H&M Enters China'S Two Or Three Tier Cities

As consumption in Europe and the United States remains weak, Swedish fashion retailer Hennes & Mauritz (H&M) refocuses on expanding China's market plan to meet China's growing demand.

But Karl-Johan Persson, the 36 year old chief executive, said that although China has great business opportunities, competition is becoming increasingly fierce there. "Persson said.

Persson said that many efforts need to be made to succeed in China now, and competition will become more intense soon because there are too many competitors entering China. Competition is fierce now, but it will become more intense in ten years.

Compared with the domestic market, most foreign clothing brands are in China's market.

Most abroad

According to Handelsbanken, H&M's profits in China are stronger than any other market, and the number of H&M stores in China is expected to increase two times in the next three years.

Although Persson declined to give details, he said that the number of new shops opened in China next year will be the largest in the world, H&M said.

We have entered cities like Changchun, Nanjing, Guangzhou and Kunming, and we plan to open stores in many cities next year, he said.

According to statistics from Boston Consulting Group, a market research firm, Chinese consumers spend only 1150 yuan (US $180) on clothing each year, which is 1/5 of the American population, but their demand for new clothes is gradually increasing.

Boston consulting company said that it is expected that China's clothing sales will increase to 800 billion yuan by 2015, and China will account for 30% of global fashion sales in the next five years.

But H&M will face space competition with other foreign retailers in China, such as Zara in Spain and Uniqlo in Japan, and some Chinese fashion brands have taken up a large area.

Shanghai Metersbonwe apparel Limited by Share Ltd (Shanghai Metersbonwe Fashion & Accessories Co.) has a distribution network of 3000 stores in China, which produces casual wear and professional clothing similar to H&M.

Persson said that since her grandfather founded H&M in 1947, Gold retail has always been the cornerstone of the company's strategy. Although competition in China's retail sites is fierce, consumers like H&M, making H&M an attractive choice for shop owners.

Basically, it is what we can bring about; if we enter the mall, we will attract consumers to the shopping mall, he said.

This is an important bargaining chip with the owners, but in the rapidly changing Chinese market, the selection of suitable shopping malls or streets will be more difficult.

Persson said that you can get a lease in a new shopping mall and will soon be very popular. But in a year, they will build another brand new shopping mall on the other side of the city.

He said H&M would try to sign flexible tenancies.

This year, H&M's profits were hit by high cotton prices and strong Swedish kronor.

Many competitors maintain profits by rising prices, but H&M keeps low prices and continues to invest in clothing to improve quality and increase environmental protection by using more renewable and organic cotton.

Persson said, if a listed company is likely to do the best thing in the short term, raising profits is not a problem, we can easily achieve it, but we must maintain a balance between short-term and long-term interests.

He said analysts have totally different time categories; if we allow analysts' expectations to lead the nose, then in the long run, they will be very unfavorable to our company's profits.

Analysts may be concerned about the company's profits, but many people think that because of the rapid expansion rate, this is also good for long-term prospects.

The goal of H&M is to increase the number of new stores to 10% to 15% year-on-year. At this rate of expansion, the number of stores in the next five years will nearly double.

But such rapid growth also brings challenges.

Persson said that we will open a new store almost every day this year. As we expand so fast, hiring the right employees is the key; if you go to the H&M store in Stockholm or Shanghai, the store looks almost the same, the product is basically the same; but the key is that the staff who manage the shop can get in line with the idea of H&M, and they have the spirit of H&M that we defend.

Persson's grandfather is the founder of the company.

When he was little, Persson would travel with his father and grandfather and go to his office.

He got his first summer job at H&M when he was 15 years old.

Although he knew very early that he wanted to work in a company, he didn't know what he would play.

After finishing business courses and working in various H&M related jobs in Asia, Persson was appointed to promote the store's high-end brand COS.

In June 2009, Persson, 34, succeeded his father as chief executive of H&M, and his father was still chairman of the board.

Persson said he was ready to take over the company's power, but the support of a strong team and executives was important.

This is also an individual effort. Persson often travels on business.

Although he is the father of two children and a fanatic fan of the Stockholm Djurg rdens football team, Persson will still try to visit H&M in 41 countries, at least once a year.

He said that his management style was simple and bureaucratic, which was basically the same as that of his grandfather in 1947.

Persson said my grandfather wanted H&M to keep the idea of a small company.

No one is authority; we insist on implementing the open policy without hierarchy.

He believes that these ideals are the reasons why H&M can make profits in every country that they are involved in.

Persson said, "we are not only profitable, but also growing in all markets we are involved in, and there are still plenty of growth opportunities in the mature market.

Persson said, we expect that there will be good growth in France, Italy and the United Kingdom. Of course, it is difficult. For a long time, we haven't seen such intense price competition and so many discount activities. Europe is unstable, but we still occupy the market share even though the environment is relatively stagnant.

He said he thought private consumption in Europe and the US would not soon improve.

H&M has about 200 stores in the United States, but Persson says there is more room to open.

Meanwhile, Persson said H&M is considering several emerging Asian countries.

He also said that the company had a strategy to enter the southern hemisphere market, despite the seasonal problem: when the northern hemisphere sells summer clothing, consumers in the south of the equator want winter clothes, while in the northern hemisphere selling winter clothes, the southern hemisphere needs summer wear.

He also wants to expand H&M's product line.

In 2009, the H&M Home family products were launched in H&M stores in some countries, and Persson said he plans to launch several new products in the coming years.

And of course the Internet.

He said that online sales have been very good in the eight countries that we offer online shopping. Next year, we will open online shopping in the United States. The goal is to launch online stores in all countries that offer physical stores.