Luxury Retailer Notes That Stabilized Sales, Huge Growth In Greater China Have Fueled Asia Expansion
Italian fashion company Valentino is looking to expand quickly in Asia, with a focus on China & Hong Kong
Most global fashion houses have, over the years, worked hard to make something of a foothold in the Chinese market. As we’ve written before, one of the first major Western fashion companies to enter China following the “reform and opening” policy of the late 1970s was Pierre Cardin, who began selling in China in 1979. Since then, major fashion boutiques from around the world can be found in China’s largest cities, and some have progressed into smaller (but still large by most standards) second- and third-tier cities throughout the country. Despite major setbacks for some retailers in formerly reliable markets like Japan — where companies like French Connection and Versace have recently closed down operations — and a drop in demand in the American market (although that has, according to reports today, stabilized for many luxury companies), the surge in demand for certain designers in the Chinese mainland should soften the blow in revenue that these companies are experiencing as a result of the global economic downturn.
The Valentino Fashion Group — which includes the Valentino, Hugo Boss, and Marlboro labels, today announced that the company has benefitted from the quick rise in consumer demand throughout China. From Bloomberg:
Revenue in China and Hong Kong jumped 40 percent in the past month, and the company expects that pace to continue, Sassi said backstage after the show…
Although sales in Japan were described today by Valentino’s CEO as “not that bad,” the company’s major focus is store expansion in mainland China, Hong Kong, and Southeast Asian markets like Singapore:
[Valentino CEO Stefano Sassi] said the group is opening Valentino stores in Asia — Singapore, China and Japan. “These are not great times to open shops, but we are going ahead with what needs to be done.”
Posted in Uncategorized
Tagged asia, China, Fashion, hugo boss, japan, Luxury, marlboro, pierre cardin, singapore, valentino, valentino group
Growing Demand In China’s Interior, Other Asian Countries Should Counterbalance Tepid Consumption Elsewhere
Although Chinese consumers have shown a taste for foreign luxury brands, domestic labels will present stiff competition in coming years
As a result of the fast-paced development of China’s eastern coastline and special administrative regions, only recently have major luxury brands made it to the country’s vast interior region, where a number of second- and third-tier cities remain relative blank slates. Since so many companies are only reaching these areas now, the spread of luxury brands in China has become a regular news story. This has only intensified over the last year, as formerly free-spending Japanese and American customers have thought twice about luxury goods while emerging customers in places like the BRIC countries and relatively fast-growing economies like Vietnam become more regular (and brand-loyal) buyers. Nonetheless, the luxury sector is still experiencing only modest growth one year on from the onset of the global economic slowdown despite their best efforts at wooing new customers.
If many recent articles are correct, though, what we’ve seen over the last year — severe as it has been — should only prove to be a blip in the grand scheme of luxury revenues. From Financier Worldwide:
Sales of designer shoes, handbags, and beauty products have weathered the financial storm particularly well. At the end of August, French cosmetics company L’Oréal reported higher than expected profits of €1.37bn for H1 2009. In June, Hermès revealed it was farming crocodiles in Australia to feed demand for its coveted £4000 Birkin bag. Around the same time, Mulberry announced that its handbag sales had recovered, climbing 21 percent in the first 10 weeks of the new financial year. Shoe supplier Kurt Geiger, which operates in upmarket department stores across the UK, also reported double-digit growth in profits for the first five months of the year.
Bain & Company predicts that trading in the developed markets will remain tough for the rest of the year, with growth of around 1 percent in 2010 before a slow recovery. However, despite the recession slowing the pace of development in emerging markets, Bain believes that, as a consequence of increasing personal wealth, growth in global GDP, and rising tourism in Russia, China, India and Brazil, spending will surge between 20 percent and 35 percent over the next five years. This is expected to aid the recovery of the luxury goods sector.
