Economic review

More Chinese firms set to buy luxury brands

2018-02-13 09:42:00 (Beijing Time)         Global Times

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Chinese textile company Shandong Ruyi Group on Friday inked a deal to purchase a controlling stake in Swiss luxury shoes and leather company Bally from Luxembourg-based JAB Holding, media reports said.

Experts told the Global Times on Monday that an increasing number of Chinese luxury producers are likely to buy famous foreign brands in the future to build up their own brands. Proper management and deployment of sales channels will help them gain more popularity with domestic consumers, experts said.

"This is an important milestone for Shandong Ruyi Group to become a global leader in the fashion apparel sector," Qiu Yafu, chairman of Shandong Ruyi Group, was quoted as saying in a report by news site sohu.com.

"We look forward to supporting Bally in achieving its continued growth and enhancing its brand globally," Qiu said.

The Chinese textile maker has been building up its network of luxury clothing and accessories in recent years. The company purchased a 41 percent controlling stake in Japanese apparel maker Renown for about 4 billion yen ($36.8 million) in 2010 and bought French fashion company SMCP in 2016. In 2017, Ruyi bought a controlling stake in Hong Kong-based menswear group Trinity for HK$2.22 billion ($284.62 million).

Chinese firms like Ruyi have strong production capacity, and buying well-known foreign brands will help them build their position as leading fashion labels in the industry, Li Shifeng, a partner at Beijing-based asset management firm Tao Feng Fund, told the Global Times on Monday.

Bally has already gained much popularity among Chinese consumers, said a Shanghai-based independent industry analyst surnamed Jiang.

Li noted that more and more Chinese firms would like to buy famous brands in overseas markets to help them upgrade. "But one of the major challenges is how Chinese buyers can properly maintain the value of the brands they have bought," Li said.

Charles Zhang, a 20-something white-collar worker in Boston, the US, told the Global Times on Monday that he had concerns about "whether Bally might be devalued after being acquired by a Chinese firm."

"The management model and the deployment of sales channels will matter if Bally wants to win further recognition in the domestic market in the future," Jiang told the Global Times on Monday.

Experts noted that the top global luxury brands have long been eyeing the Chinese market as domestic consumers are keen buyers of luxury products.

In 2016, Chinese consumers spent 166 billion yuan ($26 billion) on luxury goods in the domestic market, and such spending will continue to rise to 441 billion yuan by 2025, according to a report released by McKinsey & Co on February 5.

Consumption of luxury products by Chinese consumers will account for 44 percent of the total consumption in the sector across the world by 2025, according to the report.