Companies

Stitched up for success

By Mike Bastin (China Daily)
Updated: 2011-06-24 16:41

Metersbonwe also works on a "light asset operation" business model that involves outsourcing most of its production and transportation requirements. Such an approach helps the company to focus on its core competencies like design, marketing and distribution.

To some extent the approach has also helped the company set up more direct-sale shops, and increase investment in logistics and factories, and also shape the brand to take on established foreign brands like Zara and H&M in China.

Currently, Metersbonwe's product portfolio can be divided into three product ranges - T-shirts, jeans and fashionable winter clothes, each with their own range and brand name like MTEE for T-shirts, Mjeans for jeans and MPolar for winter apparel.

The company has also roped in celebrities like Jay Chou, the famous Taiwanese singer, to make its products more appealing to other age groups also.

"Metersbonwe's brands have matured over the last two years," says Doreen Wang, group account director at market research company Millward Brown.

"The company has opened around 200 new stores over the last few years and continues to expand with excellent use of celebrity endorsements," she says.

Wang, however, sees other Chinese apparel retailers such as VANCL posing a stiff threat soon.

"Even though Metersbonwe's brands are now seen as more fashionable and trendy, they are also perceived as a little traditional and not as modern as VANCL," she says.

Norman Yao, Millward Brown's fashion and sports industry expert, says the main reason behind the brand's success is its insight into the Chinese clothing market and the awareness of changes in fashion among younger age groups.

"We have a top level design group and strong integration capability. We also developed a supply chain that can adapt to current and new future developments," says a Metersbonwe spokesperson.

But the immediate problem for the company is on how it should focus its future expansion.

"Metersbonwe's success in China has been impressive. But at present it lacks the resources and experience necessary to succeed in international markets and, therefore, should concentrate on increasing market penetration in China's first-tier cities," says Yao.

Such expansion, however, may not be that easy.

"Metersbonwe's biggest challenge is taking on the established Western brands in China's first-tier cities such as Zara, H&M, Nike and adidas. These brands have considerable brand building experience and investment behind them which have enabled them to raise sizeable barriers to entry," says Wang.

Related readings:  Collaring the apparel market  Overseas trademarks a hot item  In cities, clothes maketh the man  Overseas trademarks a hot item

Eric Thun, lecturer in Chinese Studies at Oxford University's Contemporary China Studies Centre, feels that the "one of the most important challenges for a Chinese firm is getting the timing of global expansion right. The most fertile ground for building a brand is at home, and success at home should provide the foundation for global expansion".

But such an outlook may inhibit future growth prospects, says Morry Morgan, founder of Clarke Morgan Consulting and author of Selling Big in China, who feels that, "success for Chinese companies in international markets will result from learning and, therefore, some form of overseas market entry needs to start as soon as possible".

Morgan says that Metersbonwe should target overseas Chinese communities with their brands, especially overseas Chinese student groups in Australia, Canada and the UK.