March 03, 2016 08:14
Korean clothing companies are rushing to China to compensate for a rapidly waning fashion market at home amid the ongoing slump. In China, despite slowing growth, the fashion market is still burgeoning.
Chinese consumers view Korean clothes as fashionable and good quality. Their business in China is faring well, and a free trade agreement between the two nations that went into effect in December last year offers further incentives.
Avista, which operates around 100 stores of the BNX brand of women's clothes in China, joined hands with Dishang Group late last year to launch a new brand called G.Revive. Last month it formed a joint venture with Shanghai Silk Group to market its Kai-Aakmann line.
Smart F&D, which makes school uniforms, has tied up with Bosideng Group to sell them in China starting in the second half of this year.
Textile companies from around the world are hungry for a slice of the Chinese market, where 220 million schoolchildren need to be fitted out and the market for school uniforms is scaled at 33 billion yuan (W6.6 trillion).
According to PwC Consulting, China's clothing market grew 12 percent last year to US$79.5 billion and is expected to grow an average of 9.5 percent over the next five years.
Park Young-man of Tebah Global, which sells baby products online, points out that 16 million babies are born in China every year, some 1.6 times the total population of Seoul. "Nowadays doing business in China is a necessity rather than an option," he added.
The Korea-China FTA has made the Chinese market far more accessible for Korean businesses and vice versa. The 14 to 25-percent tariff on clothes imports will be gradually abolished over a 10-year period.
On top of that, Korean fashion brands benefit from the popularity of Korean dramas and music in China.
The Sejung Group's jewelry brand Didier Dubot, for example, became a hit when Jeon Ji-hyun sported its baubles in the mega-hit soap "My Love from the Star."
But success is by no means guaranteed. Competition between online shops is fierce and squeezing margins, says Kim Ki-yung, an analyst at SK Securities. "As incomes rise in China, consumer tastes are becoming more sophisticated, so clothing makers will have to improve their designs and tap into provincial markets."
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