Women’s Wear Daily
04.24.2014
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fashion-features

ChinaFile: Dangerous Opportunity

With the Chinese economy showing signs of weakness, and foreign brands cutting their advertising budgets, local designers may have a chance for growth.

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BEIJING — The Chinese word for “crisis” actually means “dangerous opportunity.” As the Chinese economy starts to show signs of weakness, some people are beginning to see a dangerous opportunity for their growth, including Chinese designers.

First, China’s best manufacturing facilities will have excess capacity due to reduced export orders. Chinese designers might finally have a chance to use some of the country’s best manufacturing facilities. One government official in the textile industry, however, is not that opportunistic. “The better facility might take the small orders from designers,” he said, “but the problem is their best workers probably already went home. They are too expensive to keep on the payroll.”

RELATED STORY: Click Here for Last Week's 'ChinaFile' Column >>

Second, advertisers are cutting their budgets for China as statistics indicate less-than-optimistic figures for the near future. “The outlook is very bleak for the latter half of the year,” an executive for an international public relations agency told me. The executive did not want to be named. She said there were across-the-board budget cuts for major advertising clients, some of them the biggest players in the Chinese market. Another advertising executive predicted that a lot of Chinese newspapers will die before the end of the year as ad revenues will decrease substantially.

This seems to be good news for young Chinese filmmakers, many of them fresh out of school and still with no work under their own names. Many of them have established their own studios to work with clients who want to invest in low-budget Internet films, hoping one might go viral in China. Gong Zheng, a college graduate who has worked on two film projects, claims that freelance filmmakers and studios are getting a lot of jobs these days. “Advertisers, Western brands like big shampoo brands who wouldn’t even give us a meeting before, are now coming to us for proposals.” Gong is very happy that the economy is tanking a bit, because “it gives the little guy like us a chance to surface.” Why? “Because we are cheap,” he said, but hastened to add, “cheap does not necessarily mean bad quality.”

I am not sure whether the economic downturn will really turn out to be such a great thing for the little guy. After all, when general consumer spending drops, local designers will be hit, too. Most likely harder, since their manufacturing costs are higher. Still, the low tide in media investment by foreign brands might give local designers a break to become better known in the market.

As for marketing tools, I do believe new media will see another major hike in investment, while traditional media forms such as newspapers and television will feel the brunt of the budget cuts in advertising. The government is not helping either. If anything, the authorities have tightened their control and censorship on traditional media such as newspapers. The Southern Media Group, a liberal and reform-minded media organization based in Guangdong Province, has just seen dramatic personnel turnover due to government interference. On the other hand, the Economic Observer, another nationwide newspaper, was temporarily shut down by the Beijing government for unauthorized reports about the flood that killed 77 people in the city. All this seem to push advertisers to use new media, where the government has less control.

Whether this crisis turns out to be a “dangerous opportunity” for some is still too early to tell. But the fact that China is slowing down seems to be the writing on the wall.

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