M&A

How I made it in China…

PPR acquires Qeelin, a Chinese luxury brand founded by a French expat

Now owned by PPR

Not quite a unicorn, although said to resemble one in terms of longevity and prosperity, the qilin is a difficult beast to pin down. A gentle and benevolent creature, its depiction from the Qin Dynasty shows the head of a dragon, the antlers of a deer, the scales of a fish, the hooves of an ox and tail of a lion. But many hundreds of years later under the Ming, qilin were associated more with the giraffe, after Zheng He brought two of the animals back with him from East Africa, as presents for the Emperor.

Much more recently still, the animal has been picked as a source of inspiration for one of China’s newest luxury brands. Qeelin, which sells jewellery in the $2,500-40,000 range, has positioned itself in a similar pricing category to Cartier and Tiffany. And it was in the news last week, when it became the first Chinese company to be bought by PPR, the world’s third-largest luxury group behind French peer LVMH and Swiss company Richemont.

Once more, identity was at the heart of the issue. “There is a high probability that [Qeelin] speaks more to a Chinese clientele, given that it uses the codes and tradition of that culture,” François-Henri Pinault, chief executive at PPR, told the Wall Street Journal, adding that a brand “whose origins and DNA are Chinese will benefit from a considerable advantage”.

That Qeelin is now targeting a Chinese customer base is true enough, although Pinault’s rather glowing endorsement seems to overlook the fact that the brand is the brainchild of a French luxury goods executive, Guillaume Brochard, and fellow founder, a well-travelled designer from Hong Kong called Dennis Chan.

Shortly before the PPR acquisition was announced, both Chan and Brochard featured in an article in Global Entrepreneur about expats who have started their own businesses in China, often leaving roles at well-established multinationals to try out a more entrepreneurial life.

In Qeelin’s case Brochard left a senior role at Louis Vuitton to partner with Chan, the creative director, to build a luxury brand that represented China, he told the magazine. The plan was to offer luxury with Chinese characteristics, in a similar approach to other aspiring luxury marques like Shang Xia (which is being developed by French group Hermès).

Qeelin has still been careful to cultivate a sense of international cachet, saying that its collections blend French craftsmanship with inspiration from China. It also opened its first stores in Paris, London and Hong Kong before launching in mainland China in 2008 (the company now has seven stores in China, four in Hong Kong and three in Europe). The intention was to establish a brand with the requisite international origins. “The Chinese believe that the top brands come from abroad,” Brochard explained to Global Entrepreneur.

Yet Qeelin’s collections are also infused with Chinese meaning and style, using symbols such as lions, pandas and dragons.

Jean Zimmerman, formerly a luxury goods consultant, followed a similar path in founding Ba Yan Ka La, a cosmetics brand inspired by Chinese medicine, five years ago.

Like Qeelin, Ba Yan Ka La is positioned as a luxury, but with Chinese roots. Claiming to draw from the wisdom of ancient healing, the company uses natural ingredients harvested according to the lunar calendar, featuring traditional remedies like Chinese mulberry (detoxifying), liquorice (balancing), goji berry (strengthening), lotus seed (nourishing) and Tibetan roseroot (an anti-oxidant).

Ba Yan Ka La’s promotional literature also makes much of the fact that it eschews chemicals and synthetic ingredients, formulating its products with glacial water sourced from the Yellow River in the Ba Yan Ka La mountain range of Qinghai province. Here the combination suggests East and West once more, for a product going back to Chinese roots but with a brand championing green and ethical values, with a purer, fresher offering, delivered under a commitment of “100% natural origin”.

There’s a similar approach in the restaurant sector from Element Fresh, a restaurant chain. It was also started by expats, as a catering service by Scott Minoie and Sheldon Habiger 10 years ago. Frank Rasche, an Asia veteran from Coca-Cola, joined them two years later. the chain has expanded, and it now has 10 venues in Shanghai, two in Beijing and one in Guangzhou. It also promises a fresh and invigorating offering, in which salads, smoothies and juices feature strongly. But the restaurant brand makes a little more of its Western background than Qeelin and Ba Yan Ka La. That isn’t just for the food on offer – another example is the service style, in which waiters and waitresses introduce themselves to diners at the start of a meal. This was initially a challenge, says Minoie, as staff members were too embarrassed to speak up, assuming that their Chinese guests had no interest. But many diners have grown to like the approach, becoming regular visitors.

Are there many similarities in the start-up stories? In most cases, the entrepreneurs look to have avoided local partners. Perhaps that’s because they all seem to have spent considerable time working in China before they started their own businesses, a significant factor in shaping how they approached their new ventures. Most can speak Mandarin, too, some to a high level of fluency.

Another area of common ground is their focus on higher-end customer segments, as well as concentrating on operations in Beijing and Shanghai before moving to other locations. Some have also been able to appeal to dual audiences, both international and Chinese.

“Foreign customers buy Qeelin because they like our design, while Chinese consumers prefer the auspicious meaning of Qeelin,” Brochard told Global Entrepreneur. Over at Element Fresh, the example is a little more prosaic. There, bosses noticed that international customers often come back to enjoy the same dishes, while Chinese diners want to try something different each time they visit. That means a menu with a combination of traditional favourites and constantly refreshed, newer fare, Economic Observer says.


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