With most of the growth in the fashion and luxury sectors for the next decade posed to come from China, Asian firms are snapping up Western heritage brands for the Chinese market and in some cases, become global luxury players.
Many of these brands are trophy assets that are in need of revival. Since they already have some degree of history and prestige, acquisition is a quick way for Asian firms to tap the Chinese luxury market without having to build a brand from nothing. Also, as an added bonus for some investors who take global control of the brand — instant access to the global luxury market where these brands still retain some recognition.
Most recently, Hong Kong-based YGM Trading acquired British brand Aquascutum.
Last month, Trinity Ltd., part of the Li & Fung Group, entered into a $95.3 million agreement to purchase Savile Row tailor Gieves & Hawkes. Trinity already served as the long-term lincensee for the brand’s more than 100 stores in greater China. Since 2002, Gieves & Hawkes had been owned by a subsidiary of the Hong Kong-based Wing Tai Properties Ltd.
Trinity isn’t alone. DG Capital Partners, a private equity company based in China, joined the Paris-based investment company Eurazeo to take a stake in Moncier. Pringle, Hardy Amies and Sonia Rykiel also have Chinese backers.
“Yes, there is an appetite among Chinese investors for Western brands, but the Chinese are always very careful about price and valuation,” said one investor who works with Chinese partners. “It’s a myth that they are ready to pay big prices for brands.”
French entrepreneur Arnaud de Lummen of Luvanis SA, which is looking for joint-venture partners or buyers for the intellectual property and trademark rights of a range of brands, noted that Chinese companies have so far demonstrated a preference for “troubled brands because they can obtain a bargain price.”
He added, too, that few Chinese companies possess the “know-how or vision to revive sleeping beauties. In two or three years, maybe.”
photo credit: gieves & hawkes