Miu Miu Event in Shanghai, China | Source: Miu Miu

BEIJING, China — According to Bain & Company, a consulting firm, China is currently the world’s second largest consumer of luxury goods, ahead of Japan and second only to the United States. McKinsey forecasts that by 2015, China will account for around 20 per cent, or 180 billion renminbi (US$27 billion) of global luxury sales.

With numbers like these, it’s no surprise that a major land grab is underway amongst fashion brands eager to open new stores in China. But rapid retail expansion is only one part of a comprehensive strategy for seizing the opportunity in China. Equally important are a focused approach to local PR and product strategy.

Local PR and Marketing

Currently, the most popular way for brands to build local awareness is to host large-scale, buzz-friendly events like Miu Miu’s recent 1940s-themed fashion show at Shanghai’s Park Hyatt Hotel. But while grand events like this certainly make a statement about a house’s spending power, some experts question their long-term impact. “It’s burning money — you feed a lot of people who are not your clients, then there’s another party and people forget,” said former Richemont Asia Pacific CEO and luxury consultant Francis Gouten. “It’s better to tailor make events to hit the potential clients [on a more personal level] such as VIP dinners.”

Also effective are educational activities, Gouten continued, like the kind of historical or archival exhibitions that have been used by brands like Comme des Garçons and Hermès. “We do lots of levels of education,” said Paul Cadman, CEO of Ferragamo Asia Pacific. “We’ve done several events where we imported part of our museum from Florence or brought artisans over,” he continued. “Consumers are hungry for information and we need to let them know why our product is luxurious or has a certain value. If you see what the brand is about, it’s likely you will have an emotional connection.”

“I believe the goal is to get the consumer to understand the concept of the brand,” added Nicole Chen, founder of NC Style, a consultancy that helps brands launch in China and counts Y-3 among its clients. “It’s not just about the name — you need to give people a reason to want to buy it,” she continued. “I believe Chanel became a bigger success in China because of the two films released about Coco Chanel. People in China really respect the stories and the history.”

In particular, stories that focus on craftsmanship or savoir faire resonate with Chinese consumers, said semiology expert and consultant Laurence Lim. “Certain products such as perfumes and diamonds have prestige because the Chinese still do not have the craftsmanship to make these products,” he said. “So it’s important that luxury brands communicate about their craftsmanship and differentiate themselves from other brands. There’s an appeal in how these products are made. This strategy is working like crazy.”

Tailored Product and Merchandising Strategies

When it comes to product strategies, a number of brands have experimented with China-inspired items, from Zegna’s mandarin-collared shirts to Ralph Lauren’s cheongsams. But experts advise that it is best to avoid these clichés.

“You cannot change your product completely,” said Gouten. “It’s like Shanghai Tang having a mandarin collar — it’s just a gimmick,” he continued. “[The Chinese] want to buy the name, the product and the quality. You have to be yourself, come with your DNA and be as strong as you are in your own country. Don’t try to change your identity and don’t try to be special for China.”

“They don’t want China-inspired products,” agreed Lim. “But you cannot generalise, it’s a balance,” he continued. “Brands can do unique products, but you need to keep the Western perception of luxury.” There are less blatant ways to connect product to Chinese culture, advised Chen, pointing to artistic collaborations like those recently used by Diane Von Furstenberg and Dior. “Try to bring the Chinese culture into your brand, but not through obvious ways such as Chinese design,” she underscored.

Instead, brands should focus on promoting their most unique and defining products: Chanel’s 2.55 handbag, Burberry’s trench coat, Cartier’s tank watch or Ferragamo’s Varina ballet flats, for example, that are an iconic part of the company’s history.

Some firms, like shoe designer Rupert Sanderson and sunglasses manufacturer Luxottica, are making localized products in a way that’s less about design and more about fit. “I think right now it is a smart way,” said Chen. “Many Western brands have certain cuts and styles that don’t suit the Chinese consumer.”

In terms of merchandising, there are certain product categories that offer significant opportunities in China. In a culture where gifting is prevalent, small leather goods are extremely important, while status-oriented items like expensive watches and monogram products (logos still rule the roost) also resonate strongly. Thanks to the Little Emperor Syndrome, a by-product of China’s one-child policy, childrenswear is also an important product category. Indeed, Burberry’s new Beijing flagship houses the brand’s biggest ever childrenswear department. Luggage is also a key focus. “We know people are travelling more than they did, especially in China, so the luggage business is a category that has developed dramatically,” said Cadman.

