UPDATE - FAQ #8
MARCH 6, 2020
#8-Q: If we sign the contract, when can we actually start? Do we have to wait until all other partner brands have finished the trademark registration, in order to sell? What if I had submitted my registration much earlier, do I still have to wait for others to finish before we can begin?
A: Recently, we have received almost daily inquiries from existing partner brands, and those who are still interested to join us, regarding this question. First, as I have also explained previously on the site as well, registering the trademark in the territory and having it approved, is very important. As a result, prior to each brand's trademark having been approved, we do not feel that it would be the right decision to enter the market. I have also explained previously on this site as well, but there are a lot of important reasons for this precaution.
Without the proper protection of the trademarks in place; in China, it's actually a type of business that some will operate, to pre-emptively register other people's brand names as trademarks, since China works on a first-come, first-serve basis. When brands then try to promote or sell in the China market, these "trademark trolls", then jump on this opportunity, and sue these brands for trademark infringement. This can create a lot more legal problems down the line, just like the case of MUJI, which I shared with you and all other partner designers in an earlier post. Their drawn-out trademark legal battle ended against their favor, and they had to pay a penalty to this local company, which was basically like a paper company in China, who used their name, and they even had to pay for an ad, to apologize publicly to this company, in a newspaper:
If you are sued in the future for infringement of trademark, not only would you have to pay a penalty, but you would be put on a list of entities that are intellectual property infringers - and this would greatly impact your standing and ability to even enter the market. Please understand, that our company’s strategy for promoting our partner brands is not simply to hang a few garments on the rack, place them in a few shops, and watch what happens. A big part of our strategy is to dig up that brand recognition, by using a variety of means via online and offline media, social networks, and offline events, and also with increased interaction between real consumers and also with influencers and opinion leaders. It’s not just to passively place garments in channels, but pro-actively take action to increase recognition. If today, we were simply stocking the products of our brands, and not doing much else, we would not necessarily need to register the trademarks because if some customers discover the product and like it, they will buy it. If no one discovers it, then no one will buy it. It would stop there, and as a result, the brand’s recognition would never really increase significantly in profile, the brand’s products would simply be taking up space in a stockist’s shelves. No one will know, who the designer is, what the brand story is, or be able to take part interactively with the designer of the brand, in understanding their story and fashion principles; they will not know, what the principles behind the brand might be, or where that brand’s creative director is based, what town, in what part of Europe. At the same time, there would be no media or influencers, runway shows, that would be there to highlight that brand, so under these circumstances, this brand would not be as much of a favoured target of a dishonest third-party, that was seeking brands to pre-emptively register, because the brand doesn’t have any real value.
This is why those dishonest individuals and companies, they would choose to pre-emptively register the trademark of a company like MUJI, for instance, and not a brand that no one has yet to hear of. So, when a lot of brands ask us, whether or not they can go and sell in China even now, without the brand registration, our answer is, yes, they can, but we cannot do any promotion, because if we invest resources and start to really promote each brand, and the brand profile and recognition starts to increase, under those circumstances, that brand will inevitably and naturally go from being an unfavourable target, to a very suitable target for pre-emptive trademark registration; just like a sniper suddenly having a target in its range. When a brand’s recognition has increased, that brand’s value will also increase, and therefore, that brand will become like a desired prey, for those seeking to make pre-emptive strikes. So if we do a lot of promotion, and there isn’t a registration of the trademark to protect the brand, then our promotion would just become fuel for these dishonest third parties, instead of serving as fuel for our partner designers’ brands own growth, or for the creation of our shared profit. This is why, even today, we have not yet started to sell and promote for some of our partner brands who have signed with us even one year ago; we have to wait for this process to finish.
Even if a brand has already submitted the trademark, and it's in the process of being evaluated by the bureau, there is still risk. If they start to sell and promote while the application is pending, some of these third parties will buy 1-2 pieces from the collection and make widespread copies, and then sell those pieces on taobao.com, or offline, or at various hypermarkets or fleamarkets, using of course a much lower quality production and low price. This will cause our promotion, if we were to launch the brand, to be placed in a very ironic situation, because we are doing so much storytelling about the quality of the design and concept, quality of materials used and the quality of the production, yet, when the consumers see these cheaply-made products from the other parties, they will feel insulted, that the way we are presenting these brands is in fact, not a truthful representation. Under these circumstances, the brand will suffer greatly, even if after we obtain the official registration approval, these third parties would be forced to stop their behavior, but the brand image would have already been greatly damaged by then. For us to try to remedy this, and make up for it in the minds of the consumers, would be incredibly difficult and even impossible. The brand designer’s own personal reputation would also suffer irreparable harm as well, and a lot of consumers will inevitably think that this designer’s works, are all unreliable in the sense that what they present, and what the reality is, are in fact very different. These losses, will cause a devastating blow to the future development of the brand. And also, we need to be aware, that we cannot make many legal actions against infringers during the process of trademark approval, so they are going to get away with it. As long as they stop before the final approvals, they haven’t violated your rights. This is why of the several hundred designers that have already submitted their applications, we have had held back; in a way, like an army ready for battle but lying in wait.
So again, it is not advisable to start selling into this market, before a brand's registration has been completed.
Right now, all of the partner designers we have, are in various stages of having their trademarks registered. Our current plans are, that once the first group of partner brands have their trademarks finally approved, we will start a 6-month trial operation and testing period, and the customers who are the target of this testing run, will be customers who are members of our platform, we know them well, we know who they are. The goal of this trial period, is to “break in” or smooth out, the relationship between the brand and consumers, between the brand and partner factories, and also the online and offline systems. In these 6 months, it is also the trial testing to break in the entire operational platform - from the logistics, to the business operations and environment. This is part of the professional work that needs to be done for each brand in the process of launching them in the market. Only through going through this can we work out all the kinks, and can each brand operate smoothly, in a perfect and fully efficient manner to enter the market. This is a necessary step. At the same time, we will also have those brands who have not yet been approved but have submitted their registrations from 9 months and longer, to also join the testing period. Again, because the consumers that will be in this testing period are those who we know well, so we are not worried that those who have not yet received the final approvals of their trademark, will be copied during this period. Even if someone wanted to copy, in this period, the approval periods have only 1-2 months left, so these potential copycats would not have enough time to really mobilise and profit from those actions, so they would be deterred against doing so. But those brands who have submitted for a short period of time, between 3 to 5 months, for instance, I do apologise but they have to wait longer.
This is why we asked each partner brand to immediately start the trademark registration process upon signing of cooperation agreement; otherwise, the longer that each brand waits to get this done, the longer it will be, before they can really go into the market. At the present moment, nearly 99% of our partner brands have completed the submission of their trademark application, the rest, are those whom we have signed with more recently, and even those more recent brand partners, have started to inquire into this process. We believe that as long as we have the right brand strategy, we can avoid suffering these kinds of damage to the brands when we enter the market. We will also do everything we can, to allow each partner brand to show their fashion to the world, in a smooth and calm environment, and not have any interference from these legal matters.
In this first group of partner brands whom we have signed with, there were 2 brand partners in particular, who after signing the agreement, asked us, what exactly have we done to support them already, and they would only agree to register after knowing exactly what kinds of work we had done. For these brands, since we had only just signed the agreement with them, and had not yet invested too much in their preparatory work, including on the strategy, positioning, and seeking out potential factories for them, and preparing the right media channels for promotion, etc., under these circumstances, we pro-actively requested that we cancel our cooperation. Because their insistence that we enter the market and start promoting them, without having a trademark registration in place, was a very risky and stupid suggestion. We will not work with those brands who are rushing us to enter the market without caring whether their brands will be copied, because these types of brands, do not seem to care about what is best for themselves. It gives us the feeling that the brand themselves do not believe in their own value in the market.
If a brand does not even care about their own brand’s value, and does not care whether or not they will be copied, or whether they will be at risk, and if that brand’s designer also does not seem to care about their own personal reputation, and whether or not that reputation would be put at risk due to the unlawful behavior of these potential third-party copycats, then, we do apologize, but we can only choose to cancel this type of cooperation, because we are not just an outlet, we are brand operators. We will push sales by increasing the value of each brand, and through that increased brand value, and constantly maintaining that brand value, we will increase the consumers attention, and the media coverage and generate widespread word of mouth promotion, which is what will lead to the highest “stickiness” between the brand and consumers. This kind of commercial strategy, even though it takes longer to get ready for, is worthwhile in our view; because once it does succeed, it can really birth a new fashion “star”. At the very least, it will create real buzz, and impact, and social discourse regarding the brand, and plant the seed of real brand recognition.
