When China Acquired Foreign Luxury Brands, What Thunder Spots Did China Group Step On?

When buying European luxury brands, Chinese investors are mainly concerned about their reputation and assets, and hope that the sooner they can earn money, the better. They all dream of becoming the world's Louis Vuitton and Gucci - and the profits that will come from them. This logic sounds very easy: if you buy a famous brand, you can enjoy your life, right? But what you need to remember is that even Gabriel Chanel has to go through a very difficult period before becoming a landmark brand. Increasing brand prestige requires long-term commitment.

Today, Chinese companies have accelerated their investment in European luxury brands, which may be expected in their booming economy. Many people in the industry may not realize that China began investing in Western luxury goods more than 30 years ago. In 1987, the Dickson Poon group, based in Hongkong, acquired the French company S.T. DuPont, but it did not really accelerate the overseas acquisition of Chinese luxury brands until twenty-first Century. In 2001, L'OREAL sold Lanvin to Taiwan media magnate Wang Xiaolan. Ten years later, the Fung family bought a series of Western luxury goods. But what can we learn from these early purchases?

An overview of the early years of luxury investment in China

After being acquired by Dickson Concept Group in 1987, Paris based luxury lighter S.T. DuPont has undergone a series of rapid changes. As the tobacco industry has been attacked for health reasons, the lighter brand has entered a series of new industries in many Asian regions, such as pens, leather products and even men's wear. Despite its noble brand tradition and impeccable product knowledge, S.T. DuPont is still unable to stand out in the competition of competitors such as Montblanc. Today, the brand is managed by an unknown team and has an undefined brand DNA.

Then there's Lanvin. After Harmonie SA, an investment group led by Taiwan media giant Wang Xiaolan, bought the French fashion boutique in charge of Alber Elbaz in 2001, things deteriorated rapidly in just a few years because of disagreement. At that time, Lanvin developed products for the Chinese market without the supervision of Paris studios, while Elbaz hoped that more stores could better express the brand DNA and make the brand more globally consistent. But Wang pays more attention to numbers, unable to understand why brand DNA is so important, and can not understand why brands need to formulate specific measures for the Chinese market.

In 2010, Hongkong based Trinity group made initial investments in Lanvin, but brought more disappointment. The company bought Paris fashion brand Cerruti 1881, and has never formally reopened. Since then, the brand has lost important business and brand awareness. The acquisition of luxury goods in China is not optimistic, but the Western Luxury vision is also in conflict with China's new thinking. All these reasons make this once fashionable European brand now become a brand unknown to luxury consumers.

Business in China

Building an everlasting brand has many factors related to people. To make full use of and maintain prestige needs long-term vision, passion and integrity. Insisting on these principles in the current era has become very difficult because the financial pressure on brands is becoming more and more serious in the short term. When Nicolas Guesghi re left Balenciaga, he explained that he was tired of facing financial pressure all the time. Even the Christian Lacroix brand, a brilliant luxury tycoon Bernard Arnault, is also facing failure. Despite the talent and the designer's freedom and cost, the brand has never really done it in the past 10 years that Arnault has tried.

In China, the culture of luxury goods is still not fully understood. The founder Jiang Qionger explained the difference between China and foreign countries when her company was bought by Hermes. "I can only get the support from the French luxury group to build a luxury brand, because it takes many years to cultivate a brand," Jiang Qionger said. "Chinese investors are rich but impatient. They often need to see the return on investment in 3 years. "

Although China's first batch of investors did not succeed, it is not clear what the latest investors will do. But if they do not create conditions for the development of brand reputation, this process will be difficult. They need to deal with irrationality and consistency. They must be committed to enthusiastic team members and at the same time attract customers in a real way. In short, they need a perfect balance between numbers and emotions.