BEIJING — Jean Paul Gaultier just made his first trip to the Chinese capital to host a fashion show of his fall women’s and men’s ready-to-wear and couture collections.
Close to a thousand people from all over Greater China crammed into the city’s Chaoyang Urban Planning Museum Friday night to get a glimpse of Gaultier’s latest designs. VIP attendees included Miss World Zhang Zilin, actress Jennifer Tse, actor Simon Yam and model Qi Qi.
The crowd was clearly about Gaultier’s style. There were enough striped bodies to command a naval ship, and enough kilts to start a ceilidh. And in a city that doesn’t usually condone homosexuality, and certainly never dressing up in drag, all persuasions appeared to be proudly and glamorously represented.
Two weeks after Gaultier’s 60th birthday and almost 40 years into his career, Gaultier’s visit to Beijing prompted numerous questions relating to his age. Yet the “enfant terrible” seemed unperturbed by the constant reminders of his seniority.
“I don’t feel anything has changed but the color of my hair. I always have the same passion in my work, which I love,” he said. “I’m very lucky because I’m doing the profession I have wanted to do since I was a child.”
The designer gave no sign that he’s considering retirement; instead, he was eager to talk about his plans for the future. Dressed casually in cargo pants and a T-shirt a day before the Beijing show, he talked animatedly. At the mention of Madonna, his enthusiasm doubled.
“It’s like a love story that goes on. I love her and admire her,” he said. “I think she’s a genius. She definitely has a real sense of fashion.”
The two are collaborating on the star’s upcoming tour, MDNA, which kicks off at the end of May. He declined to reveal any details about what he was designing, saying only that it would be seen on Madonna and her dancers in a section of the concert.
Straight after Beijing, it was off to Cannes to join the judging panel of the film festival. And what will his input be?
“Image is important for me. If I have to fight, I think I will not fight, but I think if I have to defend, it will be about the image,” he said.

Source: WWD 

From his child years, Alexander Wang never envisioned himself in China, but flash-forward to today, where the famed designer is set to extend his brand to the Chinese market with the opening of a 5,000-square-foot, multi-floor flagship store in Beijing. The grand opening celebration included a red-carpet event that drew rapper A$AP Rocky, Zoe Kravitz and Penn Badgley, along with a number of other popular Chinese film talents. The store itself was designed by architect Joseph Dirand, who spared no expense in using marble, bronze and rich leathers to best accommodate the senses of the shopping clientele. Unlike some European labels, Wang is not designing a special collection exclusively for debut in the Chinese market — the store will operate just as his New York or Paris flagship stores. The opening has been called a “homecoming of sorts” for Wang (whose parents are Taiwanese), who plans to open two more stores in China, and several more across Asia by the end of the year.

Source: WWD

NEW YORK (CNNMoney) — China’s broader economy may be losing momentum, but its big spenders aren’t letting anything get in the way of their love affair with Louis Vuitton, Chanel and Gucci.

China is on pace to top Japan as the world’s largest market for luxury goods, according to McKinsey & Co., which estimates sales will surge 18% annually to hit $27 billion by 2015. That’s a fifth of the worldwide total and up from just $10 billion in 2009.

“China’s consumer is still in its infancy,” said Wendy Trevisani, a portfolio manager at Thornburg Investment Management. It’s true that exports and real-estate investment are softening, but Trevisani contends consumer spending is growing “pretty much without hesitation.”

In fact, consumer spending is forecast to account for 43% of China’s GDP growth by 2020, up from about a third currently, according to McKinsey. That’s in line with the nation’s current five-year plan, which aims to help the country become less dependent on exports and investment-led growth.

And with China’s appetite for Western goods, luxury brands stand to be big beneficiaries.

One of Trevisani’s biggest holdings in the co-managed  Thornburg International Value Fund (TGVAX) is LVMH Moet Hennessy Louis Vuitton, the world’s largest luxury goods groups with its 60 brands including its namesakes, Marc Jacobs, Tag Heuer and beauty retailer Sephora.

Thanks to its 20% gain this year, the stock is one of the best performers in the Thornburg fund.

LVMH’s first-quarter sales jumped 25% thanks to China. And while Chinese buyers are Louis Vuitton’s biggest customers already, the market is far from saturated.

Nearly every brand of the company is focused on tapping further into China.