We are just like all of our partner brands - we hope to enter the market sooner rather than later. Right now, not only in China, but in Europe, including in Italy, Portugal, Poland, in Bulgaria and Romania as well, we have nearly 100 good quality factories who are ready and eager to join us. Some are very dominant in their industries, and have even huge networks of several dozens of factories under them. They produce for the leading brands in Europe, including Louis Vuitton, Armani, Hermes, Gucci, and the list does continue on. This includes garments but also leather goods, and shoes as well. These factories agree to our principles, and our mission, and they want to join forces with us to open up and compete together in the Eastern markets.
They are willing to lower their production costs, and their own margins, and are willing to develop samples for us, and respond quickly and efficiently.
A lot of these companies have also expressed that they are willing to change the way they used to do things - and to adapt to the model of offering unique and high quality items, at quick execution speeds; they are willing apply some aggressive changes to the existing business culture of Made in Europe, to supply and respond to the fast-paced market reactions of the Far East. Right now, we have another 100 or so factories with which we are undergoing discussions, and this is only the European portion of factories. From among these, we will select those factories which most fit our requirements, and have the strongest passion, and have the ability to support the explosion of volume of bestselling pieces in the China and Far East market in the future, to formally join our project.
As a result, we believe that as long as we are patient, and our preparations are thorough, and we have determination and a strong commercial strategy, as long as we understand the appetite of our Far East consumers, and combine that with a strong knowledge of the relationship between our quality, price, design, logistics and promotional operations, and we insist on this, then in the not so distant future, we will definitely usher in the “spring” of our success.
As long as we maintain our patience, our passion, and also maintain the fashion principles of each of our partner brands, then we can overcome any and all difficulties and push to success.
We originally planned to start from May of this year, to have some brands start to communicate with potential factory partners and get familiar with and adjust to one another, because that is when we believed our first group of partner designers should be finished with their trademark registrations and receiving approvals. However, with the virus that has broken out, a lot of this work has stopped. We believe that after the virus is more contained, and travel restrictions are lifted, we can then jump back into this process and restart this step. In addition, we will also be finally holding the second group of development meetings with our partner designers, that were originally planned for March. All has been delayed due to the virus outbreak, but we monitor the situation to see when we can pick things back up, and will notify our partner designers accordingly.
UPDATE - FAQ #7
FEBRUARY 26, 2020
#7-Q: Will this severe virus infection in China cause the Chinese economy to crash, and affect the consumer spending power of the nation?
A: Recently, we have had a lot of brands write to us, including those we have already confirmed officially as partners and those we are still in communication with and who are interested in cooperating with us, to ask about the virus and its impact; and because we have gotten quite a high volume of these types of queries, we have decided to address this on our website for convenience.
Indeed, it’s quite obvious that this has already impacted China’s economy greatly, it hasn’t been hard to stay abreast of this through the news, so I will not take time to repeat that information here.
Instead, I only hope that I can provide my perspective on this situation, from the eyes of a Chinese person who was born in America, and educated in America, and speak my point of view on how this virus will impact China’a economy and spending power going forward.
When evaluating whether or not there will be an impact on China’s economy, and whether there will be negative side effects from this, we have to look at it from the perspective of history, China’s current situation, and the mentality of the Chinese as a people and nation; in addition, we have to consider also the components of the social structure in China, in order to make a meaningful analysis and make a realistic judgment.
Just as I have repeated to all of the brands I have met personally, or even to those I have not yet met, but have only communicated with (who want to work with us) , China, is a vast, vast country - it covers 9.6 million square kilometers in land mass, there are 56 different ethnic groups, and it is a country that has nearly 5,000 years in its recorded history, and a population that totals 1.4 billion people. This is a highly complex, massive country, and its history is steeped in and deeply influenced by the “Rujia”, or Confucian culture, which holds as its essence the concepts of humility and tolerance.
For a country with such a long history as China, it will have a firm and sometimes unexplainable persistence when it comes to its own culture and heritage. At the same time, Chinese culture, like any ancient culture, over such time, will have its essence, and also its unnecessary byproduct, as well.
The Chinese are second to none in this world, when it comes to the high level of its reverence of ancient culture, so as a result, some of this unnecessary byproduct of this culture, is also inevitably combined into the essence, and passed down with equal intensity, and even revered as well.
Often, it seems that in the last several hundred years, Chinese have only cared about preserving their cultural essence, and remnants, and passing it down for posterity; they have forgotten, that
actually, culture is still continuously developing, evolving, and it won’t stay the same, or change, just by sheer will.
This has created a situation where in our history, even now, Chinese people have a lot of habits, and many of them are bad ones, that have persisted through the ages having been at some point, intertwined with our culture. Some of these bad habits have even brought the Chinese people of today, a lot of harm. Just like the virus that has sprung up in recent months; this is because Chinese people have traditionally eaten wild game, and have not paid enough attention to the hygienic and sanitary process in preparation. This allowed the virus borne by these wild animals, to infect humans. The epicentre of this outbreak, was in a city called Wuhan. But why, would this have happened in Wuhan?
I believe, that it occurred in Wuhan, due to the incongruence and imbalance of socio-economic class, in the societal structure in China. In China’s Tier 1 cities like Shanghai, for instance, or Beijing, Guangzhou and Shenzhen, the quality of life is already very close to that you can find in New York, Tokyo, or other major cosmopolitan cities in the world, it is virtually the same. But Wuhan, while it has already surpassed ten million in population, and is also developing very quickly and has a high GDP of its own, it is still a city that only reached several tens of millions in population, in recent years only; after the reform and opening up policies were instated.
Huge rural to urban migration toward the city, has also brought with it the bad habits of the rural population, too. So for a city like Wuhan to become the epicentre of the virus, instead of a Tier 1 city having been the source, is not surprising at all.
But it is true, that the impact caused by the virus this time to China as a country, has been very deep. It has stricken fear into the heart of every single Chinese person. It has also given pause for reflection: is it time to change these habits they have insisted on for ages, and finally give them up?
They have started to understand, that for China to become a modern country, and stand on the global stage with the image of a modern country, changing these bad habits, and letting go of these non-essential cultural remnants, is going to be very important, and they have started to question, whether or not some of this culture and these habits, should finally be changed.
Every Chinese person is now, I believe, making changes to their behavior, even subconsciously.
Chinese people, are the same as every other great people in the world. After suffering setbacks, they learn hard-won lessons from the setbacks and make changes. I believe that this state of mind, will accelerate in each of China’s cities, and will manifest itself in the changes, however big or small, in each Chinese person’s behavior.
Here, I want to turn our conversation to Paris, the capital city of France. In its history, Paris was once a city with very poor sanitation. We can glean this from the novels written about or representing those times. In order to understand how the city of Paris constructed such a remarkable system of sewer networks, we have to look at the sanitation conditions of Paris at the time they were constructed.
The plagues that ravaged Paris and the rest of Europe throughout history caused so many deaths; and the city officials created the first underground sewer network soon after; it was then refined and improved over the centuries, and today, it is even a tourist attraction to view the complex sewer network, and witness the engineering feat that keeps the city clean. We can understand this action to be a kind of declaration of war against the bad habits leftover from cultural remnants of that part of their culture. Paris was not defeated as the result of this sanitation problem; but through the course of these improvements, the people changed their habits, learned hard lessons, and built their city’s sanitation system into a shining example for other modern cities. As a result, I believe that Chinese people will be like the French, they will learn from the experience of undergoing this virus outbreak, they will change the way they behave, and become a sanitary, environmentally friendly country. And Chinese people will also, from this experience, learn where they went wrong, and fix their problems. This is a very unfortunate situation, but I feel that it will become an inflection point where by Chinese people will really change their behaviour and take a firm step into this modern world. That is why I do not feel that this outbreak will cause a devastation of the Chinese economy, and I similarly do not feel that it will bring about a crushing impact on consumer spending in China. I think, it is an inevitability, that the Chinese economy will stand back up amidst this outbreak, and come out stronger.
