Shan­dong Ruyi ac­quires Bally

More Chi­nese firms set to buy lux­ury brands

Global Times - - Front Page - By Huang Ge

Chi­nese tex­tile com­pany Shan­dong Ruyi Group on Fri­day inked a deal to pur­chase a con­trol­ling stake in Swiss lux­ury shoes and leather com­pany Bally from Lux­em­bourg-based JAB Hold­ing, me­dia re­ports said.

Ex­perts told the Global Times on Mon­day that an in­creas­ing num­ber of Chi­nese lux­ury pro­duc­ers are likely to buy fa­mous for­eign brands in the fu­ture to build up their own brands. Proper man­age­ment and de­ploy­ment of sales chan­nels will help them gain more pop­u­lar­ity with do­mes­tic con­sumers, ex­perts said.

“This is an im­por­tant mile­stone for Shan­dong Ruyi Group to be­come a global leader in the fash­ion ap­parel sec­tor,” Qiu Yafu, chair­man of Shan­dong Ruyi Group, was quoted as say­ing in a re­port by news site sohu.com.

“We look for­ward to sup­port­ing Bally in achiev­ing its con­tin­ued growth and en­hanc­ing its brand glob­ally,” Qiu said.

The Chi­nese tex­tile maker has been build­ing up its net­work of lux­ury cloth­ing and ac­ces­sories in re­cent years. The com­pany pur­chased a 41 per­cent con­trol­ling stake in Ja­panese ap­parel maker Renown for about 4 bil­lion yen ($36.8 mil­lion) in 2010 and bought French fash­ion com­pany SMCP in 2016. In 2017, Ruyi bought a con­trol­ling stake in Hong Kong­based menswear group Trin­ity for HK$2.22 bil­lion ($284.62 mil­lion).

Chi­nese firms like Ruyi have strong pro­duc­tion ca­pac­ity, and buy­ing well-known for­eign brands will help them build their po­si­tion as lead­ing fash­ion la­bels in the in­dus­try, Li Shifeng, a part­ner at Bei­jing-based as­set man­age­ment firm Tao Feng Fund, told the Global Times on Mon­day.

Bally has al­ready gained much pop­u­lar­ity among Chi­nese con­sumers, said a Shang­hai-based in­de­pen­dent in­dus­try an­a­lyst sur­named Jiang.

Li noted that more and more Chi­nese firms would like to buy fa­mous brands in over­seas mar­kets to help them up­grade. “But one of the ma­jor chal­lenges is how Chi­nese buy­ers can prop­erly main­tain the value of the brands they have bought,” Li said.

Charles Zhang, a 20-some­thing white-col­lar worker in Bos­ton, the US, told the Global Times on Mon­day that he had con­cerns about “whether Bally might be de­val­ued af­ter be­ing ac­quired by a Chi­nese firm.”

“The man­age­ment model and the de­ploy­ment of sales chan­nels will mat­ter if Bally wants to win fur­ther recog­ni­tion in the do­mes­tic mar­ket in the fu­ture,” Jiang told the Global Times on Mon­day.

Ex­perts noted that the top global lux­ury brands have long been eye­ing the Chi­nese mar­ket as do­mes­tic con­sumers are keen buy­ers of lux­ury prod­ucts.

In 2016, Chi­nese con­sumers spent 166 bil­lion yuan ($26 bil­lion) on lux­ury goods in the do­mes­tic mar­ket, and such spend­ing will con­tinue to rise to 441 bil­lion yuan by 2025, ac­cord­ing to a re­port re­leased by McK­in­sey & Co on Fe­bru­ary 5.

Con­sump­tion of lux­ury prod­ucts by Chi­nese con­sumers will ac­count for 44 per­cent of the to­tal con­sump­tion in the sec­tor across the world by 2025, ac­cord­ing to the re­port.

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