Posted in Business, China, Economy, Fashion, Luxury
Tagged asia, asian, brands, brazil, China, chinese, consumer, customer, economic growth, Economics, Fashion, global economic crisis, india, Luxury, luxury goods, middle class, russia, spending, wealth
Buffett’s Endorsement Of Trands, Suitmaker For China’s Government Elite, Gives Small Clothing Brand International Notoriety
Warren Buffett's endorsement of Chinese high-end menswear designer Trands sent its stocks soaring
Warren Buffett’s interest in China as an investment destination is well known, and his words of praise for (or investments in) the occasional Chinese company seems to have the effect of boosting that company’s visibility abroad virtually overnight. H is company’s $230 million investment in Chinese electric and hybrid automaker BYD has elevated what was only a few years ago a fledgling battery maker into a brand which is set to enter the US market as early as next year. So for little-known (even in China) Chinese menswear designer Trands, Buffett’s endorsement of his newest Chinese-brand-of-the-moment is definitely exciting news — especially because their stocks have risen 70% since the release of a video in which Buffett extols the brand’s qualities. As the Wall Street Journal writes today,
Move over Brioni, the truly rich and powerful are wearing Trands.
The obscure menswear label is produced by Dayang Group, a clothing company founded by Li Guilian, 63 years old, a diminutive farmer-turned-fashion mogul, in northeast China.
Ms. Li’s company got a major boost after Mr. Buffett, chairman and chief executive of Berkshire Hathaway Inc., recently appeared in a Dayang promotional video, posted on the company’s Web site. He heaped praise on Ms. Li, her company, and the nine Trands suits he proudly owns. Shares of Dayang’s Shanghai-listed subsidiary, Dalian Dayang Trands Co., have soared by more than 70% since the video was posted on Sept. 10.
Posted in Business, China, Fashion, Luxury
Tagged brioni, buffett, BYD, China, chinese, Fashion, geely, Investment, Luxury, trands, trend, warren buffett
Watchmaking Iconoclast’s New Location At Jin Bao Street’s Legendale Hotel Features Decor And Accents Shipped From Paris
Richard Mille's flagship store in Beijing brings an air of bygone Europe to Beijing's Jin Bao Street
Richard Mille, the French luxury watch brand,has just opened a flagship store in Beijing’s five-star Legendale Hotel, according to a company press release. Mille’s fixation with high-tech materials and unique alloys inspired by F-1 motorsport and the aerospace industry, has made him one of the most unusual — and fastest-rising — luxury watch forces in the world, and with the flood of spending we’ve seen in China on luxury goods like watches, cars, wine, jewelry and contemporary art, Beijing’s flagship Mille store should attract the city’s free-spending elite in no time.
[T]he flagship occupies 260 square meters of space at this platinum 5-star hotel that represents European elegance and luxury in the heart of this capital of the People’s Republic of China. With such a prime address and grand interiors, Sparkle Roll Group Limited, the exclusive dealer of Richard Mille in PRC, invested HK$45 million in building this flagship in Beijing.
Posted in Art, Business, China, Fashion, Investment, Luxury
Tagged Art, beijing, China, china market, contemporary art, contemporary chinese art, elite, Fashion, flagship, foreign direct investment, france, french, Investment, jewelry, jin bao street, Luxury, luxury watches, mainland china, mille, richard mille, sino-french, watch, wealth, wine
Studies Indicate Sluggish Demand In Established Markets Will Continue As Buyers Remain Motivated In China
According to new studies, Chinese luxury enthusiasts may help buoy the global luxury market for the next few years, if not drive long-term growth
Luxury brands have had what can conservatively be called a tough year, with the global economic crisis putting a gaping wound in their profits in traditionally high-demand countries like the US and Japan, and recovery lagging behind expectations. These figures have been tempered somewhat by the potential of the Chinese market to soften the blow of falling demand elsewhere, if not counteract it completely. While it is still a bit quixotic to expect China to be the savior of luxury brands everywhere — since it is still very much a developing market — it does benefit luxury brands to plan ahead for the time when China is the world’s biggest luxury market, and start brainstorming on their long-term strategy for sustained growth as well as strong brand loyalty.
