From Christian Dior to Fenty Beauty, fashion and beauty brands from across the globe have gained exposure from the Paris Olympic Games. The marketing value of these varied activations has yet to be tallied but one of the biggest winners in China might end up being Maogeping, a cosmetic brand enlisted by the country to be its official team provider. Helmed by its namesake founder and make-up artist Mao Geping, the brand is on site to ensure the country’s 400-plus athletes present their best selves — both on and off camera.

The partnership has spawned its own hashtag, #TheGloryofChinainParis in Chinese, clocking up millions of views across social media platforms Weibo, Xiaohongshu and Douyin. A more lasting reminder of the brand’s intimate connection with China’s top athletes — a new class of celebrity in the country that’s increasingly popular among fashion and beauty brands seeking endorsements beyond entertainers — is Maogeping’s Olympic-themed makeup range.

So far, China’s fashion industry has focused on coverage of sporting heroes like Zheng Qinwen, a tennis champion who looked immaculate blasting her opponents on the court in Paris, and off-duty images of Wu Yanni, a hurdler who makes headlines as much for her tattoo and makeup routines as for her speed on the track.

The Maogeping deal is one of many that Chinese companies have struck in a bid to associate themselves with the apex event in sporting excellence.

Alibaba Group, which owns e-commerce platform Tmall and other companies that are key fashion retail channels, has become an official Olympic sponsor. Rival JD.com launched a campaign offering customers a selection of champion-worn gear. Local sportswear conglomerate Anta sponsored the Chinese Olympics Committee and its competitor Li Ning created a high-tech suit for the table tennis team. Expanding its marketing footprint beyond China is Fujian-based sporting goods company Peak which provided clothing for several international Olympic teams including the Philippines and Belgium.

Companies like cosmetics brand Chando have been long-term partners of Chinese sporting teams, in its case diving. Other fashion and beauty brands have chosen to hire individual athletes as ambassadors or for other product endorsements.

“This reduces the risk in the investment compared to say a C-pop star [since the local music industry is one] that’s more scandal-prone,” said Allison Malmsten, strategy consultant at Shanghai-based marketing agency Daxue Consulting, noting that athletes are generally considered strong role models in the China market, standing for good sportsmanship, discipline and hard work.

Luxury’s bet on Chinese Olympians

Long before anyone could have imagined an LVMH-sponsored Olympics, the idea of Chinese athletes representing global luxury brands was unheard of. However, the legacy of the 2008 Beijing Summer Olympics marked their “coming of age,” said sports industry expert Li Sheng in a recent documentary about the games. “Many athletes became household names” after “a media awakening turned many into stars,” he added, which led to brands discovering their potential as celebrity marketing vehicles.

Fast forward to the 2022 Beijing Winter Olympics and a few athletes rose to superstar status such as freestyle skier Eileen Gu, who has links with Louis Vuitton and IWC Schaffhausen and snowboarder Su Yiming, whose social media feed has recently been filled with references to Cartier, Louis Vuitton and Adidas.

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Then came the run-up to this year’s Paris games. Dior China reportedly announced that sprint freestyle swimmer Zhang Yufei would represent the brand; Jaeger-LeCoultre and Boss linked hands with champion medley swimmer Wang Shun; and watchmaker Tag Heuer tied up with 200-metre breaststroke world record holder Qin Haiyang. Qin was also tapped by Louis Vuitton, alongside basketball player Yang Liwei, to be a ‘friend of the house.’

For some brands, however, recent Olympic games have shown that athlete partners are not without risks, whatever their nationality. In the case of China, its swimming team has been embroiled in doping allegations.

But overall, the perception of these stars as healthy, dedicated and morally upright role models “aligns well with the values of luxury brands [in the China market],” said Olivia Plotnick, founder of media agency Wai Social. It helps that athlete-brand partnerships also align with what the Chinese government wishes to promote on a national level: a prioritisation of health and fitness and ambitious goals for China’s sports economy.

“Investing in sports, therefore, is an excellent move, especially for luxury brands urgently looking for new growth drivers that match their brand personality,” said Mintel’s senior analyst Blaire Zhang, referring to brands that are increasingly worried by the slowdown in the China luxury market.

Prada was an early adopter of the trend, first dressing Chinese athletes in 2022. The following year it sponsored the women’s football team in a partnership that included the Asian Games and the Olympics. Table tennis captain Ma Long acts as an ambassador for the Italian luxury house and for watchmaker Omega.

