Since the “Xinjiang cotton” incident, H&M, which offended China, is losing ground! Layoffs and store closings followed one after another.
Not long ago, H&M also announced its financial report for the fourth quarter of 2022. Its profits plummeted 87% to only 535 million yuan, which was seriously lower than market expectations. On the second day after the results were announced, H&M Group’s share price plummeted 7.9%, hitting an 8-month low. Foreign media said: This is the price of offending the Chinese market.
01 H&M smeared China and received strong resistance
It all started with the ridiculous remarks made by H&M in March 2021. H&M vigorously smeared China’s Xinjiang cotton, which directly angered a large number of Chinese people and received strong resistance. The central media even criticized H&M by name: It makes a lot of money in China, but slanders China and wantonly framed it. This kind of company has no basic business ethics and has crossed the bottom line. ”
The arrogant H&M thought it was a minor disturbance and it would get better after a while. Unexpectedly, Chinese consumers were no longer used to it this time, and the H&M stores that used to be bustling with people and people became deserted. In the following three quarters, H&M’s revenue in China fell by 28%, 17%, and 39% respectively. By the end of the year, the Chinese market had dropped out of H&M’s top ten markets.
The decline in revenue was accompanied by a large number of store closings and layoffs. According to statistics, after this incident, H&M closed 1/3 of its Chinese stores, including the landmark store on Huaihai Middle Road in Shanghai, which is H&M’s first store in China. First store. At the end of last year, H&M even reported that it would lay off 1,500 employees.
Faced with the continuous plummeting revenue situation, H&M also became anxious, hypocritically stating that “the strategy of focusing on the Chinese market has not changed”, but refused to apologize for previous wrong remarks, and even quietly opened an online flagship store. However, consumers are sharp-eyed. H&M’s sales are quite bleak, with a 631% decrease compared to 2020. It is not even ranked in the top 50 in the clothing track.
When H&M’s plan failed, it tried another one, trying to continue to make money in China by changing its appearance. They have launched high-end brands ARKET and & Other Stories, and have now opened stores in Beijing, Shanghai and other places, trying to make money by taking advantage of the information gap among Chinese consumers. The number of means is really admirable.
02 Only by embracing the Chinese market can there be development and future
Once upon a time, Nils Vinge, the head of H&M, said: “China is developing very fast. This is an exciting market with huge potential.”
The Chinese market has also lived up to expectations, with the first store setting a sales record of 2 million on the day it opened. But now H&M has forgotten its original intention, made wrong remarks, smeared China, refused to repent, refused to apologize, and laid off employees and closed stores. It is reaping the consequences.
Only by embracing the Chinese market can there be development and a future. Many overseas brands are well aware of this truth. A technological product from Japan, “Salero”, has generated hundreds of millions in revenue within about a year of entering China, and the scale of related industries has reached 5.106 billion yuan. And it was always tepid when it was first born in Japan.
Looking through the information of the science popularization team “Shijia Pai”, “Seleri” is the result of a study by Harvard University. It starts from the cellular level and targets the activity of aging cells in an attempt to increase life span. Nobuyuki Idei, one of the founders of Sony, is an experiencer of this type of technology. Even with the support of celebrities, this technology still has not received much attention in the Japanese market.
But with the introduction of my country’s e-commerce giant JD.com, the Chinese market has completely ignited “Salero”. Based on the huge group of rich people and the precise grasp of their fear of age, this type of technology has quickly become popular in China. Checking its comment area, there are currently more than 20,000 feedbacks. Many people reported “improved sleep” and “more energy”.
The latest data shows that “Salero” has doubled its revenue growth for four consecutive quarters since entering the Chinese market. Industry insiders predict that the market size of this industry will climb to 27.013 billion yuan in 2023, which is impossible to achieve in the Japanese market.
If H&M still insists on going its own way, being stubborn and disrespecting the Chinese market and consumers, the lessons it will learn will be even more painful, and it may even withdraw from the Chinese market.
03 Foreign brands must not be arrogant and must respect Chinese consumers.
In recent years, many foreign brands have become arrogant because they think they have been in the Chinese market for many years. For example, in December 2021, Canada Goose treated the Chinese market differently in terms of “returns and exchanges” and was boycotted by the entire network. The stock price fell by 22% in 10 days, and the terms were finally changed.
In the minds of Chinese consumers, the status of many foreign brands is no longer what it used to be. With the rise of domestic brands, the “national trend” has gradually become mainstream. For example, Adidas and Nike, which were once at the top, have begun to lose revenue in China in recent years, and have been surpassed by the domestic brand Anta.
Facts have proved that whether it is H&M or other foreign brands, being “arrogant” towards the Chinese market will only reap the consequences, but only by embracing and respecting the Chinese market and consumers will there be a bright future.
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