To identify the major challenges faced by the western fashion luxury brands in china
Executive summary
The booming economy of China has attracted fashion luxury firms from the west. Many luxury fashion brands such as Chanel, Giorgio Armani, Christian Dior, Gucci and many more have been successful operating in the Chinese market.
As the luxury fashion brands perceive ample of growth opportunity towards the growing fashion-conscious consumer base, the rapid economic growth also presents numerous challenges for western firms. This study describes the major challenges faced by the Western luxury fashion brands in Chinese market. The study analyses the impact of cultural difference as a difficulty for the western luxury fashion firms in this foreign market and also identifies the challenges related to characteristic of luxury products and other major challenges.
The results indicated that impact of culture is reflected in difficulty from workplace etiquettes, organizational hierarchy and related organizations factors. The results also recognized the issue of protection of intellectual property, problem of counterfeit products and luxury good characteristic of scarcity, limitedness and rarity pose challenges that are faced by Western luxury fashion firms in Chinese market. Based on the findings, recommendations are made for overcoming the major challenges to successfully establish western luxury fashion brands in China.
Keywords: western fashion luxury brands, challenges, china
The fashion industry business landscape is highly demanding and competitive. In this fast-paced fashion industry with changing consumer preference, it is important for the high-end retailer to understand the opportunities and challenges to drive business growth and expansion. The luxury industry forms an oligopolistic market characteristic with few numbers of players/companies but is high in terms of its profits, sales and influence on its consumers. According to Transparency Market Research (2017), in 2013, the global luxury goods market accounted for US$296.15 billion and is estimated to reach US$374.85 billion by year 2020. The global luxury market is expected to grow at the CGAR rate of 3.4 percent from 2014 to 2020. This growth is contributed to the strong economies of developed markets in US, Japan, etc. and development of promising market such as China, Brazil, India, etc., and increase in travel retail industry. The China market has been always a preferred market for the foreign players for the luxury segment owing to huge growth potential in the market for brands and new products. According to Bain & Company, a global management consultancy, there are more than 350 million global customers for luxury goods and out of this; 50 million are Chinese consumers (Hsu et al., 2014). This indicates a high potential in the china markets, but it also carries hidden risk due to cultural, geopolitical, currency fluctuations and economic differences to expand market in Chinese territory. On the positive side, the demands for western luxury goods in the consumer market in China is driven by growth factors such as rise in disposable income, growing middle class, increase spending on luxury products, growing no. of credit cards users and travelling trend in Chinese. The Chinese market is dominant by the western luxury organizations (Sun et al., 2014). However, the business environment for global luxury players in the fashion industry is challenging in the lucrative market of China. The international brands face challenges due to fast changing consumer preferences, problems associated with intellectual property cost of skilled labor, administration difficulties, and uneven enforcement of laws, price difference and high competition from Chinese organizations. The uncertainty in the political and economic factors in Chinese market poses a serious blend of challenges for the foreign business such as western fashion luxury (Wang et al., 2014). The international fashion brands are also under immense pressure of changing customer preferences and industry and environmental regulations and cultural differences to operate or expand business in promising market especially 2-tier cities in China.
One of the challenges faced by the foreign luxury brands to prosper in the Chinese market is problem associated with the intellectual property. The violation of the intellectual property is luxury fashion is related to trademark and counterfeits. These problems have accelerated along with sale of fake brands which has negatively affected the brand perception of a luxury fashion brand in the Chinese market. According to Sun et al. (2014), the intellectual property scenario in the China has remained unchanged and unaddressed for the foreign high-end retailers. It can be understood that in present scenario the potential foreign luxury brands to enter China market would face challenge of intellectual property. There is also a high demand of skilled and qualified workers which is not matching the supply or availability in China (Chatterjee et al., 2014). This is a challenge for the western luxury firms who want to expand its business operations from tier 1 to tier 2 cities in China. The high-end luxury retailers require qualified workers handle expansion operations and maintain the brand identity. The lack of qualified workforce is a difficult for the luxury brands to manage consistent standard of customer service across its various outlets. This is leading to high cost in arranging for skilled workers from the home country or other neighboring countries to manage business expansion in Chinese markets. This also leads to a related problem to find talented pool of capable individual/employees. This is also taking considerable time of western luxury organization in its recruitment and hiring process and creating a need for a stronger investment in building workforce capabilities through training initiatives and other developmental programs. Thus, the cost of skilled workforce is an ongoing challenge for the fashion industry. At the same time, counterfeit is also challenging factor for the western luxury organization. It is because intellectual property problem is the high issue in the Chinese market and the success of companies is largely depending upon the brand perception. Thus, fake brands dilute the image of company. Moreover, trust factor is also considered as a huge issue for the companies. It is estimated that Chinese takes long time to develop the faith on particular brand. For them, quality, features, affordability and innovation is the loyal brand that wins their trust. So, it becomes challenging for the fashion industry to incorporating these all element into their product line.
It is essential to investigate the challenges in the fashion industry as these challenges can have a negative impact on the business performance and expansion in Chinese cities and may affect the business profitability and brand loyalty. The challenges need to be addressed as it can influence the factors which are critical for the success of western organization in foreign markets. This research report studies the main challenges in the luxury fashion industry in China. The purpose of the research study is to identify and discuss the key challenges faced by the western luxury organizations in China in the context of the fashion industry.
1.2 Aim & Objectives
The main aim of the research is to identify the major challenges faced by the western luxury organizations in fashion industry in China. In order to achieve this aim, the following research objectives of the research are:
- To evaluate the impact of culture differences on western luxury fashion organizations in China
- To identify the challenges and issues of Western luxury fashion organizations in China
- To suggest strategies for overcoming the challenges to establishing business in China
Following research question are explored from this research study:
- What are the major challenges for western luxury fashion organizations in China?
- What are main culture difference and its impact on western luxury fashion organizations in China?
- How western luxury fashion organizations can establish its business in China effectively?
1.4 Rationale of this Research
In this research, the researcher is motivated by the market situation of the China, in which the researcher wants to identify the issues and challenges that are faced by the global fashion luxury brands. In this, the researcher can provide different challenges to the fashion luxury brands and the firm can solve the problems after the identification. The researcher finds out the different problems of the China market that are facing by the global fashion luxury brands and how they can resolve the problems to develop the business in the same market (Lazaroiu, 2015). At the same time, the researcher also gets opportunity to increase their skills and develop the understanding about the research topic. This opportunity also motivates the researcher because it can provide the better future in the marketing research of the any organisation. This research can also develop the communication skill of the researcher because he can discuss about the same topic with other. The researcher finds out the different articles, journals and academic research that can help the researcher to develop a future in the research analysis.
The researcher enjoys the opportunity to work with the marketing research because it provides the sharpness to the communication skill and provides the practical experience in front of the audiences. This think also motivates the researcher to carry out the research in a systematic manner (Li and Cai, 2012). In addition to this, this research also provides the different market strategy to the researcher that will help the firm to overcome issues that are facing by the firm in the market. The researcher understands the different marketing strategies that can be use by the fashion luxury brands to solve the problem that are facing by the firm in the market. Moreover, the researcher is also motivated by the development of the understanding related with the overview of the luxury fashion market and how it is affected with the market of the China. The researcher also develops their understanding by investigating the impact of the cultural differentiation and how the firm can face the problem due to different culture (Raub and Liao, 2012). This research motivates the researcher because in this research some action plans are provided to remove the different problems of the luxury fashion brand in China.
