Chinese, Indian Companies Increasingly Acquiring Pedigreed Western Brands To “Leapfrog” Ahead
Some Chinese brands like Trands are hoping to break into the international mainstream without acquisitions
With the possible exception of the Warren Buffett-feted Trands, Shanghai Tang, and JNBY, which recently set up shop in New York’s Soho district, higher-end Chinese fashion brands are virtually unknown in the West and rarely celebrated at home. Though brands like NE-TIGER hope to change this by getting domestic shoppers to quit their foreign brand addiction and rediscover Chinese design, the odds are — at the moment — against them.
However, this week the Financial Times reports on a trend that Jing Daily has identified several times over the past year and a half, that of companies in emerging markets like China and India looking to leapfrog into the high-profit-margin luxury industry by acquiring well-known Western brands and taking advantage of lower labor costs, developed supply chains and distribution networks at home.
Much in the same manner that auto companies like Volvo and Land Rover were acquired by Chinese or Indian companies in recent years, in the wake of the global economic crisis dozens of pedigree apparel brands either went bust or put themselves up for sale at prices that many Chinese and Indian companies felt irresistible, with Mumbai-based SKNL purchasing HMX, the Chicago-based owner of suitmaker Hickey Freeman (a favorite of U.S. President Barack Obama) and Hong Kong-based Li & Fung taking over the British couturier Hardy Amies.
So is the “axis of fashion” really “tilting east”, as a CNN post suggests today? Or will formerly-Western-owned brands have trouble selling in their home countries under new management? From the FT:
As the article goes on to point out, however, just acquiring a famous brand isn’t an end in itself. Chinese or Indian buyers need to have a clear understanding of where they want to steer their new prize, and need to recognize the challenges they’re likely to face both at home and overseas:
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