A Guide for International Fast Fashion Brands to “Save Themselves”in China

Contents Introduction. 2 Research Questions. 4 Literature Review.. 4 Challenges Facing International Fast Fashion Brands in China. 6 Research Methodology. 9 Research Philosophy. 9 Positivism.. 11 Interpretivism.. 11 Identification of Research Paradigm.. 12 Research Approach. 13 Research Strategy. 13 Data Collection. 14 Sampling Technique. 15 Data Analysis Method. 16 Ethical Consideration. 17 Reflexivity and Research Quality Issue. 18 4. Results and Empirical Analysis. 19 4.1 Demographical Characteristics of Respondents. 19 Figure 1: Gender distribution of the participants to the survey. 20 Figure 2: Age distribution of the respondents. 21 Figure 3: Profession of respondents to the survey. 22 Figure 4: Monthly Spending on Fashion Clothing Products. 23 4.2 Consumers’ Awareness of Fast fashion Brands. 24 Figure 5: Respondents’ knowledge about fast fashion clothing. 24 Figure 6: Respondents’ purchase frequency of fast fashion products. 26 Figure 7: Brand awareness of respondents towards the selected fast fashion brands. 27 Figure 8: Consumers’ preference in fast fashion brands. 28 Figure 9: Purchase or access channel for Gen Z consumers to receive fast fashion products  29 Figure 10: The perceived attributes of fast fashion. 30 Figure 11: Purchase frequency of fast fashion products. 31 Figure 12: Consumers’ Understanding of the differences of fast fashion and traditional fashion  32 Figure 13: The perceived price level of fast fashion. 33 Discussion and Summary. 34 Conclusion. 37 Reference List 38 A Guide for International Fast Fashion Brands to “Save Themselves” in China Introduction China, the second biggest economy in the world, makes for one of the most lucrative markets for producing and consuming fast fashion brands of clothing and other fashion apparel. Its population of over 1.3 billion people, coupled with the availability of low-wage workers, makes it one of the most attractive markets and ideal destinations for the manufacture of fast fashion brands, respectively. Fast fashion brands refer to the cheap or affordable clothing designs developed from the observed fashion trends on runway shows by fashion entities for profit maximization. These fashion brands are also characteristic of equally affordable production, designing, and manufacturing procedures associated with widespread manipulation of labor laws and disregard for environmental conservation toward meeting the growing consumer demand for trending fashion. According to Simpson (2020), China was the global leader in the production of fast fashion brands in 2019. Both domestic and international fashion entities such as Zara, H&M Group, Forever 21, and UNIQLO are major contributors to the country’s leading trend in fast fashion brands (Simpson, 2020). However, international fast fashion brands are currently facing different challenges affecting their competitiveness in the lucrative Chinese market. For instance, H&M Group closed approximately 60 stores across China due to the Xinjiang cotton controversy in 2021 (Goodman, 2021). The Xinjiang cotton controversy led to a backlash from Chinese consumers who held that H&M’s failure to buy cotton from Xinjiang was an attack on the country’s economy and overall well-being (Goodman, 2021). International fast fashion brands such as Zara and UNIQLO have also faced their equal share of challenges, including the shifting consumer demands in China and the growing influence of nationalistic tendencies in purchasing decisions. It is, therefore, imperative to explore the challenges faced by international fashion brands in China toward developing effective interventional measures for surviving the rapidly shifting Chinese market. The fashion industry makes for one of the global economic sectors influencing and shaping the perspectives of individuals and groups across the social, political, and economic domains worldwide. For instance, the industry plays a significant role in developing socio-cultural perspectives on what, how, and when to wear certain clothing and apparel while dictating the socio-cultural representations of the fashion clothing and apparel designs available in the market. Business organizations in the fashion industry have to keep up with the demand for outfits or fashion wares that meet the consumers’ expectations of the perceived appealing socio-cultural fashion trends. Meeting such expectations often reflects increased sales volumes and long-term profitability and revenue generation leading to sustainable growth and development in the glamourous and highly lucrative industry. However, sustainable growth and development in the highly competitive industry demands more than creating appealing or trendy designs in clothing and other fashion apparel (Porwal, 2021). Sustainable growth and development in the fashion industry demands the development and implementation of effective business strategies to meet the shifting demands and expectations of consumers and other stakeholders across the different stages of the industry’s supply chain. The designing, manufacturing, marketing, packaging, distribution, and consumption stages of the fashion industry’s supply chain account for integral features whose consideration is vital to the sustainable growth and development of such entities (Porwal, 2021). In essence, the fashion industry players have to invest in developing attractive clothing and apparel designs that influence the consumers’ purchasing decisions by emphasizing the stakeholders’ expectations across the outlined stages of production. The Chinese fast fashion industry is not immune to sustainable growth and development objectives, thus requiring the development and implementation of effective interventional measures across the outlined stages of production. This paper seeks to unveil the challenges faced by international fast fashion brands in China and provide effective countermeasures to mitigate the identified issues toward ensuring sustainable growth and development of such organizations. The research study provides an effective framework for industry players, managers, and management scholars to develop strategic business strategies for addressing the challenges of shifting consumer and market demands. Research Questions The research study builds on the following research questions:

• What are the challenges facing international fast fashion brands in China?
