When Xi Jinping returned to China from his recent state visit to the UK his suitcases were weighed down with gifts from the Queen, including two Crown Derby candlesticks, a collection of Shakespeare’s sonnets and a framed photo of herself with Prince Philip. But perhaps the best present of all was the world’s oldest purveyor of toys – Hamley’s, which first opened its doors in 1760.
On the final day of Xi’s visit, Hong Kong-listed shoe retailer C.banner International announced a £100 million ($154 million) deal to buy the Regents Street store and its associated outlets. However, the British press reckon that the real driving force behind the takeover is Yuan Yanfei, the Chinese owner of House of Fraser.
The 50 year-old Yuan is the brother-in-law of C.banners’ boss Chen Yixi. Yuan’s privately-owned retail conglomerate Sanpower is also a strategic partner of C.banner. In an interview with the Sunday Times last weekend, Yuan said C.banner and Sanpower will jointly develop Hamley’s – as well as House of Fraser, which Sanpower purchased for £480 million in the summer of 2014 (see WiC233).
The British are renowned for their love of eccentrics and Yuan is fast becoming a prime example of the breed, after giving a number of interviews in which he has revelled in his unusual management style and love of Britain. According to the Financial Times, he hopes to send his son to Eton. When told the school has a reputation for producing “slightly odd people”, Yuan expressed great delight. “Only strange people can succeed,” he remarked. “I’m very strange. If you think like normal people, you become just like everyone else.”
This summer Yuan was spotted attending Royal Ascot and appears to have embarked on a strategy that upwardly mobile merchant have used for centuries – cosying up to the royal family. In April, for example, he was the only businessman to escort Prince William to an elephant sanctuary in Yunnan during his official trip to China. According to Sanpower’s website the tycoon and the second in line to the throne behaved “like old friends at first sight”.
In the Sunday Times interview Yuan seems hard pressed to explain why he loves Britain so much. “I don’t have some reasons specifically,” he comments, “but I think I must have one. I often think the weather’s bad and the view is so-so. There’s no industry here, no agriculture and you sell Rolls-Royces to other people.”
With House of Fraser and Hamley’s Yuan has two big brand names he can use in China. Later this autumn, Sanpower will open the first Oriental Fraser department store in Nanjing, Yuan’s native city.
The Sunday Times says Yuan has caused friction with his British management team by ignoring their opinions in the design of the new Chinese store. They are also said to object to having conference calls in the middle of the night.
Like many Chinese entrepreneurs Yuan set off on the road to his estimated $2.2 billion fortune after Deng Xiaoping came to power. Yuan was the first government employee in his district to take advantage of a new policy following Deng’s Southern Tour in 1992, which allowed officials to take unpaid leave and try out their business skills. He began buying computer parts in Shenzhen and transporting them to Nanjing (often on his own back) for reassembly.
But one of his biggest breakthroughs came in 1999 when he visited Walmart’s Shenzhen store and got hold of founder Sam Walton’s autobiography. The knowledge he gained from the book prompted him to set up computer and electronics retailer Hisap in 2000 and formulate what he has called a WDM (Walmart-Dell-McDonald’s) strategy, which mixes chain stores (Walmart), with direct delivery and no middlemen (Dell) and standardised service (McDonald’s). Hisap customers could choose different parts then watch their computers being assembled in-store.
He believes department stores still have a big future in China notwithstanding the brutal competition from online retailers such as Alibaba. With their 255-year and 166-year histories, Hamley’s and House of Fraser certainly have plenty of experience to aid him in his mission, if not much in the way of current profitability.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.