I have complete faith toward this, and the way this situation develops, will prove whether my analysis is right or wrong. I feel, of course, that my analysis will be completely proven correct.
UPDATE - FAQ #6
DECEMBER 17, 2019
#6-Q: Are all of the partner factories going to be Chinese factories?
Answer: Throughout the course of our communication with designers, many of them have asked if our partner factories are going to be all in China. In fact, many of our potential partner factories, at this point, are actually based not in China, but in Europe - in countries like Italy, Portugal, and elsewhere.
In the last 2 weeks or so, in particular, during our trip to Milan, we have met with several dozens more of those factories from Italy, Portugal and other parts of Europe, to further discuss the possibility of cooperating as production partners for our several hundred partner brands; and after explaining our mode of working I believe that we have reached a strong mutual understanding and mutual agreement, that our business does not occupy only a small space, but is unfolding to be a big player in this market, and as a result any factory who works with us has to accommodate us as a big player, in order to be selected for our cooperation, and the cooperation conditions have to fulfill our requests.
At the same time, many of these potential factory partners have also expressed agreement with the fact that the fashion industry and the right strategy for how to build a brand, and how to market a brand, is actually in a moment of change and "revolution", even; and they have also expressed excited disbelief at the speed with which the China fashion market is now growing, a lightning pace. Many of them expressed their dream to enter this market in China with their production, and many of these factories that we met with have expressed agreement with our mode of cooperation, and our principles as well. So we do feel that in the future, we will be able to work with even more European factories who agree with and share these same principles. Among these European factories there are those who produce with very high quality, for luxury brands like Louis Vuitton, Gucci, Fendi, Hermes, and others. This has also increased our confidence in producing in Europe, and we also feel that if we partner with these facilities, they will be able to provide the highest quality, at very reasonable manufacturing cost, to help all of these several hundred brands we are partnered with, moving in line with our business strategy and principles - that is, to offer unique, and high quality designs, fabric and production, at a price that emergent class of white-collar professionals in China can accept - achieve a winning position and compete in the China and surrounding Asian market.
Just as we have shared repeatedly, in the current fashion market, there is the market of luxury, and of fast fashion. But increasingly, we feel that in this moment, more and more consumers are actually hoping to purchase those items that have personality, high quality, including the high quality of the materials and production, at prices that they feel they can afford.
Especially in China, this is a country that is quickly moving towards an olive-shaped society; in the population of 1.4 billion, there are smaller and smaller numbers of ultra-wealthy at the top, and smaller and smaller numbers of those living in extreme poverty. Those in extreme poverty are now moving upwards into the belly section of the olive-shaped market, which is means they are entering the white-collar professional class. The explosive growth of this class of the population and their broader and broader demands for fashion in the market are very real; they do not have the consumption power of the small population of the ultra wealthy, but they tend to look down on fast fashion, and want a suitable alternative.
After our discussion with each potential production partner, many have expressed that this is a segment of the market they have been working hard to try to serve, they want to put in the effort to try to win these consumers. In these last 2 weeks, these kinds of discussions have given us even more confidence in opening up talks even further with more potential European production partners including garment manufacturers, leather accessories, handbags and shoes manufacturers, as well.
At the same time, they also have agreed to offer the same prices to our partner brands, for their own production orders, and even their sample orders, if they want to order the same production for their own markets to distribute in Europe, America, or elsewhere in the world. We trust that this will bring our partner brands a lot of benefits, and they will be able to take benefit from a very favourable price, that normally may be out of their reach, despite being a smaller brand. Our partner brands are global brands - although we partner with them only for our territory, the reach of their brand name is worldwide, and we believe they can benefit from access to these prices.
We will continue to deepen these discussions and cooperations with these potential partners, and we will put forth all of our effort to find our partner brands production facilities that can provide the best quality, at cost very reasonable, so reasonable that they will be surprised that it would ever be possible to have such quality, at such price.
We have also a lot of factories lined up in China, of course, and they are medium-sized facilities, who complete orders for the same big luxury brands. No matter if we aim to produce in China, or in Europe, quality will consistently remain one of the most important selection criteria.
This is our goal in selecting production partners, and we will continue our efforts in this direction.
DECEMBER 14, 2019
#5-Q: Why must I register the brand in China immediately, and why not do it after I have already started to sell in China and make money, and use that money to register the brand then?
A: This is a really good question, and recently, some designers have asked us this question.
It is important to first register before entering the market, because without this step, your brand is open to risk of being pre-emptively registered by a third party, blocking you from being able to use your own name in this market.
If it has been pre-emptively registered, your intellectual property can be misused even lawfully by these third parties, they would be able to use your name and mark freely, and put it on designs not corresponding to your real brand, or steal your existing designs, produce them, and flood the market with these products that are in fact, not approved of by you.
There are a lot of Italian, French, and other European brands, who go over to China presenting with a showroom, for instance, and even in those situations they get copied or infringed upon, and they are then upset that these showrooms do not have the legal capacity to institute a challenge against this behavior. These are small brands, and they are paying a very large cost to enter the market, but at the same time, they do not understand China, and they do not speak the language. So many smaller brands do not have the ability to sue their infringers in China to obtain redress. As a result, a lot of infringers simply are not afraid - and they believe that a smaller brand will never have the ability to fight against them in court, so they often sell products using your brand without any care at all, even using your picture and portrait, and your marketing materials, which they copy from other websites, and copy openly and freely. You can see this often in the big e-commerce websites in China.
So if a brand rushes to market without registering, this opens up the risk of being preemptively registered by these third parties, and the other side may even sue us, that you, and that we are violating their IP rights, and this kind of situation is happening constantly in China, every single day.
The risk presented by this lack of registration is also evidenced by recent developments with big brands in the China market.
A very famous, Japan-based but global brand, MUJI, has recently lost a nearly 2-year battle with a local Chinese company over their trademark:
AsiaOne: MUJI Ordered to Pay Chinese Firm $120,700 After Losing Trademark Appeal
The Beijing Supreme Court ruled that MUJI was in fact the one at fault, and had to pay the China company a penalty and issue a formal apology publicly, since the Chinese company had already registered the trademark in 2 of the relevant product categories that MUJI was selling in.
This news did in fact, create a big surprise to see such a big company lose.
Many other news outlets are already starting to report on this, and we are quite certain that there will be more reports soon, which you can find with a Google search.
This news announces to the world that when any brand wants to enter the China market, to promote and sell their products, they must make a prior registration in their relevant classes, including in categories that the brand wants to sell in eventually.
This judgment deals a significant blow to MUJI; the company has already been slipping in China since 2018, and we believe that having their trademark pre-emptively registered by these local companies, and then having similar products produced and sold under that trademark, would cause MUJI’s sales to go down. This other company can now use this trademark to slice out a piece of their pie in this market, and at the same time it will cause consumers to feel confused too, about which is actually the MUJI brand and which is not. This will impact their market share without a doubt, and will contribute to a further decline of the brand value in China.
Once consumers get confused, or feel uncertain, this really shakes their loyalty to the brand.
We can foresee that the next move for MUJI, will be that they will have no other option but to buy back the trademark from these companies, at what we can only predict to be considerable, considerable expense.
Because they were a big brand, they thought they could enter China without making a thorough registration — and this pridefulness has created these problems for them so many years down the line. They did not move as fast as possible, to register their trademark, and this is the aftermath.
Returning the focus then to our business, it is clear that we cannot ignore the huge potential that our market in China and the Far East represents.
China has already surpassed the USA in terms of its scale as the largest consumer market in the world for fashion in the world:
QZ: China Set to Overtake the US as the World's Largest Fashion Market
So for any brand, unless you deeply believe, that you will not have success in this part of the world, that your brand has no future here, if you want to enter the market in China or are preparing to do so, it is important to treat this issue with seriousness and register your trademark before entering.
But I would like to say that even if, somehow you felt that you would not be able to be successful in China, you should not believe that the trademark issue has nothing to do with your business in Europe. In fact, it has plenty to do with it, and can impact its health greatly.