Diamond jeweler De Beers, an LVMH brand, opened its first store in China less than a year ago in Beijing. Louis Vuitton boutiques, which already boast multiple locations in China’s big, thriving cities, are continuing to expand, even making a push into the country’s second- and third-tier cities.

Meanwhile, the head of the LVMH’s wine and spirits group, Christope Navarre, recently announced that the company has found land in China that is perfect for a vineyard, and will be producing a super-premium red wine within two years. “The potential is huge,” Navarre said.

LVMH, of course, is not the only luxury company enjoying success in China. Following Louis Vuitton, private label Chanel and Gucci, owned by PPR were the most desired brands in China last year, according to research by Bain & Co.

Compagnie Financière Richemont, known for its Cartier jewelry and watches, is also gaining traction. Between 2006 and 2011, its China and Hong Kong sales more than tripled.

Despite that growth, Cartier CEO Bernard Fornas recently told the Wall Street Journal that the company has not even “scratched the potential” of many cities in China.

Although China is not its biggest market yet, Fornas said many Chinese consumers are already big Cartier clients in other markets.

Prada, which includes the namesake label as well as Miu Miu and others, has also made a big bet on China. Prada’s sales in Asia, excluding Japan, climbed 42% in 2011, and nearly a quarter of the new stores the company opened last year were in the region.

The Italian fashion house also made its public debut on the Hong Kong stock exchange last year, as it continues to expand its international presence.

Chinese consumers have also embraced Coach (COH), which listed depositary receipts on the Hong Kong stock exchange last year and operates more than 80 locations through Hong Kong and China.

In addition to fashion and jewelry brands, luxury car manufacturers are also luring in Chinese customers.

Sales of Tata Motors’ (TTM) Land Rovers, Ranger Rovers and Jaguars jumped 60% in China in 2011, and last month, the company inked a deal with China’s Chery Automobile to manufacture and sell luxury cars in China.

Sales of Daimler-owned Mercedes-Benz, Volkswagen’s Audi, and BMW vehicles also continue to grow at a red-hot pace.

U.S. automakers Ford (F, Fortune 500) and General Motors (GM, Fortune 500) are also continuing to successfully grow in the world’s second-largest economy.

GM sold a record number of vehicles in China during the first quarter, up more than 10% from a year ago.

While Ford’s first-quarter sales declined in China, the company recently announced that it is investing $600 million in one of its Chinese manufacturing facilities to meet growing demand.

As China’s economy continues to grow and create more wealth, average household spending is likely to follow, a healthy signal for Western brands. And the outlook is particularly bright for luxury companies, since the biggest increase in spending is forecast to come from the most affluent consumers.

Consumers who spent $2,000 and $4,000 on discretionary items in 2010 are expected to raise that to $3,000 and $6,000, respectively, by 2020, according to McKinsey. And consumers who allocated $12,000 toward discretionary spending in 2010 are forecast to almost double that figure by 2020.

Source: CNN

Ultimate Luxury: 7000 Hours for One Dress!

In fact, describing the event as a ‘fashion show’ is almost an insult as the dresses on display were so painstakingly hand sewn and crafted over (quite literally) thousands and thousands of work hours that they were some of the most astounding works of art I’ve ever seen. Guo Pei’s dresses are so labor intensive that it takes a team of hundred embroiderers and seamstresses several years to make an entire collection and so to witness one of her ‘moving art theater performances’ was truly special.

When nostalgic emotions from my past life as an Imperial Warrior arise from my deep subconscious I often think of, and thus am a big fan of Guo Pei. Seeing her collections, I’m instantly thrown back into the days of Imperial China where Emperors ruled the Middle Kingdom (China) and their dragon robes and court attire was the ultimate in luxury. These one-off pieces would have been constructed by the country’s leading artisans and Imperial Tailors under threat of death if they weren’t absolutely perfect and worthy of being worn by the Emperor who was mandated by heaven to rule. As Guo Pei once said to me “if you screwed up a robe for the Emperor they cut your head off!” and she wasn’t joking!

Source: Mao Suit

Well, it seems a CFDA/VOGUE Fashion Fund for Chinese designers is still yet TBD, but the current design program exchange is well under way thanks to the financial support of Chinese fashion heavyweight, Silas Chou, among other in-kind sponsors. Uma Wang has been confirmed to be the Chinese counterpart—no surprise there given the success she’s had over the past few months in Europe and New York—and no word yet from New York duo Proenza Schouler on their itinerary in Shanghai.

