SHANGHAI — Tommy Hilfiger is on an Asian push.
The designer visited Shanghai last month for a fashion show and party at Shanghai Film Studios, followed by similar events in Hong Kong, Tokyo and Seoul. The visit marked Hilfiger’s first time in Shanghai, which he described as “cool. It’s such a great mix of old and new.”
And, equally important, a huge potential market. Hilfiger said of his China strategy: “I think a balance is important. And, the fact is, having a strong basics business is all about having the foundation, and that is as important as having the fashion.”
The upper-middle price range and casualwear focus of the brand taps a larger Chinese demographic than most international labels here. “I think we are very fortunate to have the positioning we have because, as a result of all the brands coming in, we somehow stand out,” the designer said. “When the luxury brands come in, they’re quite expensive, they’re reaching a very small amount of people. So, we’re really in a great position to reach a very broad range and a larger segment of the population.”
The Tommy Hilfiger group has been expanding ambitiously in mainland China, opening 40 stores in 22 cities since 2002, along with 12 in Hong Kong since 1999. The stores are run in cooperation with Hong Kong’s Dickson Group, which also manages the group’s stores in its other Asian locations in Taiwan, Singapore and Malaysia.
Hilfiger has no plans to take direct control of his China stores. “Dickson is a great partner, they understand the market very well and have been our partner for a number of years,” he said.
Rather, the focus is on increasing the number of stores in China, with 11 Tommy Hilfiger and two Tommy Jeans units slated to open within the next year, according to the group’s Hong Kong communications director, Stella Wong. They plan to increase their Beijing stores to 10 from the current two before the 2008 Olympics, and to double their Shanghai stores to 16 in time for the 2010 World Expo.
Hilfiger explained that the current stores “are all extremely successful, with a lot of momentum, a lot of growth. For some reason, the Chinese people have become very brand conscious, and they love our brand, it matches their lifestyle. And the fact that there’s a large middle- and upper-class growth in the population serves us well because these people are all excited to buy and wear status brands. They have become very attached to our logo.”
He added that he does not design separate collections for Asia or China, as he does for Europe. “It’s interesting; they’re attracted to the same styles we’re selling in the States and in Europe — it’s not that it’s that different.”
Aside from dressing local celebrities, Hilfiger said his China advertising sticks to “a global approach,” but “with slight nuances — maybe we would advertise more jeans than some areas — but very slight nuances. We’re in all the same magazines as we are in the States: the Cosmos, the Bazaars, the Vogues, GQ, Esquire, FHM, et cetera.”
The customer the firm seeks to reach he described as “upper-middle-class men, women and children. The men-women split is 50-50 — we think that’s a great place to be.”
Specifically, “what we’re finding is we’re servicing the working class with executive positions, who are wearing more casual clothing to work, and on weekends,” he said. “They’re very smart, savvy customers. They’re very well aware of the world, attracted to the style nuances. The women like to be sexy, the men like to be dressed in a hip sort of way.” He added that accessories account for about a third of sales, similar to most markets outside the U.S.
Like many analysts and his competitors, Hilfiger forecast an optimistic future for international fashion brands, given China’s fast-expanding middle and upper classes. “China is on a high, high growth path, and we don’t see an end to it. In some countries you can only go so far, and there’s an end. But, looking down the road, we don’t see any slowdown, or any drop-off, because we really haven’t even scratched the surface. With 40 stores and high growth, [and] the product lines coming in all the time, we see tremendous potential in this market.”
Because of China’s promise, the growing importance of India and solid performance in more established markets such as Japan, South Korea and Hong Kong, Hilfiger considers Asia to be joining Europe in offering a “high-growth strategy” for the company, which is having a more difficult time in the U.S.
“We expected to maintain only moderate growth — but as a result of the economic boom, Asian people have embraced our brand in, I think, a major way. They have a youthful attitude, with a lot of jeanswear. The red, white and blue attitude seems to resonate really well globally.
“India and China are our exciting growth areas, outside of Europe,” he continued.
Nonetheless, emerging markets such as China and India are never easy territory for international brands to negotiate. Piracy and counterfeiting remain rampant, despite corporate and official attempts to curtail it. Hilfiger, whose group includes an organization to prevent and prosecute piracy, does not see it as the main challenge, however. “We’re finding that young people want the real thing, and are not necessarily as enamored with counterfeits as in other countries or at other times. They want the status of the real thing.”
Rather, his main complaint lies with China’s trade policies. “When we manufacture merchandise in China, we have to ship it out of the country, then ship it back in and pay more duty.”
He took issue not with the fees, but rather with the fact that, “timing wise, it doesn’t serve as well as I would like, because if we could ship from factory to store, we would have sort of a leg up on the trends.”
Hilfiger uses about 35 factories in China, and has been manufacturing here for almost the entire 20 years of his brand’s existence, originally via his former partner, Silas Chou, of South Ocean in Hong Kong. “The quality [of manufacturing] in China continues to improve, which is very impressive,” said Hilfiger. “They really understand the need for great quality. And they’ve ramped up the production in a very strong way.”