On the other side, the researcher is also encouraged for the research because there are a number of external sources that helps to provide the consideration in the education and provides the guidance to complete the education course effusively. In addition, the research can find many new learning thinks and different creative ideas that are helpful to professional encouragement. This research also motivates the researcher due to their effect provided the good outcome to the research and encourage the moral to complete the difficult project (Terho et al., 2012). The target and goal of the research also motivates the researcher because the researcher follows the goals and target to complete the research in the provided way. This research study also helps the researcher to analyse the complex data that presents the easy conclusion of the research.
1.5 Scope of the research
In this research, the researcher has generalized the issues faced by the luxury fashion brands in China. According to the marketing manager most of the foreign luxury fashion brands are facing the challenges in the market of the China. In addition to this, the marketing research strategy focuses on the several international brands such asGucci, Armani, Christian Dior, Louis Vuitton, Zegna, Cartier, etc. that are facing the challenge in the China market. The marketing manager of the Gucci, it is advised that the global fashion industry needs a good marketing research to acquire the China market (Tse, 2014). This research is focusing on the different marketing strategies that will provide the solutions of the different challenges of the luxury fashion market of the China such as environmental analysis, cultural analysis, etc. Additionally, the researcher has also provided the competitive and to provide the different challenges and issues that can be face by the firm. At the same time, this research also provides the problems that can be faced by making any new entry into the market of the China. The marketing manager of the different luxury fashion brand can conduct a survey to understand the consumer preference to cover the market area of the China (Jin and Cedrola, 2017). The marketing adviser of the Louis Vuitton investigated the different problems for the foreign luxury fashion brands in the market of the China and also provided the techniques to beat the problems. In addition, they also provided different impacts in their findings of the culture on the fashion industry in the country
1.6 Layout of the research
The structure of the research report is outlined below to perform the study in an effective and systematic way.
Introduction: This forms the first chapter in the research report. The chapter provides the general information and the background information about the research topic. It states the purpose of conducting research in terms of research aim and objectives and formulates questions that would be addressed in the research (Bian& Forsythe, 2012). It forms the foundation to understand the research problem and defines the scope of the topic through informed research and provides justification to undertake the research.
Literature Review: This forms the second chapter in the research report. It provides a review of literature for the research topic as secondary research. The literature review takes into account the research questions to analyze the existing information in journals and published articles by other researchers, theorists and academicians and use eBooks, news, government websites to explore the topic. This is done to provide a theoretical understanding of the issue and to identify knowledge gaps in the literature study related to research issues.
Research Methodology: This constitutes the third chapter in this research report. This section outlines the overall methodology for the research. It provides details for the design of the research, research philosophy used, research approach and strategy. It also describes the methods used for data collection, sample size, method of sampling and method of analysis and interpretation of collected primary data to reach valid conclusion. This section allows the researcher to investigate the research question related to the challenges faced by western luxury retailers in the fashion industry.
Findings & Data Analysis: This constitutes the fourth chapter in the research report (De Mooij, 2010). This section presents the finding of the primary data and analysis in organized way in response to the research questions. The section also demonstrates the use of tools such as tables and charts for distribution of data for its accurate analysis and interpretation. This section is critical for the researcher as it demonstrate the potential for relating theoretical concepts with practical observations.
Conclusion & Recommendations: This forms the final and last chapter in this research report. This section will describe the overall summary of key points, findings and address the research questions. The section also presents suggestion based on the analysis for the western luxury organizations facing challenges to overcome then and expand business in China markets.
In this research chapter, the researcher provides a broader understanding of the theoretical concepts related to western luxury goods, luxury brands product and market characterises and influencing factors for luxury consumption in context of fashion industry. The researcher reviews the finding of other researchers, theorists and academicians. The researcher makes use of journal, articles, eBooks, etc. to determine the research objectives. Through the review of exiting literature, researcher can critically analyse the research topic (Jin et al., 2010). The literature review is useful to determine the impact of cultural differences on western luxury fashion organisations in china. Thus, the literature review provides a clear theoretical framework.
Though there is no single definition of luxury, the term ‘luxury’ is often associated with quality, class, limited, expensive and exclusivity. Tynan et al. (2010) states that luxury reminds status and uniqueness associated with high brand identity and awareness and of high perceived quality among its loyal consumers. Brand identify refers to an external appearance such as name, visual appearance, trademark and communications (Davies et al., 2012).Thus, luxury symbolise extravagant lifestyle which is limited but is desired by all. However, the changing customer behaviour in western societies has given a new meaning to the luxury. The modern perception of luxury signifies products/services with high perceived quality than others in same class which is within the reach of customer affordability. The retail chain such as Hennes & Mauritz (H&M) provides an example that supports the new luxury perception as it offers quality luxury fashion at affordable price. Traditionally, the concept of luxury has been linked to the fashion. Several authors have referred to ‘high fashion’ in terms of ‘luxury products ‘for causing social stratification (Ko andMegehee, 2012). Fashion has been observed as a bonding link that differentiates and separates one social class with others. In views of Fletcher (2010), fashion is a desire to change and forms a product of class and status distinction in social stratum. The higher class initiates a fashion and when it is followed by other social classes the higher class is motivated to abandon it and seek new mode of fashion to form distinction and get a sense of prestige. The studies also recognise the luxury fashion goods that bring status to its consumers. Bian and Forsythe (2012) defines the ‘luxury fashion goods’ as cars, apparels, shoes, handbags, wearables accessories like watches, jewellery and even perfume. It can be understood that the use or display of luxury goods bring status to its consumer separated from its functional use. In addition to this, Ko and Megehee (2012) reminds that luxury brands induce a sense of uniqueness and high-quality factor to hold its sales and loyalty among its elite group of customers. According to Tynan et al. (2010), brand is an identification that its attached to a product signifying a differentiated advantage. A luxury brand advocates an association with a product that is exclusive, desirable and striking. According to Davies et al. (2012), a luxury brand is related with consumers having price insensitivity, enhances consumer image through its expensiveness and demonstrates price is not an influencing factor in purchasing luxury products.Tynan et al. (2010) states that luxury fashion brands in contemporary societies have an influence of the social life which is determined by consumption of brands.In relation to luxury fashion, studies have shown the problem of rising counterfeit as the fashion luxury brands are expanding reach in international markets.According to Lisa Maria Turunen and Laaksonen, (2011), counterfeit products are low-priced and quality with a high brand value. Bian and Moutinho (2011) underlines the factors for the rise in sale of counterfeit fashion products. The author states the low trade barrier, high taxes of luxury brands, low cost technology for imitations and positive attitudes of customers toward purchasing counterfeits products are factors leading to growth of counterfeiting. It is understood that the market for counterfeit brands are dependent of consumer willingness to buy these fake products as a desire for real genuine luxury brand and to fulfil social goals. Moreover, it was recognised that labels form an integral component in fashion luxury products to communicate its brand identity and to combat counterfeit by protecting fashion brands. Li (2013) viewed label with security features incorporated during manufacturing process for brand protection and product authentication. In a similar study, Bian and Moutinho (2011) recognise RFID technique as a product level authentication in the supply chain process to lower the risk of counterfeiting. Studies on counterfeit also points to the link of intellectual property and fashion. Lisa Maria Turunen and Laaksonen, (2011) states that intellectual property provides shield to the luxury fashion brands in the form of trademarks/service marks, patents, trade dress, etc. to provide legal protection to company designer innovation, creativity and craftsmanship. Trademark refers to a recognisable design or a sign that provide identification to the luxury fashion brand and strengthen its brand identity. Here, patents as an intellectual property right and includes the right granted to luxury fashion retailer for new innovation in design or technical fabric, new process, dress or design. The licencing of intellectual property such as trademark, patent rights or design rights including designer name for third-parties are provided for only manufacturing.Li (2013) also viewed that intellectual property contributes to enhance the commercial value of the retailer and develop customer loyalty.
