If we interpret from a brand perspective, the gap between Chinese manufacturing and European manufacturing is still evident. European luxury goods originated from the royal family and nobles. This tradition has not been interrupted, and it has accumulated over time to reach today's artistic appreciation and craftsmanship. If a single luxury brand is recognized by B2C consumers, then “Made in Italy”, “Made in Germany” and “Made in Switzerland” are high-quality endorsements in the B2B field, as well as brands. We must also recognize this gap.

Karl Elsener, the current head of the family of Victorinox, admits that the Swiss army knife he produced represents Swiss manufacturing. If the quality of the product is not too hard, it is not only the Vickers brand, but also the brand. It is a "Made in Switzerland" brand. Whether it is made in Switzerland or made in Germany, it is also based on the word-of-mouth agglomeration effect of local products.

“Made in China has its roots, and there are many skilled craftsmanships that have been passed down to the present. But the Chinese people’s lifestyle has been broken, which has led to the re-launch of many industries. Now entrepreneurs are aware of this problem and are beginning to tap and re-launch. China's own cultural products, branding, but this takes time to accumulate, there is no shortcut." Wang Wei, associate professor of marketing at China Europe International Business School, told Sina Finance.

Wang Wei believes that for Chinese manufacturing, the Internet economy is like a double-edged sword. On the one hand, low-cost digital marketing brings development opportunities to many Chinese SMEs; at the same time, it makes China's manufacturing too impetuous, and short-term lack of long-term Strategic plan.

“Being a brand must be calm, have a certainty, or even a paranoid insistence. In my opinion, the vision of Chinese companies to establish their own brands is rapidly rising with the foothold of a large number of family businesses. Family Cohesion can be a soil for Chinese brands. But building brands and growing business is not the same thing, sometimes even contradictory. How to make trade-offs, how to stick to the goal after winning the goal is the key to success and the biggest challenge. It is also the inspiration we have gained from the case of successful European brands.” Wang Wei said to Sina Finance.

Besides, Caruso, who drinks wine and eats ham cheese, may indeed add luster to the brand's marketing, but returning to the product itself, Caruso's R&D staff accounts for 20% of the total number of employees, and new fabrics have always been the focus of research and development. For example, how to produce 100% camel hair and light and warm suits, how to mix a certain proportion of silk, mohair and wool to produce a special new fabric. High-end suits require a full-core lining. This alone consumes about 25 jobs and involves a lot of costly manual work. To achieve low-cost mass production of suits, it is possible to replace the whole core with rubber glue, but it is definitely not a high-end men's wear.

Therefore, the most important thing in manufacturing is the product itself, the brand or something, and that is all the way.

(The author of this article: Sina Finance Europe stationmaster. Work for more than ten years, from social news to financial news, from Shanghai to London, from the first financial daily to Sina Finance.)

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