MaxMara speeds up expansion in China
As chairman of Italian fashion brand MaxMara, one of Luigi Maramotti's biggest challenges is forecasting the outlook for its China business, which is set to grow by at least one new store a week over the next six months.
'In China, growth has been always much bigger than we could ever predict. Basically, we could not catch up' with the speed of growth, Maramotti said.
Most of the new stores would be opened on the mainland, but MaxMara also planned to add stores in Hong Kong and Taiwan, he told the South China Morning Post yesterday during a trip to Hong Kong.
Maramotti is the son of the late Achille Maramotti, founder of the closely held company. His first job at MaxMara, in 1981, was as a marketing manager.
'The [China] story for the last 10 years is the story for everybody's big expansion,' he said. 'Sometimes, it's not just double-digit but triple-digit in terms of business growth and development of our stores.'
MaxMara now hires more than 2,000 staff on the mainland, mostly salespeople. The brand has about 320 stores in China, including the mainland, Hong Kong and Taiwan, Maramotti said. His group also manages the Max & Co and iBlues labels.
He said his brand would focus on expansion in the mainland's second- and third-tier cities once the company secured strong market shares in top-tier cities including Shanghai and Beijing.
Other international fashion labels such as France's Louis Vuitton and Britain's Burberry are expanding in China. Italian brand Prada raised its profile in the region by listing its shares on the Hong Kong stock market last year.
Last week, Louis Vuitton celebrated the official launch of its four-storey flagship store in Shanghai, which is bigger than the brand's historic store on the Champs-Elysees in Paris.
Part of the reason big luxury brands have been speeding up their expansion in China in recent years is that the 2008 global financial crisis has dented American sales.
That was followed by the euro-zone debt crisis, which has damped spending power in Europe, home to many of the luxury labels, and looks set to worsen in the months ahead.
'The Western world is now in trouble,' Maramotti said.
But mainland spending on expensive jewellery has slowed recently along with the slowing of the Chinese economy, and some analysts caution that the pace of sales growth in other luxury goods is also under threat from the weakening economy.
Some politicians in the United States and Europe often blame the rise of China for the fall of Western economies. They argue that relatively cheap labour costs and an undervalued currency give China an unfair advantage, which they blame for the imbalance in international trade.
The latest fashion label to get caught up in this political debate is Ralph Lauren. The US fashion maker outsourced production of the US 2012 Olympic team's opening-ceremony uniforms to China, drawing fire from some American lawmakers in the past few weeks.
When asked if MaxMara considered making its products in China, Maramotti, who also sits on the boards of two major banks in Italy, told the Post: 'This kind of discussions on where things are made is basically wrong because the discussion is based on geography, not on quality.'
He noted that MaxMara-branded products were made mainly in Italy at present.
'I cannot predict what's going to happen in the world in the next 10 to 15 years,' he said. 'If in Italy, for instance, will we still make a lot of our things? I think in 10 years' time, nobody from the young generation will decide to be a [blue-collar worker]. I can't stop that [trend happening].'