CEO Talks: Ontimeshow’s Yeli Gu on the State of Fashion Wholesale in China
Founded in 2014, Ontimeshow was born at a time when a slew of Western-trained Chinese fashion designers decided to move to Shanghai and launch their own brands as the nation’s appetite for one-of-a-kind design started to grow.
Yeli Gu, a former costume designer and art director, saw the opportunity to build an infrastructure to better connect this growing number of independent brands with buyers. While the wholesale business model has existed for a long time, there hasn’t been an ecosystem for it for designer brands in China.
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Fast forward to almost a decade later and together with a dozen other key players such as Mode Shanghai, Tube Showroom, Not Showroom, and Shanghai Showroom, they have become a cornerstone of Shanghai’s booming fashion industry.
Despite China’s economy recovering slower than anticipated from the COVID-19 lockdowns, the demand for quality and original design is still going strong, according to Gu.
This season, more than 200 brands — 55 of them international ones — will sell to around 20,000 registered Chinese buyers with Ontimeshow at West Bund, the buzzy, affluent neighborhood filled with art galleries, water-facing luxury apartments, and an upcoming $8 billion landmark multipurpose development spearheaded by Hongkong Land.
Ontimeshow is expanding vertically as well.
It recently completed the renovation of a 46,300-square-foot space, called Ontime Center, inside the historic Joint Savings Bank Warehouse by the Suzhou River on the Bund. The center will be used to host pre-season trade shows and serve as an event space.
On the other side of the Suzhou River, Ontimeshow also manages the Bailian Group Fashion Center, a coworking space with designer tenants including Haizhen Wang, Jarel Zhang, Ruohan and Choco Concert. The state-owned Bailian Group is the largest commercial property landlord in Shanghai, owning more than 26 malls in prime locations. It became an investor in Ontimeshow in 2019, around the time when China’s concept store growth began to accelerate.
During this edition of Shanghai Fashion Week, Ontimeshow will host two fashion shows — Xiao Li at the terrace of the Bailian Group Fashion Center, with a view overlooking the Suzhou River, and Louis Shengtao Chen at the Joint Savings Bank Warehouse.
Here, Gu talks about the state of the fashion wholesale business in China, how local brands should navigate the ever-changing market landscape, and what’s the most sensible way for global players to tackle the Chinese market.
WWD: Can you tell us how big the Chinese concept store market is? How has it evolved over the past three years?
Yeli Gu: Ranging from first-tier cities all the way to fourth- and fifth-tier cities, there are around 4,000 concept stores in China. From our own data, the number of professional buyers has basically remained at around 20,000.
Of course, there are new entrants as well as those who got eliminated by the competition. The industry is becoming more demanding in terms of players’ capital reserves and professional know-how. Those who prevailed during the epidemic began to expand their stores. But compared with the spurt of growth between 2014 and 2019, the rate of growth now has more or less calmed.
Between 2020 and 2023, there has been a period of stabilization. There was a period of time in the middle of the pandemic when people were under quarantines in the West while people in China were free to move around. So the business was growing very fast. Part of the reason for that was that people couldn’t travel, so all the spending went into shopping.
The pace of development is getting faster also because major department stores joined the game. SKP launched SKP Select, Wangfujing introduced Luxemporium, and Bailian has The Balancing, just to name a few.
WWD: In the face of China’s economic slowdown and high youth unemployment, what kind of changes are there in the overall demand for designer brands?
Y.G.: The business remains stable at most stores, with many in expansion mode. I would say total demand remains unchanged, but I believe they have been more cautious in making decisions.
With international travel and interaction resuming, I think the demand for overseas brands will go up. Thanks to the recent concept store boom, international brands are more likely to find quality partners. At the same time, local buyers are looking for new brands to differentiate their brand mix, and find their niche in the ever-more competitive market.
WWD: From Ontimeshow’s perspective, what does the market’s adjustment and stabilization mean for local designer brands?
Y.G.: Chinese consumers are starting to be more self-aware. People are no longer looking for the same brand, they are valuing self-expression. Therefore, stores are seeking diversification and differentiation in their choice of brands, in order to stay ahead of the game. This change in buying direction will in turn force the brands to come up with clearer points of view.
