Ongoing Negotiations Over Acquisition of French Brand Pierre Cardin Shows Chinese Luxury Brands Have Sights Set On Rapid Growth
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:
The Shenzhen Commercial Daily said Monday the Jiansheng Trading Company in south China’s Guangdong province had offered 200 million euros (280 million dollars) to acquire the brand.
The newspaper quoted Jiansheng company officials as saying they hoped a deal could be completed within a month.
Fang refused to confirm the names of the Chinese bidders, but said a joint bid between two companies from Guangdong and Zhejiang had been made.
“This is the price that reports are saying they offered,” Fang said. “Other bidders have offered higher and lower prices.”
Chinese press reports said a series of companies were in talks including Huhao Corporation from east China’s Zhejiang province.
Pierre Cardin arrived in China in 1978 and was one of the first Western fashion houses to enter the nation after Beijing embarked on economic reforms and opened up to the outside world.
“Many Chinese only have three images of France: the Eiffel Tower, General de Gaulle, and Pierre Cardin,” said the Xinmin Daily in a report on the possible acquisition by a Chinese company.
“As one of the first international brands to enter the Chinese market, Pierre Cardin is deeply embedded in the hearts of Chinese.”
This rumored acquisition could be good for both sides. Although the Pierre Cardin name is held in relatively high esteem in developed markets, by no means does it carry the same esteem as it does in China. By selling either the entire brand or just the China operations, Pierre Cardin could in essence guarantee a sustained foothold in a market that still considers it a status symbol, while simultaneously providing its buyers with a feather in their cap. Indeed, for many analysts, the purchase of an established western luxury brand is a sign of the growing clout of Chinese apparel firms. Although, for the moment, they are treading somewhat cautiously on their global endeavors, the purchase of a brand like Pierre Cardin could provide both a learning experience as well as a pathway (or shortcut) into developed western markets.
CRI English looks into the question of whether a Chinese fashion group would even be able to take full advantage of a takeover of the Pierre Cardin brand — and, perhaps more importantly — whether Chinese luxury consumers would still favor the brand if it became, for all intents and purposes, a Chinese brand:
[A]nalysts are skeptical whether the Chinese firms have the management skills to ensure the long-term success of a brand that has become too “scattered”, due to the parceling out of rights to too many different agents.
Meanwhile, a survey on Sina.com found that 78.2 percent of Chinese consumers would not buy products by the label after the takeover.
“The bidding by the Chinese firms is a sign of maturity in China’s apparel industry,” said Wang Zhuo, secretary-general of China National Garment Association. “They possess the prowess to accomplish the takeover, so I am not surprised at hearing the news.”
But other analysts expressed doubts over the prospects of the label after the takeover.
“The brand’s current business model in China is too scattered,” said Wang Hongjun, an agent of Pierre Cardin women’s apparel in China.
Meanwhile, consumers have added their voice to the debate.
Responding to an online survey by Sina.com, 66.3 percent of netizens said they were against the takeover. Nearly, 78.2 percent said they would not buy clothes made by Pierre Cardin after the takeover.
Yu Li, a 25-year-old secretary from Shanghai, said she was looking for imported designs and brands, and hence would not buy from the “new” Pierre Cardin.
“Once the brand is taken over by Chinese companies, it will feel like its class has dropped by one level. If I’m going to spend the same money, why not go for other famous brands?”
But some consumers were more willing to give the Chinese companies a chance. “Foreign brands are already manufactured from Chinese factories anyway, so there should be no difference after the takeover” said Lu Tao, 24. “I’m willing to give it a try.”
On Monday, the 87-year-old designer Pierre Cardin – who single-handedly created and developed the firm – confirmed rumors about the sale in a telephone interview with AFP.
“Given that China offered to buy the brand, I’m starting with China.”