It’s an exciting time, and Steven Kolb’s remark about the CFDA’s commitment to the exchange is encouraging, “We never want to do anything as a one-off. We really like to connect and invest in things that have real meaning and depth.” And while I understand the CFDA’s focus is on building the careers of American designers, it seems VOGUE, as the final word on international fashion, should have a real interest in influencing the next crop of the world’s best design talent wherever they may be. For that reason, and based on the talent that’s coming out of China, I think we can expect to see some major movements in this area in the next five years to fund Chinese designers. It would be fitting for VOGUE to lead this initiative, but as we know, the world moves quickly and waits for no one.

Source: China Daily

Snatching up bargains in Europe might be a thing of the past for Chinese luxury travelers if the major labels get their way. LVMH Moet Hennessy Louis Vuitton SA and several other luxury brands are planning to raise prices in Europe as a way to make up lost profit in China.

“The combination of the two is unfortunate because what you’ll find is higher prices and at the same time lower disposable income for domestic European customers,” said Luca Solca, global head of European equities at CA Cheuvreux. He explains, “What we expect luxury companies to have to do is progressively close the pricing gap and, more likely than not, this is going to come from stepping up prices outside of Asia. You cannot continue to sustain the existing price gaps that have been a mainstay of the luxury goods industry for the past 20 or 25 years.”

Chinese tourists flocking to Europe in the past have taken advantage of savings as high as 50 percent by traveling abroad.  But with Louis Vuitton’s price differential between China and France reaching as much as 47 percent in the first quarter, something’s got to give to keep Chinese consumers from shopping abroad. “This will continue to be a feature of the industry this year unless the group rebalances pricing to discourage parallel imports,” said Barclays Capital analyst Julian Easthope.

LVMH and its competitors would need to raise prices by 3 percent outside of China to compensate for about 15 percent of mainland Chinese customers buying their products abroad, Solca said. And LVMH is not alone in rethinking its pricing structure.

Burberry Group Plc, the U.K.’s largest luxury goods maker, is experiencing similar problems. “It’s the global traveling luxury consumer that is dominating,” said Burberry Chief Financial Officer Stacey Cartwright.”

Chinese global tax-free spending grew 79 percent in March from a year earlier, the fastest increase of any nation, making them the world’s biggest tax-free spenders with 21 percent of the total, according to tourist shopping specialist  Global Blue. The products they splurge on the most in Europe are watches, jewelry and fashion, said Manelik Sfez, head of global corporate and partner marketing at Global Blue in Nyon, Switzerland.

“By no means do we feel that this is a permanent move,” LVMH Finance Director Jean-Jacques Guiony said. “Overall, no reason to be pessimistic, but at the same time, keeping flexibility and agility are the two key words in any uncertain environment.”

Source: Red Luxury

Coach is winning over Chinese aspirational consumers and business is good. The aspirational luxury retailer announced strong sales and profits for its third quarter driven by impressive growth in its China business. China continues to be high priority for Coach as it becomes the company’s largest geographical market outside of the U.S. Coach’s China sales soared by 60% in the third quarter. Coach expects revenues of $300 million from Greater China in 2012 which some analysts believe they will beat. Coach’s strong performance in China underscores the company’s success in building its image and acceptance by China’s rising aspirational buyers. Coach plans to open about 10 new stores later this year bringing their total stores in mainland China to 95.

Source: Red Luxury

According to a 2011 Bain & Co. Chinese luxury survey, Gucci stood as the third most desired luxury label in the country behind Louis Vuitton and Chanel. But for Patrizio di Marco, Gucci’s president and chief executive officer, that’s not good enough.

In advance of a recent string of Gucci promotional events in China, de Marco admitted that he wants the label to step up its game. “What is the memory of Gucci now [in China] in the past few years is a brand that is commercially successful because it opened stores. The perception is very likely the fact that we are logo based, this kind of stuff, so we definitely have to fine-tune and fix things because the brand position as I intend it to be has not been conveyed for a number of faults that I would say are related pretty much to the incredibly fast pace of our development in the country,” he said.

