(Shanghaidaily.com)
Updated: 2007-04-10 11:33

While Asians crave designer labels - often the name over the product - Swedish giant H&M successfully offers low-cost fashion for everyone. And it has just moved to China to prove that consumers are the same everywhere. Are they?

This undated photo shows two pedestrians pass by a big poster of Swedish giant H&M in Shanghai.[Photo:shanghaidaily.com]

Asia is about to change," declares Swedish fashion giant H&M as it finally expands to Asia - Shanghai next week - bringing its style of cheap and chic that has come to be accepted and admired by millions in Europe and America.

The Stockholm-based cut-price retailer opened its first store on the world's most densely populated continent a month ago in Hong Kong. It opens two stores in Shanghai this month.

One store opens next Thursday in the former Benetton building on Huaihai Road M. and the other at the Superbrand Mall in Pudong on April 26.

But the big launch party for Asia and China will be in Shanghai next Wednesday night - not in Hong Kong.

Asia is known for its taste for luxury and designer brands among young professionals, but H&M hopes to change that, or at least hopes that the wardrobes for Asian men, women, teens and children will include a wide selection of its stylish apparel.

The H&M message is that trendy, stylish and tasteful doesn't have to cost a lot of money.

"We believe that design is not a matter of price," says Rolf Eriksen, CEO of H&M. "Our fashion is created for everyone."

However, the launch party is clearly not for everyone. Coveted tickets to the event at Pudong's Science and Technology Museum are sought by every fashion enthusiast in town.

Unlike Zara, which celebrated its flagship store opening in a rather low-key way, H&M plans to throw a huge, one-of-a-kind party. Australian pop diva Kylie Minogue has been invited to make her debut on the Chinese mainland, promoting "H&M loves Kylie," a limited beachwear line.

According to Eriksen, H&M spends about three percent of its annual turnover on advertisements in one market.

From the amount of money the company is going to spend on the party - and what it has spent on the gigantic billboards suddenly flooding the city - its expectation for the Chinese market is obvious.

"China is a strategic and exciting market with great fashion awareness and spending power," he says.

"We therefore see a vast potential for expansion."

As one of the world's leading apparel retailers, H&M has chosen China to lead its development in Asia.

Apart from its first store in Hong Kong and two in Shanghai, another three will open in Hong Kong by the end of the year. The first store in Japan will open in Tokyo in 2008.

"Looking into the future, we think it's necessary to enter new markets," says CEO Erikson. "We chose Hong Kong and Shanghai because we are familiar with the two cities, where we have our production offices present for 30 years and 25 years respectively.

"It's a big step for us to enter the Far East," he continues. "The Asian market is huge. It could be one of the key markets for H&M in the future. However, we prefer to start slowly and plan carefully for further expansions."

He says the company has learned a lot in the US market, where it opened its first emporium on Fifth Avenue in New York City seven years ago. The Manhattan store was such a success that the company thought it could open much bigger stores in the US than in Europe.

"We did make some mistakes with the US market at the very beginning," he says.

"The stores we opened at that time were too big, which brought about problems. We changed our strategies and have also gradually learned how to operate long distance business from the US market."

The ideal development mode in China would be operating a couple of stores to collect necessary market information first.

Shanghai, or "China's Paris" as Eriksen puts it, will be the center. The company will consider moving to other cities after the Shanghai market is established.

"We are not in a rush," the CEO emphasizes. "The most important thing is to make sure that Chinese customers like H&M. We believe that fashion behavior is the same all over the world, be it Paris or New York, Hong Kong or Shanghai."

H&M, the second-largest clothing retailer in Europe, will compete in the surging local retail market with Spain's Zara and Mango, Germany's C&A as well as a raft of local brands such as the Hong Kong-based Esprit.

"Just like fashion, competition is worldwide," Eriksen says. "Every time we enter a new country, there will be local competitors and worldwide competitors.

"Our business idea is to offer the customers fashion and quality at the best price. We understand the customers would like to see our competitors around us. It's up to them to judge which they prefer."