2.2 Factors impacting sale of luxury fashion brand:
The literature highlights several factors that impact on the sale of luxury fashion brand. Jung Chooet al. (2012) viewed brand perception enable consumer to identify and recall a fashion brand and develop awareness of the brand. In context of fashion luxury brands, the consumer’s experience arises from the brand perception hold more relevance than its utility. Thus, perceptions for a brand and its image form a key factor in brand loyalty which is capable to affect sale of luxury fashion brand.
Some other motives that have an influence on the consumer behaviour for consumption of luxury fashion are high prestige preference of the individual, desire for high quality and exclusivity, brand loyalty, social influence, societal status and wealth status. In support of this, Ko and Megehee, (2012) specifies that ability to pay high prices due increase in household income is another factor in favor of luxury fashion brand. This has factor has inspired the individual to impress others through display of wealth and visible consumption of fashion brand that points to a distinct lifestyle and social status. Han et al. (2010) studied that preference for prestige level arises from a combination of store kind, ambience, price, quality and fashion aspects which affects the purchase intention for a luxury fashion brand.
In context of fashion, Bian and Forsythe (2012) investigated customer intentions, social factors and culture influence the decision to purchase luxury fashion brand. It can be noted that customer purchase intentions are impacted by social comparison and brand experience and opinion of individuals in a social system. Social factors play a major role in sale of luxury fashion brands. The sale of fashion luxury brand in recognized to be influenced by motivations of higher social class to display wealth and a distinct fashion lifestyle as well as motivation of another individual in social substratum to imitate a high-end lifestyle.
Davies et al. (2012) underlines that the ownership of luxury fashion brand provides the owner a personal satisfaction and admiration in the social circle. The fashion luxury brands are consumed in the visible and publicly manner that shape the preference of the owner/consumers for fashion luxury brands to buy fashion brands that would be recognized by others. Accordingly, the ownership factor, self-representation and social recognition are capable factor to influence the sale of luxury fashion brand. Thus, it can be said that desire for prestige, social recognition, peer influence, brand perception, brand awareness and image and individual motivations are some of the main factors responsible for the sale of a fashion luxury brand.
2.3 Product and market characteristics
According to Bian and Moutinho (2011), the high price, superior quality and aesthetics are distinctive aspects of a luxury brand. In the views of Miller and Mills (2012), aesthetics and a clear brand identity form key attributes for a luxury fashion brand. Moore et al. (2010) mentions that price forms an indicator of prestige and quality evidence for a luxury fashion brand. Thus, the price factor forms a fundamental characteristic of luxury fashion brands. Thus, the high price is an evidence of a brand which is considered to be a luxury. Jung Choo et al. (2012) found that reduction in price can risk the luxury brand image but reduced price provides benefits to a regular brand. It can be noted that perception of consumer for a luxury brand based on price factor requires a high perceived value to be maintained for a brand to attract consumers. Thus, apart from price, perceived high quality is another characteristic of luxury brand that concerns its consumers. Similarly, Husic and Cicic (2009) specifies that aesthetic attributes such as colors, designs and other visible components that reflects value and lifestyle forms relevant appealing products feature in fashion luxury goods. On the other hand, Moore et al. (2010) argues that rarity and price as market characteristics increases the desire of consumers to earn luxury brands. The luxury brands show high demands and desirability as price increases. For instance, making a luxury good such as perfume or car costlier would increase its attractiveness and increase its perceived quality to retain positive sales. The limitedness and scarcity are important attributes of luxury fashion brand that enhance consumer desirability of the fashion products and draw the purchase behaviour towards acquiring the luxury fashion brand. The luxury fashion brands by providing the scarcity value are managing the desirability for the brands as consumer perceive that possession of luxury fashion is limited to a few high -end class of people. The evaluation of luxury fashion market is also based on its characteristics such as high pricing potential, brand uniqueness and easy addressability in terms of reaching and communicating with target high-end market segment as cited by Miller and Mills, (2012).This means that the higher charges of the product are better due to its exclusivity.
2.4 Customer behaviour and decisions for luxury fashion brand shopping:
The literature of luxury fashion brand also draws attention to the changing shopping trend and behaviour for luxury fashion. Bian and Forsythe (2012) underlines that consumers in western societies prefer multi-brand retail websites to shop for luxury fashion. The presence of luxury fashion brands in the multi-brand sites platys a strategic role in creating high attractiveness and to strengthen its brand positioning in the consumers mind. However, Jung Choo et al. (2012), argues that the consumers for luxury fashion has distinct taste and preference for high-priced brands would always have preference for personalized service and physical experience which can be fulfilled only through brick-and-mortar luxury fashion stores. The author also viewed that consumers of luxury fashion brands make use of internet and fashion blogs to shape the purchase decisions and tend to buy from online stores at undiscounted prices. It can be noted that internet medium plays a significant role in forming a purchase decision. According to Wigley (2015), the consumers of luxury fashion brands depends on the media promotions such as in lifestyle magazines and TV promotions and use of internet medium to research and make purchase decisions and to shop for these brands.
The definitions of the word “luxury” from the literature review recognize it with premium price, high perceived quality, high social class and exclusivity. The authors viewed luxury goods as products with unique characteristics (high price, high perceived quality, rarity, scarcity, limited edition and aesthetics) and are defined as a part of social practice for self- representation and self-worth. The review reflects several factors that are an important determinant of purchase of fashion luxury brands such as ownership factor, self-representation desire for prestige, social recognition, peer influence, brand perception, awareness and image. The authors view that internet access is transforming the way consumers shop for luxury fashion goods while other argues that physical stores are preferred as the consumers seek high customer service and personalized shipping experience. It can be inferred that the luxury fashion goods are parallel with the demographic variable such as income along with individual values and social factors.
Chapter 3: Research Methodology
The research methodology is the way in which the research problems are solved in a systematic manner. In other worlds, the research methodology not only provides the research methods but also considers the logics behind applied research methods (Geerts, 2011). The researcher uses the different kind of tools and techniques in context to complete the research study in particular way. In this part of the research, the researcher provides the proper reasoning that why this method and technique is used. Additionally, the researcher also defines the way that how can research problems be solved (Vujaklija et al., 2010). In the research methodology, it is necessary to design the methodology according to the research problem.
The research philosophy is an important part for the researcher that provides in-depth understanding about the research topic. To develop the hypothesis about the research, the researcher takes the help of different assumptions, observations, concepts and studies (Bunniss and Kelly, 2010). Basically, there are two types of research philosophy for developing the knowledge about the research topic by the researcher like positivism and interpretivism philosophy. The interpretivism philosophy is used by the researcher, if there is a need of building a hypothesis understanding for solving the research issue. In this philosophy, the researcher develops the thought about the research issue and defines the different solutions for mitigate the issues. On the other side, the positivism philosophy is chosen by the researcher according to the nature of the research (Leitch et al., 2010). The reason of this, this philosophy is completely supported to the natural science for providing easy outcomes of the research.
