American Apparel to open in Sanlitun
July 28th, 2008
The other day, I helped carry boxes at the new American Apparel (AA) at the Sanlitun Village. The new shop is scheduled to open before the Olympics along with another branch at the World Trade Center. These will be the first two AAs in China.
As with many middle-market foreign brands operating in China, their plan is for the brand to be slightly more upscale than it is in the US. This will be accomplished mainly through the locations and appearance of the shops.
The products will be exactly the same ones that sell in the US market. I don’t want to dwell on the funny contradiction of having “made in USA” clothing selling in China. Several media stories explore this and discuss AA store openings in China. Hopefully AA will help reduce the trade defecit. AA believes the origin of their products will have a certain caché with young urban people here in China.
Prices will be slightly above the US, but this is only because of import taxes and shipping costs and not because of an increase in profit margins. At first, it struck me as odd that foreign clothing brands sell their products at prices higher than those in the West in a country where the average wages are, very roughly, one-fifteenth of Western levels. The Western levels of pricing for fashion products serve to remind us of the income disparity here and the fact that what we often refer to as “the middle class” is actually an elite in comparison to the rest of the population.
Prices will be slightly above the US, but this is only because of import taxes and shipping costs and not because of an increase in profit margins. At first, it struck me as odd that foreign clothing brands sell their products at prices higher than those in the West in a country where the average wages are, very roughly, one-fifteenth of Western levels. The Western levels of pricing for fashion products serve to remind us of the income disparity here and the fact that what we often refer to as “the middle class” is actually an elite in comparison to the rest of the population. Urban white collars working for foreign firms and the children of government officials and entrepreneurs will have no trouble affording AA or luxury brands. But it is critical that the right techniques are used to attract the people who can pay. Prices so out of sync with the average salary are one reason why foreign fashion brands all must make some effort to pitch their brand as high-end.
The prices for the raglan tops, polo-type knit shirts, and hoodies are all above RMB 300 – in general around 50 dollars per piece. This unisex and super skinny cords and denim are RMB 700 - some people in Beijing still make only this much every month (and never consider shopping at AA or anywhere beyond the vegetable market). Sales will only be online. The styles remain the same from season to season, so stock apparently does not need to be moved as fast as in stores like H&M and Zara. It will be interesting to see how this somewhat “anti-trend” approach goes over with the fashion-obsessed locals.
The prices shouldn’t be a problem if the marketing and positioning are handled properly. Uniqlo, H&M and Zara on sale are at a somewhat lower pricepoint, so it will be important to ensure that consumer don’t see AA as in the same class as these fast fashion brands. Clearly, these brands (with perhaps the exception of Uniqlo) are much more tied to fashion whereas AA’s products are both more original and more versatile. Since it is sporty, AA may be viewed as more akin to Adidas, Nike, and Kappa, which tend to have a higher pricepoint. These sports brands succeed mainly because their products are covered with brandnames and logos.
Wearing an AA tee-shirt or hoodie will not proclaim anything haughty to peers. Rather than targeting status-conscious businesspeople and their spouses and lovers, AA will have to succeed with young people focused on improving their own style through using well-cut basics or the activist/socially conscious message. The former group seems easier, and AA does offer something they need. Solid, well-made basics without a brandname or some obnoxious Chinglish message are hard to find in China. Also, the slim fit is perfect for the Chinese physique.
I am anxious to see if the social message approach is attempted and if it gains any traction. One potentially hopeful sign is that the spoiled younger generation isstarting to care about social causes, much like American youngsters who are selfish and not overly concerned about family but quite interested in the broader world. Of course, there could be political repercussions for attempting to bring AA’s activist message to China in any form.
Three of the future sales staff and some college students came in for the day to fold the clothing that will be in the stock room. The three future staff members are all graduates of foreign universities – always in great demand here in China. All of the floor staff will be able to speak English. AA described this as their first requirement. They evidently want people who are cool and internationalized - not those who just got in from the provinces. Staff must also be attractive and have a sense of personal style. To attract this calibre of staff, they will be offering hourly pay that is somewhere around the US minimum wage. This is much higher than what the average sales assistant makes in China, and on par with entry-level pay in foreign companies. It seems that the sales staff will be from the same socio-economic group that will be shopping at AA.
Entry Filed under: Beijing Shopping
15 Comments Add your own
1. khavurta | July 28th, 2008 at 3:50 pm
This is very informative commentary. Please add pictures of shop when it is set up as “upscale.”
As far as China’s middle income people are concerned, aren’t things like housing and food a lower proportion of income than in the west and therefore China’s young spend a different proportion on ready to wear clothing and cosmetics than in the west?
2. stylites | July 29th, 2008 at 2:58 am
I’ll try to get some shots up when the store is completed.
That’s an interesting question about food and housing being a lower proportion of income. I don’t know if that is entirely correct. A lot of affluent younger people either live with their parents or in homes that were purchased by their parents. This certainly frees up income. However, renting would still take a large percentage of their income. It’s an interesting question that I should research more.