Meanwhile, Louis Vuitton, Swatch, Audemars Piguet and Loewe are all picking up momentum on Chinese social media due to athlete affiliations. For its campaign celebrating China’s 520 romantic holiday, Bottega Veneta featured Xu Xin, a champion table tennis player who missed this year’s games, golfer Ning Zetao and multiple gold medal-winning diver Guo Jingjing, who is now a judge at the Paris games.

Kantar’s Vesper Wang explains the appeal of such marketing activations. “These go beyond immediate sales revenue, including the enhancement of brand equity and the strengthening of market position,” said the associate manager of the insights division at the market data provider’s Greater China office. Although initial investment may be high, Wang says, the potential returns in brand loyalty, market penetration and financial performance can be “considerable.”

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Quick gains can also be made from product placement during high-profile moments, unboxing or ‘warming up’ videos. After Hong Kong fencing champion Cheung Ka-Long won gold wearing a recognisable bracelet, Malmsten said searches for jeweller Van Cleef & Arpels spiked on Google Trends data in Hong Kong, which competes at the Olympics with its own team. Cheung has been on the luxury industry’s radar for some time, having featured on the cover of Vogue Hong Kong last year.

“Brands can easily livestream particularly [popular] products [in China] for a quick sales boost,” Plotnick remarked. During the Beijing winter games, a Tiffany bracelet worn by Eileen Gu went viral and reportedly sold out.

Sportswear brands seek winning formula

Among the many local brands gaining traction at the Olympics, there’s one clear commercial winner, said Paris-based Chinese fashion journalist Liu Ziyi.

Since 2019, Anta has been the official sportswear supplier of the International Olympic Committee, signing up to provide clothing, shoes, and accessories for IOC members and staff until 2027. It designed the Chinese team’s official outfits for Paris, the sleek carbon-neutral uniforms emblazoned with dragon motifs. With revenues last year of 62.3 billion yuan ($8.6 billion) parent company Anta Sports has deep pockets for such sponsorships.

The company’s activations include a new youth-focused Olympic cultural project and Anta Ling Loong, a sub-brand which launched a pop-up store open in upmarket department store SKP in Chengdu. Anta brand ambassador Eileen Gu was reportedly spotted in a Ling Loong T-shirt, at China House, which opened ahead of the games in Paris.

“Even though Gu isn’t taking part in Paris, her appearance [at China House] is a clever use of one of China’s most popular sports athletes among young Chinese fans which is bound to reflect well on Anta,” said Antoaneta Becker, director of consumer economy at the China-Britain Business Council, noting that Gu is reported to have earned around 200 million yuan ($27 million) in endorsement deals in 2021 alone.

In terms of visibility, Plotnick points out that Anta has “overtaken” Li Ning — the sportswear brand founded in 1990 by former Olympic gymnast Li Ning — as the main Chinese sportswear brand at the event. But both brands have been able to take advantage of their position as local players aligning with the ongoing guochao movement that sees patriotic consumers show their pride by buying locally designed or made goods.

For international sportswear brands like Nike, Adidas, Reebok, Puma, New Balance, Under Armour and others, the opportunity to target the China market at the Olympics typically involves partnering with individual athletes or teams.

Adidas is dressing the Chinese women’s volleyball team and athletes like tennis player Wang Xinyu. Puma has entered into endorsement deals with Zhang Ru from the national women’s basketball squad, and Wang Lanqin, Jiang Weize and Zou Yang from the national men’s team. Under Armour has tied up with the county’s 3x3 men’s basketball team and women’s volleyball player Zhu Ting. Fila has designed China’s skateboarding team uniform and Nike has dressed China’s women’s basketball team as part of a long-term collaboration.

Insights from a report on earned media value (EMV) compiled by influencer marketing agency Lefty for BoF show that most sponsors for Chinese athletes are from sportswear, consumer goods and food industries, said Liu Chuhan, business analyst at the firm. Tracking athletes participating in the Olympics from January 1 to July 22, it analysed a total of 297 influencers with a particular emphasis on fashion and beauty category engagements on Weibo.

Despite a controversy on Weibo over its latest video, Nike came out on top as the most visible fashion, sports and beauty brand on Chinese socials — securing EMV of $194,000 through 27 posts. Lefty found runner Wu Yanni and tennis player Zheng Qinwen among the stars amplifying the brand. Prada ranked second, generating an EMV of $127,000 and Adidas third with 108,000 earned from seven posts.