This week, Harvard Business looked into the Chinese luxury market, digging through statistics to discern whether this market truly is all it’s cracked up to be. While their findings suggest that hyperbolic enthusiasm about the Chinese consumer is unwarranted — as we’ve written before — they do remain bullish about the potential of this populous and fast-moving market:
New research from McKinsey & Co. indicates that, by 2015, China will be home to the world’s fourth-largest population of wealthy households, an estimated 4.4 million. McKinsey also reports that presently, about 80% of China’s wealthy are between the ages of 18 and 45 (versus 30% in the US). Jing Ulrich, the chairman of China equities at Morgan Stanley, was recently quoted in Forbes as saying of China, “With the global recovery unlikely to be smooth, domestic demand is likely to remain the primary engine of growth in the remainder of 2009.” In a Wall Street Journal op-ed last year, Zachary Karabell argued that “the rise of the Chinese consumer is the only thing standing between them [global companies] and a decline in their business.”
Posted in Business, China, Culture, Fashion, Investment, Luxury
Tagged branding, brands, China, chinese, consumer, Fashion, internet, Luxury, marketing, markets, online
Fashion Brand Sees Potential To Broaden Foothold In Lucrative, Yet Challenging Fashion Market
Ralph Lauren's sole free-standing location in China is located in Shanghai's luxury Jin Jiang Dickson Center. The company plans to branch out very rapidly in coming years
Wing-Gar Cheng writes for Bloomberg today that American retailer Ralph Lauren hopes to open 15 new stores in China annually in coming years. While the signature Ralph Lauren style has been adapted — or “copied”, depending who you ask — by brands with a long-time presence in China, like South Korea’s E-Land (not to mention counterfeiters throughout the country), the number of free-standing Ralph Lauren locations has remained limited. With the global demand for higher-end items remaining relatively anemic in the North American, Japanese, and European markets — despite improvements — China, with the high potential of its second- and third-tier cities, remains a sought-after target by mid- to higher-range fashion brands like Ralph Lauren.
As Cheng writes, rapid expansion in China is not simply driven by idealism. There is a great deal of untapped potential throughout the underserved mainland, well illustrated by a quote by George Hrdina, president of Ralph Lauren’s Asian business, who said, “We do more Ralph Lauren business on the island of Manhattan, New York, than we do in Hong Kong and China.” Clearly, adding 15 stores per year is less unrealistic than it may initially sound.
Posted in Business, China, Culture, Fashion, Investment, Luxury
Tagged bloomberg, China, chinese, Fashion, hong kong, Luxury, LV, LVMH, mainland china, New York, polo, ralph lauren, wing-gar cheng
Relaunching Of New Max Mara Boutique In Shanghai And Gala Fashion Show Attract City’s Fashion Elite
Max Mara's flagship store in Shanghai is one of the brand's most important locations
The Italian fashion house Max Mara recently relaunched its flagship Asia store in Shanghai’s Citic Square to much fanfare, and this week the company put on a large-scale gala fashion show to promote two of its product lines. Held at the Garden Lane Creative Park in the city’s Hongkou District, the event was designed to breathe some new life into the unusually quiet late summer fashion environment, and by promoting the main Max Mara line as well as the company’s Sportmax sports line, Max Mara was able to reach out to a wide consumer segment in China’s most fashionable city.
According to the Shanghai Daily, the company took full advantage of the new venue to make an impact on the luxury and fashion crowds:
Michael Michalsky Signs Development Deal With China’s Leading Sportswear Brand To Create China-Only Fashion Range
German designer Michael Michalsky sees China as a future fashion hub, rivaling Japan, France, and Italy
German designer Michael Michalsky, one of the country’s rising fashion stars, has recently signed a deal to produce a range of high-end sportswear, paving the way for other western designers to create China-only lines in partnership with China’s quickly-emerging domestic luxury brands. Michalsky has established himself as something of an iconoclast in European fashion, as he has set his sights primarily on the China market, rather than targeting traditional fashion centers like Milan or Paris.
