A brand of their own

With the mainland now a force in buying luxury goods, they're now eager to develop elite brands that they can be proud of, writes Tiffany Ap

PUBLISHED : Sunday, 06 April, 2014, 10:28pm
UPDATED : Monday, 07 April, 2014, 6:20pm

In 2010, when China's most famous NBA player, Yao Ming, was benched because of a foot injury, cutting jokes filled the internet. Why did Yao's foot break? Because he was made in China.

While the "made in China" label may have conjured up cheap, use-once-and-throw-away products four years ago, as the middle and upper classes emerge on the mainland, so is the market for 100 per cent Chinese-made HK$2,800 shirts, 15,000-yuan (HK$18,900) tea sets and 30,000-yuan silk scarves. The image of originating on the mainland is no longer inextricably intertwined with images of a dirty factory. In fact, there are those who say the "made in China" tag is turning into a boon.

The forerunners of Chinese luxury apparel brands - brands such as Qeelin, Shanghai Woo and Pye - are formulating their own ideas about what modern Chinese luxury should look like. Their footprint has gathered momentum domestically and now is beginning to creep overseas, too, raising the possibility that they could eventually develop into global powerhouses such as Hermes and Prada.

After all, the Chinese are becoming a tremendous force for luxury consumption, and are developing a taste as sophisticated as any luxury consumers worldwide. China was responsible for 47 per cent of global luxury spending last year, according to Fortune Character China, a media group that covers this sector. The US$102 billion spent on luxury items breaks down into US$28 billion domestically and US$74 billion overseas.

"An obvious choice is luxury," said Sarah Reiter, an international brand consultant who most recently worked at FutureBrand. "Right now, China is the No3 consumer of luxury goods. In 2015, it will be No1. The question is, will the Chinese consumer be consuming Chinese luxury goods or Western luxury goods? ... Right now in goods like food, beauty and luxury, that dollar is going offshore.

"I've watched inferior products be marketed well at the cost of great domestic products that don't satisfy any of the cues."

A walk down Hong Kong's most famous shopping avenue, Canton Road, proves Reiter's point. It's a parade of Western brands such as Dior, Bottega Veneta, Céline, Louis Vuitton and Balenciaga. Not a single Chinese name to be found.

In the early 1990s, Shanghai Tang made some headway. Founded by David Tang Wing-cheung, who pioneered the idea of bringing back traditional Han Chinese clothing elements in a modern way, it sold a majority stake to the Geneva-based Richemont group in 1998. However, since the acquisition, the brand has stalled, industry experts say.

Then last year in January, Qeelin, a brand of Chinese fine jewellery, began raising new hopes. Luxury conglomerate Kering - which is behind a portfolio of prestige brands including Bottega Veneta, Stella McCartney and Balenciaga - acquired a majority stake, making Qeelin its first non-European brand.

Founded by Hongkonger Dennis Chan and Frenchman Guillaume Brochard in 2004, Qeelin describes itself as "blending the best in Chinese culture and contemporary jewellery design with fine French craftsmanship". Its products are sold in such cities as Paris, London, Shanghai, Beijing, Hong Kong, Singapore and Tokyo.

Before Kering's acquisition, Qeelin put its first footprint overseas, as Kering CEO François-Henri Pinault explained on a recent visit to Hong Kong as a move to gain legitimacy on the Chinese market.

"Occidental brands' attraction is sometimes based on the fact that they are very well loved in Europe or America. It goes over very well with the Chinese," he said. "The really challenging thing is to convince Chinese people that by respecting key rules of luxury, you don't need to come from Europe or America to be a good brand.

"In the short term, of course it helps."

However, Pinault says luxury does not belong to one particular country. "It could be more related to one country when it comes to certain categories because of the history and the culture of the country, like leather goods in Italy," he said. "There's an ancient culture and craftsmanship around leather.

"When we look at the culture and history of craftsmanship, China has a very strong culture and heritage with jewellery."

Also pushing the boundaries is Pye, a label known for its soft, sophisticated cut and luxurious shirts.

Pye was founded in 1984 by Marjorie Yang Mun-tak, who runs the world's largest cotton shirt manufacturer, the Esquel Group. The label was handed to Yang's daughter, Dee Poon, to manage, and currently has a store network that covers Hong Kong, Shanghai, Beijing, Guangzhou and Urumqi in the Xinjiang Uygur Autonomous Region.

"When my mother arrived in [Hong Kong] in the late 1970s, it was the beginning of the hai gui (Putonghua for sea turtles, symbolising the return of overseas Chinese to Hong Kong and the mainland). They recognised that, even then, there were a lot of smart, interesting Chinese people like them, and they wanted something of their own," said Poon.

