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Chinese Firms Make a Push into Luxury

Chinese apparel group Shandong Ruyi said its ambition was to become 'the LVMH group of China.'
Lanvin Spring/Summer 2018 | Source: Indigital
By
  • Bloomberg

SHANGHAI, China — As China's shoppers power growth for European luxury brands, Chinese companies want to bring home some of the profits, along with their Prada loafers.

Fosun International Ltd. acquired a majority stake in French fashion house Lanvin for an undisclosed sum, the Shanghai-based group said Thursday. It's the latest in a series of moves by Chinese companies to snap up iconic European names, ranging from Bally handbags to Baccarat Champagne flutes.

"As China becomes the main growth driver of the global luxury market, we are confident that Fosun can bring great incremental value to Lanvin," Joann Cheng, executive president of Fosun Fashion Group, said in a statement.

Luxury sales in China grew 20 percent last year, according to consultancy Bain & Co., and Chinese consumers accounted for about one-third of sales worldwide. Much of that spending, including splurges during tourists' grand tours of Europe, has gone to the French conglomerates that dominate the luxury industry — Louis Vuitton owner LVMH and Gucci parent Kering.

Chinese groups have a long way to go to catch up with LVMH.

Earlier this week, Jining, China-based apparel group Shandong Ruyi said its ambition was to "develop into the LVMH group of China." The bold statement of intent came as the company denied a report that it was in talks to buy Arcadia Group, the British owner of fashion chain Topshop. But Shandong Ruyi has already bought or invested in a series of brands, including France's Sandro, Maje and Claudie Pierlot, as well as Aquascutum and Gieves & Hawkes in the U.K. Earlier this month it added Swiss leather-goods label Bally.

Shandong Ruyi “plans to continue to look for suitable acquisition targets,” favouring recognisable brands with room for rapid growth, the company said.

Jeanne Lanvin SAS, founded in 1889, is France's oldest fashion house in continuous operation. It grew into a global brand under designer Alber Elbaz after its acquisition by the Taiwanese publishing magnate Shaw-Lan Wang in 2001, but has struggled to regain its footing since the designer's departure in 2015. His successor, Bouchra Jarrar, left the house last summer after only two seasons.

China’s LVMH

The Chinese groups have a long way to go to catch up with LVMH, which has a portfolio of 70 prestigious brands, including Christian Dior fashion, Bulgari jewellery and Dom Perignon Champagne. But as top luxury labels have pushed prices higher — a basic cocktail dress can cost $2,500 or more — they’ve left an avenue for their Chinese competitors to grow by targeting a more accessible range.

Shandong Ruyi-controlled SMCP SA — which owns Sandro, Maje and Claudie Pierlot — grew 17.5 percent last year at constant currency, selling some of its dresses and handbags for around 250 euros ($307). The French brand Iro, which Fosun acquired in 2016, competes in a similar space with biker jackets priced at just under 500 euros.

Other recent forays by Fosun include a deal for Italian menswear brand Caruso and an investment in U.S. knitwear brand St. John, while Shandong Ruyi has snapped up Savile Row suitmaker Gieves & Hawkes. Last summer, Fortune Fountain Capital Ltd., which manages money for wealthy Chinese families, said it would buy a majority stake in French crystal-maker Baccarat.

By Robert Williams; editors: Eric Pfanner and John J. Edwards III.

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