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Levi’s launches new brand in China
Published on: 2010-08-19
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The mighty American blue jean, once a potent symbol of what was right about the US and wrong about communism, has come cap in hand in China to woo the almighty Asian consumer.

Levi Strauss, icon of the US jeans culture, came to Shanghai on Wednesday to launch its new global brand, Denizen. With echoes of the words denim, citizen and netizen, the five-pocket jean is aimed at 18-29 year olds in emerging markets, says Terence Tsang, head of the new brand.

Launched in Shanghai, it will initially target consumers in China, Singapore, South Korea, and eventually India. Mr Tsang said it was the first time Levi’s had launched a new global brand outside of the US, part of a growing trend of western companies taking extra steps to court Asian consumers.

Levi’s also aims to compete on fit – often a problem for Chinese consumers buying American jeans.

"Chinese consumers complain that their hips are narrower, their bottoms are smaller and their legs shorter [than the average American jean],” says Shaun Rein of China Market Research in Shanghai. To deal with that problem, Levi’s new brand will come in various fits, including the slim fit favoured by many Asians.

While Levi’s is hoping to increase its market share in China, it may face an uphill struggle. While jeans were a Chinese teen’s most rare and coveted possession in the 1980s, they are now much less frequently seen in China than in the west.

Designer jeans in the $200-$300 price bracket have found a lucrative niche market in China, but Levi’s classic basic jean does less well, retail analysts say, noting that Levi has priced its jeans too high for cheap casual wear, but too low to be a luxury item.

Chinese consumers are famous for both their love of luxury brands and bargains, but the ground between cheap and luxurious can be hard for Western retailers to till. Retail analysts say this illustrates the fact that mid-market retailing in China poses special challenges, tripping up the likes of Marks & Spencer.

The new jean line aims to hit a low-middle price point, and appeal to a thrifty emerging consumer. It will be priced at $40-60, about 10-15 per cent above the local competition, but half the current price of Levi’s jeans in China.

"There is not global brand currently at this price point,” says Mr Tsang, who demurs at the notion that the new brand represents primarily “a cheaper Levi”.

Mr Tsang said that while Levi’s did not want to portray consumers as “cheap”, the newly upwardly mobile target customers for the brand were “probably buying local brands now and have a limited amount to spend on clothing”.

Those consumers will pay 10 to 15 per cent more for a basic jean from a foreign brand with “so much heritage in jeanswear”, says Mr Tsang.

Yuval Atsmon, consultant at McKinsey in Shanghai, says Chinese consumers are increasingly value conscious: “Chinese consumers are still the most influenced in the world by big brands, but their actual choice of brand is increasingly value driven.”

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