• How can international fast fashion brands survive in China?

Provided herein is a comprehensive literature review on challenges facing international fast fashion brands in China and proposed countermeasures coupled with the research study’s methodology. Literature Review The quest to satisfy the demand for appealing trends in clothing and other fashion apparel coupled with consumers’ equally increasing complex expectations across the production chain in the fashion industry accounts for major changes in the glamorous economic sector. Global fashion industry players such as H&M Group, Zara, and UNIQLO are developing fast fashion brands of clothing that capitalize on existing fashion trends for increased competitiveness in the market (Simpson, 2020). The outlined organizations tend to develop affordable clothing designs from the trending fashion styles observed on runway or fashion week shows worldwide towards profit maximization from the new and emerging trends. Fast fashion is a lucrative economic industry for both domestic and international brands in China. The fashion industry recorded a remarkable year-on-year growth rate of 7.8% in 2018 and was projected to replace the United States as the world’s largest fast fashion market in 2019 (Lu, 2015). The Chinese fast fashion market offers an attractive destination for international brands due to its large population, with the increasing middle-class population availing more disposable income for trending clothing fashion designs (GMA Fashion China, 2022). The fact that the Chinese population is also increasingly aware of global fashion trends further contributes to the remarkable growth rate of the country’s fast fashion industry (GMA Fashion China, 2022). Both domestic and international fast fashion entities capitalize on the ensuing demand for global fashion trends by developing affordable clothing designs based on the observed global fashion styles. The recent exit of major brands such as Forever 21 from the highly competitive market, coupled with the diverse operational challenges other international fast fashion brands face, is cause for worry among the industry players (Tiffany, 2021). In 2021, Inditex shut down all its physical stores in approximately 100 locations in China in preference for e-commerce platforms to sell its different brands, including Pull and Bear, Bershka, and Stradivarius (Tiffany, 2021). C&A, a Dutch company in the International fast fashion industry, sold its entire Chinese business to Beijing Zhongke Tongrong in 2020 (Tiffany, 2021). Esprit, another key player in the Chinese fast fashion industry, also ended its joint venture with the Muslane Group in 2020, adding up to the number of international fast fashion firms that have left the Chinese market (Tiffany, 2021). The remaining international players, such as Zara and H&M, have also significantly reduced their operational activities in the Chinese market, with the former remaining with only 141 stores across the country (Tiffany, 2021). Though H&M boasts of over 500 stores in China, the firm has witnessed a significant drop in total sales and a slowing growth rate but remains adamant about capitalizing on the country’s market potential for its variety of fast fashion brands (Tiffany, 2021). Such trends necessitate exploring the Chinese fast fashion market towards highlighting the factors contributing to the slowing growth rate of international fast fashion brands in China and developing effective countermeasures to survive the increasingly competitive market. Challenges Facing International Fast Fashion Brands in China The increasing awareness of the Chinese consumers on the quality of their preferred clothing brands and their orientation to Chinese cultural clothing practices poses a key challenge to multinational fast fashion brands (Tiffany, 2021). According to Retail Asia (2019), some Chinese consumers believe that international fast fashion brands are of inferior quality and do not meet Chinese fashion preferences. The imitation of trending fashions by international fast fashion brands thrives on Western designs that do not meet the socio-cultural expectations of Chinese consumers (Retail in Asia, 2019). Chinese consumers are no longer attracted to fast fashion designs due to their countries of origin and instead prefer designs that meet their Chinese cultural expectations. Tiffany (2021) quotes Eddie Lim, a Chinese fast fashion brands veteran, reiterating that the lack of design localization is a key challenge for international fast fashion brands in China. The international fast fashion brands’ failure to keep up with the expectations of their target consumers in China also makes for one of the challenges facing such entities in the Chinese market (Booker, 2022). The brands are lacking in innovation and fail to evolve with the shifting consumer demands in the country while raising their prices. Chinese consumers prefer to buy domestic fast fashion brands as they meet their fashion tastes and preferences. The fashion homogeneity of the fast fashion brands from both the international and domestic fast fashion companies further shifts the consumers’ preferences to the latter’s brands (Booker, 2022). The fact that the domestic fashion brands offer the same clothing designs as the international brands at lower prices, thus shifting the consumers’ preferences to the locally manufactured fast fashion brands. Some Chinese