Five Lessons for the Chinese Fashion Industry from the French

Five Lessons for the Chinese
Fashion Industry from the French
By Stéphane J.G. Girod

Point of View

January 2012
Five Lessons for the Chinese Fashion Industry from the French




The young Chinese fashion industry has generated plenty of hype. But
the industry may not necessarily be heading for success. Its most pressing
challenge? To establish legitimacy in the eyes of consumers within as well
as outside China. To surmount this challenge, the industry can draw five
lessons from the French fashion industry, the most prestigious in the world
since its inception 350 years ago.
Stroll through a large city in China or chat                has emerged from an unfortunate set           year and employs 150,000 people.3 France
with Chinese tourists in Paris or Milan,                    of dynamics: Talented Chinese designers       is the world leader in the three most
and you will see that Chinese consumers,                    who lack the financial backing and time       creative segments of this sector: Perfumes
particularly younger ones, are excited by                   needed to find their style join mainstream    and Cosmetics, Haute Couture and Haute
fashion. They aspire to Western luxury                      fast-fashion companies to survive. These      Joaillerie (highly exclusive jewelry). These
labels especially. And their hunger for                     companies show little interest in nurturing   segments generate impressive growth even
fashion is growing. Analysts report that                    fashion creativity for the long term and      during economic slowdowns. They account
China will become the largest luxury                        merely reproduce trends coming from the       for 43 percent of the total advertising
market by 2020, with Chinese consumers                      West.2 As a result, consumers—in China and    expenditures of French consumer goods
buying more than 44 percent of the world’s                  elsewhere—ignore Chinese fashion brands.      industries.4 Thus, they contribute to the
luxury goods—up from 15 percent today.1                     This situation does little to brush off the   international attractiveness of other
                                                            image of poor quality sometimes associated    sectors in France’s economy, such as
There’s no doubt that China is the leading                  with “made in China” textile goods.           Gastronomy and Wine, Interior Design
textile exporter in the world. Chinese                                                                    and Decoration, and Tourism.
fashion designers are proliferating, and                    Coco Chanel captured the legitimacy
Beijing and Shanghai host dynamic                           trap in one of her famous aphorisms:          Arguably the world leader in fashion over
fashion weeks. Yet success may elude this                   “For a low couture to exist, there needs      the past 350 years, French fashion has
young industry if it cannot climb out of                    to be a high one first.” Chanel had it        built its success—and its legitimacy in the
a deadly trap: failure to gain legitimacy                   right: Legitimacy comes from the creative,    eyes of consumers everywhere—on a set of
in domestic as well as international                        high end of the fashion industry and          potent practices. We argue that the young
customers’ eyes. The legitimacy trap                        trickles down to the fast-fashion end—        Chinese fashion industry can learn five
                                                            not the other way around. And creative        lessons from the French. If applied, Chinese
                                                            fashion requires time and specific            fashion could beat the legitimacy trap and
                                                            conditions. How might the Chinese             both industries would benefit.
                                                            fashion industry escape the legitimacy
                                                            trap? A good first step is to draw lessons
                                                            from the French fashion industry.

                                                            In France, fashion contributes to a large
                                                            and critical part of the national economy:
                                                            the Lifestyle and Pleasure sector. Fasion
                                                            directly generates 35 billion in sales each




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Five Lessons for the Chinese Fashion Industry from the French