In concern to this research, the researcher applied the interpretivism philosophy instead of positivism philosophy. It is because the use of interpretivism philosophy helps the researcher to develop the understanding regarding the research issues hypothetically. There is a need for the researcher to develop the knowledge regarding the different impact of cultural differentiation on western luxury fashion firms in China. In this research, the interpretivism philosophy presents the detailed information about the research issues and outcomes as comparison then positivism research. It is because the researcher has to present the experimental data in the positivism philosophy for developing understanding about the research issues. Additionally, the available data are not useful for the positivism philosophy so the researcher has applied interpretivism philosophy for this research.
The research approach is helpful for the researcher to present or generate the reliable outcome of the research. The researcher understands the usefulness of different research tools and techniques by applying the proper research approach. At the same time, it also helps the researcher to conclude the research outcome on time with effective manner (Schuurma et al., 2011). In a research study, the researcher uses the two types of research approach like deductive approach and inductive approach. With the respect of this research study, the researcher has applied the inductive research approach as compared to deductive approach. The reason behind selecting the inductive approach, the researcher wants to develop own theory that is quite appropriate for this research. Additionally, this research is based on the interpretivism philosophy that is not relevant with the deductive approach, so the researcher has to use inductive research approach for this research (Mettler, 2011). In addition to this, the deductive approach can create the problem for the researcher if it is used by the researcher to accomplish the research objective. Additionally, most of the research issues are related with the theoretical aspects which bound the researcher to select the deductive approach for this research. Because of this, the researcher has used the inductive approach to establish the successful result of the research.
In order to collect the data properly and to analyze the data in a systematic manner, there is a vital role of the research design. Quantitative research, qualitative research design and the mixed research deign are the major parts of the research designs that are used by the researcher on the basis of research issues. The use of these all research deign is different because the subjective judgment of the research is directly related to the qualitative research design and in the use of this research design, there is a major focus of the researcher on the quality of the research. While, in the use of quantitative research design, the statistical data is developed by the researcher and presented in the table, graph, etc format. In the mixed research, both qualitative and quantitative research design are used by the researcher for better research outcomes.
In the concern of this research, the mixed research design is used by the researcher to identify the major challenges faced by the western luxury organizations in fashion industry in China. In this, researcher is enabled to get the clear and in-depth understanding about the research issues for better presentation of the research outcomes.
In this part of research study, the researcher confirms that the available information is about the research problem or not. It is also ensured by the researcher that the research strategy is used by the researcher is providing the right direction. (Stamataki et al., 2013). A researcher includes the several studies for the research strategy such as literature review, case study, survey, experiment, focus group, etc. The researcher selects one of the available studies as per the research problem and proving the suitable research result. At the same time, for this research, the researcher has used two major research strategies such as literature review and survey thorough questionnaire. It is because this research needs the valuable and real data to accomplish the research with suitable research results. These research strategies helped the researcher to develop the in-depth knowledge about the western luxury fashion organizations in China and the issues that are faced by these firms in China market.
Moreover, the researcher has used different literature reviews for collecting the secondary data like article, journals, books, and websites. These sources provided the deeply knowledge to the researcher to solve the research problems with comparing the data that are collects from primary findings (Rutter et al., 2010). The literature review also helped the researcher to discover the past researched data to make the successful research outcome. In addition, the researcher has also got the right direction by using survey through questionnaire in the research to increases the possibility of the successful outcome of the research. The survey through questionnaire provided fresh and valid data that is helpful for the researcher to provide the original output of the research.
The time limitation of the research is defined by the researcher for successfully completing the research activities. In this, there are two types of time horizon such as longitudinal and cross-sectional time horizon that are applied by the researcher for effectively complete the research on time (Kurniawati et al., 2011). The cross-sectional time horizon is used by the researcher to collect the data at one time in a month, week, day, and year. This method is selected by the researcher if the characteristics of the respondents are parallel but they may have different age, income, etc. Additionally, the researcher also selects the cross-sectional time horizon in order to small number participants because it reduces the time consumption of the researcher. In this time horizon, the responsibilities of the researcher are increased due to onetime collection of the data (Dionne, 2011). It is because the researcher has responsibility and challenges to keep the data safe until the research completed or deposited to the university.
On the other hand, the longitudinal time horizon is selected by the researcher if research data is collected multiple times. It is because this time horizon helps for the researcher by increasing validity of research and providing the valid research outcome. The use of the longitudinal time horizon also increases the responsibility of the researcher due to increases the possibility of data manipulation which affects on the research result. For this research, the cross-sectional time horizon is highly suitable than longitudinal time horizon. It is because the cross-sectional time horizon is selected by the researcher due to collecting the data onetime that reduces the chances of data manipulation. In this research, the cross-sectional time horizon also helped the researcher by enhancing the efficiency of research that was not effectively implemented in longitudinal time horizons. Moreover, the longitudinal time horizon also consumes the more time and cost of the researcher due to collection of the data multiple times, so the researcher has used the cross-sectional time horizon for this research.
This part of the research plays a vital role in the success of the research because of clearing the information about the collection of data. In the collection of data, primary and the secondary are the major ways that are used by the researcher and assist the researcher to collect the reliable and effective data. Along with this, primary data is one of the best ways that is used by the researcher to collect the maximum responses in a limited time as well as to get the fresh data. In the use of primary data collections, there are various ways like survey, interview, focus group, etc that make easy the researcher to complete the research and to collect the reliable data. At the same time, collect the information form secondary data is also an appropriate way for the researcher. It is because in a limited time, researcher can collect the data from different sources such as journal, books, etc.
Although both ways of the data collection are quite appropriate for the researcher to complete the research on time and to collect the data but at the same time, the use of primary data is quite expansive for the researcher as compared to the secondary data. The possibility of generating or collecting the reliable and authentic data is quite high in the primary data collection method as compared to the secondary data. Because of this concern, researcher used the both data collection methods including primary and the secondary. In the use of primary data collection, researcher used the survey through questionnaire, and in this, researcher targeted the manager of the all western luxury firms in China that are operating their business successfully in the Chinese market. At the same time, 40 employees from the 8 western luxury firms in China are targeted by the researcher that made easy the researcher to complete the research on time and to successful achieve the research objectives. In the formulation of the questions, the all research objectives and the research questions will be considered by the researcher because it will help the researcher to produce the reliable and dependable outcomes of the research.
In order to analysis the collection data, there are different ways that can be used by the researcher but at the same time, the use of statistical data analysis method is quite better for the researcher to effectively analysis the data and to produce the reliable outcomes of the research.The all collected data is presented by the researcher in the table and the graph format. It is because it helped the researcher to present the findings in a reliable manner and also make easy the other people to get clear and the detail view about the findings of the research. So, with the concern of all things, it can be determined that the use of statistical data analysis method and to present the data in the table and graph format with the help excel software was quiet and worth full decision of the researcher.
During the research, the researcher has highly focused on the ethical consideration by providing the appropriate data to the research and these data should not affect the ethics of others (Ponterotto, 2010). During the collection of the secondary data, the researcher has certain consideration of the ethics of past researcher. For this, it is also focused by the researcher to overcome the issues related to the plagiarism, copyright, and patent of the literature. In addition to this, the researcher has also focused on the referencing and in-texting during the research to remove the problem of plagiarism. It is because the researcher has sourced from different studies of the past researcher and the referencing and in-texting provide the credit to the author (Fargas-Malet, et al., 2010). Additionally, the university provided many roles and pentameters that are helpful to eliminate the ethical issues. It is requested to support any hindrance to eliminate ethical violence.
