China Consumer

The Kim factor

Kardashian makes push into China while 9,000 store local firm goes bust

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Can she make it big in China where others have failed: Kim Kardashian

Kim Kardashian’s ‘shapewear’ brand Skims, like its founder, is no stranger to controversy. The range was initially called Kimono, until accusations of cultural appropriation in Japan prompted a change of heart. Kardashian also launched the brand in late 2019, shortly before pandemic lockdowns rendered body-smoothing shapewear less of a priority.

Yet the brand survived the two crises and in June Skims raised $154 million in new funding, lifting its valuation to $1.6 billion, not bad for a creation that is less than two years-old.

Kardashian’s quest is to take Skims global and her first stop was China. Last week, Skims was launched at luxury department store Lane Crawford, which featured her ‘shapewear’ in its bricks-and-mortar outlets in Hong Kong and Shanghai as well as its online store.

Skims says it will sell over 100 assorted products, ‘personally curated’ by Kardashian herself. But industry observers are not overly optimistic about its prospects in China. For a start, although Kardashian boasts more followers on Instagram than any other, her fanbase on Chinese social media hardly matches up. On popular platforms like Douyin and Sina Weibo, she has less than half a million followers, putting her far behind Zhou Yangqing and Becky’s Fantasy, two of the local fashion influencers.

When it comes to price, Skims is also much more expensive than many other underwear brands. The more basic sets cost between Rmb200 ($31.40) and Rmb300, coming close to the Victoria’s Secret price range, although the latter offers more frequent promotions. Japan’s Uniqlo and Chiinese underwear brands like NEIWAI and Ubra will also be challenging competitors, having grabbed significant market share in China’s middle- to lower-end segment.

“With these potential challenges, it will be interesting to see if Kardashian can adapt her strategies to fit local needs. If so, her chances of harvesting consumer pockets in China will increase. But if not, she might become one in the long list of names to withdraw from China,” concluded Jing Daily, which monitors consumer trends.

One of the brands in retreat from China’s fashion retail sector is domestic ladieswear label La Chapelle, which once aspired to become China’s version of the Spanish fast-fashion giant Zara. The company, which faces delisting from the Shanghai Stock Exchange, filed for bankruptcy last week after three creditors petitioned the court over late payment of the apparel maker’s debts.

News of La Chapelle’s struggle to stay afloat is nothing new. In 2016, after a period of store expansion and brand acquisition (it bought the French fashion label Naf Naf in two separate transactions the year before), the company came under similar financial pressure. Although top line sales grew, profits didn’t rise with them.

Two years later, La Chapelle was bleeding cash and falling deeper into debt. Trying to stem its losses, it tried to close non-performing stores, reducing its points of sale in department stores and shopping malls by almost half to 4,800. But its transition to e-commerce was too slow at a time when fast fashion was becoming even more frenetic. The company, which is also listed on the Hong Kong Stock Exchange, has seen its H-shares crater from HK$6.58 in early 2019 to HK$0.60 this week.

“I couldn’t afford La Chapelle when I was in high school. But now I can afford it, I don’t like it anymore,” one 35 year-old shopper told 21CN Business Herald, describing the brand as “antiquated” and adding rather dismissively that its clothing styles reminded her of “socialites in the countryside”.

Slowing demand, coupled with overexpansion, led to a glut of inventory. “Fashion trends are changing so quickly. Once turnover started to slow, the company faced huge inventory pressures,” another business commentator wrote.

A change in leadership at the firm failed to make a material difference to its prospects. In fact five different people took up the role of president of the company in 2020. Zhang Danling, the candidate with the shortest tenure, held the role for just over a month, for instance.

All the while, La Chapelle’s finances worsened, with the once high-flying firm starting to miss payments on its debt. As its difficulties worsened, its assets and bank accounts have been frozen. Many of its suppliers have complained to 21CN that they fear that their outstanding invoices will never be paid.

“We are just a small factory and now we are ruined by La Chapelle. It’s miserable,” lamented the manager of a sofa factory that supplies furniture to La Chapelle outlets.

But as the saying goes, there is no such thing as bad publicity (wisdom first attributed to Irish playwright Brendan Behan, see WiC19). News of the possibility of La Chapelle going bust spread like wildfire on social media and tens of thousands of people soon poured into La Chapelle’s livestreaming channel on Taobao Live, hoping for bargains in a liquidation sale. La Chapelle grabbed the opportunity, offering substantial discounts on bigger-ticket purchases. On its official flagship store on Tmall, viewers of its livestream surged from 211,000 consumers last Wednesday to 611,000 two days later. Numbers watching its livestreaming in less pressing circumstances had generally hovered around 100,000.

“It’s making a killing after using its liquidation as an excuse,” one netizen mocked. “Maybe it won’t need to go bankrupt after all.”


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