February 20, 2014, 1:14 PM

A Chinese factory manufactures a booming e-retail business

Guangzhou Huimei Fashion Co., which began by producing clothing for overseas retailers, created its own brand and now sells its own apparel exclusively online. The company’s web sales grew 153% last year to more than $125 million.

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Chinese shoppers are buying a lot of apparel and accessories online. In fact, seven of the 10 fastest-growing retailers among those ranked in Internet Retailer’s newly published 2014 China 500 are in this category.

Among those catering to those Chinese clothing shoppers is Guangzhou Huimei Fashion Co., which began as a manufacturer for other brands, but now sells its own brand exclusively online.

It’s a common enough story in China. Huimei operated a factory in the large southern China city of Guangzhou and produced apparel for several overseas brands, such as U.S. apparel brand Forever21. But the global economic downturn that began in 2008 cut into orders, leading the company to start producing its own brand of women’s apparel, called Inman. The company began selling its Inman line on China’s largest online retail marketplace, Taobao.com, which is operated by Alibaba Group, China’s dominant e-commerce company. It later began selling on Tmall.com, Alibaba’s other big online shopping portal.

Sales have been more than doubling each year since it launched the Inman brand, says Huimei founder Fang Jianhua.  In 2013, Inman’s sales jumped 153% to 760 million yuan ($125.4 million) from 300 million yuan ($49.5 million) a year earlier. During last year’s big Singles’ Day online sale on Nov. 11, which has become a day when Chinese retailers offer big discounts online, Inman sold 120 million yuan ($19.8 million) worth of products in 24 hours on Tmall.com, earning it the No.1 spot on Tmall.com sales that day in women’s apparel.

The company’s success selling its own brand online led it to get out of the business of contract manufacturing for other companies.  As part of its focus on e-commerce, Guangzhou Huimei acquired another Chinese web-only apparel brand, Chuyu, last year. Their combined sales topped 1.12 billion yuan ($184.8 million) in 2013, Huimei says.

“I feel very lucky because my company changed its role from a factory to an e-retailer at the right time,” Fang says. “One of my competitors, who once owned a factory much larger than me, had to shut it down because of the reduction in overseas orders.”

Fang says companies like his that focused on selling online benefited from China’s clothing retailers underestimating the potential of the online channel, and being slow to move to the web for fear of cutting into sales at their  bricks-and-mortar stores. With little competition, marketing was affordable. Fang says in his early years selling on Taobao he could generate $10 in sales for every $1 of advertising.

Today, Huimei pays close attention to feedback from customers, and introduces 30 new products every week based on that feedback. Most competitors introduce products on a monthly basis, Fang says. Plus, Fang says, because he can efficiently predict trends based on customer data he turns over his inventory about every 50 days, about twice as fast as most apparel retailers in China.

For 2014, Fang says he expects Inman’s sales reach 2 billion yuan ($330 million). He is also planning to acquire more brands, and may consider buying a store-based retailer to into the offline channel.

Huimei ranks No. 51 in the newly released Internet Retailer China 500. For  more information about Chinese online retailers please click here.

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