CHAPTER FOUR RESEARCH FINDINGS AND ANALYSIS
In this research chapter, the researcher provides an analysis of primary data collected through a questionnaire survey to determine the challenges faced by western luxury organizations in the fashion industry in Chinese market. The survey questionnaire form is designed with the use of standardized questions to get maximum response from the participants to fulfill the research objectives. 60 questionnaire forms were used to gather data from survey and were distributed to the managers of the western luxury fashion firms through visit to the firm stores and delivered through email. Out of 60 forms, 40 were received for the research analysis to reach a valid outcome. In addition to this, secondary findings are analyzed, and the primary research findings are studied to form a link with the secondary data to increase the validity and reliability aspects for this research. The MS Excel is used to for data distribution and for data representation in form of tables and charts to effectively analysis the responses for each research question.
4.2.1. Challenges of Western luxury brands in China
According to Zhou and Li (2010) the western companies have to face the challenge in the market of the china due to lots of complexity of market. In this, the communication is the big challenge that creates the misunderstanding in the completion of the work. China has the different language that does not include the English in the local and official language that build the difficulty in the business. In the research of the Park et al., (2010) the western luxury organizations are highly affected by the differentiation of the language. It is because the business needs the negotiation to deal in the market and there are quite people who understand both western and Chinese language. The language also increases the communication barrier in the organization and outside the organization.
In the findings of Liu and Kokko (2010) the access of the market in china is very difficult due to buying habit of the consumer. The environment of the china market is fully captured by the local companies due to much restriction of new entrance of the multinational companies. The preference of the consumer in china is the local product that the main reason that many western organizations sunk in china. In support to this, Li and Zhou (2010) defined that the competitive firms also a big issue to survive in the market of china by a western organisation. The competitive firms can be developed with the fast speed in the market of the china using technology.
In the research study of Park et al., (2010) it is found that the western organizations face the biggest challenge of human resources to do the business effectively. It is because, the western business firms provide the authority and flexibility in the work, while each employee in china need the clearly defined role. It differentiates the management system of the china employee, so the organization can face the issue of management.
In the views of Thompson, (2010), intellectual property is the biggest problems for luxury companies whose success relies on brand perception and this problem is quite common in especially Chinese market. It is because counterfeits are common in Chinese market and that’s the biggest reason why none of the big brands sustain in china market over longer time. It is estimated that Chinese generally counterfeit the original product and sell into their brand name into their local market which creates the problems for the luxury companies to stay in china market. From the survey of foreign business government surveyed, it is observed that approx.58% of foreign business representatives surveyed claimed that the intellectual property situation for foreign companies in china is still remain unchanged. Due to this practice, there are various big brands that early departing from the china and these are the Google, Zara etc. This clearly defines the problem which is luxury brand face into china economy.
On the other hand, Wang (2012) depicted that collectivism is the biggest challenge for the luxury companies as people of china is taking any decision based on the group interest so this influences their buying decision. Such practices will prove to be ineffective for the companies. This is because if companies try to target the member in group so in that case the group member decision is depend upon their group interest. That’s surely impact the consumer buying process. Thus, collectivism behaviour is not supporting the luxury companies of making a mark in their market. In support to this, Xun (2010) Pragmatic culture is also considered as a huge challenge for the western luxury companies. It is because pragmatic approach defines that deep-rooted culture, traditions which are follows by the people. This approach is widely followed in china and that’s restricting new brands innovation. Due to luxury fails to implement their new innovative product ranges and services. At the same time, Klossek et al. (2012) mentioned that Chinese are high brand conscious people and they take long time to develop the faith on brand. For them, big brand is that which includes high quality, affordability in price, innovative features with involving their traditions, cultures element. Thus, these elements contribute as a big brand. That is why, Chinese takes maximum time to develop their trust or faith on any brand. Thus, these issues challenging the luxury companies for sustaining in china market for large span of time
4.2.2 Impact of cultural differences on western luxury fashion organizations in China
In the views of Podoshen et al., (2011) there are various factors which influence the western luxury fashion firms in terms to operate their functions effectively in china’s market. In regard to this, cultural differences are considered as a main factor that has a strong impact on the western fashion firms. Likewise, china’s culture is quite different in every area such as in workplace etiquettes, organisational hierarchy and in terms of lifestyle etc. these elements becomes an issue for the western fashion firms to easily operate in china market. In a similar manner Li et al., (2012) stated that communication is the essences for any business venture success, but it is critical when there is cultural differences in it. It is finding that Chinese are more cultured people. That’s why they prefer more ethics in their communication level. However, power distances is widely accepted in china communication system as Chinese people prefer to give less power to the individuals in the company and they also does not accept the open communications between the organisation hierarchy. Such practices impact the western fashion companies in terms to restrict their ideas and innovation to share with their colleagues. It directly influences to the customers in terms to fulfil their changing needs.
According to Zhuang et al., (2010), lack of individualism is also a factor in cultural differences which also has a strong impact over the luxury companies in china market. It is because Chinese follows highly collectivist culture where people act in the interest of group and not necessarily of themselves. So in that case, it becomes quite difficult for the luxury companies to influences the whole group buying decision. for instances, if group member prefers to buy those products which has low price and ignore the quality then western companies face problem to target young-once in group for their high price quality product. Thus, collectivist culture does not provide advantage to company. In contrary of this, Engand Bogaert, (2010) argued that china is the growing market in the globe and young individual also attracting towards the western culture. In that case it gives high opportunity to luxury organisation to sustain in market over longer duration. Likewise, there are various fashion brands that successfully work into the Chinese market. Gucci and Zara are the best example that successfully marks their position in the Chinese market by targeting the fashion-conscious individuals in the Chinese market. Besides that, it is also found that Middle Class Group Chinese also investing high towards the clothing line so that such practices give the high chances to new companies in regard to enter into the Chinese market.
In support to this, Fang (2010) illustrated that after globalization, fashion consumption rate of Chinese people is increasing days by day and that’s open the market for the western culture to enter into china market and sustain over the longer time. Thus, this clearly states that with the Chinese market gives high opportunity to western firms in terms to mark their position.
ButZhao et al., (2011) believed that cultural differences are the major element that provides negative impact on the luxury company even if there are so many opportunities is available to them. However, Masculinity is also a factor which influences the western companies’ operations as it is find that Chinese market is male dominate market where all brands develop their product by looking at them only. So, this creates problems to the western fashion companies to target the females for their clothing lines.
Furthermore, trust factor also influences the performances of luxury organisation due to Chinese people does not easily believes on the product simply with their appearances. Besides that, they look for the quality, features and innovation in product and based on that Chinese develop their trust on particular brand. So, to generate the trust of the Chinese over the brand is quite tedious task for the luxury companies in terms to stay in market. If the trust is built then it provides positive impact on the luxury organisation (Bonetti, 2014). Through these factors, it can be stated that cultural differences have a strong impact on the luxury companies in a negative manner. But with the changing customer preferences, it also provides high opportunity to grow to the western companies.