According to Lefty’s methodology, which used a CPM (cost per thousand impressions) of $13.75 for Weibo posts and videos and $5.50 for Douyin videos, the most bankable Olympic athlete was swimmer Zhang Yufei who has partnerships with Omega, generating $419,000 in EMV. Zhang was followed by table tennis player Ma Long, who is linked to Chinese brand Erdos, Omega and Prada. In third place was Sun Yingsha.

Fashion media champion female athletes

In the run up to the Olympics, Chinese fashion publications have been full of sports-related and athlete content.

Balenciaga selected gold medal swimmer Pan Zhanle as its cover star for So Figaro China’s issue which was released on the same day as Balenciaga’s Shanghai show back in May. Brands have also been leaning into the games for advertorials such as Wonderland magazine’s collaboration with Anta.

“It’s the perfect moment for magazines to raise ad income,” journalist Liu said.

Elsewhere, Harper’s Bazaar China featured an off-duty Zheng Qinwen in a black Balenciaga blazer on its August cover — the only nod to her profession was the handle of a tennis racket poking out of a handbag.

Marie Claire China featured theretired Olympic gold medallist ‘diving queen’ Guo Jingjing wearing Bottega Veneta and Cartier shot in Paris. Magazines have also been publishing Olympics-inspired shoots such as August’s Vogue China starring model Ju Xiao Wen and Elle China’s story with model Lina Zhang.

“The Ju Xiao Wen Vogue shoot got very positive feedback,” Liu said.

The editorials of female athletes and fitness-themed models have been amplified on China’s digital channels where the empowerment of women through sports is a particularly hot topic. A recent Douyin report outlined how women athletes now receive much more attention from the public than in the very recent past; half of the top ten most followed athletes on the social platform are now women.

“Ultimately, because the pool interested in sports has widened since China hosted [the Olympics]… it offers [brands and publications] more possibilities — especially for women-centric content,” Liu explains

Malmsten believes that it is female athletes’ proclivity to present themselves as multidimensional figures which can lead to “a high ROI (return on investment) for fashion and lifestyle brand partners.” Seen through this lens, brands that collaborate with the likes of hurdler Wu Yanni, already a personality off the track, could be tipped as marketing winners at this year’s Paris games — especially if she takes home a medal later this week.

Another might be tennis star Zheng Qinwen, who won gold in the women’s singles over the weekend, a first for the Chinese Olympic team. Nike, which had featured Zheng in a new advert just before the games started, wasted no time in celebrating its own marketing gold. Sports Illustrated summed it up with the headline: “Nike takes victory lap [in]...perfectly timed commercial.”

In the 13 years since Chanel launched its exhibition at Shanghai’s Museum of Contemporary Art, the French luxury brand has learned a lot about navigating China’s art scene. The “Culture Chanel” show may have satisfied audiences by featuring over 400 iconic pieces drawn from the archives, but the associated film drew criticism from some members of the public for its exoticist approach to Chinese culture.

Today, Chanel’s inroads into China’s art scene are more nuanced — and practical. In May, the brand announced it will increase investment to help restore and upgrade Shanghai’s Power Station of Art, a state-run contemporary art institution that has previously hosted events by Cartier and Shanghai Fashion Week’s Labelhood shows. The partnership, which commenced in 2021, also saw Chanel bring its touring exhibition on Gabrielle Chanel to the museum in July.

Renaud Bailly, Chanel’s president of the North Asia region, has described the partnership as marking “a new chapter in the house’s commitment in China” and contributing to the cultural landscape in Shanghai by “providing a platform to creators and bringing the most illuminating experiences to the public.” But how the brand will measure the initiative’s success in commercial terms remains a mystery.

When pressed to elaborate, a Chanel spokesperson stated simply that the “Chanel Culture Fund is non-commercial,” referring to the global programme of cultural patronage that partners with institutions across Europe, North America and Asia — including the Shanghai museum. Yet marketing initiatives like this are key to achieving its stated ambitions to grow sales in the key market.

Using art to help sell luxury goods is one of the oldest marketing tactics out there, with couturier Elsa Schiaparelli cited as a pioneering figure for her collaborations with surrealist Salvador Dalí during the 1930s and ’40s in Europe. The strategy has become far more transactional in recent years as high-end fashion and jewellery brands flock to international art fairs like Frieze and Art Basel, including the latter’s outpost in Hong Kong, in a bid to expand their client base to more wealthy art buyers.

Luxury brands have not missed their moment to build on this momentum in China, investing ever-greater sums of money to associate themselves with the local art scene. Gucci, Prada, Louis Vuitton, Cartier, Christian Dior, Valentino and others have employed initiatives that range from physical exhibitions to collaborations with local artists. While some brands have generated a lot of marketing buzz with their initiatives, others have underwhelmed audiences by not sufficiently localising art projects. A few have underestimated the risks of cultural patronage in a market as unique as China.

