Fashioning a future in a fierce market

An International outdoor apparel exhibition in Beijing. According to the China Textile Commerce Association, China's outdoor apparel market has grown at an average annual rate of 47.33 percent from 2000 to 2010. [Photo/China Daily]

Local brand awareness is vital for VF's success

Walk through many malls in Shanghai and you will find, for example, a North Face store next to Columbia and Jack Wolfskin. Perhaps there will also be a Lee store and Gap, along with many local names nearby. For VF Corp, one of the largest US apparel manufacturers by sales revenue, competition in China is becoming fierce across its entire business spectrum.

So, as a profit-driven, shareholder-answering concern, the country may be a land of opportunity but it has to fight for its bit of what's available.

"Competition is increasing and we expect that will continue as others are looking for sources of growth, particularly international brands," said Aidan J. O'Meara, president of VF Asia-Pacific, who has been overseeing the Chinese market for more than five years.

As the owner of dozens of brands, including North Face, Lee, Wrangler and Timberland, VF sells a variety of clothes from jeans and outerwear to suits.

Taking just the outdoor category as an example, in which VF has strong brand awareness, there are 325 international outdoor labels and 229 domestic ones in China in 2010, according to China Outdoor Commerce Alliance. To make things more challenging, local manufacturers have become more and more competitive in recent years.

Aidan J. O'Meara

The Beijing-based outdoor brand Toread, with its more than 13-year history in China, has opened more than 1,000 stores around the nation. Its turnover reached 434 million yuan ($69.49 million) in 2010.

In the jeans sector, VF's Lee brand topped the ranks in terms of market share in China in 2012, according to China National Commercial Information Center. However, the local brand Meters/bonwe and Kipone also have broad market recognition among local customers. Fujian-based Kipone was one of the top 10 jeans brands measured by market share in 2012.

However, VF remains positive about the market and has introduced a rapid expansion plan to a broad customer base and increased market penetration around the nation. In the next five years, the company plans to add the number of stores and shops-in-shops to 6,000 from the current figure of about 2,300 and will have its brand introduced to smaller cities.

As part of the plan, VF will launch its largest distribution center in Kunshan, Suzhou city, in Jiangsu province, in 2013.

Looking forward, China is expected to contribute 60 percent of sales revenue to the company's Asia-Pacific region by 2017 compared with 50 percent to date.

O'Meara, 49, seems quite confident about achieving that goal, despite many experts warning there are too many apparel brands in the Chinese market and pointing to the fact that the nation's economic growth is cooling.

"We believe that China will remain a fast-growing economy which will become more consumption-driven in the future. We also believe in the strength and diversity of our brand portfolio with its proven relevance to Chinese customers," he said.

Under O'Meara's management, VF's China business reported more than 50 percent sales growth annually over the past five years. The number is projected to be 20 percent this year amid cooling economic growth and increasing competition.

O'Meara said the company plans to pay more attention to differentiating itself from others.

"When we say differentiate, we mean a high level of brand awareness compared with other brands and a functional differentiation," said O'Meara. "Differentiation means creating a distinctive personality."

As head of a US company wanting to expand in China, O'Meara recognizes how important it is to make the brand relevant to local people to expand the customer base.

Q+A: Aidan J. O'Meara