H&M’s China Design Hub could help them inside and outside of China

Last week was a big week for many foreign brands selling in China. Saturday saw the conclusion of the world’s largest online shopping festival – Singles’ Day – reportedly the biggest yet for GMV (Gross Merchandise Value) sold, although, like last year, the big platforms are keeping mum on sales numbers, like last year. Aussie brands were buzzing on the back of the ‘handsome boy’s’ visit. The FHC (Food & Hospitality China) trade show, and the world’s largest import event, CIIE (China International Import Expo), both took place in Shanghai. CIIE was the biggie, attracting 3,400 exhibitors and nearly 410,000 professional visitors who collectively signed $78.4 billion worth of tentative deals – 6.7% more than last year, and the highest figure yet.  

The halls of CIIE were filled with booths from trade organisations and brands, some which really connected with visitors. There was no shortage of innovative products making their debuts at the event, from the ‘world’s sweetest pineapple’ to a thoughtful seat-shaped suitcase, and a host of dragon-themed goods in advance of the 2024 Chinese zodiac. There were plenty of big announcements from brands, with one of the more interesting coming from Sweden’s fast fashion giant H&M.

It was just 2021, following its decision not to buy Xinjiang cotton, when H&M stores were shut down by landlords and all traces of the brand disappeared from the Chinese internet – the biggest ‘cancel’ we’ve ever seen in China. To its credit, H&M didn’t quit China, recognising the long term potential of the country’s enormous middle class.

At CIIE, H&M unveiled its design hub, acknowledging that it needs to get closer to Chinese consumers to be better at making its products relevant, and ensure that it keeps up with their ever-changing needs and preferences.

CIIE proved valuable for many foreign brands coming to China, not just to sign deals and find partners, but also to help gage the appetite from Chinese consumers for their products. One example noted by the South China Morning Post, was US water treatment company BANG.D who said one of the main challenges in China is the mismatch between their key features of the products and what Chinese customers want. “Chinese want different functions in one product and like fancy designs, but what we offer is safe and endurable products with simple designs. It’s difficult to strike a balance on that,” the brand said.

In over a dozen years of working with foreign brands at the Skinny, we’ve seen countless companies entering China trying to flog products that hold little relevance with Chinese consumers.

A few years ago, a world leading protein powder brand found that their products weren’t selling as well in China as other markets. Our research determined that their tried and true target audience of burly males and large formats didn’t connect with most of their addressable audience in China.

Similarly, a global fashion brand we worked with hoped to position their gear to appeal to the rugged DIYer like it did in other markets. Much like Home Depot discovered some years earlier, the positioning had to be altered to connect with their target audience in China.

Another brand we worked with was targeting the masses with frozen food. Home delivery had just become popular and many people preferred that convenience to dealing with ‘less fresh’ frozen food that took more effort and time to prepare. On top of that, most freezers were tiny and few kitchens had the ovens required to cook the food.

There are countless more examples of how different Chinese consumers’ needs can be different to those of Western consumers, whether it be fashion or fish. H&M is wise to invest in gaining a deeper understanding about Chinese consumers to ensure that it is relevant and resonant with an increasingly choosy target market.  

H&M’s design stores won’t just help the company improve their understanding of Chinese consumers, it may also help them understand their Chinese competitors. This would allow H&M to better compete with companies like Shein in other markets too. It could learn from Chinese operational models spanning everything from fashion, to cars, to dairy products, where Chinese brands are regularly awarded and recognised as the most innovative in the world.

In addition to working with brands to help them define and understand their Chinese target market, China Skinny has also looked under the hood of many successful Chinese brands to help companies understand them, and better compete with them in China as well as other markets. Contact China Skinny to learn how we can assist with this.