Lesson 1
Nurture avant-garde creativity, and the mass market—and legitimacy—will follow
French fashion got its legitimacy from the                  Twice a year, the “Grands Couturiers” define     consumers’ eyes. Some players in these
high-end, highly creative segment first.                    the next season’s trends, which inspire          segments have become European and even
Indeed, the industry took off thanks to a                   ready-to-wear designers and fast-fashion         international market leaders. For example,
rule that it still applies today: Provide the               companies worldwide. The Haute Couture           boasting sales of 1.1 billion in 2010 in
best quality, an aura of exclusiveness and                  label is registered and legally protected        ready-to-wear and underwear, Etam
unparalleled customer service.                              internationally; only members of the             has 4,200 stores in 40 countries. Three
                                                            Fédération Française de la Haute Couture         thousand of these stores are in China,
With its roots in the seventeenth century,                  can use it. Grands Couturiers must comply        where Etam plays on its French origin.
French fashion has had plenty of time                       with qualitative and quantitative criteria,
to master these mandates. Consider:                         hand-produce their collections in-house          Without these segments, there wouldn’t be
When Louis XIV and his prime minister,                      and present their collections in Paris.          a French fashion industry; there would only
Jean Baptiste Colbert, established several                                                                   be French Haute Couture. Chinese fashion
royal manufactures of precious fabrics in                   To find suppliers, highly creative designers     companies could learn from this aspect of
the 1670s, their goal was to strengthen                     based in Paris increasingly looked to France’s   French fashion’s history by reversing their
French luxury exports. As Colbert put it,                   other regions, where smaller, specialized        priorities. Instead of focusing on fast-
“Fashion is to France what Peru’s goldmines                 suppliers, world-class laboratories and large    fashion, which curtails the development of
are to Spain.”5 They succeeded so well                      international fashion companies emerged.         a style, Chinese entrepreneurs should focus
that a network of avant-garde designers                     Today, these regions employ as much as           on the higher end of the fashion market
flourished in Paris over the next centuries.                60 percent of the industry’s workforce and       and encourage the emergence of creative,
Highly creative fashion then became                         serve as essential innovation centers to the     original styles that will attract consumers’
embodied in Haute Couture—which is to                       French fashion industry.                         and journalist’s attention everywhere.
apparel what R&D is to cosmetics. Put
simply, Haute Couture is the research                       The brand management capabilities,
engine of the world’s fashion industry.                     wealth and entrepreneurial talent fueling
                                                            Haute Couture in France gradually spilled
                                                            over to mass-market fashion segments,
                                                            stimulating the emergence of strong brands
                                                            that gained legitimacy for the industry in




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Five Lessons for the Chinese Fashion Industry from the French




Lesson 2
Find financial “angels” with a long-term mindset
Fashion-minded financial “angels” manage                    A long-term mindset has enabled               China’s fashion industry through means such
their ventures with profitability in mind.                  angels to incubate future star brands         as tax incentives. Young designers may also
But they also understand that fashion is                    by nurturing their young, promising           consider partnering with business associates
connected to art and cultural identity, so                  designers. They provide designers with        who can set up credible business plans to
they stay committed for the long haul.                      ample autonomy, time and funding to           attract financial angels. Schools of fashion
For instance, the Wertheimer family has                     develop their style. They also impart         design may also wish to step up their game
nurtured Chanel since the 1920s, and                        critical management know-how. LVMH,           to attract the attention of financial angels.
the Hermès family has managed the                           for instance, made a smart bet when
eponymous firm for generations. Examples                    it appointed the promising but still
abound outside the luxury segment, too.                     little known John Galliano as Hubert de
                                                            Givenchy’s direct successor in 1995.

                                                            If such angels are scarce in China, the
                                                            government may want to consider
                                                            encouraging their involvement in




Lesson 3
Open up to foreign direct investment
French fashion has benefited hugely from                    Wang appointed talented designer Alber        association with the Hermès brand. Hermès
France’s openness to foreign investors,                     Elbaz and granted autonomy to Lanvin’s        will benefit in the long run too. By building
who have brought knowledge, talent                          management and creative teams,7 moves         on its core image of exclusive quality and
and capital to small companies that                         that restored Lanvin’s brand power.           design, it will attract not only consumers
later became international successes.                                                                     who favor French style but also those
For instance, when Germany’s Triumph                        The Chinese fashion industry has only         drawn to Asian style.
acquired HOM in Marseille in 1986, it                       recently begun benefiting from FDI. Hermès’
transformed it into an international leader                 investment in Shang Xia is one example.       To implement this lesson, young Chinese
in men’s underwear design.6 Foreign                         According to its website, Shang Xia is a      fashion designers and fashion design schools
investors have also turned ailing French                    contemporary brand founded in 2008 “to        should reach out to foreign investors. French
companies around. Consider Lanvin,                          bring the excellence of Chinese and other     fashion players that are now commercially
acquired by Ms. Shaw-Lan Wang in 2001.                      Asian craftsmanship into contemporary         active in China should use their presence
                                                            lifestyle through the encounter of heritage   in China to spot promising talent and back
                                                            and innovation.” Regarded as one of a         their ventures. They too would gain in the
                                                            handful of firms so far that could satisfy    rise of the Chinese fashion industry.
                                                            Chinese consumers’ aspirations for social
                                                            status and become an international hit,
                                                            Shang Xia gains crucial advantages from its