But overall, it’s important to note that the China market is evolving extremely fast. “Historically, Chinese men didn’t like to wear suede shoes but now they do,” noted Cadman. In this context of rapid change, it’s critical that brands keep a sharp eye on evolving client tastes, closely monitor their sales figures and be prepared to adapt their strategies and execute accordingly.

Divia Harilela is an editor and writer based in Hong Kong. She is founder of The D’Vine, a blog focused on the luxury and fashion market in Asia.

Christopher Kane | Source: Styles and Sounds

Britain’s got it all sewn up (Telegraph)
“Ten or 15 years ago… ‘Made in Britain’ was a synonym for doomed amateurism in the fashion field. Now, through meticulous hard work… things have turned around… So let me be the first to wave the flag on behalf of the innovators who’ve created an unsung virtuous economic circle which is underpinning and developing a skilled network of factories in and around London, while also propping up the UK’s GDP.”

Marc Jacobs: Now we are ten (Independent)
“Ten years is a long time in fashion’s goldfish bowl of communal memory. The past decade takes in the birth of e-commerce, two major wars, a technology boom, the rise and rise of the stock market, followed by its subsequent crash. It’s difficult terrain to negotiate, especially when the aim is to remain not just upright but positively ebullient.”

LVMH Fund to Target Indian Lifestyle Arena (WSJ)
“LVMH Group, will launch its private equity fund in India, in an attempt to tap the burgeoning disposable income and rising aspirations of the country’s urban population, especially women… ‘We are looking at investing in companies in the lifestyle arena in Asia, primarily from the aspirational segment, meaning people who are moving from mass-produced goods to the next layer up.’”

Versace sees 2011 turnaround on Japan push (Reuters)
“Italian fashion brand Versace is going ahead with plans to re-enter Japan this year despite the quake-hit country’s woes… After the family-run company unveiled 2010 results above its own expectations, Ferraris said Versace was on track to meet its target of becoming profitable by the end of this year at the operating level.”

DVF eyes the Mainland (The D’Vine)
“Fashion designer Diane von Furstenberg has been given many titles in her life – mother, working girl (via Dolly Parton’s song of the same name), princess and president (of the Council of Fashion Designers of America). While she may never be America’s first lady in the political sense, she comes close in the sartorial stakes.”

Giambattista Valli Store, Paris | Source: Giambattista Valli

Giambattista Valli: “True Luxury Is When Others Come To You” (Style.com)
“There’s something about Giambattista Valli’s clothes that is so fundamentally optimistic, they’ve got you at hello,” said Style.com’s Tim Blanks—and last week, the designer opened his first Paris boutique, in the centuries-old Galerie de la Madeleine.”

Diane Von Furstenberg and China: A Perfect Fit? (NY Times)
“Today, there are roughly three dozen DVF boutiques worldwide, and she’s extending her reach into China, with shops in Beijing and Shanghai…’I came for the first time in 1990. And I’ve always had this fantasy. I’d like to sell every Chinese a T-shirt.’”

When friendship and fashion equal success (Financial Times)
“When launching Gilt Groupe, an online shopping site that currently has 3m members, the co-founders did not trouble to write a traditional business plan. Instead Alexis Maybank, 35 and Alexandra Wilkis Wilson, 33, took what they had learnt from Harvard Business School and bypassed the formality.”

EBay to Buy Germany’s Brands4friends (Bloomberg)
“EBay Inc., the largest e-commerce marketplace, agreed to buy brands4friends, Germany’s biggest online shopping club, to increase fashion sales in Europe.”

Seamless Sabya (Deccan Herald)
“His clothes are an extension of his personality — they’re cheery, colourful and above all, exude a strong sense of Indianness. With his mantra being ‘clothes are just extensions of one’s intellect’, B-town’s favourite designer, Sabyasachi Mukherjee has proved his mettle in the business of fashion.”

Keeping Fast Fashion Fresh, and Profitable (IHT)
“It is not often that the Grand Palais… hosts a giant Ferris Wheel, a spinning swing, a shimmering mini Eiffel Tower, and a parade of scantily clad models showing lingerie on a catwalk resembling the Champs-Élysées. In the center of this adult amusement park stood Karl-Johan Persson, 34, in his new role as chief executive of H&M Hennes & Mauritz.”

