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Monday night, Beijing was treated to a quiet celebration of style in the form of a Calvin Klein Collection party. Over the past few years, Calvin Klein Underwear in China has been a growing source of profit for the Warnaco Group (recently bought by PVH Corporation, which owns Calvin Klein Collection), and the brand is optimistic about its growth in 2013. According to Women’s Wear Daily, the company expects China to become the number one market for its underwear and jeans by next year.
This claim stands in stark contrast to the reality that is currently facing many expensive luxury brands in China. Burberry, for example, recently reported that its sales figures for 2012 were far lower than expected, despite massive expansion in Asia. The British brand was looking at 30% growth only to see that figure drop dramatically with investors fleeing the scene. Hugo Boss and Louis Vuitton, which were some of the earliest luxury brands to expand into the promising Chinese market, have watched growth nearly flatline even through aggressive investment and expansion.
Some economists have claimed that the stumbling of these luxury brands is due to the recent economic slow-down in China. This has led to concerns that perhaps expansion into China is not the sure bet it was several years ago. Although the Chinese economy is indeed slowing down and affecting luxury sales, consumer research group Euromonitor claims that China will still become the second biggest luxury market by 2017. Monday night’s Calvin Klein show was humble, but judging by the brand’s confident talk, the company is still expecting a big win from Calvin Klein Underwear in China.
Of course, conventional wisdom has suggested that the enormous counterfeit industry in China is hurting big-name brands. At one point, it was considered savvy among Chinese shoppers to purchase a flashy bag that looks just like a Louis Vuitton at a fraction of the price. Now, however, there are signs that this trend is shifting. In an article comparing recent statistics from Bain and McKinsey, The Economist argued that demand for luxury goods was still growing while willingness to settle for a replica was decreasing rapidly.
Classically, China has pursued luxury goods for status reasons. Most Chinese shoppers preferred to purchase high-priced hand bags because of the implications of the Burberry Check, not because the purse was necessarily a well-made item. It was more acceptable to buy a counterfeit bag because quality wasn’t as important to buyers as the brandname.
According to The Wall Street Journal, consumer tastes in China are beginning to mature. A shift in focus from flashy logos to quality has begun, and many of the brands that were “there first” on the Chinese market are suffering from overexposure. When Chinese Burberry stores proudly streamed Christopher Bailey’s collection live from London Fashion week, Beijing consumers saw the glitz and glamour that had been so popular, but they were no longer impressed.
When you look at the big sellers and styles of the brands that are suddenly doing poorly in China (for example: Burberry scarves and Louis Vuitton bags), you notice that they are covered in logos and are instantly recognizable. Meanwhile, brands that have done better this year have taken a more subtle approach in Asia. Armani has toned down its branding, even as the company expands. Gucci has emphasized understated materials rather than the logo heavy hand bags that used to be a bigger seller.
Finally, you see Calvin Klein Underwear in China. Rather than pushing out glitzy images of the CK logo, the brand enjoyed a quiet evening focused on the quality and elegance of the newest ready-to-wear offerings. Six years ago, when Chinese consumers wanted bling, the Calvin Klein brand was a tough sell. Now, however, Chinese spenders seem to be just as eager to part with their cash, but are more interested in subtler, classic pieces. Luckily for Calvin Klein, classic underwear is right up the brand’s alley.
Check out the gallery below to see photos from the party thrown by Calvin Klein. Guests were treated to a dinner and a special performance by Kimbra.
Photo Credit: Women’s Wear Daily