Fashion
Luxury retail tech start-up Mihaibao is looking to disrupt how Chinese consumers shop for luxury goods and how Western brands reach Chinese markets. And investors are certainly taking notice.
Although still in a beta testing phase, the company is making waves due in part to the big-name participants in its $1.6 million seed round. Investors at this stage include Alibaba angel investor and former CTO John Wu, the UK Government and Royal Family, PayPal and more.
“Chinese people are obsessed with Western luxury goods,” said Mihaibao co-founder Jacqueline Lam. “But on international websites, Chinese customers are dealing with language barriers, multiple shipping fees, and foreign currencies and payments.”
Mihaibao co-founder Jacqueline Lam.
Furthermore, while Western brands are eager to tap the Chinese market, “many do not understand the Chinese culture, shopping behaviour and trends, making China a high-risk investment,” said Lam.
While many luxury brands have launched bricks-and-mortar stores in China, the taxes and mark-ups are high and the ranges often limited. Many such stores have been forced to slash prices, according to Bloomberg, due in part to online competition. China also has a massive ‘grey market’ for luxury goods fuelled by shopping agents who make a living moving Western luxury goods into China and reselling them.
All of this means that there is massive demand in China for luxury goods but no real simple or satisfactory way of connecting consumers with the brands they want. And that is what Lam and Mihaibao are trying to do.
Mihaibao is essentially a tech company. It has partnered with more than 200 Western luxury brands — including the likes of Chanel, Dolce & Gabbana, Gucci, Jimmy Choo, Valentino and many more — which are featured on the Mihaibao website. Shoppers pick what they want from the website and Mihaibao calculates prices and shipping costs via live currency conversion and deals with any tax or customs issues, for a percentage of the sale.
As a tech company, Mihaibao is also focusing on its data capabilities, which it’s using to analyse key trends in the Chinese market to help its brands bring the right products to Chinese consumers.
“Not only can we tailor the Chinese shopper’s experience but we can also help brands target the people that have created demand for a particular product — we know how the Chinese shopper thinks,” Lam told CNN.
Together with streamlining the shopping process for Chinese consumers, Mihaibao is also working to establish consumer trust with buying luxury Western goods online. Many consumers have trust issues with major marketplaces, like China’s Tmall, which often sell counterfeit luxury goods side-by-side with the real thing.
Whether Mihaibao can bridge the gap between Western luxury brands and eager Chinese consumers remains to be seen. But this young start-up’s powerful backers are certainly making people sit up and take notice.