The copycat issue mentioned above is one key concern - even if you are not operating in China, this will cause your customers in Europe to get confused too, they will not understand what is the difference between your products in Europe versus in China, because even though you are not entering the China market, but those companies who might have pre-emptively registered your brand, they can produce products that are really similar to yours, sell publicly through the internet, causing confusion for your brand in the market, and causing damage also to your European business. Please understand, that China is not a market that you can just not pay attention to - the market is far too big, and even if you do not go to China, any kind of copycat behaviour done toward your brand here is going to impact you and cause it to suffer real damage.
This is our point of view. Once your trademark is stolen in this market, you will not have any more chances in the future to get it back, except, at great financial and sometimes even legal cost.
In the past, there were some designers who did not seem to understand why we kept insisting on this; but I trust that after reading this news, I feel that any lack of understanding toward this process, will now become agreement with our point of view.
Some of our partner brands have received interest from buyers in Japan, Hong Kong, Taiwan and China already; and for these designers, I have always maintained a very strong attitude that they should not pursue these orders, just to make a small amount of 1,000 euros or 2,000 euros in revenue for a small sale, and as a result, risk exposing themselves pre-maturely, without being properly registered and protected yet, and in the future, potentially have to deal with these much larger problems once the brand grows.
So again, we have strongly disagreed with the thinking that you should take a few smaller orders or sales from our region, without being protected fully; the reason is that when your products are exposed briefly, you open yourself up to pre-emptive registration risk, then when you are really actually ready to sell in China, if you have been pre-emptively registered, that company would turn around, and actually be able to sue you for infringement of their trademark instead. You would then have to deal with heavy penalties, and have to issue formal apologies, as in the case above.
If you refuse to pay the penalty or apologize, the court will have the right to place a further punishment on you, and this will not only impact the brand in our region, it will impact all related efforts - for instance - with marketing and promotion. Global magazines with real industry weight, International media and television, and important fashion shows and events, they would no longer feel comfortable working with you, because they do not want to offend any in China, such a big market. They also would be scared to incur any legal problems of their own as a result. The same would be true for showrooms and buyers too. China, after all, is now the biggest market in the world for fashion, and no business would take actions to jeopardise their business or image, or create any potential legal problems for themselves in this market; so they would not work with your brand if it means exposing them to that risk by extension.
This news about MUJI, further proves that our thinking and our insistence on this point, has always been the correct one.
DECEMBER 8, 2019
We write today with a quick update on what we have been working on.
In the last ten days or so, we have held a series of development meetings in Milan with our first group of partner brands.
There were a little over 100 small to mid-sized brands in attendance, hailing from all different parts of Europe, and we were very pleased to see each of our partners once more, and to experience this very exciting moment of updating on the next steps forward.
During these meetings, we presented a preview of our concept and selling platforms, and in an even more detailed way, explained our principles, and our concrete way of operating, including how we will concretely attract customers to us, through increasing the stickiness between our brands and their consumers and fans. This is a key part of our approach to this project - a brand’s success depends on the ability to attract and keep the attention of consumers, the ability to entice the consumer to visit the brand’s shop, to make purchases, and in addition, to continuously come back again. At the same time, it is the ability to influence consumers to spread the word through their social networks and personal interactions, and build that strong organic reach of the brand. This is a vital necessary condition for the success of a brand.
During these meetings, we explained our strategy and point of view on the fashion industry at present, and its future; through sharing with our partner brands our concrete approach, and explanations, we also reaffirmed that our point of view is actionable, and moving in the right direction. We very clearly expressed to our partner brands, the difference in the brand building strategies of the older brands, and modern brands of today. In this age of information exchange, the brand strategy of the past is already outdated and behind the times. When you point out the success stories of brands like Gucci, or Louis Vuitton, to show how a brand should be working toward success in today’s age, this is no longer a relevant market for how to win success as a brand, in our view. The reason being that consumers of today do not have the brand loyalty that they used to; with the emergence of the fast-paced information age, attention spans have become increasingly short.
The shelf life for each brand has become shorter and shorter, and as a result of all of the different sensory inputs and choices these consumers face every day in this information age, they no longer have just one focal point, and instead, their focus is dissipated amongst many different things at once. In the past, the strategy for brands was to focus their efforts on making a huge investment, and through advertising, and movie stars, and influencers, and establishing highly luxurious and well-ornamented shops, their aim was to conquer the eyeballs and attention of the customer, and in doing so, solidify the consumers' trust and admiration toward that brand. This is a large investment, in a very broad and far-ranging effort, and society also cooperated and facilitated the growth of these brands and the legacy that they stood for. In the past, this was enough to stimulate the mind of the consumer, and as a result, they accepted that there was only this formula--that this was luxury--and this was the defining measure of success as a brand. That was the only strategy. And it's true, in the past, when information was not exchanged so quickly, this strategy would, in fact, achieve success, but today, the situation is no longer the same. Young people today, their thinking is really alive and vibrant, and their understanding of fashion has changed from brand worship, to embracing their own unique perspective. They are no longer willing to be like everyone else, even copying the fashion taste of actors or singers, as a young consumer, they no longer see this as the only way to pursue fashion.
As a result, this has caused that strong loyalty toward brands, which we had seen in the past, to falter; and the shelf life of each brand to shrink significantly. Now, consumers today, they feel that only through expressing their own personality through what they wear, can they express their individual and unique understanding of beauty. They treat fashion as their way of announcing their commitment to their own uniqueness, and that unique point of view that they want to share with the world. We believe, that in this age where fashion principles are so quickly revolutionizing, we have to follow and respect this trend, this new thinking, and pro-actively match these changes. We have to provide even more choice, even more variety, and push our partner brands to chase after this new changed thinking, and to match the need for personalised and unique taste. We believe, that in the future, it will be very difficult for a fashion brand to maintain a top position for an extended period of time any longer; and as a result, any brand designer cannot just sit and wait for the consumer to come to them any longer. Instead, brands have to be pro-active in sharing, presenting, and grabbing their attention, driving them to understand the brand's point of view, and unique design perspective. This is a trend now, that in the near future, will grow to firmly become an immovable tenet of brand-building. We feel very lucky to have been able to share these perspectives with our partner brands during these meetings, and as a result, we really also felt their strong acceptance and agreement, and support, of these principles as well.
After we have all come to an agreement on these terms - what then becomes most important, is concretely, how will we aim to go about doing this? How will we realise these principles? How are we going to match the changing trends of this fashion world? In this meeting, we very clearly, and in a detailed manner, presented our concrete modes of doing so.
We carefully explained, to each of our partner brands, how we aim to attract customers to them, not just in theory, but with concrete tools, plans, and innovative platforms and features. The participants during this last week’s meetings, expressed to us that they felt really positively about our plan of action, that it was not only feasible, but innovative and refreshing.
Additionally, we also took time to explain to our partner brands, how we can use not just their designs and fashion principles, but other means and angles, to reinforce this stickiness between brand and consumer as well. But due to confidentiality, we will not make all of these details openly available on our site. But we were very satisfied that our partner brands expressed agreement, and enthusiasm, at our plans of action. We feel really excited as well, and are even more determined to put forth the necessary effort to bring it to fruition.
At these meetings, we also completed the selection of each partner brand’s shop location in our platform. During this process, many designers put forth their thoughts and point of view, some said that it was an innovative and personal new way, to connect the brand to the consumer, and that it energised them even more, and gave them even more confidence, to put forth their best efforts to design, and present their vision, with fervour and passion.
We also showed our partner brands their own specialised window in our platform, where they will be able to communicate anything that they would like about them, their brands and inspiration, also their own plans for their brands and their schedule, to the consumers in our region, and also refreshed their understanding of tools they will be using to communicate with their production partners as well.
Through these series of meetings, this face to face interaction, we felt that with the brands we have partnered with, we really are one big family now, in the same boat, have felt that our thinking, and trust, has become fused strongly together with our partner brands.
We want to hereby thank each of the hundred or so designers who flew to meet us, despite their busy schedules, some from further places in Europe than others, in order to participate in these meetings. We want to express our heartfelt thanks for spending those 5 to 6 hours with us, listening to our plans and experiencing all of the tools and functions of our platform, about how we plan to operate, and also viewing together with us the tools and methods through which they will concretely be able to present themselves in our platform and market. I want to particularly thank those who, because our meetings went long, had to miss trains or flights home; we are very sorry about these inconveniences, and in the future, we will have a second and third series of meetings with our partner brands; and during these upcoming meetings, we will improve our methods, to be more efficient and take better care on managing the timing of these meetings.
