By  on February 22, 2006

MILAN — A major new player in the Italian fashion industry is on the horizon, and it's none other than China.

Chinese companies no longer want to be considered merely low-cost manufacturers, but are keen to become investors and brand developers. To fulfill that goal, Chinese companies are looking either to acquire textile mills here, which are often in financial trouble caused by China's low-cost labor; to take over established brands, or, more often, to set up joint ventures to launch new brands or distribute Italian labels in China.

"China is no longer content with producing goods — it wants to go to the next level, to share brand vision, to be part of a distribution plan and bring added value to a project," said Alfredo Canessa, chairman and president of Ballantyne, which is launching a new brand for fall called Chinese Cashmere Company, in a joint venture with the Hong Kong-based firm Fenix.

"This venture is part of a long-term strategy," said Canessa. "Over the past seven or eight years, the Chinese have increased their production of finished products. We want to be part of this scenario, if and when China will no longer be a low-cost manufacturing country."

CCC, a young sportswear brand for men and women, bears the Made in China label and its retail price is positioned 50 percent lower than an equivalent Italian piece. The brand will be distributed in China by Fenix and in the rest of the world by Ballantyne. The Scottish brand is controlled by Italian equity fund Charme.

"The feedback has been positive so far, as the market appreciates the fact that we clearly state that the product is not made in Italy," said Canessa.

In Europe, there is still no regulation that requires a fashion company state the country of origin of a product, although obviously designers and manufacturers for years have traded on the cachet of the Made in Italy label. There was a push by the European Union to drop nation-specific labels in favor of a Made in Europe one, but this was put on the back burner after an outcry from such countries as Italy and France.

"Surely, the Chinese will not stand for being only fashion manufacturers for long," said Laura Tsui, vice president of Shanghai InterChina Consulting, which was established to assist Westerners in their businesses in China. The consultant has offices in Shanghai, Beijing, Shenzhen, Hong Kong, Spain and Italy.

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