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Five Lessons for the Chinese Fashion Industry from the French




Lesson 4
Import and export top talent
An equal reliance on national as well as                    Consider how Paris put Japanese fashion on     on to produce successful companies whose
foreign talent has contributed to French                    the international map and how the industry     inspiration came from Japanese minimalism
fashion’s enduring attractiveness. The                      in both Japan and France benefited. When       and high-tech textile innovation.
industry owes its success as much to the                    Kenzo and Issey Miyake arrived in Paris in
French designers it has recruited as it does                the 1960s, Japanese fashion was unknown.       If Chinese designers gained a foothold
to foreign but Francophile designers who,                   The two designers first worked for several     in Paris by acquiring similar experience,
stimulated by intense competition, built                    years in Parisian fashion houses before        the best of them may be able to use the
successful careers in France. In fact, Paris is             creating their own brands in Paris in the      Haute Couture label—which could help the
such an alluring international platform that                1970s. They were soon followed by Hanae        industry gain legitimacy among Chinese
foreign designers accounted for about 30                    Mori, who made major contributions to          consumers. French players should actively
of the 92 shows in the latest Mode à Paris                  Haute Couture. When Yoji Yamamoto              encourage the emergence of Chinese talent
(women’s fashion week).8                                    and Rei Kawakubo (Comme des Garçons)           in Paris. The Chinese industry could further
                                                            achieved international fame in 1981            strengthen its legitimacy by drawing skilled
                                                            after presenting their collections in Paris,   foreign designers to China.
                                                            Japanese fashion’s international identity
                                                            was forged. French fashion won, too: Paris
                                                            associated itself with another avant-garde
                                                            movement, which further strengthened
                                                            its international attractiveness. Equally
                                                            important, France’s fashion industry went




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Five Lessons for the Chinese Fashion Industry from the French




Lesson 5
Build an institutional ecosystem
French fashion acquired and sustained                       worldwide. French fashion owes much            counterfeiting. This could help Chinese
its international legitimacy thanks to                      to foreign media too, including Harper’s       brands protect their intellectual property,
systematic cooperation between industry                     Bazaar’s popularizing of Christian Dior’s      which in turn would enable them to sustain
players, the media, non-governmental                        “New Look” in America after 1947.9             their cachet and attract angel investors.
institutions and the French state. For
example, media in France played a critical                  Chinese fashion players could similarly        Connections between French fashion firms
role in catalyzing excitement around                        leverage the media to educate Chinese          and fashion design schools (e.g., ESMOD),
French fashion throughout the country but                   consumers about fashion and shape their        creative management schools (e.g., IFM)
also in Europe and America. As early as the                 perception of Chinese fashion. Chinese         and business schools located in France and
late eighteenth century and until World                     media should also make sure that emerging      overseas have further benefited France’s
War II, magazines such as La Mésangère                      brands such as Shang Xia and Shanghai          fashion industry. This ecosystem also
became the standard-bearers of French                       Tang are not merely perceived as targeting     extends to the French state. For example, in
fashion, owing to their sophisticated                       foreign consumers.                             early 2011, the Ministry of Industry set up
fashion prints, detailed account of                                                                        a strategic committee, chaired by Dior and
seasonal trends and entertaining reviews                    Cooperation between fashion houses within      Hermes’ CEOs. The committee’s goals are to
of Parisian happenings. Since then, media                   professional associations has been equally     consolidate the value of “made in France”
powerhouses such as Elle, Marie-Claire                      crucial. Consider the Comité Colbert.          and to pilot a “bank of Fashion” that will
and Fashion TV have continued this work                     Founded in 1954, the association gathers       grant preferential financial conditions to
                                                            the 75 most prestigious French companies       emerging young designers and fashion
                                                            in the luxury sector and a few international   entrepreneurs. Players in Chinese fashion
                                                            associated companies.10 It also organizes      could foster similar connections and in
                                                            joint promotional events around the            particular reflect on the potential future
                                                            world, strives to combat counterfeiting        value of a “made in China” label.
                                                            and identifies luxury e-commerce best
                                                            practices. Chinese professional associations
                                                            could play a similar role; for example,
                                                            by lobbying Chinese authorities to fight