We believe that the moment to enter the market will be the moment when our partner brands have prepared themselves as well, with registration of their marks finalised in our region. At that time, there will be even more communication, and even further obstacles and challenges that arise; there will be new problems, but we believe that as long as we keep our current open communication style that we have maintained thus far, any problems will not be insurmountable, and even the toughest problems, can be overcome. We will communicate using compromise, acceptance, understanding, and within the bounds of our contract, to work towards the future, arm in arm, towards our mutual goal, and mutual profit.
FAQ #1 - 4
OCTOBER 22, 2019
Thank you for visiting our website.
Recently, many brands and designers have asked questions, which we find have been repeatedly posed to us by different brands, and we feel that these questions are representative of a collective curiosity. We want to address these questions publicly here, in a sort of FAQ, that we will be updating in a series of posts.
#1 - Q: You are working with many designers, and while I don’t doubt that some brands will succeed, the majority of these brands probably will not be successful so easily. How do you guarantee the interests of these other designers, who do not succeed? Because the contract is perpetual, if I am not successful, then I am stuck. What can I do?
A: This is a good question. We do fully agree, that not every brand, will succeed. I trust that the ones who will really achieve great success, who become really famous brands, will not be the majority. But, please think about how we should view this “success”? From a business perspective, to go from an unknown brand, to become a brand that most consumers acknowledge and generally like, this is considered success. But from another perspective, even if some brands have not become really successful to the point of becoming famous brands, but if they can make money, this should also be considered a success as well. Why do we feel this way? The reason is:
Firstly, Chinese customers have long harboured a love and admiration for the fashion brands of Italy, and France, and Europe in general. I believe that most Europeans have witnessed with their own eyes, Chinese tourists coming to the continent and frantically buying luxury goods. This is proof, that the fashion brands in Europe have a very high level of market recognition in China.
In China, there are 167 cities with at least 1 million in population. Some of these cities have populations that exceed 10 million, for instance Beijing, Shanghai, Guangzhou and Shenzhen, and several other cities as well. This does not even include surrounding countries that have cities with population higher than 1 million. For instance, Tokyo, Osaka, Seoul, Singapore, Kuala Lumpur, Bangkok, just to name a few, and in total then, the number of cities with population over 1 million in our territory, is nearly 200. And so, if under the worst circumstances, a partner brand’s collection sells just 1 piece, of each style, every month in each one of these cities, the earnings would still be quite significant. What I mean is, if a collection has 30 styles, for instance, then let’s say if 1 piece of each style sells per month in one city, that’s a total of 30 pieces sold. In a year, that would be 360 pieces sold. In 200 cities, that would be 72,000 pieces sold per year. If based on the revenue share that we must pay to our partner brands as part of our agreement, then the brand’s profit, which is a net profit, is very promising indeed. I believe that our partner brands can calculate for themselves, what that could total. Is such a strong earning not big enough to be considered a success?
And these earnings, are without any financial investment made in operations from the part of the brand; it’s a pure profit for the brand, they don’t have to take the cost of sampling, sourcing, development, advertising and promotion, or inventory either. The only investment from the brand, is their ideas, and their time.
So again, does this count as “success”? We believe, the answer is a resounding “yes".
We trust that if the brand continuously adjusts their designs, and follows the trends and changes in China, and also puts forth their own design talent and vision, the sales amount still has a possibility to even increase. As a result, we feel that this is indeed, a very favorable cooperation opportunity, because China’s huge consumer market, and its fast-growing middle class, will provide these brands a chance to show themselves on this massive stage. At the same time, we also trust that if you have the passion, and you really embrace this market, in China, then no matter what, you will be able to find consumers that match with your taste, even if it is not the biggest slice of the market, it’s enough to make you successful. To continuously, pro-actively understand the market, this is the only way to get there, and if you enthusiastically embrace the market, and put forth your blood, sweat and tears, then I trust that the China market will definitely give you a meaningful return.
Again, we believe that the China market won’t let our partner brands down; unless, the brand lacks in their own passion and determination to start with.
#2 - Q: You and your company do not have any experience in fashion, how can you do such a big fashion project? Fashion is an industry that may look very simple, but is actually very complicated, and detailed. Is it possible that you have underestimated the complexity and expertise required to operate in this market?
A: This is also a very natural question to ask. Indeed, we are a new company, and in my personal background, as the founder of the company, I have amassed only knowledge in the law, and venture capital. But in this world, a lot of things are not necessarily such that you have to have experience, in order to succeed at it.
.For instance, Jack Ma, who founded Alibaba.com, was not an expert at computers, but he created one of the biggest e-commerce companies in China, and in the world. Elon Musk, for example, he was not a specialist in aerospace engineering, but he created SpaceX, and it is nearing completion of a task that no one could do before him, reducing the cost of space exploration with the goal of colonising Mars. Steve Jobs, the founder of Apple, revolutionised how humans interact with one another completely with the advent of the iPhone more than a decade ago, was he didn’t write a line of code himself.
These are monumental achievements. Between all of these individuals, they shared genius-level abilities.
At the same time, though, behind each success story, there is, and must be, the strength of capital to support it.
In our case, we will hire a substantial team of people who have industry-specific experience, including those experts in production and sourcing, stylists and visual merchandisers, and brand managers, and we will in Italy, France and other countries in Europe, hire fashion editors and writers, to cooperate with our editors in China and the rest of the Far East, to put forth a very professional and experienced team that will help our partner brands with their promotion and sales, and work with our partner brands to pinpoint the strategy of their brand.
Of course, there are other methods that we will use, meant to make up for the fact that we do not have that specific experience in the fashion market. I want to share with each person here, that on Wall Street I have heard this saying often: "Capital is the smartest entity in the world". Since we have decided to invest into the fashion industry, even though we lack experience in fashion, in my background, I have more than 10 years in venture capital in different countries including China, Hong Kong, Taiwan, Japan and Silicon Valley; and of course we have considered our weaknesses and strengths. We cannot make investments blindly, because as mentioned, capital is the smartest entity in the world.
Before I jumped into this industry, after I graduated from UC Berkeley, I spent a brief time assisting an emerging designer in New York City, his name is Eddie Borgo, and it allowed me to have some insight into the operations and structures that emerging brands on the cusp of growth need to face.
The rest of my professional experience hasn’t been in fashion, but rather in investment and in financing, and how to attract capital to a project, and gain its financial support for the project’s growth. In this, I have more than 10 years of experience. In the investment field, I have very close and direct relationships with successful investment companies, and billionaires, even. I have maintained a very good communication with these companies and individuals. As a result, for me, and for any good project that I come across, whether it is my own, or someone else’s project, not having enough financial strength is never going to be a problem.
Perhaps you may be concerned that due to the sheer size of the project, that finance could become a problem through the growth of the project and that it might hinder the success of the project. My reply is yes, in any project, in the course of its grow, of course it needs the support of capital, as I mentioned above. And although at the moment, our project does not have any pressure financially, we do understand that as the business the grows in size, there will come a day where we need the support of capital, to me, financing is my specialty, and in this regard, we do not face obstacles. For this, and the more than 10 years I have under my belt in this investment industry, I am full of confidence.
With my conviction, any good project, will never lack in financing.
#3 - Q: I am just one of the many, many brands you will select; I feel like a drop of water in a vast ocean. How will you have the time and energy to focus on me, won’t your resources be too diluted? This seems like a big obstacle to my success.
A: To answer this question, firstly, I hope that we can first make clear that our market is China, and the rest of the Far East. It is not Europe. The sheer scale of this market, makes it impossible that just one brand could take the whole market for themselves.
In China, our main market, there are various stages of development in the country and it is not a homogenous society. China has 56 different ethnic minorities, they speak different languages, there are different religions and in fact, the country is in different stages of economic development. There is huge variation.
Because the economic development in the country is unbalanced, the level of consumers is also different; at the same time, their pursuits, their tastes and preferences, are also going to be naturally quite different.
In short, this market has various needs at different levels, and different tastes and preferences, and even different spending power; we have identified brands that we believe can satisfy the needs at each of these different levels and tastes and preferences, and different levels of spending power. For each of the brands that we are cooperating with, we are very certain that they each can find their place and carve out market share in this massive market, and gain the respect and love of the consumers toward their designs.
