Exception is indeed an exception to typical Chinese brands.
As one of the earliest Chinese designer brands, Exception never tried to court the mainstream market. Yet almost by accident, it became one of the most well-known Chinese aspirational brands. The company still insists on sticking to its own unique design philosophy and is willing to go against fashion trends, which has helped it to establish a group of loyal followers, including Chinese First Lady, Peng Liyuan.
Exception’s price points are much higher than most domestic brands with wool sweaters and linen tunics retailing from ￥1000- 2000 (US$150-300), while a trench coat or jacket can cost as much as ￥5000 (US$745). On average, pieces are priced around ￥2,000 ($300). Discounts are rare and only given on off-season products. Further, Exception has stayed out of the online rat race and sells only through physical retail stores.
The story of Exception is a story of artistic sense and business acumen working together to succeed in a fickle market. Its founder is an admirer of Japanese designer Yōji Yamamoto and even collaborated with Mr. Yamamoto to create the sub-brand YMOYNOT. Despite market challenges, Exception remains one of the most commercially successful designer brands.
In the Beginning…
Exception de Mixmind, as the company is officially known, was founded by Mao Jihong (毛继鸿) and Ma Ke (马可), with Ma Ke as the chief designer and Mao Jihong handling the business direction. In 1996, after winning a series of young fashion designer awards, the couple set up their own company, Guangzhou Exception Garment Ltd., and then launched its designer brand Exception de Mixmind in China.
Currently, Exception de Mixmind has 90 stores in China with an estimated annual revenue of ￥1.5 billion ($220 million). The company also acts as the represent for international brands such as C.P. Company (Italy), Stone Island (Italy), and Kowalsk (Spain) in China.
After Mr. Mao and Ms. Ma divorced, Exception’s sub-brand, Useless, went independent. Ms. Ma withdrew from the daily operations of Exception and focused on Useless, but stayed on with Exception as creative advisor.
Mr. Mao is a lecturer at Fudan University for its EMBA course. Currently, he is also the vice president of China National Garment Association (CNGA).
The Politics of Fashion
Jason Wu cemented his status in the fashion industry when Michelle Obama wore one of his dresses to the presidential inauguration ceremony. In the same way, China’s First Lady Peng Liyuan made Exception a nationwide iconic fashion brand. Wearing dresses from Exception as she accompanied President Xi Jinping on a series of diplomatic missions, the brand was thrust into the international spotlight and was quickly getting all kinds of media attention. When she wore a diamond blue windbreaker it appeared in every newspaper and in every fashion magazine.
Soon Exception became a household name.
Every wealthy Chinese lady wanted a dress from Exception. Every high-end supplier wanted to work with the brand.
While Exception might appear to be an overnight success, the brand’s story is one of decades of hard work, perseverance, and making smart business decisions.
Since its inception, Exception targeted a very specific, sophisticated customer group. It appealed to female customers who wanted design and quality, who but also want to be different, who were aware of international trends but wanted something that offered an Oriental aesthetic. Although the brand never tried to target a specific age group, many of its customers are successful career women in their late forties or fifties. Some of them have been following the brand for decades.
Exception has always maintained its own design philosophy, staying focused on serving its core customer base. Long before Peng Liyuan became the nation’s leading lady, she was already a big fan of Exception’s design.
Dare to Experiment
Exception mainly uses natural fibers such as cotton and linen, is willing to try special treatments and different processes. The cut and fit are flatter than Western styles, however, each garment has a lot of interesting details like an asymmetrical cut or different textured fabrics that have been spliced together. The company uses the best raw materials in order to ensure that each garment meets the highest quality standards. In addition, garments are often embellished with hand embroidery or treated with special dyestuffs to achieve a unique look.
Exception is not afraid to express its own ideology. Each of the company’s stores has its own signature look, which it achieves through the use of unusual materials. The Beijing Guomao shop is decorated with copper pieces, while its shop within Sogo has a cave eco-system made with recycled material. Consumers have mixed feelings about the shop design – being inspired by it but also not totally embracing it. But they respect the fact that Exception always dares to experiment with the edgiest designs and ideas, knowing that you can't please everyone – and in fact, you shouldn't even try to.
Moving Up
In 2008, Mao Jihong made one of his most important business decisions. He cut almost half of his Exception shops and doubled his retail price points. The number of shops went from 100 to 60, prices jumped from ￥500 - 800 to ￥1000- 2000. This smart business decision helped Exception transform itself into a high-end brand and laid the foundation for its future success.
“If we had not moved up by that time, we would have missed a narrow window of opportunity and been swept out of the market,” Mr. Mao told students in an EMBA program at Shanghai Fudan University.
Moving up helped Exception open the door to a whole new market while getting out of the price sensitive zone and aided the brand in focusing on quality and exclusivity.
Unconventional Marketing Strategy
Exception has also been very strategic in its marketing. The brand attends a series of high-end fashion events where it can associate itself with edgy designers and avant-garde artists, as well as presenting its own runway show in Paris during fashion week.
In-store events are another way that Exception differentiates itself. For example, acclaimed journalist and sustainability advocate, Chai Jing(柴静), released her new book in Exception’s shop. The brand also worked with Leone d'Oro and Palme d'Or awarded director Jia Zhangke (贾樟柯) to film a documentary about its sub-brand Useless.
Through these more creative marketing efforts, Exception is able to get national and international media exposure without spending a massive amount of money on consumer advertising. More importantly, since Exception’s customers are the kind of people who appreciates independent films and read Chai Jing, the brand successfully reaches its targeted customer and establishes a strong bond with them.