Competition in China's underwear market fierce

Foreign lingerie brands adjust designs to cater to Chinese customers. [Photo/China Daily]

There's a fine, frilly line between what is underwear and what is lingerie. On one side there is simple functionality and comfort; on the other, glamor and effect. And each incorporates a good part of the other.

The Chinese, once very much on the basic side, have of late been striding confidently upmarket as women seek more in the way of sophistication and less in pure practical terms.

But for the makers and sellers of underwear, the changes in the market are anything but elegant or glamorous. Competition is fierce, It's a tough scene and very unbecoming.

As with so many products, foreign brands have the edge, but where before they used Chinese manufacturers, many have now moved to other Asian countries for production, as various costs in China increase.

Chinese companies are left fighting among themselves, struggling for brand identity. Factories that used to produce good-quality pieces cheaply for established brands, are registering their own, hoping for a bit of a lift on the domestic scene - but there are so many of them and still having to cater for demand for smart but basic underwear.

"Chinese manufacturers are very efficient and the quality of craftsmanship you get for the price is quite good," says Sergio Flores Bonamaso, general manager of Promise SA, a Spanish lingerie company that has been using Chinese manufacturers for more than 10 years.

"But our business here is somewhat difficult because there are so many brands, and everyone in the world wants to sell in China."

With a flagging market in Europe, last year Promise decided to enter the Chinese one, signing a deal with a new manufacturer.

Retail turnover in the Chinese underwear market rose 13 percent last year compared with the year before. Compared with outerwear and footwear, the demand for underwear was less affected by the economic downturn. This was because of comparatively affordable prices and the less discretionary nature of the product, says companiesandmarkets.com.

More than 40 percent of Chinese underwear customers are aged 25 to 44, an age group expecting higher income as the Chinese economic boom continues, according to a Global Underwear Market Report 2012 issued by US-based Research and Markets.

For the 44-year-old family-owned Promise, which had revenue of 20 million euros last year, China therefore is promising ground for further growth.

"We are growing at an average rate of 10 percent year-on-year," Bonamaso says. "The European market is slowing down, but the United States and China are catching up."

It has been a slow start, with China accounting for very little of the company's turnover. He reckons it will take another five years to cultivate the market.

"We have signed contracts with 15 provincial agents and have outlets in eight shopping malls in Shenzhen," he says.

Promise's product sets, which include lingerie, nightwear and shapewear, range in price from 300 yuan ($49) to 800 yuan.

Also last year, Lepoux, a French underwear brand, sashayed into the Chinese market through its agent, Hong Kong-based Glamorous Apparel Ltd.

Although the 30-year-old brand is positioned as a lower-end one in France, it is targeting middle to top-end buyers in China.

One set of nightwear or lingerie, which it says combines a touch of old Hollywood glamour with contemporary styling and fitting, costs from 400 yuan to 800 yuan.

"We have set up six selling points in Shenzhen, Guangzhou and Huizhou," says He Qiming, a regional manager for Glamorous Apparel.

"In 2012 we had income of about 3 million yuan from our three stores in the first year. This year, as we sped up opening new stores, the sales volume has doubled."

He says they will focus on opening specialty stores and placing goods in department stores in major cities such as Shanghai, Wuhan and Chongqing.

"To cater to the local market, we are also adjusting some of the designs according to Asian women's body characteristics."

Elle, another French lingerie brand, has been benefiting from the evolving tastes of Chinese women for much longer. It was brought to China by Guangzhou B. Lingerie Trading Co Ltd in 2006, though they had to wait a while for the market to change.

"From 2006 to 2008, we had consecutive negative growth because most Chinese women were tending to choose simple and plain underwear," says Shi Guoliang, franchise supervisor of the company. "Our products, with large areas of lace and bright colors, were regarded as too showy.

"But after gaining experience of the market and establishing a complete sales channel, we began to develop franchising around the country. Sales grew 30 percent a year after 2010. By the end of last year, we had opened 180 direct selling shops."