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$21.6 billion. That is the estimated value of fashion retail in China for the month of April 2018 alone.

As one of the most lucrative fashion markets in the world, China remains an enigma for many retailers due to the challenges companies have historically faced in entering the country.

Volley global brand manager John Szwede understands these logistical challenges well. Volley tested the market with a 25sqm glass cylinder pop up shop at Beijing Xidan Joy City, a shopping centre that sees 26,000,000 customers through its doors annually. .

In July, it will open a 100sqm flagship store in Shanghai and offer Volley’s largest assortment of footwear, apparel and accessories. It is the first ever dedicated flagship Volley retail store in the history of the 79-year-old brand.

“I think a lot of western culture underestimates the power of those countries and the strength of their current retail business,” Szwede said.

“Online businesses certainly haven’t affected Chinese retail like they have in other parts of the world like Europe or the United States to the degree where a lot of brick and mortar stores are struggling.

“The only difficult thing about China is its very, very hard logistically to set up a company there and get your money out of that country.”

For designer brand Manning Cartell, the solution was a strategic partnership, in this instance with Stashd. The phone app allows international brands to set up digital storefronts in the country and manages logistical operations in the region on their behalf.

Stashd founder Jessica Wilson says brands have three main ways to move into China, but adds that each option is laced with challenges.

“Brands could firstly enter into China through an online retailer like Tmall or JD but a lot of the times, they’ve got hefty up front fees and then they also take a commission and those brands are also not overly focussed on fashion retail.

“The second way is via a sales agent but they can often take 35-40% of the margin for brands.

“The third is that they set up their own entity in China but that means they’ve got to through the legal process of setting up a business and get everything set up for China.”

Szwede says regardless of entry strategies, it is critical to adopt a phased expansion path.

“We first started doing business online in China in March last year and then a few months after that, we appointed a partner and then five months after that, they appointed a sub-distributor who’s doing our retail store now.

“We’re probably only three months into being with them and they’ve already locked in five stores. They move very fast in China, they work 24/7 and they’re just relentless if they want to get stuff done.

“Our parent company, Brand Collective, is a very large and agile large corporate business but with language barriers and the lack of business knowledge in China, we’ve left a lot of our logistics to our external partners.

“A challenge for us is probably being able obtain data from some of our partners in China. The challenge is that all of our reporting is in Chinese so sometimes, some things can slip through the translation gaps so we may need a new sort of structure that helps us with that.”

Another key consideration for brands in the region is speed to market.

Wilson says that this especially true for Chinese millennials, who have now become major spenders in the retail space as they begin to have more disposable income on average.

“In China, everyone wants everything now, if not yesterday. With their expectations around shipping, our partnership with DHL allows us to ship products into China within three to five days.

“For it to be three to five days is really attractive for them. Normally, for them to get access to products from an international market, they’d normally wait three to four weeks so we wanted to make sure that we were appealing to the market.”

While discussions around speed to market in Australia have come down to the ability to deliver things such as same day delivery, brands must recognise that there is a level of re-learning required for the Chinese market where the expectations for businesses are drastically different compared to other major markets.

Szwede says the region requires a unique logistical blueprint.

“Speed to market in China is about getting really well-structured planning in place with our Chinese factory and just to make sure that they’ve got enough fabric to draw on at any one time.

“It’s been really difficult to forecast what we think the capacity of the Chinese market is because every time we put a certain amount of product in there, we sell out much quicker than we anticipate.

“The beauty of having the business in China is that we don’t have to ship anything to Australia and it only takes about three to four days to clear the warehouse and get back into our retail stores.

“If we don’t have fabric, we’re looking at anywhere around 35-45 days for product to reach the market in China but if we’ve got fabric, we can turn stock around in two weeks.”

According to a report by A.T. Kearney, one of the biggest logistical shifts in the past few years has been the shift in businesses away from targeting tier one cities in China.

There has been a trend for businesses to shift their attention towards inland tier two and three cities with fast-growing populations who made up eight of the 10 fastest-growing cities in China over the past few years according to research.

Wilson says that the ability to target tier two and three cities has opened up new potential markets that have historically been overlooked by western brands.

“When it comes to being aligned with DHL, they’ve got the partnerships in China to really get us into second and third tier cities so that was really important to us.

“China is a market that is constantly moving and with the millennial market in China being around 415 million people, it’s very much a market that is after western products.”

For Szwede, expanding Volley into China has proven to be a lucrative move for the business even after dealing with a number of challenges that he states are unique to the Chinese market.

“It’s incredible to be pioneering such an amazing iconic brand into that country and to me, doing something that a lot of people talk about doing and never do.

“The opportunity is incredible if you can tolerate a fair amount of pain to get it going. It’s amazing how things operate over there and how quickly they get things done.

“It is difficult and possibly fraught with danger but it’s been an incredible learning year for the business. Doing business in China is like doing business with no other country in the world.”

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