Expanding a fashion retail business into China

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Company Background

Abercrombie (Abercrombie & Fitch) is a brand of men's and womens clothing, including outerwear, available exclusively through its own retail stores commonly found in shopping malls and shopping centers in North America. The company also offers its products through its online catalog. The company currently wishes to expand its offerings overseas and is considering expansion into China. There are several approaches the organization can adopt to expand into Chinese markets. Each of these strategies comes with its own risks and advantages. In considering global expansion, Abercrombie decision makers must first determine whether the overseas expansion will adhere to the same guiding principles as the North American brand, specifically considering the protection of the brand name the company has worked so hard to maintain. Counterfeit and knock off products have entered the market and can affect sales.

Considerations for Global Expansion
Chinese Consumer Markets
Abercrombie currently competes with many well-known clothing and accessory brands, such as Old Navy, Aeropostale, Inc., American Eagle Outfitters, Chicos, Christopher & Banks, Lands End, Gap, Citi Trends, and Express, Inc., among many others. Though styles may be similar among competitors, each brand tries to establish its own look, through selection of styles they believe are in high demand from consumers. Abercrombie caters to teens, young adults, though some fashions and outer wear may be suitable for older, working adults. The company does not offer formal wear or professional business attire, such as suits.
In China, the fashion market has tripled over the past decade, with men and women spending on fashion items equally. While spending on fashion by adults age 25-40 is a mere fraction of what is spent in North America, it is expected that the Chinese fashion market will triple in the next decade (The Boston Consulting Group, 2011). Brands like Nike and Addidas are well established in the country, though fashion stores like Gap and Benneton have only begun to establish a presence, with a few locations. There are a few well-established global and domestic brands, like Semir, Li-Ning, and Anta, though no single brand dominates the fashion market. This means that any brand entering China's fashion industry has the potential to succeed, as long as the right consumers can be reached with the right message and the most desirable products.
Availability of Workforce and Technology
The workforce in China is technology savvy. There is continued growth in the retail sector, in the use of automation for many processes (Aberdeen Group, 2013). Supply chain activities such as ordering inventory and shipping products can easily be incorporated ...