Gender
| Gender | Response | Analysis – Percentage (%) |
| Male | 24 | 60 |
| Female | 16 | 40 |
| Total | 40 | 100 |
Table 1: Gender
The above table and figure represents the demographic analysis of gender for the research which highlights most of the respondents in this survey questionnaire were male which accounted for 60 percent. A slightly less percentage (40 percent) highlights female participants in the questionnaire survey.
Age Group
| Options | Response | Analysis – Percentage (%) |
| Less than 30 | 3 | 7 |
| 31 – 40 | 19 | 47 |
| 41– 50 | 8 | 20 |
| 51 – 60 | 7 | 18 |
| 61 and above | 3 | 8 |
| Total | 40 | 100 |
Table 2: Age group
The findings represent that most of the respondents (47 percent) belong to the age group of 31 – 40 years. It was found that that age group of 41– 50 years forms the second higher group of respondents with 20 percent and the 18 percent respondent belongs to age group of 51 – 60years. There were few respondents of less than 30 years and 61 years and above which represents only 7 and 8 percent respectively. From this demographic analysis, it can be noted that the responses were received from all the managers belonging to different age groups to gain knowledge for research questions from different standpoints.
Experience
| Options | Response | Analysis – Percentage (%) |
| Below 2 years | 3 | 7 |
| 3-5 years | 10 | 25 |
| 6-10 years | 19 | 48 |
| Above 10 years | 8 | 20 |
| Total | 40 | 100 |
Table 3: Experience of Managers
From the data shown in table and figure, it is analyzed that the survey received a positive and higher response from 48 percent respondents who have 6 – 10 years of managerial experience. 25 percent respondents have 3-5 years of experience and 20 percent respondents have more than 10 years of experience. The percentage of respondents having an experience of less than two years accounts for only 7 percent in this survey. The results indicate that the respondent for this research are well-experienced which is helpful for the researcher to get valid responses for the research questions.
Managers in different Western Luxury fashion brand in China
You are associated with which major Western Luxury fashion brand in China?
| Western Luxury brands | Response | Analysis – Percentage (%) |
| Chanel | 7 | 17 |
| Christian Dior | 8 | 20 |
| Cartier | 5 | 12 |
| Gucci | 5 | 13 |
| Giorgio Armani | 6 | 15 |
| Louis Vuitton | 4 | 10 |
| Zegna | 5 | 13 |
| Total | 40 | 100 |
Table 4: Managers in different Western Luxury fashion brand in China
Figure 4: Managers in different Western Luxury fashion brand in China
From the above table and figure, it can be analyzed that most of the respondents (20 percent) were associated with Christian Dior and followed by participation of managers from Chanel respondents (17 percent) and Giorgio Armani (15 percent) respectively. The different manager respondents were also from Zegna and Gucci (13 percent each), Cartier (12 percent) and Louis Vuitton (10 percent). Thus, from this analysis it can be identified that the survey received responses from managers of different Western luxury brands which was useful for the researcher to analyses the responses of different managers for each questionnaire responses.
Managing/ operating fashion business by the western firms in China
According to your views, managing or operating fashion business in China is quite challenging task for the western firms?
| Choices | Response | Analysis – Percentage (%) |
| Strongly agree | 13 | 32 |
| Agree | 19 | 48 |
| Neutral | 8 | 20 |
| Disagree | 0 | 0 |
| Strongly disagree | 0 | 0 |
| Total | 40 | 100 |
Table 5: Managing/ operating fashion business as a challenge for the western firm in China
Figure 5: Managing/ operating fashion business as a challenge for the western firm in China
From the above primary data and figure, it can be observed that most of the respondents represented by 80 percent (32+48) were in agreement with the question statement. It is also clear that there was no disagreement for managing fashion business as a challenge in China faced by foreign luxury fashion brands. However, only 20 percent respondent remained neutral in response.
Luxury fashion goods characteristics
According to you, which of the following luxury fashion goods characteristics can challenging for growth of western luxury firms in China market in present scenario?
| Choices | Response | Analysis – Percentage (%) |
| Premium pricing power | 11 | 27 |
| Rarity | 8 | 20 |
| Scarcity and limitedness | 16 | 40 |
| Exclusivity | 5 | 13 |
| Total | 40 | 100 |
Table 6: Challenges posed by luxury fashion goods characteristics
Figure 6: Challenge posed by luxury fashion goods characteristics
The analysis of data in the above table and figure indicates that majority of the respondents (40 percent) take into consideration the scarcity and limitedness as the major challenge in the Chinese market in the luxury fashion industry. 27 percent respondent viewed premium pricing power of luxury fashion goods as a challenging factor. However, rarity and exclusivity are considered as challenging characteristics by 20 percent and 13 percent respondents respectively. It can be said that scarcity and limitedness and rarity factor can be a potential challenge for luxury fashion brands growth as in meeting huge demands from developing economy in China would lessen the product and market characteristics of luxury fashion products in China.
Difference in Culture in China as an obstacle for Western firms
Do you consider this; difference in the culture of China is serious issue for the firms to target the customers and to gain the competitive advantage?
| Choices | Response | Analysis – Percentage (%) |
| Strongly agree | 10 | 25 |
| Agree | 16 | 40 |
| Neutral | 5 | 12 |
| Disagree | 9 | 23 |
| Strongly disagree | 0 | 0 |
| Total | 40 | 100 |
Table 7: Cultural difference in China as an obstacle for targeting customers and competitive advantage
Figure 7: Cultural difference in China as an obstacle for targeting customers and competitive advantage
This primary data analysis reveals that majority of the respondents agree to the question statements that cultural differences forms a hindrance in attracting fashion customers towards fashion luxury goods and gain competitive advantage in the Chinese market. This agreement to statement is indicated by 65 percent (25+40) respondents. However, 23 percent of respondents do not agree to this whereas 12 percent respondents remained neutral in context of this question.
Impact of Culture Differences
Please provide your opinion on the impact of difference in culture that you find most powerful impact on the firm?
| Factors | Choices | Response | Analysis – Percentage (%) |
| Work place etiquettes, organisational hierarchy, etc | 1 -Strongly Agree | 6 | 15 |
| 2-Agree | 24 | 60 | |
| 3-Neutral | 2 | 5 | |
| 4-Disagree | 8 | 20 | |
| 5-Strongly Disagree | 0 | 0 | |
| Lack of individualism | 1 -Strongly Agree | 8 | 20 |
| 2-Agree | 19 | 47 | |
| 3-Neutral | 4 | 10 | |
| 4-Disagree | 6 | 15 | |
| 5-Strongly Disagree | 3 | 8 | |
| Masculinity | 1 -Strongly Agree | 4 | 10 |
| 2-Agree | 17 | 42 | |
| 3-Neutral | 10 | 25 | |
| 4-Disagree | 9 | 23 | |
| 5-Strongly Disagree | 0 | 0 | |
| Trust | 1 -Strongly Agree | 6 | 15 |
| 2-Agree | 17 | 42 | |
| 3-Neutral | 10 | 25 | |
| 4-Disagree | 7 | 18 | |
| 5-Strongly Disagree | 0 | 0 | |
| Total | 40 | 100 |
Table 8: Impact of Culture Differences
Figure 8: Impact of Culture Differences
From the above responses, the impact of culture differences on western luxury firms in China for different factors was analyzed which highlights workplace etiquettes, organizational hierarchy and related factors as the most agreed factor by 75 percent respondents (15+60). The findings also point other factors such as lack of individualism for which 67 percent respondents (20+47) agree. It was observed that the less respondents (57 percent) consider factor such as trust and masculinity (52 percent) for the impact of culture differences.