Hermès and Gucci Press Equestrian Advantage (NY Times)
“The heart of the sponsorships is not commerce but the soul of the brands. Hermès has never deviated from its noble, officer-and-gentleman image. But this is a good time to reinforce that classy conception, at a moment when luxury has become associated with a period of extravagance and excess… Last weekend’s event may turn out for Gucci to be a Masters not just in jumping, but also in handling its heritage.”

John Galliano to start men’s wear line (Independent)
“Italian fashion giant Ittierre will license John Galliano’s first men’s wear range. While Galliano is responsible for the creative direction of French luxury fashion house Dior (in addition to his own label, John Galliano), this new line will be down-to-earth in comparison, with the designer eyeing a ‘contemporary-priced, ‘urban casual’ sportswear line.’”

Tough to let go for 70-something fashion designers (Reuters)
“The passing of the artistic torch is one of the most discussed subjects in the fashion world as it can make or break the survival of the brand — but no fashion house is willing to talk about it officially. Aside from Armani, the clock is ticking for a number of other fashion companies headed by 70-something designers including Ralph Lauren and Oscar de la Renta in the United States and Karl Lagerfeld at Chanel in France.”

A fashion icon, unwrapped (Chicago Tribune)
“Meeting Diane von Furstenberg, we weren’t sure what to expect. After all, this is a woman who married a prince, made millions, graced the cover of Newsweek at age 29 and hung out with Andy Warhol… Definite diva potential. Instead, DVF …was decidedly un-diva like. No big sunglasses. No handlers. No swish of the fur à la Meryl Streep in ‘The Devil Wears Prada.’”

Left: DVF Spring 2009, right: Mercy Spring 2008 | Source: National Post

Today we introduce Legal Patterns, a new series of articles on BoF exploring fashion and the law. Just as design patterns form the foundation of good fashion design, legal frameworks enable fashion businesses to defend their financial interests and protect their designs.

BRUSSELS, Belgium — In the fashion industry, the copycatting of designs is a not a simple issue. Accusations fly in all directions: luxury houses accuse high-street brands; artisans accuse fashion houses; and fashion houses accuse other fashion houses. Indeed, Diane von Furstenberg has found herself on both sides of the issue, submitting copycatted high-street designs by Mango and Forever 21 as legal evidence in court, while herself being accused of copying a jacket designed by the Canadian brand Mercy.

Nor is this a new problem. Since their inception, houses have struggled with fashion espionage. In the past, fashion companies tried to maintain strict control over their intellectual property, not through an assertion of legal rights, but by physically hiding their designs from competitors. In the 1950s, for instance, Christian Dior’s press officer insisted that “all precautions must have been taken to ensure that no member of the profession [e.g. fashion designers, manufacturers, milliners] would be attending” their fashion shows.

Until a few years ago, fashion houses religiously pursued this strategy of strict control. But with the rise of blogging and fast fashion, this approach no longer works. Today’s fashion world is faster and more transparent than ever, blurring the line between what is ‘copying’ and what is ‘inspiration’ and putting new pressure on fashion houses to protect their intellectual property.

Can the law help?

Applying intellectual property rights (IPRs) – like copyright and design right – is tricky when it comes to fashion. Generally speaking, IPRs are granted to the author or creator of a work to reward investment and encourage creativity with a monopoly right. But IPRs mustn’t unreasonably restrict the ability of others to develop new ideas and produce new works, so the scope of the monopoly is limited in some way, usually by time. The scope of copyright protection depends on the depth of originality of the work, while the scope of design rights depend on how novel the design is compared to the “state of art.” But because many fashion items have certain fixed parameters — a dress must fit the body, a bag must have handles — there are substantial limits on the legal protections available to designers.

Furthermore, it can be difficult to prove claims of copying in court, because the legal process involves a subjective comparison of the copy and the original by a judge trying to put himself in the shoes of a typical customer. Indeed, the majority of cases are settled out of court, leaving the industry with little precedent on which to build legal certainty.

Blatant copycats like counterfeiters mustn’t be tolerated. In these cases, a purposeful law is largely in place in the European Union, though efforts to facilitate enforcement would be welcome. But the trickier issue is how to deal with what the fashion industry calls ‘inspiration.’

