CHINA FASHION BUSINESS

▼The following discussion and summary from the Coldy Fashion Circle address industry-related issues. These insights are the product of collective wisdom and do not represent individual opinions. The aim is to benefit industry professionals.

Brand vs. Business

A Hangzhou-based e-commerce company primarily relies on the 老板娘 (female boss) to drive sales via livestreaming on Douyin (TikTok), generating 3 billion RMB GMV in 2024 through her solo efforts. While the company recently expanded to Xiaohongshu (Little Red Book) and Taobao, these platforms lack effective operations and rely solely on organic growth. This over-dependence on individual influence starkly contrasts with brands like UNICA, JOC, and THEM—often called the “Big Four” influencer brands—which have established mature sales systems independent of personal charisma.

In comparison, an ODM factory with stable annual revenue of 60-80 million RMB decided to venture into e-commerce after 5-6 years of profitability. However, the factory lacked confidence in its products’ market appeal and hesitated to invest heavily. They set ambitious targets for their e-commerce team: 5 million RMB in returns and 20 million GMV within a year, but prohibited the use of influencer marketing, celebrity endorsements, or cross-platform promotions, relying solely on Taobao/Tmall’s internal traffic. Ultimately, the team achieved only 2 million RMB in returns, leading to the dismissal of the entire design, operations, graphic, and photography teams. Even for customer photo shoots, budgets were strictly capped at 50-100 RMB, with any overages rejected. Poor results were blamed on external photographers, despite the constraints.

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In this market environment, the divergence between brand thinking and business thinking becomes evident. Brand-building focuses on permeating user psychology, emphasizing cognitive and emotional connections. Business thinking prioritizes immediate profits and cash flow, chasing short-term returns. This creates a unique dynamic: a brand is a form of business, but inputs and outputs are not linearly correlated. Poor business performance may be temporary, but prolonged failure leads to collapse. Success depends not on choosing between brand or business, but on effective management.

An excellent example is An Ko Rau, a sportswear brand under the Suiran Group. Initially a generic product line, An Ko Rau capitalized on the rise of “light outdoor” trends by adopting a premium pricing strategy, successfully expanding from online to offline. Its flagship store in Shanghai’s Jiuguang Mall maintains a consistent brand positioning: “urban outdoor fashion for city living.” The brand avoids price wars on e-commerce platforms to preserve its value system.

An Ko Rau’s products are renowned for superior quality, with physical items often outperforming their images, especially in tailoring. While not every piece is a hit, each season produces bestsellers. Its customer base aligns with the brand’s ethos, though foundational elements like design, color, and quality remain critical.

The brand thrives through unique community engagement. Starting in Shanghai, it opened offline stores emphasizing sports communities, integrating trending activities like frisbee and flag football to promote urban lifestyles and eco-conscious values. This mirrors Lululemon’s community-driven approach (though Lululemon now faces growth challenges), while An Ko Rau’s sustainability focus aligns closer to Patagonia.

These cases show that whether building a brand or running a business, precise market positioning and sustainable models are key. A brand can be a business, but not necessarily a profitable one; conversely, a business may survive long-term only by embracing brand-building.https://wxa.wxs.qq.com/tmpl/lr/base_tmpl.html

Is Brand Building Necessary in the 0-to-1 Phase?

1. Advantages of Brand Building

The concept of branding originated from simple markings—putting a name on a product. As commerce evolved, branding expanded from tangible products to human-centric values, permeating every operational aspect. A brand can be understood through three dimensions: visual identity, product/marketing solutions, and cultural community value.

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Brand building is a holistic system involving internal and external alignment. Many companies overemphasize external reputation while neglecting internal consistency. Achieving unity requires answering the fundamental “why”—guiding talent recruitment, product development, marketing, and service standards. In contrast, focusing solely on “how” leads to superficial tactics like chasing viral hits, influencer hype, or traffic spikes.

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A case in point: A startup initially used premium fabrics from Japan’s Takisada and Shibaya, adopting a minimalist aesthetic inspired by COS. Despite investing heavily in photography and product pages, its spring collection sold only 20 items due to lack of PR and traffic marketing. The company blamed high pricing, slashed costs, and saw summer sales rise to 800 units. When advisors suggested either investing in 2-3 years of brand cultivation or pivoting to market trends first, the founder insisted on hitting 5 million RMB revenue within a year, dismissing competitors like KAIJIAN and The Row as “generic” while aspiring to Acne Studios and Maison Margiela’s high-end positioning.

