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UK's online fashion giant ASOS quits Chinese market

Reporter: Chen Tong 丨 CCTV.com

04-19-2016 00:54 BJT

ASOS, the UK's largest online fashion retailer, has announced that it is going to leave China after a three-year struggle. The company has lost around 25 million yuan in China during the first half of its last fiscal year and is now ... giving up. What's behind the online disaster at ASOS?

ASOS came to China in 2013, pledging to put 100 million yuan into importing British fashion and creating a sales force to market it. Perhaps crucially, however, unlike other fashion brands that also maintain physical stores, ASOS sells only on the internet. It seemed a reasonable business model for China, though, where the e-commerce market has seen a dramatic boom over the past few years. But that turned out to be the problem -- why should Chinese customers choose ASOS with so many alternatives available on the internet?

Catering to the shopping habits of Chinese buyers, ASOS in addition to its own web site, also opened a Tmall store. But few people knew about it. ASOS has some 180,000 followers on Tmall -- far fewer than other fast-fashion brands such as Uniqlo and Zara. Lin Tingting, who has been in the fashion industry for years, says having a presence on China's most popular online shopping site doesn't necessary mean that you've adapted to the local community.

"ASOS has a very successful business model overseas. E-commerce in Europe is very different from the domestic market. In Europe, online platforms try to boost sales by various marketing incentives rather than by discounted prices. But China's e-commerce grew up with a model of discounted sales. Almost all the platforms sell discounted products -- items at original prices account for only ten percent of the market," said Lin Tingting, vice president of Yifeng Int'l Holdings.

ASOS says it will cost the company between eight and eleven million pounds to abandon the Chinese market, and that's on top of an estimated loss of 4 million pounds for the current fiscal year. The company is very direct about its situation. In an email interview, it told Money Talks that it has "no confidence in its ability to provide Chinese consumers with the incomparable ASOS shopping experience." All ASOS business in China is expected to be closed by late May, and all staff dismissed.

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