Visuals of Bally's Fall 2017 advertising campaign

LONDON – Chinese New Year starts on Feb. 16, and the Year of the Dog could fast become the year of the deal for ambitious Chinese investors looking to buy European fashion and luxury brands.

Shandong Ruyi’s purchase of Bally, revealed last Friday, was the latest in a rapid-fire series of deals that have seen Chinese buyers large and small, emerging and established, put their money behind European high street and heritage brands over the past nine months.

It’s certainly the right time to strike, with Chinese demand for European luxury products swelling. UBS has forecast a 10 percent growth in revenues from Chinese consumers this year. The Swiss bank said the Chinese middle classes are in the mood to spend, with personal finances improving, robust GDP growth in the region, rising disposable income and property prices cooling down.

What better time, then, for Chinese investors to clear the path for Western brands entering China and own a piece of the luxury action, too?

Wendy Yu is just one example of a new generation of Chinese investors. She made her first high-end fashion play earlier this year, taking a stake in the London brand Mary Katrantzou, and said Yu Capital has up to $20 million earmarked for emerging business this year. She said she wants to support Katrantzou, by “adding value where I can, helping her to make important introductions in China, navigate through the Chinese market and working on projects especially in e-commerce and client-wise.”

Last fall, Adrian Cheng and his business partner Clive Ng unveiled C Ventures, a fund that will channel money into fashion, media and lifestyle brands. C Ventures sits alongside Cheng’s K11 Investment and both vehicles recently made a $165 million investment in Moda Operandi together with Apax Digital.

In November, Fosun bought a majority stake in the Italian tailor Caruso. It’s currently doing due diligence on the lingerie label La Perla and is among bidders vying for Lanvin, sources said. Last week, Richard Li, founder and chairman of Secoo, China’s largest luxury e-commerce platform, swept into London looking for opportunities to expand Secoo in Europe, while last year JD.com threw its weight behind Farfetch with a $397 million investment, and has forged partnerships with Kering and the British Fashion Council.

“It is fair to say that Chinese companies are being far more proactive with their forays into fashion and consumer goods, and I am particularly impressed with Shandong Ruyi,” said Luca Solca, sector head of luxury goods at Exane BNP Paribas.

He pointed to SMCP, parent of Sandro, Maje and Claudie Pierlot, which Ruyi took public on the Paris Stock Exchange last year, calling it a “fast growing fashion retail brand, with significant potential,” and also gave the thumbs-up to Shandong Ruyi’s purchase of Bally.

“Bally is probably easier to extract value from than Jimmy Choo, especially if one brought it to a midprice strategy,” said Solca. Bally and Jimmy Choo had long been siblings in the JAB Luxury stable, and last year, Choo was sold to Michael Kors Holdings for $1.35 billion.

Investors such as Shandong Ruyi may be the exception rather than the rule, however, as history is littered with Chinese investments that have fallen flat in Europe.

British department store chain House of Fraser, which was acquired in 2014 by the cigar-puffing Chinese mogul Yuan Yafei’s Sanpower group, is struggling with shrinking sales and under-investment from Yafei. The retailer has recently been asking for rent reductions on some of its 59 stores in the U.K., and earlier this year lost its credit insurance and had its credit rating downgraded by Moody’s.

The Hong Kong-based Trinity Group, which recently took Shandong Ruyi on as a majority partner, ran into a different kind of trouble after buying British brands such as Gieves & Hawkes and Kent & Curwen (before the David Beckham and Seven Global investment and brand revamp).

The company rolled out stores and products in China that differed in terms of aesthetics and quality from the European ones, leading to much confusion on the part of Chinese and international consumers alike.

One retailer who has witnessed the long arc of Chinese investment in British heritage brands said that Chinese managers have historically not had the management tools or the skill set to connect with the luxury consumer.

That could all be changing now with a new and savvier generation of investors and consumers emerging.

Solca said he’s seeing signs that Chinese companies are getting better at brand management, and points to the Chinese sports company Anta and its ownership of Fila.