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2. Misconceptions About Brand Building

Many mistakenly equate branding with premium pricing. In reality, a brand’s value lies in stabilizing product direction, building consumer loyalty, shaping cognitive frameworks, leveraging social consensus to influence psychology, and ultimately reducing decision-making costs.

For visual identity, startups need not pursue full VI systems—a recognizable logo and distinct color palette often suffice. Yeo’s Coconut Drink, for instance, thrives despite its simplistic, PowerPoint-style design. Visual standards vary by category: LV and Gucci emphasize logos, while Prada and Margiela favor subtlety. Chanel seamlessly integrates logos into accessory designs.

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A prevalent misconception in current marketing practices is the overreliance on the traditional “three-piece suite” model—TV commercials, launch events, and celebrity endorsements—which makes brand-building appear luxurious yet impractical. In contrast, successful brands like An Ko Rau adopt more pragmatic strategies. Modern brand-building increasingly aligns with the Minimum Viable Product (MVP) approach under internet-driven thinking, using rapid market validation to adjust strategies.

In channel development, there should be no rigid distinction between e-commerce brands and traditional brands. While e-commerce platforms face low traffic conversion rates, traditional channels also struggle with fragmented consumer attention. Both require mutual reinforcement: online operations should enhance offline experiences, and offline channels must strengthen digital integration. Although e-commerce platforms have limitations in spatial and contextual experiences, this precisely highlights a critical direction for future development.https://wxa.wxs.qq.com/tmpl/lr/base_tmpl.html

Brand-Building Strategies for Startups

1. Strategic Positioning: Identify Your Niche and Breakthrough Points

In the 0-to-1 phase, businesses must first define their commercial direction. At this stage, brand-building is merely one of many tools, akin to chasing traffic through the “three-piece suite.” The key is to maximize resource efficiency at specific milestones.

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To initiate brand-building, conduct multidimensional analyses—such as PEST (Political, Economic, Social, Technological) or SWOT (Strengths, Weaknesses, Opportunities, Threats)—to study industry trends, market dynamics, competitive landscapes, key customer value chain points, and internal strengths. Identify suitable market entry points using a quadrant analysis of global vs. local and cost vs. premium, supplemented by STP (Segmentation, Targeting, Positioning) planning across products, scenarios, and demographics. Additionally, technological innovations and cultural shifts often create new market opportunities.

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A 2018 skincare brand case illustrates this well. Initially capitalizing on the medical aesthetic mask trend, the brand pivoted to microbiome-focused skincare when regulations tightened. After validating product features via Taobao affiliates for its Green Fu Fu masks, it refined core brand assets by analyzing user needs, ultimately dominating the acne patch niche market.

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A counterexample involves the inaugural sponsor of a TV show. Despite securing low-cost exposure through a hit variety program, the brand was ostracized by other sponsors due to pyramid-scheme accusations and false advertising, losing both sponsorship rights and the ability to leverage its established assets. This case starkly warns against premature expansion with incomplete brand foundations.

2. Clarify Brand Positioning: Define Unique Value Propositions

Startups can leverage social media platforms to attract their first 1,000 customers through product prototypes, extracting brand ethos from user feedback. On platforms like Xiaohongshu (Little Red Book), study category characteristics and competitor content strategies to design keywords around “solving specific problems for specific groups in specific scenarios,” ensuring precise traffic acquisition.

Brand-building also requires aligning with market demands to identify unmet needs and articulate unique value propositions across R&D, supply chains, marketing, and services. Some brands’ missions and visions evolve through practice, but survival depends on competitive resilience and the market’s tolerance for trial-and-error.

3. Optimize Tactics: Consumer Insights and Resource Allocation

A brand is ultimately the outcome of operations—some flourish briefly, others endure. Market size alone doesn’t dictate longevity; successful brands like Virgin Group and Mitsui evolve into corporate symbols. Thus, in the 0-to-1 phase, leverage existing strengths while addressing weaknesses. For example, on Xiaohongshu, prioritize content creation or business development based on team capabilities to break through traffic bottlenecks.

Most founders adapt iteratively, prioritizing business fundamentals to ensure survival. Commercial success indirectly validates market positioning. This reinforces a core principle: while early-stage brand-building won’t solve all business challenges, it remains indispensable for long-term stability.

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