Weighing Up the Risks and Rewards

Mainland Chinese society’s perception of the contemporary art world doesn’t always mirror the West’s due to its development in the post-Cultural Revolution context. Brands must ensure that content and messaging is on point and free of reputational risk for all stakeholders — not just the brand, its art collaborators, loyal customers and the wider public but also the Chinese government, which takes a keen interest in monitoring art.

“Brands need to be extra aware of selecting the artist and their concept directions and the message behind these,” cautioned Garth Chow, director of Chongqing-based consultancy Jingsheng, advising brands to be “extra sensitive about what the market might like or not.”

Focusing squarely on the fashion side of art collaborations might have shielded brands from sensitivities and backlash in the pre-social media era, but that is no longer the case.

Dior, for example, has collaborated with relatively provocative artists like Shanghai-born Xu Zhen, whose conceptual work explores socio-political taboos and consumerism, for a reinterpretation of a handbag. However, it was a seemingly innocuous fashion image at the exhibition Art’N Dior by the photographer Chen Man that brought trouble to the house’s doors. In 2021, the brand had to withdraw the work after netizens reacted negatively to its depiction of Chinese beauty, and the photographer issued a grovelling apology.

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Besides not showing enough caution toward or respect for Chinese audiences, other pitfalls to avoid include being seen as a “predator of culture,” said Dr. Federica Carlotto, author of the recently published book “Luxury Brand and Art Collaborations.” Art initiatives “need to be authentic,” otherwise they will be called out in China.

“There are definitely companies saying let’s jump on the bandwagon. But if they are not consistent with relevant messaging to the wider community, they’ll be guilty of ‘art-washing,’” she said, in a comparison with greenwashing, which is used to describe sustainability initiatives that don’t measure up.

Broadly, however, the opportunity for luxury to leverage art in China is an attractive one. According to Carlotto, Chinese society now features “a consumption culture that doesn’t see any conflict between art and luxury” and a younger generation who likes to “raise their cultural capital alongside buying things.”

Timing is also key. In an era of softening demand in China with major luxury groups like LVMH and Kering reporting a slowdown and in the market, art-led marketing activations could help motivate increasingly wary aspirational consumers — but only if they provide a unique, emotional and meaningful way to engage with the brand, experts suggest.

The Race to Preserve, Steer and Channel Culture

“If you create your own foundation, you are in charge of culture. You are enabling discourses and what is relevant to a wider public and local communities,” said Carlotto, explaining the shift towards the creation of global art foundations by luxury brands like Prada, Gucci and Louis Vuitton.

In 2017, the latter introduced Espace Louis Vuitton — an art space highlighting the longstanding relationship between Louis Vuitton and artists — to China’s art capital, Beijing. The project is distinct from the Louis Vuitton Foundation in Paris, opened a few years earlier. By wrapping China into the group’s global art strategy (other Espace outposts exist in Tokyo, Venice and Seoul, for example) at a relatively early stage, the brand paid tribute to China’s art-going public while introducing brand customers and fans to respected international artists.

Prada’s global art strategy started in the 1990s with the formation of Fondazione Prada and was formalised in 2015 with a permanent space in Milan. Only two years later, it repurposed an historic Shanghai residence as a dedicated cultural institution. Helping to requalify historic buildings around the world, Prada took six years to restore Prada Rong Zhai to its current form, a villa with three floors and a surrounding garden. It has an active rota of exhibitions from local and international artists including Li Qing and Michaël Borremans.

“That’s a really big statement to sophisticated consumers in China,” said Jonathan Travers-Smith, founder and CEO of marketing agency Hot Pot China, who recently visited Prada Rong Zhai, noting that the return on investment for such large-scale, long-term projects is often difficult to quantify because brands don’t always identify the right performance indicators to measure it. But broadly speaking, he believes such foundations bring a “sense of mystique and differentiation” to luxury brands in the local market, especially in terms of “sentiment and association.”

Yuan Ning, an advocate for the preservation of Chinese heritage and co-founder of an art and culture salon called Salon Iter, contends that some art-based initiatives can help luxury brands in China to “insert themselves into the local market” and “enhance cultural authority.”

In recent years, there has been a shift towards greater respect for local culture by brands and consumers alike. It is a manifestation of the guochao movement that sees patriotic consumers show their pride by buying locally designed or made goods.

