Shein, Xiaomi: How Chinese companies are expanding in Europe

According to the EHI Retail Institute, Shein earned around 170 million euros in Germany in 2019 – but in the Corona year 2020 the number should be many times higher. Because in the last year alone, the privately owned company Shein quadrupled its worldwide sales, as the news portal Nikkei Asia reports, citing Chinese news agencies.

Corona accelerates the spread of Chinese brands

 The  fast fashion retailer is just one example of the triumphant advance of Chinese brands in the West. “Chinese manufacturers are conquering the western world in almost all consumer goods sectors,” says Martin Schulte, consumer goods expert at the management consultancy Oliver Wyman. So far it has mainly been electronics companies, including the smartphone manufacturer Xiaomi, now Chinese manufacturers are “also advancing into classic Western sectors such as the textile industry.”

Xiaomi and Shein show: Chinese companies are not only taking over western companies, but are also expanding and trading increasingly in Europe and the USA. While Chinese textile factories have so far mainly produced for European cheap brands such as Primark, C&A or H&M, Chinese brands are now increasingly the buyers who sell the goods themselves in Western markets. And Xiaomi, with its Mi phones in Germany only since August 2019, has already risen to become the third largest smartphone dealer.

 The  Chinese-born billionaire Karen Lo took over the majority in the Ratingen fashion company with her company North Point Talent and relocated the headquarters to Hong Kong.

In China, the pandemic is as good as over

It seems that the penetration of Chinese companies into the western market is being accelerated by the corona crisis. In fact, the pandemic in China has almost been overcome thanks to some rigid measures.

 The  Chinese are almost completely back to work – and work at high speed, six days a week, while the European states shimmy from lockdown to lockdown. “Europeans are extremely busy with themselves, trying to stabilize their core business instead of thinking about expansion,” says Schulte. See the example of Philips: Its electronics division is for sale. In the past, European companies would have bid widely, according to industry reports, there are now mostly Chinese bidders in the running, including Haier.

Another factor has only indirectly to do with the pandemic: »In the corona crisis, our markets have become much more digital. This has two advantages for the Chinese: On the one hand, they don’t have to set up any branches to gain a foothold here. And they are much more familiar with modern e-commerce than we do, ”says Schulte.

Online marketplaces in 2030: almost half of e-commerce

 The  vehicle for successful expansion: the online marketplaces.

 The  sales platforms for independent retailers from Amazon, Zalando or Alibaba are the growth business par excellence: By 2030 they will grow to almost 50 percent of all e-commerce, predicts a study by Oliver Wyman on marketplace management. Today, according to the study, their share is 29 percent.

“Nevertheless: Compared to Chinese platforms like JD.com or Alibaba, the Amazon marketplace often looks more like a regional league,” says Schulte.

 The  Chinese marketplaces are much more professional, faster and more precisely tailored to their customers. Western retailers such as Otto, Zalando, Media-Saturn and Douglas are also jumping into the marketplace business. But the Chinese now make up the lion’s share of the world’s largest marketplaces – including Ali Express, the foreign branch of Alibaba, lesser-known names such as Pinduoduo, or TMALL.com – the latter are only available in Chinese.

Chinese traders are marketplace experts

And the Chinese retailers know much better how to use the marketplaces successfully: with the right prices and the right content, tailored directly to their respective customers. Shein is particularly well positioned here with its online shops on Amazon or AliExpress. Shein knows extremely well about the young target groups of the respective marketplaces and advertises perfectly.

 The  offer is extremely cheap and reacts very quickly to trends. Shein uses fashion bloggers via social media channels such as Instagram and TikTok. And there is close interaction with customers, because marketplaces like Aliexpress are increasingly acting like influencer platforms themselves. Shein has more than two million followers on AliExpress alone – more than on Pinterest or TikTok.

Xiaomi’s success is also based on the close proximity to its users – via social media and its own “Mi Community” – in both directions: Xiaomi not only advertises its own brand, but also allows feedback to flow into product development, “writes one Xiaomi spokesman on SPIEGEL request.