WWD.com/globe-news/designer-luxury/boosting-italian-brands-in-china-6930906/
government-trade
government-trade

Boosting Italian Brands in China

A new effort is being made to take Italian fashions to China’s ballooning middle class.

MILAN — Premium luxury brands already offer shops for China’s elite consumers, but a new effort is being made to take Italian fashions to China’s ballooning middle class, and to give small to medium-size Italian brands — with reasonably accessible prices — an unprecedented shot at jumping the commercial and cultural hurdles necessary to enter the Asian country’s second- and third-tier cities.

The Camera della Moda, which organizes Milan Fashion Week, and the shopping center arm of the Chinese Chamber of Commerce sealed an agreement in Milan to export the “Italian style of life” to China, beginning with commercial collaboration for fashion, but extending, down the road, to food and furnishings too.

Mario Boselli, president of the Camera, and Xing He Ping, president of China Business Coalition Professional Committee (CBCPC), scratched their signatures on papers and shook hands to the applause of journalists on a deal to develop new, winning retail formulas through information exchange, facilitating new distribution channels in China for Italian goods; forming strategic business alliances; promoting Chinese investment in the Italian fashion and textile sectors, and supporting real estate developments aimed at selling Italian lifestyle products.

“The issue is that the big companies are already present in China, but operate only through monobrand stores,” said Boselli.

And luxury brands are mainly present in China’s major cosmopolitan cities.

“We are looking to take smaller Italian brands to secondary and tertiary cities,” Xing said.

Boselli said that roughly 400 million Chinese are expected to move from rural areas to second- and third-tier cities in the near future, seeding optimism that middle classes will bloom in those cities and fuel demand for quality — but not necessarily luxury — goods.

“The transformation will be epochal,” Boselli said.

“The Chinese market is looking for Italian products that are not luxury, but offer an optimal quality-to-price ratio,” explained Luciano Nataloni, a member of the Camera team.

Nataloni added that, nevertheless, making the market function depends on intense bilateral information exchange.

“It sounds like it should be easy, but in reality it is the opposite,” Nataloni said.

One path will be the development of new Chinese-owned retail channels that favor Italian goods.

“We aim to encourage Chinese real estate developers to create opportunities for Italian companies to enter China,” Xing said.

Two new retail brands for selling Italian fashion goods are currently under development, according to architect Pierfranceso Cravel, who is working with Chinese developers through CBCPC. Cravel said the first stores are slated to open by October 2014, in time for the winter 2014-2015 season.

“One is a kind of Chinese Saks,” reported Cravel, meaning a multibrand, high-end department store.

He described the other as a multibrand “research” fashion store, similar to a landmark firm in Florence called Luisaviaroma. Cravel said the CBCPC had lined up Chinese real estate partners ready to invest “many” tens of millions of euros in the ventures, but that there were still a number of cultural and market-specific challenges to be worked through.

One issue is unfamiliarity with small Italian brands, which complicates merchandising practices such as shops-in-shop.

“The Chinese consumer has to feel a quality guarantee. Italian firms have to feel guaranteed that they will be represented in a way that is coherent with their soul and aesthetics,” Cravel explained.

He also said the new distribution channels need to scout products that fit local desires and tastes at prices consumers find acceptable. Under the agreement, that means fishing among the smaller or less-pricey brands of the Camera’s 140 members — not its runway show headliners.

“Luxury is not for everyone,” summed up Fu Yixiang, a member of the Chinese team.