Courtesy of Lelio Gavazza and Beatrice Spagnoli
At least eighteen Italian shoemakers have factories in Wenzhou, and according to the Zheijang Foreign Trade and Economic Cooperation Bureau,Wenzhou holds the record for being the largest footwear manufacturing center in the world. China’s shoe market is not as developed as its clothing market, mostly because footwear brands emerged in China later than their clothing cousins. Ermenegildo Zegna, for example, began operations in China in the late 1980’s. Marketing and advertising investments have also been limited, insufficient to effectively penetrate such a large market and reach far away customers in secondary cities. Fundamental but also lacking is an understanding of Chinese consumers, who do not yet associate footwear with fashion, valuing comfort over design. Men tend to have very few pairs of shoes with little regard for the style, favoring comfort and simplicity. Women tend more towards appearance, using high heels but neglecting to coordinate colors and styles.
In a market as vast and highly competitive as China, certain peculiar characteristics beg analysis. High fashion aside, almost all mid-level shoes are produced by Chinese brands. Domestic competition is high, as companies vie to expand their distribution into second and third tier cities where economic growth is livelier. This competition presents a difficult obstacle for newcomers, who find themselves competing against megabrands like Belle, which controls two-thirds of the market with 22 brands and sales volumes of over €3 bln, and Daphne and Saturday, who together have 10% of market share. Control of distribution channels is also vitally important in a country where 71% of purchases are made in department stores and shopping malls. High fashion brands like Salvatore Ferragamo and Tod’s have created a different atmosphere in the high-end segment, and other brands are approaching China with aggressive market development strategies.
Italian footwear brands have a rapid growth outlook, with sector analysis foreseeing significant and long lasting expansion. Considering that the average Chinese consumer today has a relatively low buying power that is bound to increase, there is plenty of room for Italian shoes in the market.
Wenzhou’s dynamic industrial situation presents ample growth opportunities, but footwear makers – including the Italians – have had to adapt to the dimensions of the market to stay competitive on a global scale. Italian brands have often had to change their corporate and manufacturing stances with respects to distributors and local manufacturers, to maintain quality standards and better control over the local supply chain. It is thanks to these changes that Italian brands have the chance to take advantage of solid future growth, driven by a healthy consumer class made up of the women of the ‘80’s and ‘90’s who enjoy a higher quality of life and are able to afford prestigious brands with their growing purchasing power.
* Osservatorio Asia