3. QQ | July 29th, 2008 at 4:01 am
i thought aa was made in china…
4. Micah Sittig | July 29th, 2008 at 12:40 pm
I’ll still be getting my hoodies and unbranded T-shirts at Uniqlo.
5. huiyan | July 30th, 2008 at 4:57 pm
i donot why the chinese word is coming out always. anyway, you blog is interesting.
6. Lifter | July 30th, 2008 at 5:27 pm
AA has some great items..I like the classic T-Shirts ant the Lame bikini’s for the girls.
BUT…Overall it is very cheaply made junk. You can find better durability elsewhere.
7. IO | July 31st, 2008 at 8:11 am
“The styles remain the same from season to season”
nope, they do introduce new styles on a regular basis in addition to mainstays.
i dont think it’s “cheaply made junk”, their seasonal items have great quality and the basic items have great fit.
Girls - get AA bras. i think that’ll be a good selling item for chinese girls, maybe finally there will be no more tacky looking padded ones.
8. stylites | July 31st, 2008 at 8:50 am
You’re right. They do introduce new styles. For example, a casual blazer will be coming out this fall. I need to modify that statement. It is merely in relation to other similarly priced high street shops that their styles remain relatively consistent. American Apparel does pride itself in maintaining the same cool pieces from season to season and not always offering the past styles on deep discount. Part of their aim is to offer sexy classics.
And I also agree with you that it would not qualify as “cheaply made junk” - certainly no more than any other clothing chain.
Lifter, what is the high quality chain?
9. Lifter | August 1st, 2008 at 11:58 pm
High quality chain in Bejing? Well we all know the answer to that.
My problem with AA is that their fabrics are the absolute minimal weight/gage possible. Their items are flimsy compared to other consumer chains like American Eagle Outfitters and they are generally more expensive. Looking at the web pages a plain cotton t-shirt is $17 at AA while a much more substantial t-shirt is $15 at AE etc.
I’m happy to see AA here…But I will be happier if we get an Abercrombie and Fitch or AE in Beijing.
10. stylites | August 2nd, 2008 at 2:37 am
Their PR people are already irritating me.
11. Shawn | August 5th, 2008 at 7:17 pm
Stylites - they’re (we’re) irritating you how? Let me know and I can try to fix it.
12. Roxanne Au | August 6th, 2008 at 3:53 am
Well…I’m from Guangzhou and it seems that there’s no AA here. So I’m not quite familiar with this brand. However, it gains certain recognition from you guys.
Actually i’m not the one who is quite keen on so-called American-made / European-made brands, although they DO own something that is worthy to learn from. My point is, what we Chinese should do is to develop our own brand in our own style. I once visited the Graduation Exhibition of the Guangzhou Academy of Fine Arts last summer and worked as volunteer in the 2007 Get-It-Louder exhibition (yet they are not all about clothes fashion design). I can see the Chinese have our own concept of design and their works, full of creativeness, are by no means worse than the imported products. Why are the Chinese authorities blind to all these???…
One can argue about that.
13. stylites | August 6th, 2008 at 4:51 am
@ Roxanne, Thanks for the thought provoking comments. In terms of fashion, China has a rich heritage, active present, and bright future. I don’t think anyone thinks that Chinese shouldn’t develop their own brands in their own style. This is already happening both in China and abroad, but it doesn’t mean American brands need to avoid China.
Still, your reaction needs to be considered by American Apparel as it crafts its marketing strategy for this country. The appeal of “made in the USA” might not be quite as great as it might think. The fact that even a piece like mine met with a slightly patriotic response illustrates this issue. China produces casual clothing very well. It could easily produce everything that American Apparel produces. The appeal of American Apparel is more the ethical business approach and the sexy marketing. I think the former could have definite appeal if customers are properly educated and the message is presented in an entirely unpolitical and unpatronizing manner. For the latter, they will have to think carefully. I have some ideas.
14. Roxanne Au | August 7th, 2008 at 2:29 am
Thank you for your response, Nels. ^ ^
So we should adjust our mind on this issue. What I emphasize most is that the authorities should spare more time and efforts, and money, to support our local products, to help the local arts flourish. I don’t mean we should avoid the foreign products. I’ve said that they Do own something worthy to learn from. Yet while drawing experience from them, we should also figure out which one should enjoy the priority to be promoted. Such concept of combination is the final way out. Maybe it is similar to your point, it “needs to be considered by AA as it crafts its marketing strategy for this country”. It also needs to be considered by our authorities.
15. LZ | August 10th, 2008 at 10:06 pm
For AA, it is not just “made in the USA”…it’s “made in the usa by workers who are paid a living wage and given subsidized health insurance”. I doubt american eagle and the like have factories that aren’t in southeast asia, and that employees are paid more than 2 cents/shirt. As a consumer, if you have the luxury of choice and are aware of the implications of that decision, and still buys that shirt from AE et al, the message you’re sending is “I know you mistreat your workers and I find nothing wrong with it”
Would AA’s “sweatshop free” slogan work in China? I don’t know
For what it’s worth, I am Chinese and I do not work for AA.
Leave a Comment
Some HTML allowed:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>
Trackback this post | Subscribe to the comments via RSS Feed