Loewe has harnessed this movement to great effect by leveraging consumers’ growing appreciation for traditional applied arts, say experts. Ning name-checked the LVMH-owned brand’s ceramics-themed exhibition at the Art021 Shanghai Contemporary Art Fair, which presented Deng Xiping’s porcelain artworks and sponsored the creation of a new educational program at the Jingdezhen Ceramic University to preserve the ancient craft. The accompanying video for that initiative was seen on Weibo nearly 8 million times.

This low-key approach chimes with what Ning describes as a shift away from “hype-driven” events to a more thoughtful introspection to rediscover stories from the artisans behind the craft. “For brands to continue to last in China, no matter who they are, they have to tap into the heritage and culture angle, no matter if it’s in real estate like old cultural heritage sites or intangible cultural heritage,” she said.

Ning’s advice is simple: follow the interests of the high-net-worth art buyers and collectors who are going “back to their heritage” and have growing interest in traditional art, ceramics and pottery. They can be found at art fairs, which have expanded their presence in China, offering luxury brands ample scope to connect with highbrow consumers. This year’s Art Basel Hong Kong, sponsored by LVMH’s Ruinart, drew 75,000 visitors in March. June saw the eighth edition of Gallery Weekend Beijing in the city’s historic 798 Art District.

Local luxury brands have also started to get in on the action. “There’s a shared sensitivity … between women in art and fashion, people who value art and [our] brand,” said Ian Hylton, president of Chinese womenswear brand Ms Min, who took part in Shanghai’s art fair Art021. Founded by Min Liu, Ms Min has numerous clients from the art world, many of whom were introductions from curators such as Pearl Lam or Vanessa Guo.

The Popularity of Applied Arts Projects

Luxury brands have been upping their investment in branded exhibitions in China so much in recent years that observers say the market is showing early signs of fatigue.

Loewe managed to inject excitement into this jaded format in March when Crafted World opened at the Shanghai’s Exhibition Centre. It won fans for its overt appreciation of heritage and featured, among other international artists’ work, a sculpture from 2023 Loewe Craft Prize finalist Huang Wanbing, a Shanghai-based multidisciplinary artist and fashion designer.

According to Chow, Loewe’s exhibition had the edge over previous art-based shows, such as Dior’s touring exhibitions where it invites artists to reinterpret signature pieces. In his words, Dior’s shows are “engaging” but Loewe’s exhibition was more “on point,” approachable and received more attention from younger audiences. When spectators left Loewe’s show, the emotional connection was strong enough that many were left wanting to buy mementos like keychains, wallets or T-shirts.

“Whereas the Lady Dior exhibition drew a distance between who’s buying Dior normally and who’s buying their collectible art pieces, Loewe brought it to the public,” said Chow.

Dior and Loewe both declined BoF’s request for comment.

“Loewe is the new benchmark for how brands should be leveraging the art scene to build brand equity,” said Tanguy Laurent, creative director of Shanghai’s creative studio TLCD, citing alignment between the brand’s initiatives and “the revival of local artisanry” driven by “growing cultural confidence and the government’s promotion of the Chinese craftsmanship spirit,” among other things.

In a very different manner, Gucci’s Art Wall in Shanghai — one of five across global cities — has gone a step further by engaging the general public. The 2022 street-art initiative asked fans to submit their own artworks, with tangible results in a mural. At the time, it reportedly generated over 500 million views for the hashtag #BloomingShanghai thanks to the brand’s partnership with a constellation of local celebrities who amplified the campaign on their Weibo accounts.

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The Italian brand used outdoor murals a few years earlier in the city, promoting an exhibition it supported at the city’s Yuz Museum called “The Artist is Present,” which featured a portrait of the artist Marina Abramovic.

Combining Patronage With Artist Collaborations

Louis Vuitton has a long history of collaborating with artists for its products, from its 1980s scarves printed with artwork from the likes of Sol LeWitt to the landmark Stephen Sprouse collection of graffiti-inspired logo bags and later collections featuring work by veterans like Takashi Murakami, Yayoi Kusama and Jeff Koons.

But since China skews younger than most luxury markets, so too does the audience brands must appeal to. This means artists who reflect that demographic should be considered, Chow suggests. Cue Louis Vuitton’s women’s pre-fall show in Shanghai where women’s artistic director Nicolas Ghesquière opted to work with 32-year-old Beijing artist Sun Yitian, who is known for her disembodied dolls. The Louis Vuitton products featuring her animal artwork ranged from clothing to accessories and debuted at a show held in the Long Museum. The series was then blown up to cover the facade of K11 Art Mall.