This year is our 10th anniversary. These Chinese brands that have grown up with us have also been in business for 10 years as well. From the [business-to-business] side, we see that most of them have found a clear path going forward. Some value commercial scale, some pay more attention to self-expression, and some focus on a single category. They all found success in their respective market segments.
WWD: Is it harder now for emerging brands to find success in China?
Y.G.: It’s a different time now. If you launch a brand right after graduation with little working experience, the chance for success in China is low, since there are so many brands in the space already. It requires the designer to have a profound understanding of the market in order to find its niche in the market.
A new development we are seeing is that brands that have reached a certain scale globally in the past few years are now trying to tackle the Chinese market. They are the newcomers who are more likely to succeed in China if they find the right local partner, in my opinion.
WWD: What services does Ontimeshow provide to brands with various needs?
Y.G.: First of all, the biggest chunk of our business is the trade show, which is four seasons a year. The two main seasons are in West Bund. It’s for brands with a certain scale, usually with over 100 million renminbi, or $13.89 million, annual turnover like Le Fame and Deepmoss.
We also have a showroom service called Room Room; it is a similar positioning to other major players you see in the West, but with a deep link to stores in China. Internationally successful brands like EENK and Self-Portrait come here because they are able to meet buyers, distributors, and senior management at department stores from across China.
Following the investment from Bailian Group in 2019, we now look after the Bailian Group Fashion Center, with tenants including Haizhen Wang, Jarel Zhang, Ruohan and Choco Concert. This part is linked to brand incubation, which we would like to explore in the future when we are ready.
Then we have our latest project, Ontime Center. It’s a flexible venue that provides more diversified services for brands, such as pre-collection showrooms, monobrand showrooms, as well as fashion showcases, and networking events.
Going back to your emerging talent question, we actually have a talent support program called Young Talent. A panel of industry experts helps us pick 10 new brands out of over 200 submissions each season. We will provide training to better prepare them to face the market. It doesn’t necessarily mean that these brands will be commercially successful if they are selected, but it will add to the dimensions they lacked in the early stages of brand development.
WWD: Who are the leading players in the Chinese concept store market, and what new trends are emerging among them?
Y.G.: The coastal area of China, and inland cities like Chengdu and Chongqing, are bolstered with many key players. Since the pandemic, many of them have gone online to sell via livestream. So the traditional geography bond is less of an issue these days. For retailers like SND from Chongqing, the online business is probably as big as the turnovers of its 15 physical stores.
WWD: What should global brands be mindful of if they want to enter the Chinese market now?
Y.G.: More than ever they need to find a trustworthy local partner and stay curious about China. We have met with a lot of overseas brands that are curious about the Chinese market, but they may not come here very often. It takes a certain amount of time to get to know a market.
My advice to brands is to work with different potential partners through various smaller projects at the same time. On the basis of these projects, you can then determine who I’m looking for as a long-term business partner. The development of a brand in China has different stages. The Chinese market is big but that does not mean that your brand can immediately become big here. It requires patience, determination and stamina.
Even though the retail environment is challenging, life goes on as usual. The market is still developing, but it has just changed from rapid growth to slower growth. The demand for fashion consumption from the Chinese middle and upper classes is still going strong. It’s just that everyone is more rational about spending.
WWD: Chinese investors are actively looking into the fashion sector. Do you think with the backing of local investors, a brand can scale faster?
Y.G.: I believe there are good reasons behind every investment. Every brand’s position is different, so I think it’s really a case-by-case situation. A successful case would be the alliance between Self-Portrait and the Ellassay Group. Ellassay has a high market share and swift execution capabilities in China’s women’s apparel market and Self-Portrait is an expert in generating buzz globally. Self-Portrait is now the fastest-growing brand under Ellassay’s portfolios.
WWD: What’s next for Ontimeshow?
Y.G.: We have plans to expand into the consumer end, and help brands that we work with closely on retail strategy in China. I think it’s a natural step for many of them when their wholesale business grows to a certain level, and hits a ceiling.
At the same time, I am looking to incorporate more international brands in Room Room. So far, the South Korean brand EENK has grown exponentially in China with our support, reaching around 100 million renminbi in annual turnover.
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