Mao Suit Weekly June 12

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Sir Paul Smith Poses With Guests at his Beijing Flaghsip Opening

Today is the 5th day of the 5th Lunar month and so marks the celebration of the Dragon Boat festival across the Chinese world and many parts of Asia. Today is a public holiday in both the Mainland and Hong Kong and people will celebrate by eating rice dumplings. More on the festival via Wikipedia.

Mainland China has a system of trading weekend for weekday public holidays. So, last Sat. 8th and Sun 9th became official working days for the entire country and then Mon. 10th and Tue. 11th became public holidays so people get three days off in a row.

This often creates a chunk of confusion and many foreigners in China don’t see the point, yet it makes sense if you take extra holidays on Thu and Fri which then gives you 7 days straight of holidays – enough to duck of to Paris for some shopping!

For the many fashion and luxury brands with Hong Kong offices overseeing the Mainland, the holiday hinders normal operations because Hong Kong doesn’t follow the substitute system. In Hong Kong the weekend is still the weekend and only Wed. 12th is a public holiday.

Therefore China is working on the weekend, but Hong Kong isn’t, then Hong Kong is working on the weekdays, but China isn’t. Inevitably anyone with responsibility, in either location ends up working the whole time and doesn’t get any holidays!

I’ve spent the last few days exploring Hong Kong’s malls including several in the New Territories – over an hour drive away from the famed Canton Road. I never ceased to be amazed at just how busy Hong Kong’s malls can be – the busiest I have ever seen.  And the busiest ones all seem to be part of mixed-use developments where residential and office buildings, plus transport hubs with subways and buses etc. are all combined into one.

The end result is hundreds of thousands of people living or working directly above, or transiting through the malls everyday and guaranteeing a high footfall and business success. As written in this post, some Chinese Mall Developers would be wise to study these success stories from Hong Kong.

It was interesting to see new brands to Hong Kong including Michael Kors, Victoria’s Secret and Desigual all opening in these ‘suburban’ malls.

Here below in the first installment of Mao Suit’s new weekly news round up are my selection and comments on the best China fashion and luxury stories this week.

Happy Dragon Boating!

 

CHINESE ONSUMERS

Chinese Travelers Remain Biggest Overseas SpendersChina Daily

The title and first paragraph say it all:

Chinese are still spending more on shopping overseas than people from any other nation, with an average of $1,139 per trip despite the country’s super-rich travel less often…..according to the Hurun Report’s Chinese Luxury Traveler White Paper 2013.”

 

RETAIL and STORES

Paul Smith Re-Enters China to Woo Wealthy CustomersReuters

A no-nonsense article by Bloomberg on the re-entrance of Paul Smith into the China market with the opening of his Beijing flagship store. It’s encouraging to see the brand being realistic about their 25 stores in 5 years expansion plan, because that’s is pretty much how long it will take to source and set up that many locations.

Previously under distribution by Bluebell out of Hong Kong, Paul Smith is now in the hands of Imaginex who are more heavily invested/committed to China and already have a wide footprint of Juicy Couture, Club Monaco and Paul & Shark etc. stores and relationships with landlords they can leverage with Paul Smith.

Under operation of the Joyce Group (via subsidiary Imaginex), the Paul Smith store now joins Joyce’s host of other flagship stores in the Sanlitun North Village including Alexander McQueen, Christian Louboutin, and DSquared. In my mind Sanlitun Villge has one of the most impressive flagship store collections in the world with Marni, Miu Miu and Versace etc.

I spoke with both Sir Paul himself and  the Imaginex team at the opening and they were very positive on the outlook of the business in China, but acknowledged it will take time to build the brand and their presence.

See below for photos form the opening.

 

Beyond BlingThe Economist

The economist nails it with the comment: “China remains the biggest prize in the luxury industry, but the low-hanging fruit is gone.”

 

Beijing Shopping Center Project Sits in LimboChina Buzz

Unfortunately, a not uncommon occurrence in China. A mall gets built and then an ownership or control dispute ensues between various factions. In this case the massive 600,000 sqm. Guoson Center mall in a prime location in Beijing’s CBD has been finished for years, yet remains completely unleased and unopened.

China’s No. one mall in terms of sales in 2012 – Shin Kong Place in Beijing also underwent a prolonged legal battle as original JV partners from the Mainland and Taiwan fought for control. During this time leases were only often only renewed for three months at a time making it very difficult to plan. The dispute has been settled now (Guess who won? ) and a major revamp underway with many new luxury brands opening there over the next year.

 

E-COMMERCE

It’s Official? Alibaba doing more business than Amazon + eBayAlizilla 

An article by Alibaba’s official news and commentary website Alizilla about Alibaba generating more GMV (Gross Merchandise Value) than Amazon and ebay combined. The article sources and links to the original (very long and detailed) KPCB presentation by Mary Meeker at the recent Internet Trends D11 conference.

 

LightInTheBox Jumps After First Chinese IPO in U.S. of 2013 Business Week

Latest Chinese E-commerce company to go IPO in NY. Well done to LightInTheBox!

 

Alibaba Tries Team Approach in Bid to Build Logistics NetworkCaixin

Alibaba enters into a JV with several companies including Yintai Holdings to build their own logistics networks in China – a wise move considering the challenges of doing logistics in China.

This is a significant development as Yintai Holding operate some of the better luxury brand amlls around China including the Beijing Yintai Centre – home to Park Hyatt, Hermes, Giorgio Armani, Dolce & Gabbana, Lane Crawford etc. Yintai are one of the more forward thinking mall operators in China who saw the rise of e-commerce and got in on the game early with yintai.com. Now many physical mall operators are desperately trying to catch up and launch their own online platforms.

Last year I got into the elevator at Beijing’s Park Hyatt with Alibaba CEO Jack Ma and Yintai Holding Chairman Shen Guojun. I guess they were working on the deal. I literally gave them an elevator pitch on  Mao Suit and they promised to check it out. Wonder if they did?

Winning at e-commerce in China is so much about logistics and for any brands looking to do e-commerce in China I suggest you start by getting your head around China’s logistics challenges before anything else.

 

Why E-bay failed in China [first time around]– Technode

Former ebay China executive gives his thoughts on why eBay failed in China (the first time around). He puts it down to China’s size and a lack of patience.

In November 2012, eBay re-entered China in co-operation with online luxury portal xiu.com

 

Adidas’s Endless War on Taobao FakesTech in Asia

Report citing that Adidas has all but given up trying to combat fakes on Taobao.com.

Fakes are a major issue in China for all fashion brands. How much time and effort are you willing to put in to stopping what cant be stopped?

 

BUSINESS ADMINISTRATION IN CHINA

China Importation Law  – China Law Blog

Part four in a series of articles on the legal ins-and-outs of importing into China.  The articles are a bit heavy and technical (so skip them if your not on the admin side of the business) yet vital knowledge for companies wanting to import in China.

As I wrote about in this article on the logistics of fashion in China, there are stringent tests at both customs and in store on fashion items.


A Paul Smith Devotee Checking the Merchandise at the Store Opening

Sir Paul Smith was Accommodating all fans at his Store Opening

Paul Smith Beijing Flagship - Interior

Paul Smith Beijing Flagship - Interior

Paul Smith's Beijing Flagship - Facade

Paul Smith's Beijing Flagship - Chinese Touches

" Our Future Looks Bright in China" Says Sir Paul Smith


 

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