“[With this move] they’re saying we are speaking your language, and it’s cooler than before … It’s a new way to tell consumers [in China] ‘we care about the market and the young generations,’” Chow said.

Louis Vuitton declined BoF’s requests for comment.

Hermès, which has recently shown more resilience in the China market than some of its peers, has taken a slightly different route. Its latest collaboration with the artist Song Dong on window displays in Shanghai blurred the boundaries between the store and a gallery, generating what Travers-Smith describes as a positive “halo effect.”

“The role of merchandising in the store with a known artist gives a unique, standout look beyond marketing. It’s an association for the brand and everywhere you look through the store, it’s elevated by that artist.”

But in China’s fast-paced, dynamic cultural sector, it is often hard to know where to invest and which art-led model to prioritise.

According to Laurent, dedicated art destinations like those operated by Louis Vuitton and Prada can lose their shine over time. Even projects as successful as Prada Rong Zhai have their limitations. “Its impact is intense but yet not spread out. Also, repetition is a cue when you dedicate a set space for exhibitions,” he said, suggesting that a permanent location might not always be advantageous.

Jacques Roizen, managing director of consulting firm DLG China, echoes that sentiment. Temporary art exhibitions organised by luxury brands, such as Gucci and Chanel, have the advantage of being “more spectacular and exceptional,” he said, in comparison to the approach of “maintaining a permanent art museum, especially in the Chinese market, where consumers are always looking for the greatest and the latest.”

For the second season running, Semir took to the runway at the last month’s Shanghai Fashion Week. The mass market clothing brand is an unlikely inclusion in the biannual showcase as its casual designs are far less fashion-forward than Shushu/Tong, Comme Moi or other designer labels on the calendar. It also retails for less than a tenth the price of its upmarket counterparts.

Brands operating in a similar price bracket in Europe’s fashion capitals, such as H&M and Zara, have come to realise that most consumers don’t value seeing them on the Paris catwalks but, in China, Semir intends to keep on showing, according to sources at the Shanghai event. It’s understandable in this fiercely contested corner of the Chinese market. Local brands have had to be bold to gain an edge over rivals with global brand status.

Unlike export-focused Chinese disruptors Shein and Temu, traditional offline Chinese brands in the mass market segment have doubled down on their home market. Semir, owned by Wenzhou-based apparel conglomerate Zhejiang Semir Garment Co Ltd., has scale on its side, boasting revenues of more than 13 billion yuan ($1.8 billion) in 2022. But it is just one of many Chinese apparel giants operating in a similar price bracket.

Though some face mounting challenges, established names like Shanghai-based Metersbonwe and Ningo firms Peacebird and Youngor have accumulated deep-rooted brand awareness across the country. Others battling for market share include Hangzhou-based Eifini and Guangzhou’s Mo&Co and Urban Revivo. The high-street segment of the Chinese market — unlike luxury which remains heavily skewed towards foreign brands — has seen local players emerge as serious contenders.

Where does that leave H&M and Zara?

Mounting obstacles and challenges

The willingness of Chinese consumers to pay a premium for non-luxury foreign brands has been on the decline in recent years amid their “increased conviction over the quality and comfort of local brands, as well as their levels of service,” said Daniel Zipser, senior partner at the Greater China office of consultancy McKinsey & Company.

The commercial reality of this shift is playing out on Alibaba-owned e-commerce platform Tmall. For example, among the top 20 brands in the sportswear category, local players accounted for 49 percent of sales in 2023, compared with 43 percent in 2019.

Although global brands with defensible value propositions and strong customer engagement models remain well positioned, “a large supply of local brands are available on platforms such as Taobao and Douyin that provide access to [increasingly higher] quality products more tailored to local style needs and fit and which offer more competitive prices.”

This landscape makes it “very challenging for the traditional fast fashion players to compete at the lower end of an extremely competitive market,” Zipser added.

But it wasn’t always this way. Despite local brands’ home advantage, H&M and Zara were able to rapidly expand in China over the last decade, with the former opening about 100 stores every year from 2013 to 2017, according to Guanyan Report Network.

Expansion peaked around 2017 for many foreign brands in this price bracket before their progress was interrupted in 2018 when the Chinese economy started slowing down more sharply than it did previously, said Daxue Consulting’s marketing manager Antonello Germano. “[At the time] there was some uncertainty due to the US-China trade war and a dip in consumer confidence,” he added.

