Fast-fashion retailer Shein blazed a trail for Chinese companies in the US and European markets. Now, another China-based apparel brand wants to replicate its success.
With more stores than Inditex SA’s Zara and Hennes & Mauritz AB’s H&M in China, and catching up to them in Southeast Asia, Guangzhou-based Urban Revivo is set to open first US flagship store in New York City’s SoHo Friday. It’s one of 25 stores outside of China founder Leo Li has planned for this year, including two more in London, and several in Japan and the Middle East.
If all goes well, new store openings outside China could accelerate next year, with overseas outlets reaching 100 by then, he said.
Meanwhile, Li is also sketching out a supply chain outside China that will eventually make at least half of the apparel sold in overseas markets. Production will start in Turkey this year for Europe, and the company is also exploring local manufacturing partners for the US market.
“We ventured out to Southeast Asia in 2016 but real globalisation for fashion only starts when we break into US and Europe,” Li said in an interview with Bloomberg News, “Now our going global is for real.”
It’s an outsized ambition for a Chinese brand with annual sales of roughly $1 billion, just a fraction of what Zara, H&M and Shein can earn, but Shein’s global success shows Chinese apparel makers can secure a foothold in Western fashion capitals.
Urban Revivo not only plans to add storefronts, but also factories near or in the overseas market it will sell. That underscores the urgency to build a parallel supply chain as part of Chinese companies’ global expansion plans in the face of punitive trade policies unleashed by US President Donald Trump.
Trump’s tariff blitz and decision to close the so-called “de minimis” import levy exemption loophole has already forced China-linked companies to re-map their supply chains.
Shein is said to have been asking some of its top suppliers to add production lines in Vietnam, Bloomberg reported earlier in February. Meanwhile, Temu, operated by Chinese tech giant PDD Holdings Inc., is also giving up substantial control of its Chinese supply chain to encourage merchants to ship goods to US warehouses.
Unlike Shein, whose success in cracking the Western market rests in part on selling online, China’s brick-and-mortar clothing retailers have so far largely failed to crack developed markets. Brands ranging from sportswear maker Li Ning Co. to down-jacket maker Bosideng International Holdings Ltd. have shut flagship stores in prime locations in major US and European cities after failing to win over local consumers.
Still, a stagnant demand at home has prompted Chinese apparel makers big and small to seek growth in oversea markets. Li said he realised years ago global expansion is a must as Urban Revivo saw limited room to grow in a fragmented China womenswear space, where no single brand commands a market share more than 2 percent.
Urban Revivo estimates that US and Europe could eventually account for at least 30 percent of total sales, if the company manages to penetrate further. Currently, it earns the majority of its revenue in China, as well as a small fraction from the dozens of stores already operating in Southeast Asia.
It’s easy for Chinese companies to dominate in the category of trendy clothing, according to Li, where low price trumps brand loyalty.
To beat global giants like Zara and H&M in western markets, Li said it will stick to the playbook that worked well in China: leveraging its mature supply chain and e-commerce expertise to respond to fickle consumer tastes in days, rather than the weeks and even months that it usually takes for international rivals.
By contrast, global fashion brands have struggled to survive the competition, price wars and weak consumer sentiment in China, with Zara and Uniqlo owner Fast Retailing Co. recently shutting under-performing stores. They also face risks from growing nationalism. H&M sales tumbled in 2021 after Chinese consumers called for a boycott as the brand said it won’t use cotton from Xinjiang.
“For Chinese firms, everyone tries their best to create something new,” said Li. “You can say they are forced to because of the fierce competition, but they are indeed more energetic and quick.”
While Urban Revivo’s clothes will sell at roughly four to five times higher than Shein’s ultra-cheap fashion, Li said moving production closer to overseas market will save logistics and tariffs cost and keep the brand competitive with similarly positioned rivals such as Zara. Local suppliers will churn out trendy items, while factories in China still make less time-sensitive ones.
“You might feel China’s a huge market, but if you have ambition, if you plan to go public, the market is not big enough,” Li said. “We believe there will be more globalised Chinese apparel brands in the next decade.”
By Bloomberg News