consumers may also opt for the easily available secondhand luxury clothing designs from the country’s fast-rising local luxury resale e-commerce platforms instead of the international fast fashion brands (Booker, 2022). While the local or domestic fast fashion entities are developing new ways of meeting the fashion demands of their target consumers, the international brands are stuck imitating the global fashion trends. Such imitations lack a connection with the mindset of Chinese fashion consumers, who prefer the alternatives provided by domestic brands, including the local luxury resale via e-commerce platforms (Retail in Asia, 2019). Another challenge facing international fast fashion brands in China is the lack of strategic collaborations in the industry to add value to their different clothing brands. Domestic fast fashion brands are forming strategic partnerships with established international brands towards creating value addition to their diverse portfolios. Among such strategic collaborations includes the partnership between Peacebird, a domestic fast fashion firm, with foreign designers (Booker, 2022). Peacebird is in partnership with French and Dutch designers Coralie Marabelle and Mikey Wormacko to create innovative fast fashion designs that meet the evolving consumer expectations in China (Booker, 2022). Such collaborations allow domestic fast fashion brands to develop fashion designs with Chinese elements, thus securing their market shares in the highly competitive industry. The rising cases of brand nationalism in China is a major obstacle to sustainable growth and development of international fast fashion brands in the Chinese market. The public outcry leading to the closure of over 60 stores by H&M in China due to the Xinjiang cotton controversy makes for an excellent example of the adverse repercussions of brand nationalism limiting the sustainable growth and development of global fast fashion brands (Goodman, 2021). H&M Group’s promise to stop buying cotton from the Xinjiang region attracted a national outburst across different platforms, with individuals and groups calling for a boycott of its fast fashion brands (Brant, 2021). The firm was acting on the international pressure to stop buying textile cotton from the Chinese territory of Xinjiang due to the human rights abuses meted out on the Uyghur people through forced labor. However, the firm’s decision was seen as an attack on China, thus attracting rebuke from the Chinese population and adverse economic repercussions (Brant, 2021). Booker (2022) further states that the rising popularity of Guochao, the national trend, led to the closure of H&M’s stores across the country and the failure of other international brands. According to Sun (2022), the enhancement of the cultural confidence of young Chinese groups or the country’s generation-Z in embracing the national trend accounts for the country’s increasing preference for domestic fast fashion brands. Such occurrences leave international brands at a disadvantage, with domestic brands performing better in the highly competitive market. A 2021 survey conducted by PwC on Chinese consumers aged 18 and above revealed that 37% of the respondents prefer buying local Chinese brands, with only 24% preferring international brands (Booker, 2022). Another element of the national trend affecting limiting the competitiveness of international fast fashion brands in China is their failure or underutilization of e-commerce platforms (Yanhong, 2020). The rise of Shein, a Chinese fashion company, to becoming a more valuable company than H&M and Zara showcases an underutilization of online platforms by international fast fashion brands (Markman, 2022). It also reiterates the lack of innovation and elevation to the shifting consumer trends across the nation, where the majority of fast fashion consumers prefer using e-commerce platforms to make their purchases (Meiyan, 2020). The increasing awareness among Chinese consumers on sustainability also poses another challenge to international fast fashion brands. China is currently enjoying an eco-friendly atmosphere with 55% of its population purchasing sustainable products from the fast fashion industry (GMA Fashion China, 2022). Consumers expect international and domestic brands to uphold their environmental concerns while observing legal production practices. Hence, international brands that fail to meet such expectations may face difficulties in maintaining their competitive edge in the Chinese market that continues to shift to eco-friendly or sustainable fashion. There is a lack of clarity within the Chinese fashion industry, especially with regards to how the large fashion brands can leverage on the new generations to ensure their survival. A majority of relevant and available studies happen to mainly focus on projections but fail to offer clarity and a way forward with regard to how brands can adapt. However, this study seeks to add to the literature by ensuring that the perspective of the new generations are taken into account. Research Methodology This chapter serves the purpose to review research methods and select the most suitable method for this research to use and collect data. Research methodology refers to process of identifying the techniques or procedures for the researchers to use in identifying, selecting, analysing data collected (Flick, 2015). According to the research onion model of