From 2020 onwards, challenges mounted. On top of the Covid-19 pandemic and resulting global supply chain disruptions, the Xinjiang cotton forced labour crisis of 2021 prompted Chinese consumers to boycott a group of international companies including H&M and Uniqlo. At the same time, fashion brands reliant on physical store networks struggled as more Chinese consumers adopted online shopping during the country’s prolonged lockdowns.

Still, China’s branded mass market grew at a CAGR (compound annual growth rate) of around 2 to 3 percent between 2019 and 2023, albeit more slowly than the 3.5 to 4.5 percent CAGR it clocked during the pre-pandemic period between 2015 and 2019, according to Bain & Company. The consultancy estimates that the market is currently worth around 85 to 95 billion euros ($92-103 billion).

“We would not say that the Chinese branded mass market is ‘struggling’, but that it is facing a stronger competitive pressure from premium and luxury brands increasing their presence within China,” said senior partner at Bain & Company, Claudia D’Arpizio in an email.

H&M’s post-pandemic recovery not been straightforward. The brand took 16 months to return to Tmall following its dramatic removal from the platform in 2021 over the Xinjiang crisis. It only returned to JD.com in 2023. That year, H&M shut its Beijing Sanlitun store only 12 months after closing one in Shanghai.

By last year, former H&M Group chief executive Helena Helmersson suggested that the company’s China market performance was still mixed. “Overall, we see it’s going in the right direction even though we’re not at the level we want to be,” she told Reuters in July. “We do see that our focus on the customer offering and also making the customer experience really locally relevant is paying off.”

H&M told BoF in a written statement that it continues to view China as “a very important market” and continues to improve its localisation strategies. The company no longer breaks out individual country performance in the Asia region.

The recovery of Zara-owner Inditex has also been challenging. In July 2022, three of the group’s brands, Bershka, Pull & Bear and Stradivarius, completed their exit from China by shuttering their Tmall flagships. However, even as the company scaled back its physical store footprint by a fifth, it more than doubled its pre-tax profits in China in the 2023 financial year, suggesting that its focus on the Zara brand and online sales was bearing fruit.

Inditex declined to BoF’s requests to comment further.

By contrast, Uniqlo has shown that the battle for China’s mass market can be won by foreign brands. In October, Japanese parent company Fast Retailing reported a 28 percent surge in full-year operating profit on the back of a stronger than expected post-pandemic recovery in China where it has 930 stores in the mainland alone.

But even Uniqlo’s future is far from guaranteed in a rapidly evolving market like China and emulating it may not be the right approach for competitors with a different set of brand aesthetics, values and DNA.

Moreover, many of the challenges faced by foreign brands stand in contrast to a more favourable climate for home players.

Players with a home advantage

In February 2024, a report by market research company Forrester, “From Dominance To Decline: Global Brands Are Losing In China,” confirmed the consumer shift to domestic brands that started around 2016. It states that the competitive advantage of some global brands has ebbed away, not least due to a miscalculation of consumer values.

One of those is the staying power of the ‘guochao’ movement (the rise of cultural and national pride in China) in business over recent years. Amrita Banta, managing director of Agility Research & Strategy, explained that perceptions have “been transformed with the rise of Chinese heritage hip culture showing a new ‘cultural confidence in local brands.”

Local brands are often seen to be more cost effective and convenient. The lingering macro environment in China of a weakened economy and subdued consumer sentiment means shoppers have become more rational when purchasing — even for lower threshold items. Most want more choice and more bang for their buck, despite the growing focus on sustainability.

More than 80 percent of Chinese consumer respondents in a 2023 Mintel survey stated that, when buying fast fashion, product was more important than brand name.

“Products are the first absolute,” confirmed Sandrine Zerbib, president of Baozun Brand Management in the European office of parent company Baozun, which bought the China business of Gap in 2022 after the American mass market giant found the market too difficult to navigate.

Speed is the second priority. “Chinese youth catch on to the latest fashion trends very rapidly, spreading like wildfire on platforms such as [social commerce app Xiaohongshu]. For instance, one day everyone might be discussing the ‘rich heiress’ look, and the next it’s suddenly all about sporting the bright-coloured ‘dopamine’ aesthetic. These styles quickly find their way into the stores of local Chinese brands [but] international brands take a lot longer to pick up on them and implement them effectively,” observed Tom Nixon, co-founder of China-focused digital agency Qumin.

Zerbib explains that local companies often think “Chinese-first,” as opposed to global brands which have to consider shoppers across multiple regions. “Aesthetically, Chinese consumers appreciate different colours and designs but by applying western codes, [western brands] miss out. Sizing is another one, even an S is sometimes too big,” she said.

