Donatella Looks to Expand in China

"Just coming and seeing everything was the best part, getting to see the cities and how they are so ancient but also very modern..." remarked Donatella Versace.

SHANGHAI — “Just coming and seeing everything was the best part, getting to see the cities and how they are so ancient but also very modern, so there is a contrast,” remarked Donatella Versace regarding her inaugural trip to China this week. “People here are very curious, and want to see you, touch you. They don’t trust something or someone until they’ve talked to you, but once you’ve established that personal contact, they are very warm.”

Versace was in Shanghai for two days and in Greater China for a total of six, holding parties and press conferences at each stop. The latter were held to reveal plans for an ambitious expansion of Versace’s China presence, investing 10 million euros, or $12.5 million, to grow from five stores to 14 by the end of 2007. “We’re expanding now because we’re ready to invest here now, because the figures tell us the market is now ready.”

For the designer, the visit was as much a personal as a commercial exploration of the Middle Kingdom. “I came because I’d never been before, and I’ve always been curious about China,” she said. “It has a fantastic culture, and the economic boom has resulted in amazing energy and creativity. You see it in the emerging Chinese young artists. While some are obviously inspired by others, some are truly original. There is a distinct Chinese sense of modernity, different from Western modernity.”

Versace, Giancarlo Di Risio, chief executive officer of Gianni Versace SpA and their staff arrived on Oct. 15 in Beijing, where they visited landmarks like Tiananmen Square, the For­bidden City and the Temple of Heaven. Italian ambassador to China Gabriele Menegatti threw a party for Versace at his official residence on Oct. 16. Celebrity guests included Chinese actress Fan Bingbing, Nineties folk singer Ai Jing and contemporary artist Zheng Fangzhi. They were joined by Hong Huang, publisher of the Chinese editions of Time Out; Yabshi Pan Rinzinwangmo, daughter of Tibet’s 10th Panchen Lama, and models Lu Yan and Ma Yanli.

The following day, Versace proceeded to Shanghai to attend an exclusive dinner at the Shanghai home of Pearl Lam, a Hong Kong socialite and owner of the Contrasts design gallery, which has locations in Hong Kong, Shanghai, Beijing and Hangzhou. Co-hosted by Vogue China editor in chief Angelica Cheung, guests included models, Shanghai soccer star Huai Xie, several directors of Vogue’s various Asian editions, Shanghai socialite Nora Sun and Taiwanese socialites Landy Lin and Tiffany Yang.

This story first appeared in the October 23, 2006 issue of WWD.  Subscribe Today.

A reception in Hong Kong on Oct. 19 took place at The Box, a bar and restaurant overlooking Victoria Harbor due to open next week. Local movie stars including Carina Lau, currently facing a consumer lawsuit in the mainland for her promotion of now-banned SK-II cosmetics, Josie Ho and Conroy Chan attended, along with television personality Kathy Chow and several business leaders.

“My greatest surprise from the trip was that the Chinese are actually very fashionable, because in Europe the Chinese you see are not like this. The girls in China are very engaged and very lively,” said Versace. “The Shanghainese are very artistic in their style and attitude. Beijing is a cultural but old city, Shanghai is very open, while Hong Kong has both history and fashion.”

Versace opened its first China store in 1994, but has maintained a low profile until now, with only three units in Hong Kong, one in Shanghai’s Plaza 66 and one in Beijing’s Palace Hotel. Versace opened a support office in Beijing three or four years ago, and it currently employs four marketing and distribution staff. In addition to its fully owned shops, Versace distributes its Jeans Couture line through a local franchisee.

“There is not a big difference between the different Chinese cities in terms of business. Maybe a year ago there was a difference, but we think that the difference is disappearing, and the market is unifying,” Di Risio observed.

A sixth location launched last month at the Chengdu Depart­ment Store in mainland China’s Sichuan Province. “We will open in many cities in China, Chengdu is just the first,” said Di Risio, adding most of the new locations are still under discussion. Next up is a location in Taiwan, at Taipei 101, currently the world’s tallest building, opening in December. The group has also reserved a space in Beijing’s Four Seasons Department Store, unrelated to the hotel group, which will open in August 2007. A space at Hong Kong’s Pacific Place is also confirmed for next year.

“Hong Kong will get one more store, and Beijing two more by 2008 or 2007,” Di Risio continued. “Shanghai has several locations that mean luxury. Plaza 66 is a place with many of the luxury brands, and we are sure another location will eventually be renovated into its level.”

And while some have questioned how much business is being generated by designer stores in China at the moment, Di Risio is confident Versace will do well. “We are confident that the return on our investment will be shorter rather than longer. For example, in the last two years our greater China sales doubled,” he said. “Currently, all of Asia represents 23 percent of our sales. China is still small because we only have five stores, but in 2007 it will grow.”

Versace added that she looks forward to establishing a stronger dialogue with Chinese consumers, but that doing so would be a challenge. “The hardest part is making people come close to fashion. Versace has a history of being bright, and our new line is very different from what people are used to.”

The company’s existing stores’ turnover is about 60 percent accessories, compared with 50 percent globally, said Di Risio. “I expect China will edge more toward the norm.”

Di Risio described Versace’s core clients as “young, fashionable, independent and working” and denied that China risks a glut of luxury fashion. “It’s a free market,” he claimed, “the problem is to make the right product and offer the correct thing the clients want. Competition stimulates us all.…There is a big market in China, and it is very important to us. China has the potential to become our number-three global market, after Japan and the U.S.”