What Happened: On April 28, the Fosun Fashion Group announced a strategic alliance with Baozun, a leading e-commerce service partner, Activation Group, an integrated marketing solutions provider for luxury brands, as well as several other industry players. They will hold minority shares in the group, becoming the preferred partners for the group’s heritage brands. The strategic alliance will work together to explore new business models and solutions for various brand expansions to capitalize on China’s vast and ever-growing luxury market. Launched in 2017 and based in Shanghai, the Fosun Fashion Group focuses on strategic investment in the luxury fashion sector. The Group’s current brand portfolio includes Lanvin, Wolford, St. John, and Caruso.
The Jing Take: During the ongoing pandemic, the resilience of China’s luxury consumers prevented a slump for global luxury brands. According to Bain & Co., the market achieved 48 percent growth in 2020 and is set to continue as the main growth driver of the global luxury market. Its booming e-commerce industry has especially offered a bright spot to luxury brands: last Singles’ Day, the e-commerce platform Baozun beat its record achieving a 54.8 percent year-on-year increase (total order value of $2.55 billion) from international clients such as Gucci, Nike, and Burberry. The strategic partnership with Baozun and Activation will further strengthen Lanvin and other Fosun brands’ omnichannel presence in the Mainland.
In the aftermath of COVID-19, the luxury scene has become even more competitive and is revealing an M&A era dominated by major players in the fashion industry. Fosun’s unexpected consortium can be seen as a reaction to recent alliances between major luxury conglomerates, including Alibaba and Richemont’s joint venture with Farfetch, and the recent LVMH with Prada and Richemont Aura Blockchain Consortium. The strategic partnership not only supports its brands’ operations and expansion in the market, but perhaps more importantly, increases its leverage in future brand acquisition negotiations.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.