Challenges for Western luxury organizations in China
Which is the major challenge are faced by the western luxury organization in China?
| Options | Response | Analysis – Percentage (%) |
| Language issues | 4 | 10 |
| Changing nature of the customers | 3 | 7 |
| Human resources | 5 | 12 |
| Intellectual property | 10 | 25 |
| Counterfeit products | 11 | 28 |
| Collectivism culture | 7 | 18 |
| Total | 40 | 100 |
Table 9: Challenges for Western luxury organizations in China
Figure 9: Challenges for Western luxury organizations in China
The above table and figure show the responses for challenges that are faced by firms operating in China and are potential challengers for any Western luxury organizations in entering this market. From the primary data findings, it is indicated that issue of counterfeit products and intellectual property protection are considered to be challenging factors for Western luxury organizations. These two factors received responses from 28 percent respondents and 25 percent respectively. 18 percent respondents view collectivism culture as a major challenge in Chinese markets whereas 12 percent respondents considered availability of competent human resources as a challenge for the western luxury brands in this market. Language issues and customer changing preferences were considered by only 10 and 7 percent respondents respectively in context of this question.
Strategies to mitigate the challenges
Please provide your concern about the best ways and the strategies that can be used by the western firms?
| Strategies | Choices | Response | Analysis – Percentage (%) |
| Enhance and upgrade the technology | 1 -Strongly Agree | 27 | 67 |
| 2-Agree | 11 | 28 | |
| 3-Neutral | 2 | 5 | |
| 4-Disagree | 0 | 0 | |
| 5-Strongly Disagree | 0 | 0 | |
| Training programs | 1 -Strongly Agree | 11 | 27 |
| 2-Agree | 18 | 45 | |
| 3-Neutral | 7 | 18 | |
| 4-Disagree | 4 | 10 | |
| 5-Strongly Disagree | 0 | 0 | |
| Protection of Intellectual property | 1 -Strongly Agree | 31 | 77 |
| 2-Agree | 9 | 23 | |
| 3-Neutral | 0 | 0 | |
| 4-Disagree | 0 | 0 | |
| 5-Strongly Disagree | 0 | 0 | |
| Consumer awareness | 1 -Strongly Agree | 6 | 15 |
| 2-Agree | 18 | 45 | |
| 3-Neutral | 5 | 12 | |
| 4-Disagree | 9 | 23 | |
| 5-Strongly Disagree | 2 | 5 | |
| Develop relationship with stakeholders | 1 -Strongly Agree | 17 | 42 |
| 2-Agree | 19 | 48 | |
| 3-Neutral | 4 | 10 | |
| 4-Disagree | 0 | 0 | |
| 5-Strongly Disagree | 0 | 0 | |
| Total | 40 | 100 |
Table 10: Strategies to mitigate the challenges
From the above facts and figure, it is analyzed that protection of intellectual property is considered to an effective strategy to deal with challenges of Western luxury fashion firms in China. This factor received a strong agreement from all the managers’ respondents. The other strategies such as enhance/upgrade the technology receive agreements from 95 percent respondents (67+28) whereas to develop relationship with stakeholders is considered 90 percent (42 +48) respondents. The finding reveals that majority of the managers respondents from western luxury firms show higher preference for trademarks and patents protection, investment in technology and developing stakeholder relationship relative to training program (72 percent) and providing consumer awareness (60 percent).
Discussion: From findings from the primary data analysis, provides some valuable insights on the challenges that are faced by the western luxury organizations operating in china fashion industry. It can be discussed that managers of different Western luxury firms consider cultural difference between China and West as a major challenge in the growth and performance of fashion luxury brands in Chinese market. The culture difference brings changes in values and belief and the manner in which these firms approach the fashion consumers. Though the Chinese are influenced by the Western brands, but the cultural influence presents a different shopping and business communications than west. In this context, the impact of culture difference is felt by the managers in terms of workplace etiquettes, organizational hierarchy and other organizational related factors. The strong hierarchy structure and a bureaucratic nature to a certain extent in the Chinese culture is a challenge to western firms who considers hierarchy structure are inefficient and slowdown the process of decision making. It can be discussed that organizational hierarchy in China indicates that the flow of information in following hierarchy rules is slow and restricted and time consuming which impact the business communication with different stakeholders. The strong hierarchy structures also indicate lack of creativities in the organization. Tus, the impact of cultural difference is a concern for western firms planning to set up business operations in China. Additionally, the characteristic of luxury good such as scarcity and limitedness, rarity was also considered by the managers as a challenge in the Chinese markets. The consumers tend to pay higher price for luxury fashion brands for its product characteristics such as exclusivity, perceived value, not owned by others, etc. to enhance the fashion lifestyle and social status. Thus, in coping with high demand for luxury fashion brands in China it is seen to lose its product and market characteristics. Thus, it is essential to preserve the characteristics of fashion brands for considering it in luxury segment which is a challenging task in China. Moreover, the findings identified that the intellectual property protection and problem of counterfeit products is also a challenge in the Chinese market. It can be discussed that the same market also supports the sale of counterfeit due to leakage from supply chains, low technology to initiate, free trade policies, etc. thus, indicating less control of supply chain management by western luxury firms in China. The issue of intellectual property protection from theft is another major challenge for these firms. This concern for the protection of intellectual property of Western firms in China is a hindrance for the growth of these brands as in China as western companies believe that bringing its technology to this market can pose a risk of loss of its intellectual property. It can also be conversed that the western business can deal with the challenge in setting up successful luxury fashion brands in china through legitimate protection of the intellectual property through patents, trademarks. The registration of patent and copyright is thus, essential for any Western luxury firm to protect its intellectual property in a formal manner. It is also conferred that through making investment in technological development to enhance and upgrade the existing technology used by these firms. The technologies in the manufacturing process through labels, threads, stamps, etc. can protect its intellectual property and also can provide more security features for product tracking, product authentication, etc. and a better control over the supply chain in different phases such as manufacturing, distribution etc.
Overall, the primary and secondary finding of the survey through questionnaire has contributed in the understanding and identification of major challenges faced by Western luxury fashion firms in setting up business operation to enter the market of China. The influence of cultural differences as a challenging factor for continued survival for western firms is analysed. In this study, the impact of cultural difference for organisation hierarchy structure, workplace etiquette and communication along with managers concerns over intellectual property protection and counterfeit products were observed to be key challenges for Western luxury firms in Chinese fashion industry. In addition, it provides helpful strategies help the other luxury fashion firms to make them better decisions in entering this market.
