When serial entrepreneur George Ji Wenhong and private equity investor Huang Jin launched luxury goods and fashion clothing online retailer Xiu.com during the global recession in 2008, they relied on word-of-mouth to generate interest. Huang was data-driven and convinced that advertising couldnt positively impact sales, particularly in the short-run. He thought our competitors were stupid for spending so much on ads, recalls Ji, who first met Huang when the two were roommates in college in Beijing in 1988.
Eschewing ad spending, they invested some of the $15.5 million they had raised in hiring a team of global buyers from New York to Paris to procure foreign brands. While Net-a-Porter ships to China, many popular luxury-fashion sites, including Rue La La and Gilt Groupe, still dont. Because the companies lack mainland presence, the shipping fee for each of their items would likely be prohibitively high for shoppers. Ji and Huangs message to Western companies: Why open 50 brick-and-mortar stores in China when Xiu.com can market and sell your product?