As Michalsky told Deutsche Welle, his decision to focus on China’s fashion and luxury markets came naturally: “China is the most exciting market for fashion right now…The Chinese are really open to fashion, and let’s face it, the future of the world lies in this region.” Deutsche Welle’s profile of Michalsky shows a designer whose interest in the potential of the Chinese market is led as much by personal fascination as new business realities. As China’s position as one of the world’s top markets for luxury goods is heightened by falling consumption in developed countries, it seems likely that Michalsky is the first of many designers to work with Chinese luxury brands in coming years rather than an anomaly:
Posted in Business, China, Fashion, Investment, Luxury
Tagged adidas, berlin, bmw, cartier, China, Fashion, germany, gucci, jil sander, louis vuitton, Luxury, michael michalsky, uniqlo
Ongoing Negotiations Over Acquisition of French Brand Pierre Cardin Shows Chinese Luxury Brands Have Sights Set On Rapid Growth
Pierre Cardin has become one of the most recognizable and coveted foreign brands in China since entering the market in 1978. Photo (c) CRI English
Mixed signals surround the rumored takeover of the Pierre Cardin brand by two Chinese groups, which would — if true — illustrate the speed with which Chinese companies hope to attain global reach and influence. Early reports appeared to suggest that an acquisition of only Cardin’s China operations was imminent, but statements by the brand’s China director, Fang Fang, insinuated that the company was open to the idea of a wholesale takeover of its global assets. Although Pierre Cardin himself has denied these rumors, the story is making waves in the Chinese and global business press.
As one of the first western brands to enter the Chinese market after the government initiated its “opening and reform” policies in the late 1970s, Pierre Cardin carries significant brand equity in China, a point which gives this story extra importance in the grand scheme of Chinese luxury branding. As the AFP pointed out today, the acquisition of the Pierre Cardin brand by a Chinese company would be, in the mainland at least, considered a point of pride:
Posted in Business, China, Culture, Fashion, Investment, Luxury
Tagged beijing, branding, brands, China, chinese, Fashion, Luxury, pierre cardin
Hotels, Fashion Brands Becoming Increasingly Global; Competing with Well-Established Foreign Brands In Chinese Market
Chinese luxury brand Liwai has gained recognition over the last 10 years -- Will it eventually learn how to appeal to consumers at home and abroad?
Home-grown Chinese luxury brands have been in the news a lot lately, with articles focusing on how their “Chinese flavor” is transitioning from a liability into a selling point. As Chinese consumers have opened up to global brands — and increasingly taken them for granted in some cosmopolitan centers — a space has opened up in the Chinese luxury market for domestic luxury brands. These luxury brands, which are following the lead of Hong Kong fashion brands like Shanghai Tang and designers like Swire, are starting to incorporate traditional Chinese cultural aspects into a more globalized luxury style, creating an appealing Sino-Global market segment. As these Mainland brands start to pick up steam and compete on a broader scale, eventually spreading into overseas markets, it’s likely that Chinese luxury brands will develop a clout on par with their French or Italian counterparts in time.They just need to figure out their marketing and growth strategy, and need to fully get over the hump of Chinese luxury consumers often looking down at domestic brands and products.
Going along the cosmopolitan path of developers like Swire, BizChinaUpdate writes today on the Zendai Group, which is setting out to launch China’s first “bona-fide luxury hotel brand.” With their first luxury hotel slated to open next year in Shanghai, Zendai hopes to capitalize on the buzz surrounding 2010 World Expo and use the event as a launchpad for their brand.
Posted in Business, China, Culture, Economy, Fashion, Investment, Luxury
Tagged China, chinabizupdate, domestic, Fashion, liwai, Luxury, shanghai tang, zendai