In truth, we strongly believe that no one brand who joins us, could diminish the talent or value of the other, or let the other lose its shine. No inclusion of another brand, could cause one brand to fade into the dark, or go unnoticed by the market. This is not a zero-sum game. The market is just too big, and each brand will have to follow a separate and distinct approach, and the strategy will be different, naturally.
If the brands are full of confidence in their own unique point of view, and full of passion and enthusiasm, and they are willing to put forth effort in communicating their brand vision, then we fully believe, that brightness will shine through in this market.
The fact of the matter is, based on common sense, no one brand can win the love of all the people. I would encourage each brand, or reader, not to think with a purely European perspective, because that could lead to errors in judgment. Please try to envisage this from the perspective of our market - it’s truly very, very big and varied.
Please imagine, also, if we cooperate with just a few brands, this would cause trouble for the overall strategy and customer acquisition, for each of these brands. Only with a big amount of brands, will the consumers actually visit, and even linger, with each individual brand.
So then, how do we let the consumers want to listen to the story of these small brands, you might ask this, when there are so many of them in the same space?
In fact, herein lies a key part of the strategy. These large numbers of other brands, will help each individual brand stand out, and be noticed.
This is the same concept as when one goes shopping. Would most people prefer to go to a shop on a street with nothing else, but that one shop, or would most people prefer to go to a bustling shopping district, where there are streets lined with various different shops? I think the answer is quite obvious.
It doesn't matter if we speak about fashion, or restaurants, or other kinds of consumer experiences, this impulse is universal, even when it comes to e-commerce as well. Every restaurant wants to open next to areas where there are a lot of other restaurants, despite the competition, because that is the location that people will think to go, when they are hungry. This causes the exposure of that restaurant to go up very quickly; some customers may not choose to go inside that restaurant today, but they might choose to, tomorrow.
Similarly, when it comes to e-commerce, and virtual shops, no one would be interested in seeing a website with just 20 brands; they want to come to a site with many choices, so they can make their selection. This even further proves the points I want to make, which is, the power to attract consumers lies fully in how many options and choices one can provide to the consumer, such that they can have a broad-ranging experience. In any industry, this concept is the same.
This is why we created supermarkets, why we created Amazon, and Alibaba. Any brand, they will because of the fact that they are featured on Amazon or Alibaba, experience a big increase in their sales. They would not, because there are too many other options on these platforms, have a negative impact on their growth.
If we cooperate with just 20 brands, for example, in a market with nearly 2 billion people in the region, who would really care or pay attention, to our 20 brands?
The brands that we cooperate with, their histories are not long, and they do not have the legacy established yet, and the story built up over time that more established brands have, so it is very difficult to create that kind of unshakeable standing as a recognised brand in a short amount of time.
Similarly, what I would like to ask, is for a journalist with a world-famous industry publication like Vogue, would they be willing to go to a platform with many, many brands, to seek out the next fashion stars, or would they prefer to stick to sifting through social media and other avenues, to find brands that may not yet be widely known? It is quite clear, that they would appreciate and would come to a platform that has many brands, and observe the reaction of the consumers, and how they perform, together in this platform. And from there, they can think how to feature each of these brands in their publication.
Please imagine, if in the future, when we launch our own fashion events and shows for this region, if we have just 20 brands, versus, if we have several hundred brands to show this massive market, would people want to come to our event for just 20 brands, or for the promise of several hundred potentialities that could pique their interest, vying for their attention? I trust, the answer is also very obvious.
I would ask each brand to also ask themselves, that in the case above, would their own exposure be increased, or reduced with the participation of more partner brands? At these events, do consider, how many people would come, if just 20 brands are being shown, versus several hundred?
Does each brand’s exposure potentially increase or decrease, with these larger numbers of brands on board then?
We have confidence in the brands that we selected, because we understand what this market’s needs are. And so, we believe that in China, and the rest of the Far East, there are those people who will like what each brand presents. Through our interactions with each of these brands, over the course of a long communication, we have the confidence that these brands can be successful, together with our efforts.
Please also understand, that if our partner brands are not able to be successful, the first ones to lose would be us.
We will not ask any of our partner brands for fees or money, not today, and not ever; the costs of operation fall on our shoulders, from the sampling, sourcing, development, production, promotion and selling costs and more. So it follows that we care even more so than each brand, that they reach their success sooner rather than later, in this market of ours. We take each partner brand with the same level of seriousness and enthusiasm - and we will dedicate time to each for planning, and strategizing; if we don't do this, we are just taking actions that would eventually harm ourselves.
We deeply understand how important it is, to communicate with the brand, and to reach a mutual understanding via that communication, and how crucial that is to promoting the brand strategy. As a result, we will provide as much assistance and advice as we can, and work closely with each, in helping them to attract the attention of these potential consumers. Using various methods, we will let each of their fans feel the fashion principles and the pulse of that brand they have come to admire. This is in our interest, and the brand’s interest, this is our mutual best interest.
I trust, that anyone reading this, and any brand we have come in contact with, will hopefully even more so understand our approach with these explanations. We also hope, that they can understand why, cooperating with other brands, would not detract from our focus, and would not cause us to neglect any one partner brand. Because for us, what we want to do, is for each flower in this garden, to give them the chance to bloom freely, to try and move their audience with their beauty, aesthetics and their impact. This is our goal, and it’s again where our interest lies. Therefore it is not the addition of more brands that would harm the chances of any one brand; but rather, the brand’s own loss of confidence, or passion, that would cause it to falter.
We know that not every brand will immediately reach success. There will be many brands who will run into difficulties and low points. We can completely foresee this. But we also feel, that as long as we remain convicted, that the fashion principles of the brands we have partnered with have the ability to invoke an emotional reaction, to somehow move these consumers in our region, then we can remain firm in our enthusiasm for the brand, and continuously work with the brand, exchanging information and communicating, to keep on improving, presenting and spreading their message to their audience. Under those circumstances, we trust that ultimately, we can gradually bring closer the distance between the consumers and the brand, and turn them into fans, and even create a kind of fervent admiration toward the brand. This is a very complicated, and meticulous work. We have a passion for this work, and we feel excited to have the opportunity even, to be doing this kind of work. As a result, we are full of enthusiasm, and we will forever keep this energy. This is one important foundation upon which, while constantly adjusting and adapting to the market, our partner brands can achieve success in our region.
So we feel that the more brands that we feel have good potential to be loved in our market that we have on board, the greater our exposure will be in this market. Because consumers of different levels, and different regions, will be willing to visit our offline, and our online shops, and as a result, for each of the brands we partner with, their exposure is going to increase as well.
And because of this increase in exposure, there is an undeniable positive impact in helping each brand to increase its value in the market. At the same time, we trust that because of the massive scale of the market itself, it can undoubtedly absorb, and take on, the presence of these several hundred brands in the market. These brands each play different roles in this market, and as a result, we are strongly convicted that the more brands who match our market’s various needs who join us, would be a plus, and not a negative, for the brands we are already partnered with. At the same time, because of the addition of a lot of brands, naturally, there will be learning and competition amongst everyone. This will stimulate the “soul” of each brand, to really dig deep, and create even more spectacular fashion, to be even more loved. We strongly believe that this will spur the improvement and growth of each brand.
Of course, we will not continue to add more brands without end; just as I had written in a prior update, when we feel that there are too many brands representing one segment or aesthetic, we will stop adding more in that category. We will re-evaluate in 3 to 5 years time, and once more seek out potential brands, because at that time, the fashion perspective, trends and even principles may have shifted, and new concepts will appear. I hope that this explanation can very thoroughly answer any potential question in this regard. At the same time, if any brand has a different opinion, I am also very willing to have a detailed discussion in private or via phone.
Q - #4: How can I be sure that you are being truthful about how much you are producing and selling, and not hiding the real amounts in order to pay me less than what I have earned? I do not understand China, and I do not have the ability to check up on how much you have really produced or sold. Under these circumstances, how can I not be worried, and how can I protect my interests as a brand?
A: We fully understand these concerns; and if the roles were reversed, we would have the same concerns as well.
