Before Louis, China had eyes only for Pierre.
Or to be a little more specific, for Pierre Cardin, the first luxury brand to impress Chinese consumers, long before Louis Vutton was to arrive on the local scene.
“Many Chinese only have three images of France: the Eiffel Tower, General de Gaulle, and Pierre Cardin,” reports the Xinmin Daily. “As one of the first international brands to enter the Chinese market, Pierre Cardin is deeply embedded in the hearts of Chinese.”
The French designer seems to have been ahead of the early fashion pack, as one of the first Western fashion designers to come to China – he turned up with a dozen models from Paris to stage a show in Beijing in 1979.
But the 87-year-old French designer – regarded as a licensing expert – is now looking to sell his operations in China.
China Business News confirmed that four businessmen from Wenzhou have won the bidding, and will take over the fashion brand and its associated business in China for an undisclosed sum.
Another example of cash-rich Chinese companies acquiring foreign labels to build global influence? Possibly, but what is interesting in this case is that these four men are from Wenzhou, a city better known for its low-cost manufacturing. If there is a brand on a product made in Wenzhou, it is normally somebody else’s.
Wenzhou’s is a remarkable story. With little government assistance, but a lot of hard work and entrepreneurial flair, its privately-owned factories dominate in the manufacture of many items. The city makes 70% of the world’s cigarette lighters, for instance. If you use zippers, plugs or hinges, yup, most likely they are from Wenzhou too.
But the Wenzhou legend, which relies heavily on exports, has been badly hit by the global economic crisis. According to Zhou Dewen, head of the Wenzhou Small and Medium-sized Companies Association, production has stopped at 20% of Wenzhou’s factories, while exports have dropped 15% this year. Of the 300,000 companies in Wenzhou, 8,000 have shut down this year.
So the fact that these Wenzhou industrialists are buying a French brand seems to suggest that some in the city see the need to move away from its contract-manufacturing roots.
China’s consumer sector has also proved more resilient than many expected, with domestic retail sales bucking global trends. The clothing, furniture and cosmetics sectors have all reported robust growth.
A source close to the deal told China Business News that the new owners plan to set up a marketing base in Wenzhou, taking advantage of their local business connections.
But some analysts doubt that the Wenzhou model will work for a luxury label.
One possibility is that the brand could lose its “foreign” catchet. In an online survey by Sina.com, the country’s most popular internet portal, 62.9% of netizens said they were against the takeover; 75.7% 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 are more forgiving. “Foreign brands are already manufactured in Chinese factories anyway, so there should be no difference after the takeover,” said Lu Tao, 24. “I’m willing to give it a try.”
Other argue that the brand has been threatened for a while, due to its aggressive licensing strategy to more than 20 domestic agents.
“The brand’s current business model in China is too scattered,” said Wang Hongjun, an agent of Pierre Cardin women’s apparel in China. Wang told the China Daily that too many agents have been authorised to develop various products under the brand.
Another Chinese firm trying to buy its way into branded goods is Wantong Group, a Zhejiang-based aluminum product supplier.
Wantong has inked a deal to buy Italian yacht maker Dalla Pieta. The deal, at around Rmb100 million ($14.6 million), seems a decent price for a firm with a 50 year history in the industry. Dalla Pieta has been struggling financially since the onset of the global financial crisis.
“The image of China-made yachts is not high-end enough. Such overseas acquisitions will help upgrade the industry and strengthen the competitiveness of Chinese builders in global markets,” says Zheng Weihang, secretary-general of China Cruise & Yacht Industry Association.
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