Luxury brands have never had it this bad in China. For most of them, China is no longer the cash cow it once was. Multiple reports suggest that the luxury retail business in China is shrinking. The top 10 global luxury brands as per Millward Brown’s latest BrandZ report—a list that includes names like Louis Vuitton, Hermes, Gucci and Chanel—saw 6% of their total brand valuation evaporate in 2015, and China is partly to be blamed. Already the likes of Louis Vuitton, Armani, Prada and Chanel have started shuttering stores in China. But all is not lost and luxury can still make a comeback in China.
Japanese clothing retailer Uniqlo has quickly found huge popularity in China based on an ethos of high quality at affordable prices. It has been steadily building its presence in China over the last decade, and now has ambitious plans to accelerate its growth, most notably through a bold expansion in its number of shops. That might seem sensible given its growing popularity—revenue soared by 21% between August 2014 and 2015 across Uniqlo globally, largely driven by an increase in Greater China revenues of 46% and operating profit of 66%. But is it now at risk of over-reaching itself, particularly given the slowing Chinese economy?
Yum Brands, owner of brands like KFC, Pizza Hut and Taco Bell, has been on a scary roller coaster ride in China. The highs were really high—the Chinese loved KFC so much that China became Yum’s largest market in terms of profits globally. Things were so good that Yum even ventured into uncharted territory: a western brand offering Chinese food to Chinese customers. But 2012 onwards Yum China has been running into trouble. The troubles have grown so big that the parent company finally succumbed to investor pressure and split the China operations into a separate company. Post the split, can Yum China get its mojo back?
An underdog in an industry dominated by giants, sportswear brand Under Armour recently pulled off a growth miracle by increasing its quarterly revenues more than 20% in 21 consecutive quarters. The 19-year-old Baltimore, MD-based company surpassed its German competitor Adidas last year in sales in the US, only trailing Nike in the world’s largest sportswear market. And now Under Armour trying to replicate its success in global markets, especially China. What does it have going for it in the world’s second-largest consumer market?
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