Firstly, I want to explain that all of the products sold, the styles and quantities and the prices, will be available for you to see through our management platform, after you have logged in with your password you will be able to see all of the information regarding your sales and production. So you never have to wait for a sell-through report at the end of the season, you can see immediately and at any time how the brand is doing. We aim to be fully transparent.
But despite this, you may worry that we may take your designs and secretly produce more pieces or sell them without your knowledge, without posting it on the platform, and I think that these are very valid points. We could potentially do this, the truth is, there is no surefire way for you to know, whether or not we may be doing so.
However, the truth is that we have collaborations in place with several hundred designers. If we were to just do this even once, violate the trust of one brand, do you think, when this has been discovered, that our business would still survive? Certainly not, because no other brand would ever trust us again. All of our effort, time, money, and investments in building this project, in hiring our staff, our management, it would all be wasted, because we would lose the trust of our brands; they would stop working with us, and the lifeblood of our business would be cut off. We would lose everything and have to shut down. Do you believe that I, or anyone, would do anything that would risk such an investment, over something with so little potential gain in relative terms? Would I try to avoid paying any one brand, their agreed upon profits, with the risk of losing the entire reputation of our business and its future?
If you were us, would you do so? I do not think so, and I do not think anyone in the world would do this, because it is against human nature to risk everything you have, in order to gain something that by comparison, is very small. Our goal in investing in each brand is to grow with them, to build globally recognized brands together over time, and that is something that requires a very strong foundation of trust and communication. If we break it, it is the end for our business, so it is not worth it for us.
As a result, unless we are completely crazy, we would not do something so foolish, that would harm our own interests, and destroy our own business and reputation. What we would gain, compared to what we might lose, is completely disproportionate in this case, and because of this, we are very clear that we will not engage in such behavior.
SEPTEMBER 22, 2019
Thank you for visiting our website.
Recently, many brands and designers have inquired as to why we are selecting a large number of brands, and what our selection criteria is.
We do not have time to always individually answer each query, and so, on our website here, we would like to make an explanation on this point, such that in the future we may not answer all queries one at a time.
I want to explain that we indeed need to select a lot of brands. The reason for this, is that in China, there are various stages of development in the country and overall region, and it is not a homogenous society.
China has 56 different ethnic minorities, they speak different languages, there are different religions and of course, economic situations; it is a very broad ranging market with a lot of variation. And given the stratification of the China market, there are different levels of customers to be served, given the still uneven development of the country today, they have different needs and preferences. There are Tier 1, Tier 2, and even Tier 3 cities, so the price, and aesthetic, has a wide range to cover.
So the brands that we select should be diverse enough to match the various taste and preference of this market.
At the same time, the culture of the surrounding Far East regions, is also not all the same. Their point of view toward fashion is not the same.
So when it comes to selecting a larger number of brands, and designers, the consumers will then have a lot of choices to select from.
In addition - the larger numbers help each other in many ways: more people means more bargaining power, with suppliers, with factories, with influencers. We can get better prices to support each of our designers, in each different category that they work in.
We can reduce costs, and we can then support each brand for longer, to go further.
So overall, this will give us a competitive advantage as well - not just to have unique designs, but even on the cost, we will be able to compete.
In addition, even the most talented brand, cannot stand alone in China.
We feel, that it is like in a garden, even the most beautiful flower will go unnoticed, unless it has the backdrop of the full garden to enhance its beauty.
At the same time, there can be internal competition and because there is internal competition it will cause everyone to work harder and be better, win more collectively, in the market.
Regarding our selection criteria, we are focused on uniqueness, personality and offering something that feels very representative, of the culture, or the geography, of where each brand is based, and where each brand is from. For instance, some brands based in Sicily, the designs truly reflect that influence, and others are from the south of France, for instance, and Milan and Rome, and each of their brands has some representative characteristic of their hometown.
The reason this is important, is that in China, the people respect and they truly love Western culture, and the younger generation in particular, want to go and experience the fashion and specific culture of each of the different regions. In order to show the unique aspects of their own personality and individuality, these consumers are seeking out these experiences, and this trend is taking hold very quickly; they have even traveled to Europe when possible, to have a more immersive experience, and understand the European culture from various angles - from food, to entertainment, to fashion. They then bring this feeling with them back home to China, keeping with them the fondness and curiosity toward the places they had visited.
For instance, they will take extra note of the local delicacies, and specialties, whether it's a particular type of red wine, or honey, or another kind of local product that is really unique and indicative of that particular region.
Our project is centered on this feeling, and as a result, we are looking for those smaller brands that can satisfy the desire of these consumers to show their own status and personality to the world, and that is not just through their money, but through their taste, through their many travels and understanding of Europe.
At the same time, we believe that we are at an inflection point in the fashion industry - everywhere in the world, the changes taking place now in fashion are impossible to ignore.
Mckinsey & Company has published research, showing that 2019 is a turning point in the “history” of China's fashion apparel industry. Their research has stated that China will replace the US as the largest single market in the world's apparel industry in and from 2019. In fact, China has gradually become one of the market leaders in initiating global trends in world fashion. This is evidenced by the attitude of many important brands. For example, Ermenegildo Zegna, the iconic Italian menswear brand, said that when the company wants to feel the pulse of luxury shoppers, New York is no longer a place to try new products. Instead, they have said, “Now we are testing new things in China, and if it works, we bring them all over the world”. That amount of attention paid, in and of itself, is something that would have been unheard of just a decade ago.
Although China's fashion market is huge, its distribution patterns are quite scattered and fragmented because the development of the market between the Tier 1, Tier 2 and Tier 3 cities is different in their paces and demands. However, it is useful to look back at its development in the past forty years, because we can see the evolution of this market more clearly, and really grasp the momentous opportunity we have here; we can feel what we are really on the cusp of.
The pursuit of fashion by Chinese consumers is no different from that of other consumers in the world on a basic level. However, what is defined as "fashionable", is always affected, often deeply, by the social-economic progress, and status, and the political and economic development of a country, and also how its interactions with foreign countries, has impacted the way a nation's people view themselves, in the world.
As an example, Belle International and Daphne International, two locally born Chinese brands, they were the earliest emerging brands in China, and they were the leaders of Chinese fashion in the 2000's.
They at one point had 5,000 boutiques and Chinese consumers wore them for more than a decade. There was a time when their very simple plaid shirt and down jacket, and basic line of womens footwear, was considered the most "fashionable" items.
However, with the rapid rise of fast fashion after the entry of Zara and H&M into China in 2007, Belle International and Daphne International began to feel old and tired. Their unchanging brand styles for more than a decade have reduced their market share in the region significantly, and, as a result, they have had to close hundreds of stores from 2015.
The rise of fast fashion really happened in China after the 2008 Olympic Games; with a further opening up of the country, the younger generation began to adopt a new fashion concept which included a lot or variety and always on-trend; but their focus was not excessively on the quality of the clothing. Fast fashion, for the first time, brought the runways of Paris, Milan and New York closer to the young consumer in Beijing. Whatever new styles had been displayed on those runways, would quickly arrive to young consumers, and in just 2-3 weeks after the shows, satisfying their thirst for the newest fashion trends.
However, the rising tide of the fast fashion chased by young Chinese consumers has finally started to ebb. Since these fast fashion companies were pushed to the forefront of the market in 2016, their dominance has begun to decline gradually. The announcements by Topshop and Forever 21 in 2018 and 2019 respectively, to turn off their lights and withdraw from the Chinese market entirely, were well-observed examples. The Chinese consumers have gradually realized that fast fashion is no longer sufficient in satisfying their needs. Beyond the trend, there lacks quality. Aside from the poor quality, fast fashion lacks personality and uniqueness, these are other aspects of fashion that make it an important part of our consumption as customers.
For instance, when a young mother who participates in her child’s mother-teacher conference, happens to find that her outfit is the same as another child’s mother, or when an office employee finds that the stitches of her zipper have come loose, after joining her colleagues for an after-work gathering, all these occurrences would make these middle-class consumers frustrated, and feel ashamed that their image, and by extension, their self-confidence, have been compromised simply because of the clothes they choose to wear. They do not want this kind of thing to happen when they upgrade their tastes in the pursuits of their own fashion style. As a result, fast fashion has gradually faded and skidded away from their minds. What they want is a kind of fashion that reflects their personality. It has a good cost/quality ratio, that they can also afford. They don't need to worry about wearing the same clothing, or their zippers coming undone. They want to feel free and comfortable. They want to wear something that can fully reflect their own personality and fashion point of view. At the same time, they will not blindly pursue high-end luxury goods that they cannot afford, because Chinese society has gradually evolved into an atmosphere in which excessively showing off luxury goods that do not match their own wealth, or even personal style, will not make their identities seem more elevated, but rather, it will only turn them into “nouveau riche” in the eyes of their peers.