Fashion is an extremely fast-paced business, with very short periods for recouping costs. At first, this would seem to bolster the case for stronger, short-term legal protections against stolen ‘inspiration.’ But on closer inspection, these kinds of copycats can actually contribute to the creativity and innovation that drives the industry.

Indeed, we saw signs of creative inspiration all over the Spring/Summer 2010 shows: Was the beige ruffled dress from Valentino inspired by the white dress Viktor & Rolf presented in their Spring Summer 2006 collection? Was Jason Wu’s violet dress with a black waist band inspired by the violet dress by Alber Elbaz for Lanvin Spring Summer 2008?

We also see copying on the high-street, with H&M, Zara and others quickly reproducing high fashion trends. However, one could reasonably argue that this simply gives affluent consumers more reason to buy new and different things, which puts more pressure on fashion houses to innovate, driving the industry forward.

Certainly, this system of inspiration can be seen as a positive — even inherent — part of the fashion industry. But it should operate on fair terms.

Here, perhaps fashion can learn a thing or two from the music industry. With music, ‘collecting societies’ ensure that artists and rights owners are fairly remunerated when their works are played or — more relevant to fashion — sampled.

This type of system could be tailored to the fashion industry. For example, the “sampling” of a fashion design could go through a society that’s specifically set up to collect and distribute remuneration across Europe. Such an approach would not grant a right of reproduction, but allow designers, fashion houses, artisans, and others to draw inspiration from each other on fair terms.

Furthermore, why not recognize “moral rights” for fashion designs? As well as economic rights, copyright law grants something called a “moral right.” This is essentially the creator’s right to attribution by name when his work is copied.

Moral rights are not currently granted by design right law, but in the world of computer software development, “open source” licenses often contain attribution of authorship. Adopting a similar concept for the fashion industry would obligate “samplers” to not only pay a fee, but give fair attribution to the original designer, channeling potential customers towards the source of the design.

If last century’s strategy of strict controls on fashion IP is failing, perhaps an “open source” system that acknowledges and promotes the sampling of inspiration based on fair remuneration and attribution could be the answer for the next century.

Hanne Melin is a competition and IP lawyer based in Brussels.

Diane Von Furstenberg

Tightening Belts? She’s the Expert (New York Times)
Stephanie Rosenbloom sits down with Diane Von Furstenberg.

Proposed new law sparks rift in US fashion industry (Business World)
“A proposed new law that would extend copyright protection to clothing has designers in an uproar and threatens to widen a rift in the American fashion industry.”

The chambermaid wears Prada (FT)
“Designing uniforms for restaurant employees and airline crews has long been a fashion sideline. Bruce Oldfield did it for McDonald’s staff last year; 40 years ago Emilio Pucci created a uniform for Braniff International Airways, as Julien Macdonald did, more recently, for British Airways.”

Shopping for $1,000 Shoes? There’s an App for That (New York Times)
“Net-a-Porter.com, the high-end online fashion retailer, persuaded shoppers to buy couture dresses and shoes on the Web. Now, it is betting they will buy luxury goods from their cellphones.”

Bulgari S/S 09 ad campaign, courtesy of Bulgari

Bulgari sees improvement in April after Q1 loss (Reuters)
“Italy’s Bulgari posted improved sales in its own stores in April after a first-quarter net loss, hurt by the financial crisis sapping demand for luxury jewellery, watches and perfumes.”

Fashion icon pays up in copycat spat (Toronto Star)
“A struggling Toronto fashion label is getting an undisclosed financial settlement from fashion icon Diane von Furstenberg for appropriating the design of their vintage-looking, tea-dyed, floral jacket.” This is not the first time a young designer has accused Von Furstenberg of stealing their designs, as reported on BoF in April of last year.

Selfridges’ Heiress-In-Chief (Forbes)
“Alannah Weston is the daughter of a billionaire, she’s arty and she’s charged with running London’s superstore into its next 100 years.”

Out on a Lim: Phillip Lim’s Three Product Launches (WWD)
“Phillip Lim is optimistic. ‘We’re not fearful of the economy,’ he says, a bit zenlike considering the impact of the recession on his four-year-old line, 3.1 Phillip Lim.” (Subscription required)

Gisele Bündchen: The charmed life of the mega-model (The Independent)
“There are supermodels – and there is Gisele Bündchen. How did the girl from Brazil become the biggest star in fashion history?”