© Reuters. A sales agent works at Ordifen lingerie shop in the southern Chinese city of Shenzhen
By Farah Master HONG KONG (Reuters) – High-end underwear sales are outmatching China’s normally downbeat luxury market, and heating up competitors in between international brand names and local rivals wanting to go upmarket. U.S. brand Victoria’s Trick will open its very first store, and companies including Italy’s ultra-luxury La Perla and Germany’s Accomplishment are including stores and moving beyond China’s mega-cities to tap a lingerie market that has actually more than doubled in five years to $18 billion, according to Mintel Group. Chinese customer tastes are growing, women are more confident about purchasing for themselves and President Xi Jinping’s drive against conspicuous usage is likely diverting spending from fancy top quality bags and accessories to sports and ath-leisure wear and the more discreet underwear. “Luxury is … not about purchasing to display, it’s about buying products that make you feel excellent,” states Chiara Scaglia, La Perla’s Asia chief. China’s ladies’s underwear market is expected to have a retail value of $25 billion by next year – double that of the United States – and will grow to $33 billion by 2020, according to Euromonitor. Chinese companies such as Beijing Aimer, Maniform and Ordifen are likewise chasing after that cash, targeting higher-end consumers and raising their quality. “That indicates foreign brands will need to out-compete regional brands not just on quality, but likewise innovation,” stated Matthew Crabbe, director at Mintel. In the meantime, the marketplace is highly fragmented, with none of the leading firms having more than around a 3 percent share. International brand names see China as a top priority to assist strengthen overall sales provided a relatively bleak international outlook. La Perla, which offers bras priced around 2,000 yuan ($300), has 8 shops in China and strategies added outlets in Chengdu and Chongqing within the year. It likewise aims to open a males’s store in Beijing. “The perception of the underwear sector has actually altered,” Scaglia informed Reuters. “At the starting many people we spoke with were puzzled regarding why anyone needs to spend over $1,000 on panties for something no one sees.” EXPANDING FOOTPRINT Victoria’s Secret will open a 20,000 square foot (1,860 square meter) flagship shop in Shanghai this year, taking over a prime downtown location that used to house a Louis Vuitton store. “I believe it will reveal our arrival in China in a very substantial method, and should be the beginning of a massive company for us,” said Martin Waters, L Brands (NYSE:-RRB- International President. Triumph, which already has 1,000 China stores, prepares to open in five brand-new cities this year and up to 11 cities next year. Cosmo Girl (HK:-RRB-, a Chinese company that has actually focused on the mass market, selling bras from 50 yuan ($7.50), in 2014 bought Ordifen to increase its existence in the luxury market. “We want to gradually step into the high-end market,” stated Peter Lam, Cosmo Woman’s assistant chief financial officer. Gao Qiannan, a 22-year-old Shandong trainee who states she invests upwards of 1,500 yuan a year on lingerie, does not believe there’s a big distinction between Chinese and foreign brand names. “If I can purchase a domestic brand name, I will, but if I particularly like the worldwide brand’s design, I’ll get that,” she said. The international brands say they don’t provide products specifically for the Chinese market, though La Perla notes that some colors – red and infant pink – sell far better in Asia than in Europe or the United States. The Italian brand has likewise utilized Chinese supermodel Liu Wen in its campaigns. Japanese and South Korean brands are likewise growing in popularity in China. Yin Huijuan, 23, who spends 800 yuan ($120) on lingerie every 3 months, stated she prefers Japanese brands such as Wacoal and Narue. “I feel foreign brands’ style is more comprehensive and diversified, these are aspects where domestic brands fail,” she said. CONSUMER CAUTION, ONLINE COMPETITION Even in the underwear market, though, there are bumps. Cosmo Woman, which has 8,600 outlets including Ordifen’s 550 China stores, saw robust development in its mass market sales last year, but has warned about its profits for the very first half of this year, citing China’s slowing financial development, customer care and competing online sales. Hong Kong-listed Embry Holdings (HK:-RRB-, which owns the Embry Type lingerie brand, stated its group retail sales slipped by nearly a 5th in April-June on harder competition and the economy. Regardless of those bumps, the underwear sector keeps a strong appeal, stated Eugene Mak, an analyst at China Merchant Securities in Hong Kong, and firms like Cosmo Lady are still exceeding other clothing retailers. He forecasts the marketplace will strike a consolidation phase at a long time. “It’s an extremely young market, however in the near-term it’s going to be unpleasant,” he said.