Global clothing brands pull out from China market

Foreign brands who are unable to adapt to the local market struggle more.

A number of global apparel brands have decided to pull out from the China market in a bid to scale down their operations and secure cash flow to survive the pandemic pressures, according to a report from Fung Business Intelligence.

In June, two global fashion brands, namely Superdry from the UK and Iconix from the US, announced their withdrawal from the China market. Earlier, Old Navy and Esprit closed all of their China stores in March and May respectively, whilst Guess and earth music&ecology announced their China exit plans in June.

“As COVID-19 looks like it is here to stay for a while, we believe more struggling apparel players will scale down their operations to minimize spending and preserve cash for future growth initiatives,” the report stated.

The pandemic has made survival in the China market even more difficult for foreign brands incapable of adapting to the local market, the report stated. In Superdry’s case, the brand entered the China market through setting up a joint venture company in 2015, but has been stuck in adapting to the local market over the past four years.

In FY 2019, Superdry recorded losses of up to $4.69m (£3.7m) in China, whilst the outbreak disrupted the brand’s distribution, supply chain, design and marketing plans.

“Considering the on-going consumption upgrading trend in China and growing popularity of homegrown fashion brands among Chinese consumers, it is vital for foreign players to keep up with the changing tastes and spending patterns of Chinese consumers, especially the young generations,” the report added.