The underworld king of erotic underwear in China

We heard the sexy business of Victoria’s Secret is no longer looking sexy, experiencing sales slump and store closures lately (see Link). However about 524 kilometers away from Shanghai, in a tiny county called Guanyun with a population of 800,000, its steady revenue generating from erotic lingerie, at least RMB1 billion annually, is making heads turn. In fact, little did many realize that this once rural and remote region is already becoming the epicenter of “erotic lingerie” in China, occupying at least 60% of the market share in this vertical.

It is estimated that Guanyun should host more than 2000 retailers and vendors for the “erotic underwear” industry nowadays. Behind this ever-sprawling and thriving empire, a 26 years old native man actually holds the reins. At the tender age of 15, had been influenced by his mother’s small apparel business, he started out as humble C2C vendor on Taobao marketplace, gradually honing a love of selling erotic underwear at a point that he was so unsatisfied with the products he had outsourced from those shitty factories from Guangdong province, south of China. His raw commercial brilliance convinced him to design and manufacture his own product, around the time when few even dared to foray into this controversial sector, gradually pivoting his business model from C2C to B2C. Soon in 2009 at the age of 18, he and his mother established a formal company with a tantalizing name “MidNight Charm”. It is said the man was so obsessed with the product style that quite often he even tried the lingerie on his own body, filling up two big apples around his chest just to check the cleavage effect. The lingerie design of the mother and son team soon took off like a rocket. They even came up a “see-through” lace product that could give the illusion of pushing up your breasts and stretching your leg lines, making almost every woman, from the overweight to the middle-aged, confident to wear. That product was the so-called “explosive SKU” that year, which sold out millions within a short time period. Now “MidNight Charm” has more than 3000 SKUs, and launching  300 new products every year with annual turnover at least around RMB50 million. Today “MidNight Charm” has transformed itself into the biggest B2B player. His meteoric rise was not only trailblazing but also trendsetting for the village as many locals gave up the traditional farming and dived into selling erotic underwear online. And they all purchased the products from “MidNight Charm”.

It does not mean the sector did not face headwinds. The regulator’s crackdown on nightclubs in Dongguan, Guangdong province or online streaming video hostesses maneuvering on the grey area did slow the booming performance of MidNight Charm. However, earlier in 2014, the king of the erotic lingerie was already seeking overseas expansion via Alibaba’s, whose company should account for a substantial market share outside China, especially in the US.

It is said 90% of the erotic lingerie buyers are actually women and they usually do not wear them more than once. So MidNight Charm’s strategy of manufacturing those sexy little fabrics which barely can cover the body at dirt cheap pricing should receive a warm welcome from the foreign markets.

Again we are witnessing another epitome case of extremely aggressive and determined Chinese founder winning in the ever-changing consumer market in China.

By: Cecilia Wu