Saunders, Lewis, and Thornhill (2007), there are research philosophy, research approach, research strategy, data collection method, sampling, data analysis method demonstrated to form research methodology. Meanwhile, ethical consideration, reflectivity and research quality issues are discussed in this chapter. Research Philosophy A research philosophy refers to a belief about the way in which researchers collect, use, and analyse data about an event or a phenomenon (Holden & Lynch, 2004). There are three broad research philosophies demonstrated for researchers, which are ontology, epistemology, and axiology (Al-Ababneh, 2020). Ontology is a theory of studying being, which deals with the nature of reality. The interpretation of individuals about the constitutes of a fact is considered essential in the system of belief of ontology (Al-Ababneh, 2020). Meanwhile, the role of individuals is significant especially when it comes to the perception developed about reality(Scotland, 2012). Ontology is often used in social science study, which is used for identifying the relationship between different social factors, structure and norms (Czerniak, Dobrosielski, Zarzycki, & Apiecionek, 2015). Al-Saadi (2014) explains that the focus of ontology is on the exploration of people’s belief in the nature and the reality. Epistemology refers to the research philosophy analysing the nature of knowledge and the conditions required for people to develop and constitute knowledge based on justification (Killam, 2013). Epistemology is adopted to facilitate the process of making sense of the world, while it is valuable for researchers to determine the underlying information to develop knowledge (Tekin & Kotaman, 2013). Epistemology can be used in exploring social behaviours of people (Al-Ababneh, 2020). By applying the research philosophy of epistemology, researchers will explore factual knowledge and to explore evidence to justify the identification of truth (Scott, 2014). Both positivism and interpretivism are adopted to facilitate the research philosophy of epistemology (Berryman, 2019). Axiology refers to the exploration of value in the study, while the nature, type and criteria of value are discussed (Biedenbach & Jacobsson, 2016). When adopting axiology in the research, researchers hold the belief that it is significant to study whether there are positive or negative influence over the development of value in the specific events or phenomenon. Researchers’ role is maximised when conducting axiology research, since they need to make value judgement and determined the value in the research subject (Killam, 2013).   Among the three research philosophies of ontology, epistemology, and axiology, it is assumed that epistemology is more suitable for this research to adopt. Epistemological question is meant for studying the relationship between the researcher and the events or phenomena, while it is important for researchers to explore the source of data when developing knowledge (Bunge, 2012). Between the research paradigms of positivism and interpretivism, this research will decide to explore which paradigm is more suitable for this research to investigate Chinese Generation Z consumers’ consuming behaviours and attitudes towards fast fashion.   Positivism  Positivism is a research paradigm used for developing factual knowledge by conducting objective observation and measurement (Comte, 2015). Positivism facilitates the development of objective knowledge and reduces the impacts of human bias (Park, Konge, & Artino, 2020). Researchers need to keep an independent role in positivist research, while their interest and opinions are excluded to ensure objectivity of the research (Bryant, 1985). The justification about the undertaking of positivist research is that the world is full of observable information for researchers, while the analysis of the data collected will lead to the prediction of future events (Park et al., 2020). To support objective research, quantifiable data are collected in positivist research (Comte, 2015). With the collection of quantitative data, quantitative data analysis is used (Michell, 2003).   Positivism is limited in studying time, space and experience of people, especially when data collected are not quantifiable (Braithwaite, 1993). It is a challenge to exclude subjective inputs of the researcher in the design process of the research (Laudan, 1996). Positivist research relies on status quo, which indicates that it is unlikely to leverage positivist research result to develop in-depth insights and to explore underlying explanation and reasoning (Chia, 2002).   Interpretivism  The development of interpretivism is meant for making up to the limitation of positivism (Walsham, 1995). As positivism paradigm cannot develop in-depth insights, it is therefore expected that interpretivism is developed to facilitate the knowledge (Ryan, 2018). The justification of using interpretivism is that there is complexity in the study if social phenomena, while it is important to drive empathic understanding based on the attitudes and perception of people (Walsham, 1995).   