CHAPTER FIVE CONCLUSIONS AND RECOMMENDATIONS
The influence of Chinese consumers towards the western fashion presents several opportunities for the Western Chinese brands for its expansion in the foreign market in China. At the same time, the Western firms operating in China face several challenges that have a strong impact on its growth and success of these firms. The study summarises major challenges faced by Western luxury firms operating in highly competitive fashion industry in China. In specific terms, some of the major challenges pose a potential barrier to entry of luxury fashion brands from west in China. The study summarises the difference in cultures of China from West that can restrict the business operation of western luxury firms. In this study, it is recognised that the culture difference is felt by managers in terms of both internal and external aspects. Considering the internal system, this difference in culture has impacted in terms of workplace etiquettes and stronger hierarchy structures which are considered to slow and ineffective for decision making, information flow and lacks inventiveness. Externally, the managers of different western luxury firms viewed it as an obstacle in attracting luxury fashion consumers and to gain competitive advantage in the market. Limitedness, scarcity and rarity characteristic of luxury fashion products are also identified to pose a challenge in the market owing to high demands from growing Chinese economy. Another key challenger identified is the protection of IP and problem of counterfeit brands in China for the Western firms as it can impact sales of genuine products and as a result produce negative effect for these firms in terms of profitability and sustainability in the competitive Chinese fashion industry. It can be concluded that the western fashion luxury commodities due to cultural differences, intellectual property, counterfire products, limitedness and scarcity in high demand markets face difficulty in marketing and growth in Chinese markets.
6.2 Recommendations
6.2.1. Strategies for overcoming the challenges to establishing business in China based on the secondary findings
Kim and Ko (2012) discusses the use of technological driven platform such as social networking and blogging for selling the luxury fashion brands at a global level. The author suggests that these approaches increase the participation of luxury brands in the existing market trends to stimulate demands and draw attention towards these brands. Similarly, Li et al. (2012) observed that developing a brand identity such as in case of Chanel has driven sale of luxury brand as a creative individuality. On the different side, Han et al. (2010) suggest the use of target ads based on income level of consumers to market luxury fashion brand in international market. In context of the counterfeit issues of luxury fashion brands the literature of luxury fashion brands highlights the strategies used by high-end retailers to protect these brands from counterfeit. Brands such as Burberry have allocated large budgets to resist counterfeiting. Other strategies reflected in studies are through protection of intellectual property (IP), developing control in manufacturing and distribution of fashion luxury products, label security techniques, RFID technique, developing effective relationship with custom officials and use of technologies that improve product security (Li, 2013), watermarks and other type of identification and security tags to protect form counterfeit.
According to Helms & Nixon, (2010), it is stated that China is a country which has used advanced technology in creating the products that are consumed by the customers. So the companies of other western countries should also try to enhance and upgrade their technology and R&D should also be improved so that the product quality is enhanced. Better technology will help to produce supreme quality products. In support of this, Dahan et al., (2010) depicted that as there exist language as well as communication barriers so companies should try to provide training to the employees so that these barriers can be overcome and reduced further. It is also important to have an international team that will help to overcome the Chinese and Western cultural differences. In the research of Klossek et al., (2012) it was found that the companies before conducting their business practices in China should always conduct a pre-research about the country’s background and how they conduct business operations. In support of this, Tang (2011) illustrated that western companies should also make products which having economical prices as the consumers in china are in habit of buying cheap and local products. As the Chinese employees are always taught to do work in accordance with the instructions and always and lack in flexible lines of authority as compare to the western companies’ employees, so they can be given training and told on to be more creative and risk taking. The work done by the Chinese employees can also be monitored and observed accordingly.
In the research of Schuler et al., (2011) it is identified that communication is the main barrier in cultural differences. Regarding this, it is recommended that luxury companies should prepare themselves for communicating with the Chinese. For this, it needs to conduct the training program for the western employees so that they can learn how to influences or communicate their product information to target audiences. Other than that, it is also suggested that luxury company to successfully operate their business into Chinese market, they can include the joint venture, alliances strategy for understanding the Chinese language, culture and customs etc. Such practices provide advantage to companies especially SMEs (Small, Medium Enterprise).
According to Helms & Nixon, (2010) intellectual property problem can be solve through security features and technological development, patents, trademarks, licencing or through making compulsion of signing an agreement with companies in order to avoid the counterfeit problem while operating the business in china market. Thus, based on such strategy, western luxury companies can successfully execute their business and stay on longer duration.
6.2.2. Strategies for overcoming the challenges to establishing business in China based on the primary findings
In order to cope with the different key challenges, based on the findings and discussion, the researchers suggest some recommendations that the western luxury firms in fashion industry can be considered to increase the chances of growth, success and survivability of the luxury fashion brand in the prospering markets in China. It is recommended that the marketers of luxury fashion brands need to get some insights form the cultural analysis to device marketing and promotions campaigns respecting the traditional cultural values and rules to overcome the challenging milestone. Thus, gaining cultural intelligence would be useful for the Western luxury fashion firms to devise strategies for market to attract the elite consumers target segment based on lifestyle and demographic variables. Based on the survey findings, it is suggested that thinking in the way of Chinese work culture would give Western firms time to incorporate the western managerial practices in china as an incremental change to develop a cultural sophistication. The managers in these firms is required to adapt to Chines business ethics as it impacts the business performance. It is also required to develop a communication policy that facilitate smooth business communication among the stakeholders and alliance with local partners to deal with language issue and understanding of business etiquette and non-verbal clues. The internal coordination would streamline the retail operations with improved communication towards attaining competitive advantage.
In accordance with the research findings, it is also suggested to the Western firms to exploit the technological advancements in China by investing in technologies to improve and upgrade the existing technology. The improvements in technologies would help the firms to improve the security features for protection of intellectual property and through use of patents, trademark and licensing of patents, and security technologies for tracking, product authentication, and improved control over supply chain process. It is also suggested that the western firms should focus its efforts to develop a strong stakeholder relationship this would also enhance positive brand image and perception towards its brands from its internal and external customers and help to build loyalty in customers to motivate the consumer to shop at undiscounted prices to fulfill personal representation and fulfill social goals.
APPENDIX # 1 RESEARCH QUESTIONNAIRE
- Gender:
- Male
- Female
- Age group:
- Less than 30
- 31 – 40
- 41– 50
- 51 – 60
- 61 and above
- Experience
- Below 2 years
- 3-5 years
- 6-10 years
- Above 10 years
- You are associated with which major Western Luxury fashion brand in China?
- Chanel
- Christian Dior
- Cartier
- Gucci
- Giorgio Armani
- Louis Vuitton
- Zegna
- According to your views, managing or operating fashion business in China is quite challenging task for the western firms?
- Strongly agree
- Agree
- Neutral
- Disagree
- Strongly Disagree
- According to you, which of the following luxury fashion goods characteristics can challenging for growth of western luxury firms in China market in present scenario?
- Premium pricing power
- Rarity
- Scarcity and limitedness
- Exclusivity
- Do you consider this; difference in the culture of China is serious issue for the firms to target the customers and to gain the competitive advantage?
- Strongly agree
- Agree
- Neutral
- Disagree
- Strongly Disagree
- Impact of Culture Differences
Please provide your opinion on the impact of difference in culture that you find most powerful impact on the firm?
(1-Strongly Agree, 2-Agree, 3- Neutral, 4- Disagree, 5- Strongly Disagree)
- Workplace etiquettes, organisational hierarchy, etc
- Lack of individualism
- Masculinity
- Trust
- Challenges for Western luxury organizations in China
Which is the major challenge are faced by the western luxury organization in China?
- Language issues
- Changing nature of the customers
- Human resources
- Counterfeit products
- Intellectual property
- Collectivism culture
- Strategies to mitigate the challenges
Please provide your concern about the best ways and the strategies that can be used by the western firms?
(1-Strongly agree, 2-Agree, 3- Neutral, 4- Disagree, 5- Strongly Disagree)
- Enhance and upgrade the technology
- Training programs
- Protection of IP
- Consumer awareness
- Develop relationship with stakeholders
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