Gucci entered the Chinese market by opening 2 stores – one in Beijing, the other in Shanghai – in 1996. As late as 2004, the label maintained only 4 stores nationally.  But in December 2011, Gucci counted 46 stores in 32 cities on the Mainland and 57 stores in Greater China among its assets. Di Marco says 10 more are on the way this year. With them, he hopes to usher in three prongs of change for his brand’s image. He said, “The problem is that we have to make sure they know why we are, what we stand for, our core values, and that is something that has to be told in numerous ways. I want Gucci in every single moment of its expression to stress again the three features differentiating this brand from any other brand. There is no brand as cool as Gucci and at the same time has the craftsmanship as Gucci and at the same time [socially] responsible.”

Gucci initially gained popularity in China for being a logo-heavy brand, which the new rich gobbled up in an attempt to appear sophisticated. But now, as quality, craftsmanship, and elegance take hold in the culture, the Double Gs just won’t do.

Di Marco said Gucci is moving away from its Tom Ford era of overt sex and glamour to a new one of sophistication, class and femininity. Frida Giannini, Gucci’s creative director, backs this move. “Honestly, I don’t see that Chinese girls, they want to be oversexed, that they want to be in leather,” she said. “They want to be part of a lifestyle that I think Gucci is, so this is my intention to invite people to enjoy the experience of the Gucci world instead of just selling a pair of stiletto heels with black patent leather or other very aggressive things. I would prefer that someone comes into our store to buy something of a very high quality, a very high design that they can keep in the wardrobe for the next 10 years.”

Source: Red Luxury

Sourcing from China is getting more expensive, but it is still cheap, so a decision to go for Made in Morocco or Made in Moldova instead is not all about price.

This is an industry where fickle consumer behavior is the main driver of demand. Players have to be nimble to survive against heavyweights like Inditex’s Zara, which can have a catwalk dress look-alike in its stores within weeks, and which already counts 60 percent of its offering as “close or nearby production” – Europe and nearby places.

“Of course it is more expensive for us to make things in Turkey and Tunisia than in China, but it is not that much more expensive considering how much salaries (in China) have increased, and it is much more convenient for us because it is closer, so we have more control over quality,” La Perla designer Giovanni Bianchi told Reuters. The maker of fine lace underwear moved production of its mass-market Studio La Perla label to Turkey and Tunisia from China late last year, and has also moved sourcing of its nightwear from China to Portugal.

It estimates that for every 10 euros it spends in China on labor, for the same work, it pays 15-16 euros ($20-21) in Tunisia or Turkey – so China remains cheapest by its calculations.

But that is changing.

China’s national wage index has been rising on average by 15 percent every year in the past five years. Institut Francais de la Mode, France’s fashion trade group, estimates monthly pay in China’s coastal areas soared to 400 euros in 2011 from 240 in 2005. That compares with current pay rates of 160 euros in Tunisia, 152 euros in Morocco, and 200 euros in Moldova.

And tougher manufacturing terms demanded by Chinese factories have also given fashion companies second thoughts about working with them. French Fashion houses Jean-Charles de Castelbajac and Barbara Bui, and ready-to-wear group Etam, have also recently moved part of their production closer to home.

They say Chinese manufacturers put increasing pressure on them to place orders bigger than they want to commit to, risking unsold stock and resulting discounts that could harm brand image.

“The price/quality ratio we got in China was no longer what we wanted,” said Celine Lopes, who oversees production at Jean-Charles de Castelbajac and recently moved production to Hungary.

Barbara Bui moved output to Hungary, Bulgaria, Romania and Turkey in 2010. “The distance and language barrier in China made it difficult for us to always control quality,” said Deputy Chief Executive Jean-Michel Lagarde.

“We can more easily impose our way of doing things when we work with manufacturers in southern and eastern Europe.”

Etam has 20,000 employees in China, but last month it announce a move for some of its production to Tunisia, Morocco, Portugal, Greece and Turkey. “This is to increase our reactivity and gets things to market faster,” said managing director Laurent Milchior.

PICK AND CHOOSE

Anne-Laure Linget, a spokeswoman for France’s trade body that represents French lingerie and knitwear, said Chinese manufacturers have become tougher on payment, schedules and volumes since the closure of plants in the downturn of 2008/2009 gave those that remained a stronger bargaining hand and allowed them to pick and choose their customers.

