Korean fashion brands are entering the luxury streets of Shanghai, China, one after another. As K-fashion awareness rises amid easing tensions in Korea-China relations, the reshaping of China's fashion market around live commerce has reduced demand for offline stores and lowered rents in prime retail districts, which is also cited as a driver for expansion.
According to the industry on the 5th, Musinsa will open "Musinsa Standard Shanghai Shinsegae New World Mall" on Nanjing East Road in Shanghai at the end of this month. It comes three months after it opened its first overseas store on Huaihai Road at the end of last year. Huaihai Road is a shopping street packed with global luxury stores such as Hermès, Louis Vuitton, and Chanel.
Nanjing East Road, where Musinsa's second store will open, is Shanghai's busiest commercial district and is called the Myeong-dong of Shanghai. It is crowded with global brand stores and souvenir shops. Musinsa plans to enter the largest department store on Nanjing East Road to expand contact points with local customers.
Earlier, LF Corp. opened "SpaceH Shanghai," the first overseas flagship store (standalone large store) for its fashion brand Hazzys, in Shanghai's Xintiandi last month. Xintiandi is a commercial area connected to Huaihai Road, with many luxury brands and high-end restaurants. LF Corp.'s strategy is to strengthen its premium brand image in the local market with Hazzys at the forefront.
Since the end of last year, as Korea-China relations have entered a thaw, consumer-goods corporations such as fashion and cosmetics that had slowed for a while are accelerating their push into the Chinese market. Analysts say expectations for the easing of the ban on the Korean wave in China and growing interest among local young people in Korean fashion are intersecting.
On top of that, changes in China's fashion distribution structure are also spurring corporations' entry. In recent years, China's fashion market has grown rapidly around live commerce such as Douyin and Taobao Live. As foot traffic to offline stores has declined and some global and local brands have moved to restructure their store networks, rents in Shanghai's core retail districts have fallen compared with the past, creating favorable conditions for entry.
Beyond Musinsa and LF Corp., Korean fashion brands are continuing to expand into Shanghai. LF Corp.'s subsidiary brand Dunst; Samsung C&T's fashion institutional sector's Juun.J (JUUN.J); Misto Holdings' Marithe Francois Girbaud; and Emis (EMIS) have also opened stores one after another in major Shanghai districts. AU BRANDZ's Rockfish Weatherwear opened a flagship store on Nanjing West Road, a luxury street in Shanghai, at the end of last year.
However, while Korean fashion brands are building a favorable position in the Chinese market for now, some say competition will intensify over the long term. Local designer brands are beginning to grow in earnest, and unlike in the past, consumers have started to consider not just the simple Korean wave image but a comprehensive mix of brand and product competitiveness and in-store experience elements.
In fact, among Korean fashion corporations, there are cases in which businesses aggressively expanded in the Chinese market but failed to respond to market changes and then contracted. Stylenanda is a prime example. After entering China in 2009 and rapidly expanding its offline stores, Stylenanda withdrew from most stores in 2022 and even suspended operation of its online website.
China is the world's second-largest fashion consumption market after the United States. According to the Ministry of Trade, Industry and Resources, Korea's textile exports to China last year totaled $1.37 billion (about 2.013 trillion won), up 3.9% from a year earlier. That level exceeded exports to the United States ($1.27 billion) during the same period.