Qualitative data are collected in interpretivist research, which is meant for gaining social and experiential insights (Goldkuhl, 2012). An advantage of using interpretivist is its flexibility in the collection of data from different sources (Alharahsheh & Pius, 2020). The limitation of interpretivism lies in the fact that the data are sourced from subjective views and perception (Chowdhury, 2014). Hence, the results of interpretivist research cannot be generalized to predict future events or phenomenon (Williams, 2000). There is a concern of bias in the subjective data collected from interpretivist research (Heshusius & Ballard, 1996).   Identification of Research Paradigm As positivism and interpretivism are reviewed, it is important to select the most suitable research paradigm to apply to the research. As the advantages and limitations are understood from these two research paradigms, it is then important to choose the research paradigm based on the research aim and objectives. As explained in the introduction chapter, this research aims to investigate the market trend and objective views of the consumers to provide suggestions to fast fashion brands in China to survive, as they face challenges in the competitive fashion market in China. Hence, positivism paradigm is more suitable for this research to develop objective views and develop factual knowledge on the phenomenon identified. Specifically, collecting quantitative data is important for this research gain objective knowledge.   Research Approach  As research approach, it refers to the procedures and steps identified to facilitate the data analysis process (Singleton Jr, Straits, Straits, & McAllister, 1988). Saunders, Lewis, and Thornhil (2016) point out that researchers can use deductive and inductive approach to analyse data and lead to the development knowledge. Bryman and Bell (2011) suggest that research hypotheses should be identified from literature review for exploring the results of the current studies. With the adoption of deductive approach, researchers will need to test whether the primary data are consistent with the research hypotheses, while the results of the research are determined (Bloomberg & Volpe, 2008). Inductive approach refers to the process of developing knowledge directly from data collected from research, which is meant for seeking new theories (Cooper & Schindler, 2003). Researchers do not need to develop research hypotheses from literature review. Deductive approach is usually used in positivist research, as it is important for positivist research to verify the interrelationship of variables, while inductive approach is applied to interpretivist research (Singleton Jr et al., 1988).   As explained that this research finds it more suitable to conduct positivist research, especially because it contributes to the objective knowledge development. In this case, deductive research approach is considered more suitable for this research.   Research Strategy  Research strategy refers to the specific steps and tools selected for the researchers to investigate a subject and develop knowledge (Saunders, Lewis and Thornhil, 2016). With the selection of positivist paradigm, it is assumed that it is critical to collect quantitative data from the target audience. Among different quantitative research methods, survey method is considered most suitable for this research to use. A survey refers to a research tool to investigate the behavioural trends from a predefined group of respondents, as it is expected that they have the views to use (Moy & Murphy, 2016). The purpose for this research to use a survey method is to ensure that quantitative and primary data are collected. Before conducting a survey, it is important to design a questionnaire, which is an important tool for collecting information from survey respondents (Saris & Gallhofer, 2014). The conduction of survey facilitate the collection of quantitative data, while questions need to reflect the research objectives and research purpose (Saris & Gallhofer, 2014). Closed-end questions are used in the research to ensure that all respondents’ answers can be quantified when researchers process the data (Dowrick, Wootten, Murphy, & Costello, 2015).   Upon the completion of the survey questionnaire reflecting the research objectives, the questionnaire was published on a survey website to facilitate the investigation process. All the respondents who were interested in the research had access to the website to answer the questions of the survey, while the researcher collected quantitative data from the survey.   Data Collection  This research collects primary data, as it is important to leverage the understanding of the behaviours and attitudes of the Chinese customers to understand the current issues that fast fashion faces in the Chinese market and to provide suggestions for the Chinese brands to improve the business strategies in the market. The collection of primary data allows the researcher to use fresh data reflecting the current market trends and business insights (Driscoll, 2011). For this research, the conduction of survey is meant for exploring primary data from respondents who are Gen Z consumers of fast fashion brands in Chinese market. The reason why it is necessary to collect primary data instead of using the existing secondary data from other industrial reports and company database is because there are uncertainties from the external business environment affecting the consumers’ purchase behaviours and business performance of companies, which need to be specifically determined. Considering the difficulties to approach the Chinese Gen Z consumers for collecting the primary research, this research considers using online survey to...