MILAN — Seeking common ground and new business opportunities are top priorities for the Italian and Chinese fashion and textile industries, increasingly so in light of the uncertain global economy and the first signs of a slowdown in China.
This story first appeared in the September 10, 2012 issue of WWD. Subscribe Today.
It’s a slowdown, Cesare Romiti, president of the Fondazione Italia Cina, quickly put into perspective at the Milano Fashion Global Summit, held here Friday, just as the European Central Bank unveiled its bond plan and said it was prepared to print money. “Gross domestic product in China is up 7 percent compared with the previous 10 percent growth for decades, a rate that is not even imaginable in the West,” he said of the Asian country that is expected to account for 20 percent of the global luxury market in 2015, according to McKinsey & Co.
Du Yuzhou, honorary president of the China National Textile and Apparel Council and president of the China National Garment Association, said the fashion industry in China now “is at a crucial moment of transferring and upgrading, focused on development, proactive fiscal policy and a more prudent monetary policy.”
Relevant strategic changes are taking place, as domestic and external demand decrease and the price of raw materials increase. Local cotton is one-third more expensive than foreign cotton, he said, highlighting how this is “a crucial moment” to comply with new expectations and “have a better life for all ethnic groups.”
China is laying the foundations to achieve a “well-off society in an all-round way in 2020 and a socialist modernization in mid-21st century,” developing a real economy, and on the path of “scientific development for a faster transformation,” implementing a green, low-carbon and recyclable pattern to build a modern industrial system in a 12-year plan. Upgrading technology for more modern production and providing new fiber resources, equipment and services as “industrialization continues to increase the demand for technical textiles” are high up on the agenda.
Yuzhou pointed to the fact that exports from China to Italy dropped 20 percent last year, while those from Italy to China were up 20 percent. To tackle all these challenges, Yuzhou urged executives to “create new advantages by cooperating in international markets, to move from processing and manufacturing to independent research and development, build up the supply chain, expand international cooperation, take full advantage of the Eastern area and facilitate industrial transfer to the mid-Western area, adding importance to the creativity of product and improve the industry chain.”
Gianluca Brozzetti, chief executive officer of Roberto Cavalli, spurred the Chinese delegation at the summit to consider that foreign companies in China should “have the same opportunities,” lamenting that import taxes are “still very high, product testing is still one of the toughest in the world,” and that there are “very complicated bank procedures,” and difficulties in obtaining visas, not to mention intellectual property issues “that have an impact on our products.” Brozzetti said the Cavalli brand, which entered China “late” compared to its competitors, just opened a store in Beijing and will open a unit in Shanghai in November, with plans to open around 60 stores in the region in five years.
Vittorio Missoni, who heads the family-owned company, is making a fresh start in China next year after a negative experience with previous partners. “It’s a big country and there are many, big collaboration opportunities. In the past it was easy to find investors for franchised stores, but they often had money but no experience, so we had to take a drastic move and close those stores,” said Missoni, explaining that the previous partners “had no knowledge” of the fashion world or of the brand. “First find a partner that loves the brand and educate it,” was Missoni’s advice. He also pointed to the need to “stay focused and take one step at a time.”
Likewise, Saverio Moschillo, president of John Richmond, cautioned against rushing into retailing in China, pointing out that the company opened eight stores there then closed five of them. But the group’s experience in retailing in the area was “very positive,” ever since the first unit opened in Hong Kong 15 years ago.
In terms of business, he conceded there may be a slowdown, but believes it will impact second lines or brands that are positioned in the medium-low range, as the demand for high-end designer labels is “still strong and increasing.” Moschillo elicited chuckles when he related the encounter with a young man from China at John Richmond’s men’s show in June — a man who embodies everyone’s dream customer, as he owned 24 Ferraris and changed his clothes according to the car he was driving.
Along those lines, Roger Vickery, chairman of International Brand Growers consultancy, said that the number of high net worth individuals in the Asia-Pacific region rose 1.6 percent to 3.37 million in 2011, surpassing the U.S. for the first time.
Mario Boselli, president of the Italian Chamber of Fashion, encouraged commercial alliances and partnerships through joint ventures and endorsed the presence of Chinese brands at trade shows in Italy and of Italian labels at Chinese trade shows. He also hoped more Chinese companies would employ Italian textiles — although most speakers mentioned they worked with several Italian mills and manufacturers for years.
Zhou Yan, president of Dalian Sunfed Fashion Co. Ltd., said the company, which launched the SunFed apparel brand in 1997, started working with Italians in 1998, and had collaborated with firms such as Lanificio Cerruti, Loro Piana, Limonta and Marcolin. Yan stressed the “importance of an international spirit and the independent personality of a brand. The logo is not always so important, while the individuality of the person and how she expresses herself is, and the brand must interpret her character and personality.” Yan also said that Chinese customers are always looking for new brands.
Indeed, Miao Hongbing, president of Beijing White Collar Fashion Co. Ltd., said there is a focus on “creating our own brands,” despite the ongoing attraction in China for brands like Louis Vuitton, Chanel, Gucci, Hermès, Christian Dior, Giorgio Armani, Rolex, Cartier, Prada and Versace. In addition to the ideas of elegance, design, refinement, technology and lifestyle, a brand should “sell stories and dreams, the hope to be happy,” he said.