“Fila was a clever way for Anta to address its consumer base with a higher-end Western brand. It was much cheaper than acquiring Puma, which at one point seemed the alternative,” he said.

He also argued that Adrian Cheng is breaking new ground in terms of retail innovation. “His ideas of retail as entertainment and discovery will soon be the industry standard, I believe,” said Solca.

It remains to be seen what Shandong Ruyi, which is on an aggressive drive to become a global powerhouse in fashion and apparel, does with Bally.

The deal was revealed early Friday and will see Shandong Ruyi take a majority stake in the accessories brand, with JAB and current Bally management, including chief executive officer Frédéric de Narp, each holding minority stakes.

Yafu Qiu, chairman of Shandong Ruyi, called Bally “one of the most important luxury shoe and leather accessories brands,” and said its history and products complement Shandong’s strengths in ready-to-wear.

“We are extremely excited to begin this new journey of Bally alongside JAB and the Bally management team,” he said, adding the acquisition was an important milestone for Shandong in its drive to become “a global leader in the fashion apparel sector.”

De Narp called the deal “super exciting,” adding that Shandong is buying “the vision, the brand, the strategy and the team. They are ambitious, and Bally will absolutely complement the portfolio of the ready-to-wear brands that they have.”

The plan, he said, is to “continue on the road and execute the strategy that’s right for this company, so there will be no disruption. Just the same team and the same strategy.” De Narp has said the goal is to reach $1 billion in sales in the long-term.

De Narp had been working with Bank of America Merrill Lynch and Citigroup to find a buyer for Bally, and called the result “a dream. The chairman of Shandong Ruyi is a family man, we share the same values, and believe in the empowerment of people. We really clicked. He was the only one that I really loved from the get-go.”

Bally was the final brand in JAB’s luxury stable to be sold after Jimmy Choo and Belstaff, which went to Michael Kors Holdings Ltd. and Ineos, the British petrochemicals giant, respectively. The Bally deal is the only one where JAB – which announced last April it was exiting the luxury business — has retained a stake.

The fact that Bally now has a major Chinese owner – and that it’s Shandong – should come as no surprise. The brand first entered China in 1986, and the country is now its largest market. Bally has more than 50 points of sale there, and is notching double-digit growth in the region.

Last June, Bally launched a dedicated e-commerce site for the country, and that same month named the Chinese actress Tang Yan, known for movies such as “Waking Love Up” and “Assembly,” as the brand’s first ambassador for Asia-Pacific.

Bally has likely been on Shandong’s radar for a while. Over the past two years the Chinese group has mounted an aggressive acquisitions drive, snapping up European heritage and high-street fashion and clothing brands one after the other. Bally is Shandong’s first major acquisition in the European luxury accessories space.

Shandong Ruyi Investment is one of the country’s largest textile manufacturers and ranks among the top 100 Chinese multinational enterprises. Founded in 1972 and headquartered in Jining, in the province of Shandong, it owns a fully integrated sourcing and supply chain, with operations that stretch from raw material cultivation to the design and sale of brands and apparel.

In 2016, Shandong bought SMCP; last year it acquired Aquascutum from the Chinese company YGM Trading, and most recently took the majority stake in Trinity. Shandong is also a joint owner of The Carloway Mill in Scotland, one of the few remaining makers of Harris Tweed.

The conglomerate operates 13 domestic industrial parks and boasts some of the largest production lines and advanced technologies in China. It has close to 5,000 points of sale across six continents.

Bally was founded in Switzerland in 1851, and although the company has had its management and strategic ups and downs over the years, it has always turned out quality leather goods.

De Narp, who joined Bally in 2013, had been working on a long-term strategic plan to slim down and reshape the brand for the future. He had recently transferred the corporate headquarters from London to Milan to be near the brand’s historic base in Caslano, Switzerland.

Over the years, de Narp tweaked Bally’s market positioning, drafted David Chipperfield to refurbish the store portfolio, put a bigger focus on women’s and got Bally back into the big multibrand stores. He also placed a major focus on travel retail and set out to pique the interest of a younger generation with collaborations with music artists such as Swizz Beatz.

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