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7 Reasons Why Chinese Fashion Company Hstyle is Taking on Zara

Hstyle – also known as Handuyishe – was launched by entrepreneur Zhao Yingguang in 2008. It’s a Korean-inspired fashion company built entirely on e-commerce websites like Alibaba’s Tmall, Amazon China, JD.com and VIP.com. In 2015, the company had annual income of RMB 1.5 billion ($230 million).

 

 

Here are seven ways in which Hstyle competes with well-known western giants like Zara and why it could be crowned king of the web.

 

  1. The largest Internet-based fast-fashion company in China develops 30,000 new products per year, far more than the 22,000 products produced by Zara.
  2. On November 11, 2014, known in China as Singles Day, which has become the country’s biggest online shopping extravaganza similar to Black Friday in the US, Hstyle had turnover of RMB 279 million (about $42 million) in a single day.
  3. Each product life cycle is managed by a group of just three people – a designer, a page promoter and a product specialist. This highly-decentralized working structure means the trio operates like a mini firm, with control over everything from product styles, sizes and colors to promotions and discounts.
  4. Each product group sets their own goals based on the previous year’s sales and are ranked on three main criteria – completion of the task, gross margins and inventory turnover. The groups are ranked every day, with the best performers receiving a bonus.

“The expansion of brands requires both bottom-up action and top-down support. Starting a new brand is a difficult uphill battle with many new challenges, so it deserves support from the top.” Zhao Yingguang (pictured above), CEO, Hstyle

 

  1. Groups are incentivized to launch new brands, with members of the group becoming founders of the brand and receiving an increase in their bonus from 1.5% to 2.5% of sales. Turnover targets are also set lower to further encourage the launch of new products.
  2. Hstyle allows independent designers to start their own brands, turning the business into an incubator of sorts. In 2012, Hstyle launched a sub-brand, AMH, whose market value reached close to $45 million just two years later. The company now has 18 sub-brands.
  3. CEO Zhao Yingguang has set Hstyle’s target revenue at RMB 10 billion by 2020 (approximately $1.5 billion), with 50 sub-brands. Its mission is to become a global corporation with multiple fashion brands that are recognized around the world.

Zhao Yingguang is an alumnus of CKGSB’s EMBA program and a current student of CKGSB’s DBA program.