“Chinese companies prefer (lingerie) orders coming from the U.S. because they are less complicated than European ones as U.S. brands use more basic designs and need bigger volumes than European brands,” Linget said. “So Chinese manufacturers have become less keen to work with Europeans and have tightened their terms.” She said some brands also found that manufacturers in Eastern Europe, Tunisia and Turkey expressed more interest in taking part in the elaboration of the manufacturing process than their Chinese counterparts.

The shift is also to some extent a byproduct of a deliberate and centralized Chinese government policy. Asia’s No. 1 economy wants to keep moving up the value chain into manufacturing that require skills and technologies.

“In the latest 5-year plan, Beijing aims to retain only those high value-added manufacturing industries and that brings up cost as a whole,” said Paul Tang, chief economist at Bank of East Asia.

Asia remains the European branded fashion industry’s manufacturing powerhouse, representing 75 percent of sourcing in 2012, according to a study by the Institut Francais de la Mode.

And between January and September last year, the value of orders from China rose 8 percent from a year earlier to 23 billion euros, the study said, still dwarfing even the bigger players among the new breed closer to home, such as Morocco, where orders grew 10 percent to 1.7 billion euros.

But the study noted that French fashion and lingerie brands had developed a strong interest in working with Bulgarian manufacturers, and that more than a quarter of all French lingerie is now made in Tunisia and Morocco.

It also highlighted Ukraine as a hotspot, with big brands including Hugo Boss, Quiksilver and FCUK while in Romania, they included Harrod’s, Zara and C&A. In Belarus, big clients were Calvin Klein, DKNY and Next while in Moldova they were Dolce & Gabbana, Guess and Armani and Cavalli.

NEXT STOP DETROIT?

Crouched over their sewing machines in a brightly-lit factory in eastern Tunisia sit dozens of women in blue uniforms, carefully stitching bras and lingerie that might have been made by workers in China but for this trend.

The factory, in an industrial zone near the city of Sfax, employs 700 workers and makes lingerie and swimwear for La Perla and other brands.

At other tables, factory workers check finished bras in white and cream lace for defects before sorting them into yellow and grey crates for packaging. The clatter of sewing machines bounces off the white walls.

Manager Michel Demurs worries about the cost of raw material and the impact of last year’s Arab Spring, which he says has discouraged some clients, but if the trend he is part of continues, these may prove to be minor concerns, and it may not just be clothing manufacturing coming his way.

Stanley Lau, deputy chairman of the Federation of Hong Kong Industries, which represents around 3000 industrialists running factories in China, estimates that production costs in China have gone up 20-30 percent over the past two years.

He says the country remains very strong in basic manufacturing with formidable supply chains and industrial clusters in regions like the Pearl River Delta, but competition is warming up. “Foreign investors are already not treating China as the only choice, they make other considerations. In the past they would only think about China as a place to set up a factory, but now there are four or five choices for them …They will consider other factors like proximity to market, labor, the supply chain, in making such decisions.” So how far west might the factories move? “We’ve seen some enterprises set up factories in Detroit,” says Lau. “You can see that this has become a trend.”

Source: Reuters

In the first annual report since Prada listed shares in Hong Kong last June, sales rose 25 percent to  $3.41 billion, while the brand’s profit soared by 72 percent.  Sales of high-margin leather goods increased 41% to account for 56% of Prada’s sales.

Prada’s sales in Asia, excluding Japan, now account for more than one-third of the group’s sales. The company still expects further market penetration. “Our brand awareness is big enough, but our expansion is not complete,” Prada Deputy Chairman Carlo Mazzi said in an interview. “In China, we’re present in just 10 cities. There are many important cities we are not present in and where we need to open.”

Of the 75 stores Prada opened last year, 18 are located in Asia. The brand now has 25 stores in China. In Guangzhou and Shenyang, Prada opened stores for both the Prada and Miu Miu labels. Prada also opened plenty of stores in Europe where, ironically enough, some of the biggest spenders are tourists from China.

Despite all the good news, Prada is mum about future projections. “Markets are too anxious,” Mazzi said. “The top luxury market is a little more sure than the rest of the market.”

Many luxury-goods analysts expect China to become the biggest country for luxury goods by the end of the decade, supplanting the more mature Japan.

Source: Red Luxury