Levis launches new global brand aimed at China

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Jeans maker Levi Strauss & Co. launched a new global brand in China on Wednesday, joining a growing list of companies that hope to crack this fast-growing and youthful market by tailoring their products to Chinese tastes.

Models at the launch were wearing sneakers and high-heeled sandals: not a cowboy hat or boot in sight. The new brand is aimed at young consumers in emerging markets, starting with China, Singapore and South Korea.

From Nissan sedans to watches and Hermes luxury goods, global companies increasingly are designing products and brands with the Chinese market in mind as incomes rise amid rapid economic growth.

The newest incarnation of Levis will aim at a broader segment of Chinese consumers than traditional Levis, which sell for over $100 in the upscale malls along Shanghai’s tony Nanjing Rd. shopping strip.

“In the last few years we seen a new group of consumers,” said Aaron Boey, president for Levi Strauss’s Asia-Pacific division. “Many of them want stylish clothes but at accessible prices,” he said. Levi is calling the new brand “dENIZEN.”

The Levis brand enjoys an avid following in China, among a relatively limited number well-off younger shoppers, some of whom are collectors.

“Some people favor the classics, such as No. 501; others look for different designs and some are obsessed with Levis’ cowboy spirit or the history behind the brand,” said Christina Wong, managing editor of INSTYLE magazine in Shanghai.

San Francisco, California-based Levi Strauss is keen to expand its base in one of the world’s biggest consumer markets, where sales of apparel and footwear hit $169 billion last year, according to a report by Bank of America-Merrill Lynch, and growing at a healthy double-digit pace.

Already, sales of garments and shoes in China have outpaced pricey Japan, accounting for more than a third for all of Asia, and increasingly, fashion-conscious Shanghai is viewed as a foothold for the region.

A slew of retailers have crowded into the city’s department stores and malls, from luxury brands like Louis Vuitton to more affordable labels like Esprit and H&M. In May, Japan’s Fast Retailing opened a mammoth flagship Uniqlo outlet on Nanjing Rd., where crowds lined up for weeks to check out its latest line of China fashions.

From beverages to shampoos, global companies are finding ways to appeal to local consumers with made-for-China brands.

On a more upscale note, Hermes International’s new China brand of clothing and other products, Shang Xia, will debut with the opening of its first store next month in Shanghai.

Levi Strauss, which retreated from the China market for a time in the mid-1990s citing concerns over labor rights, now has hundreds of outlets in China and plans to open up to 1,000 by 2015.

The company, which also sells Dockers pants and Signature brand products, is honing its focus on China’s emerging middle class – a popular strategy in the recession-stricken age of less-is-more in more mature Western markets.

The new label Levis jeans will sell for the equivalent of $40 to $60 – a range likely to suit the relatively young 20-40 age range that dominates China’s spending on clothing and accessories.

The first dENIZEN shop will open later this month in Shanghai.

With Lee, Diesel and other big brands coming on strong, there is plenty of competition.

“If Levis doesn’t move quickly, it might lose market share,” said Wong.

Many Chinese consumers are keen on a local, or “nationalistic” identity for the products they buy and companies are matching this, even if products are destined for the global market.

Nissan Motor Co.’s Teana sedan, for example, has a full-size back seat, conservative looks and a reasonable price. It is sold globally, though it was designed with Chinese buyers in mind.

“We have not seen this before to the extent we are seeing this in China. We are dealing with 1 billion people with income per capita growing exponentially,” said Max Magni, a partner with consulting firm McKinsey & Co.

“Chinese consumers are not brand loyal, but they are brand conscious. They are trying something new all the time,” Magni said.

At the same time, consumers are becoming more pragmatic and looking for extra value, and having a brand that caters to their tastes can provide some of that extra appeal, he says.