Facing the rise of the Chinese fashion market of more than 400 million, in fact close to 500 million middle-class consumers, it is our mission, as well as our challenge, to correctly position our brands, closely follow and grasp the market pulse for those consumer groups that are gradually starting to crave that individualistic, personal experience with their fashion.
In response to this trend, we hope to propose a different solution in the mid-end fashion market where Chinese consumers expect personalization, quality, and uniqueness, as well as a reasonable price vs. quality; by providing the original and unique design point of view of hundreds of unique European design brands.
So again, even though fast fashion, and high luxury, they both still have a lot of fans in China, and while they will not disappear, people are starting to tire of these two options. They bounce back and forth between these standardised offerings, making an almost helpless choice, since there are no other alternatives.
Once again, it is against this kind of backdrop, that we aim to provide another potentiality for the customer, a myriad of choices, so that they may freely enjoy the fashion from each of these various regions, as a Chinese saying goes, it is “letting a hundred flowers blossom”, and among those blossoms, there will inevitably be that one that stands out to each of these newly discerning consumers.
Facing this vast market in the East, we feel that this approach is a new innovation, and as part of this movement we need to gather the strength of many, many designers, who have the talent and vision, and want to create their own brand.
At present, we are still actively seeking new brand partners, but because there has been some overlap in those brands already selected, and some of the incoming inquiries, we have had to say "no" to many people. In each kind of similar aesthetic, we may bring on 7 or 8 brands that overlap in some way, we hope, that with some internal competition, each brand will work doubly hard, and they will strive to be winners, pushing each other to be better. But if we end up with dozens of the same type of brand, then we will have to refuse some of them. This is our reasoning, and response to some of the questions that have been continually asked, that is, to understand how many brands we will select, and what our criteria is.
In another three to five years time, once our project has launched and is up and running, we will once again open our doors, to those people with a fashion point of view that represents a unique perspective. We will see which types of aesthetics have a strong demand, and if we do not have enough representative brands, then we will add more to make up for it at that time; and we will also open up to the new design points of view that are popping up, and we will absorb them into our platform as well.
At that time, we believe the fashion world will also have begun to change, and there will be innovations and points of view; and we will absorb more of these creatives into our project, and those brands with the ability to direct and lead with their taste and point of view, at that moment, they will be able to shine as well. Our demand does not lie in just pure numbers - but rather in gathering the quantity that we feel can represent and also satisfy the diverse tastes of the consumers in each distinct part of China, and also the surrounding Far East region. So our mission, and also our goal, is to catapult as many of these highly unique designers and brands, into our market.
We hope that this serves as an explanation, and in the future, we will not continue to explain on these points, in the interest of time and efficiency. We hope also for the communication and understanding of our potential partners as well.
Thanks for your time and attention.
SEPTEMBER 15, 2019
Thank you for visiting our website.
We would like to write with a short update and explanation on our selection process:
Recently there have been several designers who have been upset or disappointed, that we had not selected them as one of our partner designers after the interview process. There have been too many inquiries in this regard, and each designer has different reasons for complaint, so we do not have the time to explain constantly back and forth. We want to clarify a few aspects right here on our website, as to why we have made some refusals, and explain publicly. And we also hope, that each designer who may have been refused, can understand, why we would make this reasoning to say no. After this announcement, we may not make individual explanations one at a time.
Why there have been more and more rejections, after the selection process, is in fact not because we think that these designers are less talented than those designers with whom we have already signed, but rather, at this moment we have signed with more than several hundred designers. There are, however, many additional designers that have a design aesthetic that is quite similar to those designers with whom we have already signed with. Our business model does not rely on selecting just one type of aesthetic, such as just a feminine and classic look, or just a more avant-garde look. We do not make these kind of distinctions. The reason for this, is that in China, there are various stages of development in the country and overall region, and it is not a homogenous society.
China has 56 different ethnic minorities, they speak different languages, there are different religions and of course, economic situations; it is a very broad ranging market with a lot of variation. And given the stratification of the China market, there are different levels of customers to be served, given the still uneven development of the country today, they have different needs and preferences. There are Tier 1, Tier 2, and even Tier 3 cities, so the price, and aesthetic, has a wide range to cover.
Each of the designers we have selected, really does understand our thinking - they are full of passion, and enthusiasm, and with the spirit of serving their customers, they are ready to tackle this market and work with us, for different levels of consumers as well.
But when the types of aesthetics represented are too many, it is true that we will have some difficulty in seeking success for each designer, and therefore, our rejection of some candidates, is not just meant to protect our investment, it is also a kind of respect and goodwill toward the designers we have had to turn away. Because if they had joined us, but did not succeed ultimately, it would create a sense of failure, which would not be a pleasant one and at the same time, too many similar designers appearing in this market would cause the market to be too crowded, and for the brands of those designers with whom we have already signed with, it would create an excessive amount of competition. We do sincerely hope, that if any of these designers who were rejected still hope to join us and become a partner designer, they can consider to adjust their aesthetic slightly, and create an even more unique representation. If they do so, they can also feel free to contact us again, and we would still believe that there will be a good chance to cooperate.
At the same time, our plan at the present is to hold another round of designer selections in three to five years. At that time, if you are one of those designers who has been refused previously, but your design aesthetic has since evolved, you can also similarly contact us as well.
At this present moment, we are selecting for those designers who have a unique point of view, and can really present that unique fashion point of view very strongly.
We very deeply believe that these kind of designers, can capture the hearts of a good number of customers in this vast market of China and the surrounding regions of the Far East, and can also turn those customers into true fans.
This unique offering to our market, is the direction that we are working hard towards, and all of the designers who cooperate with us, should be able to succeed based on this, at least, they should be able to make money. This is our mission and dream.
At present, there are many factories and suppliers even based in Europe, for instance in Italy, Poland, Portugal, and Bulgaria, with whom we have decided to cooperate with in the future, of course this also includes factories from China, and Taiwan and elsewhere, such that based on their different design aesthetic, and the level of consumers they are targeting in our market, each of our partner designers can eventually produce in either of these countries.
In this moment, we are laying the preparatory groundwork, and our partner designers are in the process of applying for their trademark registrations, via service providers they have located on their own to handle this process. Following this, each of our partner designers will also be selecting the space and location of their dedicated shop as well for when we begin to operate. As a result, for those designers whom we have had to say no to, if you have not been selected this time, you can still keep abreast of our activities, if you feel that your aesthetic has been evolving constantly, you can once again contact us.
If you as a designer do not have the ability to change a part of your aesthetic, then I do apologize, we really do not have the ability to accept this many designers with a similar aesthetic in each level. Because after all, to make a brand successful really does take time, effort and investment, and it is a long process that involves a great amount of financial risk as well. Once again, toward those designers we had to say no to, it is only that we have met you a bit late in this process, and not necessarily that we do not agree or believe in your design abilities. No matter who you work with, I believe, you would find your chance and opportunity. I also hope that you can utilise the time that we have spent communicating with each other, even if ultimately we do not advance to a cooperation, to understand the existence of this vast market in China, you can hopefully through our interactions, have understood a bit more about this market, how it moves, and even try to enter this market on your own or in other ways.
We trust and believe, that this massive market in China, and the people who comprise it, are starting to pursue their fashion needs and dreams in a very discerning way; this will definitely give all talented designers the chance, even those that we have rejected, that chance to carve out a portion of this market share for themselves.
No matter what, we want to say that our mutual communication is a kind of destiny in and of itself, and even though we have not ended up working together after this long communication, to those designers whom we have rejected, or to those designers who have rejected us, we really believe that this communication has existed for a reason, in your life as a fashion designer. We do want to say sorry to those designers we could not bring on board in this moment. If you do still venture to our markets, please let us know, and we will try to be as helpful as we can.
Thank you for your time and attention.