"Particularly in China, we see a lot of foreign brands come in and have a view of aspiration, which is about creating that Western lifestyle. I wanted to come up with something that reflects what we want to be and where we want to be in the future."

"There are so many aspects of our culture, heritage and technical prowess that we could leverage upon. The history of cotton is more than 5,000 years old. We are working on reviving natural dyes. If you think of the Industrial Revolution, they moved towards the chemical dyes, but the art of natural dyeing has existed for many years in China," she said.

FutureBrand has been studying the perceptions consumers hold regarding where a product comes from. Its first Made In report - released in March, which deals with origin and provenance of brands and surveyed more than 1,000 consumers - found that China placed ninth in the world.

It used to be that a product's provenance was one-dimensional. However, the concept of where a product is "made" now has five layers to it: where it's sourced, designed, manufactured, assembled and where the company is incorporated.

"It can be a Paris-designed garment, so you're getting the quality of Parisian fashion thinking, Reiter said. "But the fabric could be sourced in Italy, it's then made in China because we know the assembly is very high quality, so I'm drawing associations of style from Paris, associations of quality from Italy and associations from quality and workmanship from China and all the way through the process."

One of the options for Chinese brands might be to associate with certain cities rather than the country, Reiter said.

"Shanghai and Hong Kong are two of the world's most amazing cities. If we look at the qualities and associations ... Shanghai and Hong Kong have extraordinary associations - Shanghai for fashion and sophistication, and Hong Kong for commercial savvy, business acumen and [being] a financial centre," she said.

Stephen Sun - the owner of Shanghai Woo, a luxury brand that specialises in silk and cashmere scarves - is leveraging Shanghai's cachet. The "soft gold" or "diamond fibre", as he likes to call it, goes for as much as 30,000 yuan.

He was inspired by his friend the late Chinese artist Chen Yifei, who told him that while he often went to Paris, he felt ashamed at never seeing any luxury brands representing where he came from.

"China has a splendid, magnificent culture of 5,000 years," Sun said. "His story really moved me. I thought for one week, and I had the idea to build a new brand."

That was in 2002. Sun went about harnessing the artisanal expertise in the Wu region, which encompasses Shanghai; Hangzhou, Zhejiang; and Suzhou, Jiangsu - areas renowned for their fine silk - and he sources his delicate cashmere from Inner Mongolia.

Then comes the hand embroidering. "In Italy and France, there are very few people who can do this. We have 200 people in Suzhou doing hand embroidery," Sun said.

He also minces no words about the "made in China" reputation, which he said is "very bad". But he's on a mission: "I want to prove, to tell all the consumers in the world, that 'created in China' is good," he said.

So far, he feels encouraged. He's since expanded to 38 stores in 12 cities around China, and his clientele, which used to consist of nearly all overseas customers, has shifted to a domestic audience.

Shanghai Woo's ability to expand will be tested when Sun opens his first overseas store in Paris. He has been scouting locations, and although he had originally planned to open it by the end of the year, early next year is more likely. His voice shows a bit of anxiety when he talks about it, but stores in New York and London are also in his grand vision. "It's a truly global brand," Sun said.

Even so, there may be a ceiling to what a brand from an emerging country can achieve. Tanuj Shori, luxury and consumer analyst for Nomura, is sceptical that a "true luxury" brand - as opposed to an "affordable luxury" brand - can emerge from the mainland anytime in the next century, given that previous boom countries such as the US and Japan have failed to produce one.

The most successful luxury fashion stories in the US - Michael Kors, Coach and Ralph Lauren - satisfy a more affordable luxury niche. Japan, despite producing several excellent contemporary designers and its reputation for precision and design innovation, hasn't produced an esteemed luxury house, either.

"People were saying the same thing about Japan and the US, but there are no examples," Shori said. "I don't see it happening for at least a hundred years."

In contrast, the craftsmanship of Louis Vuitton dates to 1854. Delvaux, associated with the Belgian royal house, goes back to 1829, and Prada originated in 1913.

But Pye's Poon disagrees that legacy is a prerequisite for luxury and that the parameters for a luxury experience are shifting: "I don't think you need 400 years of history to say that you're luxurious. I think we live in a world that is full of disruptive technology and change.

"I don't know if people consider Apple a luxurious product. I think Apple is a hell of a lot more luxurious than Vertu, although [Vertu] is all diamonds and pearls. People who buy Tesla cars are also considering buying Ferraris. It doesn't have the legacy, but it is luxury."

Markets and time will tell, but Pinault of Kering is sure Qeelin and other Chinese brands will succeed. "I am completely convinced that, over the years, China will understand more and more what luxury is about," he said. "It's not only about the French flag or Italian flag. It's the authenticity of the product, what the product is made of and how it is made. Qeelin is following those rules. It's a pure Chinese luxury brand, with no gimmick."