Asian luxury brand owners aiming high

02 September 2010

BEIJING: Increasing numbers of luxury specialists in Asia are seeking to enhance their status by acquiring ailing foreign brands, and adapting them to reflect local tastes.

SKNL, based in Mumbai, bought Hartmarx, the parent of Hart Schaffner Marx and Hickey Freeman, which attracted a considerable amount of attention after Barack Obama was inaugurated wearing one of its suits, last September.

"We want to introduce American creativity and expertise to India," said Tushar Maloo, who runs SKNL's office in New York.

"We won't take upscale brands such as Hickey Freeman downmarket. We are about getting customers to spend hundreds of dollars - not like Wal-Mart, which is about spending nickels."

Although multinational players including Cartier, Dior, Giorgio Armani, Ermenegildo Zegna and Versace have set their sights on India, indigenous designers may benefit from a more nuanced understanding of popular preferences.

Neelesh Hundekari, of ATKearney, the consultancy, suggested shoppers in the country typically favour "something unique", and displaying clearly premium credentials.

"A simple white kurta will not connote luxury. It's the regal, royal touch - the amount of effort in the patterns that have been created," he said.

"People look at a garment and say: 'Oh, a lot of effort has gone into making this.' Its luxury is apparent."

Domestic enterprises like JJ Valaya, Ravi Bajaj, Rohit Bal and Tarun Tahiliani have sought to leverage these desires, while modernising traditional themes.

"You can be of any shape and a sari will always make you look good, or at least make you look much better than you would in western wear," said Hundekari.

Elsewhere, the investment arm of Hong Kong's Li & Fung bought British tailor Hardy Amies in 2008 and Gieves & Hawkes in 2006.

"[This] is a trend that is only going to gain momentum," predicted Luca Solca, chief luxury analyst at Sanford Bernstein.

According to Bain & Co, the consultancy, sales of high-end products should reach $14.6bn (€11.4bn; £9.5bn) in 2014, with second and third tier cities driving this process.

Korean firm Sunjoo Group, which operates franchises for a variety of global retailers, took over German leather goods specialist MCM in 2005.

It has since doubled the revenues generated by this operation, largely through focusing on Asia, and named China as a particular priority in 2010.

"If Korea doesn't take the initiative in leading the Asian fashion market, China will," Sung Joo Kim, the founder of the Sunjoo Group, said.

In a reversal of this shift, Hermès is launching a new range, called Shang Xia, in China, and has endeavoured to ensure its authenticity by running it as a separate entity.

"It is a Chinese brand, developed in China with the Chinese team, based on Chinese craftsmanship and broadly made in China. We don't want any confusion," said Florian Craen, Hermès managing director for north Asia.

However, doubts remain as to whether Asian companies will be able to secure a foothold internationally, Mark Bandak at Blackstone Advisory Partners, argued.

"Just as in the 1970s, 'Made in Japan' had a negative taint, today so does 'Made in China' or 'Made in India' … The question for them is how do you change that image? This is key at the moment."

Data sourced from Financial Times/Wall Street Journal; additional content by Warc staff