Which fashion future for China?
The young Chinese fashion industry faces                    must patiently interweave the strands          beneficial relationships with a diversity
a promising but difficult road ahead.                       of legitimacy to create a fabric that          of ecosystem players. Close cooperation
At present, its challenge is to establish                   captures Chinese fashion’s unique identity.    with the French fashion industry would
its legitimacy, not least in Chinese                        Drawing lessons from French fashion’s          be mutually beneficial.
consumers’ eyes. Focusing on fast results                   history could help the Chinese industry
and fast fashion will not help industry                     accomplish this—by nurturing avant-garde
leaders reach this goal. Instead, they                      creativity, attracting domestic and foreign
                                                            talent and investors willing to commit for
                                                            the long term, and establishing mutually




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Five Lessons for the Chinese Fashion Industry from the French




About the Author                                            About the Accenture Institute                Notes
                                                                                                         1 “China to Become the World’s Largest Market for
                                                            for High Performance                            Luxury Goods over the Next decade,” CSLA
Stéphane J.G. Girod, Ph.D. (stephane.                                                                       (February 2, 2011). https://www.clsa.com/about-clsa/
girod@accenture.com) is a research fellow                   The Accenture Institute for High                media-centre/2011-media-releases/china-to-
                                                                                                            become-the-worlds-largest-market-for-luxury-goods.php
with the Accenture Institute for High                       Performance creates strategic insights       2 “Will Chinese Designers Get Left Behind in China’s
Performance. He publishes in the field of                   into key management issues and                  Fashion Boom?” CNN (September 29, 2011). http://cnn.
international strategy and organization.                    macroeconomic and political trends              com/2011/09/15living/china-fashion-designers/index.html
                                                                                                         3 Ministère des Affaires Etrangères. http://www.diplomatie.
He has six years’ professional experience in                through original research and analysis.
                                                                                                            gouv.fr/fr/france_829/economie_19084/index.html
the fashion industry. He is based in London.                Its management researchers combine           4. “La Mode en Chiffres,” Ministère de l’Economie,
                                                            world-class reputations with Accenture’s        des Finances et de l’Industrie, Services des Etudes
                                                            extensive consulting, technology and            et des Statistiques Industrielles (Sessi). http://www.insee.
                                                                                                            fr/sessi/publications/dossiers_sect/pdf/mode2005.pdf
                                                            outsourcing experience to conduct            5. http://www.citations.com/citations-motcle-commerce/
                                                            innovative research and analysis into           jean-baptiste-colbert/commerce-la-mode-est-pour-
                                                            how organizations become and remain             la-france-ce-que-les-mines-du-perou-sont-pour-l-
                                                                                                            espagne--94-353410--.htm
                                                            high-performance businesses.                 6 “HOM, Nouveau Siège Social et Clarification de l’Offre,”
                                                                                                            Le Journal des Entreprises (June 11, 2009). http://www.
                                                                                                            lejournaldesentreprises.com/editions/13/actualite/
                                                            About Accenture                                 entreprise-du-mois/hom-nouveau-siege-social-et-clarifi-
                                                                                                            cation-de-l-offre-06-11-2009-79941.php
                                                                                                         7 “Interview de Thierry Andretta, CEO de Lanvin,” Fashion
                                                            Accenture is a global management                Daily News (October 21, 2011).http://www.fashion-daily-
                                                            consulting, technology services and             news.com/interview/thierry-andretta-ceo-de-lanvin.html
                                                                                                         8 This excludes the Italian houses owned by French groups
                                                            outsourcing company. Committed                  that are still Italian operators.
                                                            to delivering innovation, Accenture          9 “Le Luxe: Production et Services,” Conseil Economique et
                                                            collaborates with its clients to help them      Social (2008). http://www.conseil-economique-et-social.
                                                                                                            fr/rapport/doclon/08022002.pdf
                                                            become high-performance businesses and       10 Comité Colbert: http://www.comitecolbert.com/internet/
                                                            governments. With deep industry and             index.php?option=com_content&task=view&id=159&Ite
                                                            business process expertise, broad global        mid=112&lang=en
                                                            resources and a proven track record,
                                                            Accenture can mobilize the right people,
                                                            skills and technologies to help clients
                                                            improve their performance. With more
                                                            than 236,000 people in more than
                                                            120 countries, the company generated
                                                            net revenues of US$25.5 billion for the
                                                            fiscal year ended Aug. 31, 2011. Its
                                                            home page is www.accenture.com.




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