Today, fast fashion market giants like H&M and Zara face not only agile Chinese competitors but also pioneering foreign rivals. Danish brands in the Bestseller Group, including Jack & Jones, Only and Vero Moda were among the first wave of foreign brands to enter China in the mid-90s and have maintained their relevance thanks to early adoption of e-commerce in combination with a deep penetration of more than 6,000 stores nationwide.

Localisation in a cut-throat market

Lucrezia Seu, founder of Shanghai-based marketing agency Plush Consulting, explains that localisation goes much deeper in a market of China’s scale and complexity. “International [brands] often… forget that in many cases, the real strength of consumers’ spending power for lower- and mid-range price points actually lies with the second-tier cities and below.”

According to Qumin’s Nixon, Zara and H&M remain “confined to major urban centres” and are “failing to penetrate lower-tier markets” where local brands thrive.

Domestic brands also tend to better understand the nuances of consumer behaviour at a hyper-local level, experts suggest. “Brands such as Mo&Co and Urban Revivo offer everyday wear solutions for consumers [by] appreciating local trends not only of major cities but also smaller cities in China. They are able to nail the price point as well as style offerings and trends,” Seu said.

Marketing prowess is another factor. Local names are often quicker to spot the best Chinese TV shows, movies and celebrities to partner with. For example, Eifini sponsors “The Goddess,” amplifying its product placement with the hit TV show using an e-commerce model akin to ‘see-now-buy-now’.

Designer collaborations are now a prerequisite in the race to win younger fans, and this trend has shifted away from partnerships with global names to those closer to home. Peacebird has actively leveraged this strategy. In March, the apparel giant pinned its hopes on Jacques Wei, an emerging Shanghai designer brand sold at leading luxury retailers.

H&M’s first collaboration with a buzzy Chinese designer was in 2019 with its Angel Chen deal. That was followed with Pronounce in 2021 but the series ended during the Xinjiang cotton crisis. Zara then took over the space, partnering with Susan Fang in 2022 and Calvin Luo last year. Fang has since joined hands with H&M Group’s & Other Stories brand. Just last week, local media reported that H&M is planning to show an entire collection based around Chinese designer collaborations at the next edition of Shanghai Fashion Week.

These forward-thinking partnerships did much to further ingrain brands in the psyche of young Chinese consumers, but foreign fast fashion players must now go to greater lengths to match or surpass their local rivals.

Both brands have started extending their partnerships beyond the fashion category. H&M Group’s premium line brand Cos has collaborated with teahouse Chen Jin in Chengdu and H&M launched its first Chinese artist collaboration with Wan Yang. Over the Lunar New Year, Zara made a surprising pairing with local porcelain brand Xixingle.

Making the right retail investments will be key for either brand to make gains in China. Inditex listed 242 stores in China (comprising 119 for Zara fashion, 30 for Zara Home, 54 for Massimo Dutti and 39 for Oysho) in its latest annual report. H&M Group currently has 290 stores in the country.

Another priority is getting the optimal online distribution mix though Tmall still looms larger than most platforms. Zara’s overall GMV (gross merchandise value) on Tmall for the year between Mar. 2023 and Feb. 2024 was over 1,059 million yuan ($146 million), according to data provided by Baozun. H&M’s GMV exceeded 278 million yuan ($38 million) and its upmarket sister brand Cos surpassed 722 million yuan ($99 million).

In a daring move, Zara has surprised China-watchers by launching a new weekly livestream experience on TikTok sister app Douyin. It runs for five hours and includes catwalks, walkthroughs of the fitting rooms and makeup area and behind-the-scenes views.

“This has gathered a lot of attention and praise among young Chinese consumers,” said Seu pointing out that the content “feels more high fashion and entertainment rather than a simple [livestream] sales push.”

Positioning themselves incrementally upmarket could be one way in China. Close to 60 percent of respondents in a recent Mintel survey said they accept fast fashion items in an increasingly expensive price bracket (over 1,000 yuan). Inditex and H&M Group have responded to this by introducing premium fast fashion offerings and lines in at higher price points and better fabrics.

Despite these and other moves, experts say that most foreign fast fashion brands appear to be stuck in something of a catch-22: until the China market accounts for a greater share of their global business, their leaders are unlikely to devote the level of investment needed to stimulate game-changing growth. For companies able to find a way through that conundrum — and compete against local rivals with a growing home advantage — the payoff could be significant.

However, brands like H&M and Zara must change tack to do so, suggests Zerbib.

“They have been market leaders globally for so long and that comes with a specific mindset. But [in China] now they must shift to a contender mindset,” she said.