“Purchasing A Luxury Brand Is A Shortcut For Chinese Enterprises By…Acquiring A Brand’s Heritage”
Though the vast majority of home-grown Chinese luxury brands struggle at home and abroad to convince consumers that “Made in China” doesn’t only mean low-end and low-quality, since 2008 many Chinese firms have used another avenue to reposition themselves in the luxury segment: foreign brand acquisitions. Hard-hit by the global financial crisis in 2008 and in the years since, several high-profile Western luxury brands — from yachtmakers like Dalla Pieta (purchased by the Wantong Group in 2009) and Ferretti (bought by the Shandong Heavy Industry Group & Weichai Group earlier this year) to apparel brands such as Gieves & Hawkes (recently acquired by Trinity) — have been acquired by companies from mainland China and Hong Kong. For some groups, particularly those in mainland China, these acquisitions are a shortcut to international markets that would otherwise be uninterested in a Chinese brand formed in the 1980s or 1990s. As Yang Qingshan of China’s University of International Business and Economics (UIBE) recently put it, “Purchasing a luxury brand is a shortcut for Chinese enterprises by instantly acquiring a brand’s heritage, which can span hundreds of years.”
This week, Hong Kong-based YGM Trading, which owns retail licenses for brands like J.Lindeberg, Charles Jourdan, and Ashworth, announced that it has entered exclusive acquisition talks with the British luxury fashion brand Aquascutum — which went bust last month. YGM previously purchased the Asia retail license for the brand back in 2009, covering 42 regional markets. Though Aquascutum has gone to great lengths to promote its British heritage throughout Asia, the brand has in recent years been overshadowed in terms of “Britishness” by a resurgent Burberry, which has aggressively targeted the Chinese market via rapid brick-and-mortar expansion and cutting-edge digital marketing. As Burberry raced ahead in China and throughout Asia, Aquascutum — with YGM at the helm in Asia — never managed to click with consumers, forcing the brand to rely more on sales in its home market, Europe and the US. This, obviously, failed to pay off.
If the expected acquisition of Aquascutum by YGM does go through and the Hong Kong group comes to the rescue, we’ll be interested to see if or how they retool the brand’s marketing — particularly in Asia — to compete with the likes of British heritage brands like Burberry or the Trinity-owned Gieves & Hawkes.