Cracking the code of Anta’s success vs. Fosun’s luxury struggle: Part 2

    Since its acquisition by Anta, Amer Sports has seen its portfolio brands go from strength to strength in the Greater China region. Here we look at contrasting fortunes via Fosun’s rocky acquisition of Lanvin.
    Lanvin Group reported relatively flat 1% revenue growth for 2023. Image: Shutterstock
      Published   in Retail

    Editor’s note: This the second installment in our two-part series on Anta Sports. For the first piece, click here.

    The 2019 acquisition of Amer Sports by a group led by China's Anta Sports, and the largely hands-off approach to managing Amer that followed contrast starkly with the strategy taken by China’s Fosun Fashion Group after it took control of Lanvin, one of France’s oldest luxury houses, in 2018.

    Owned by the Shanghai-based conglomerate Fosun International, Fosun Fashion Group had big plans to revitalize Lanvin and leverage the booming luxury demand in mainland China while diversifying its portfolio into luxury fashion.

    Integrating Lanvin into Fosun’s broader portfolio, which included previous Western acquisitions like Austrian lingerie brand Wolford, Italian footwear brand Sergio Rossi, and American knitwear brand St John, was loaded with ambition. At the time of its acquisition, Fosun chairman Guo Guangchang planned to leverage Lanvin’s prestigious heritage and long history to carve out a significant space in an increasingly competitive luxury market and undertake a large-scale expansion in China.

    Despite these ambitions, Lanvin and Fosun, which rebranded as Lanvin Group in 2021, faced hurdles almost immediately. The group struggled to resonate with a global audience and compete with fellow French luxury behemoths like Chanel, Dior, and Hermès in mainland China.

    Lanvin struggles to compete with fellow French luxury behemoths in China. Photo: Lanvin
    Lanvin struggles to compete with fellow French luxury behemoths in China. Photo: Lanvin

    Lanvin Group’s difficulties were marked by management changes and strategic shifts, indicative of the challenges in aligning the brand’s heritage with contemporary market demands. The departure of CEO Jean-Philippe Hecquet, less than two years into his tenure, and the transient leadership of Joann Cheng as interim CEO resulted in relatively chaotic leadership before the appointment of deputy CEO Arnaud Bazin in 2021 and Hecquet’s replacement later that year by current CEO Siddhartha Shukla.

    After Shukla’s appointment in 2021, Lanvin Group aggressively sought to revitalize its operations and expand its global footprint, moves that culminated in a debut on the New York Stock Exchange in December 2022 through a merger with a special purpose acquisition company (SPAC) backed by Chinese investment firm Primavera Capital.

    This move raised over $150 million at a valuation of $1 billion, despite the broader market’s skepticism towards SPACs and a general downturn in the IPO market. The capital infusion aimed to bolster Lanvin Group’s presence in Asia and North America, tapping into e-commerce and livestream commerce to widen consumer reach.

    Despite a rocky market debut, when its shares plummeted 25 percent on the opening day, the group has focused on strategic global expansion across its portfolio, pushing not just Lanvin but Wolford, Sergio Rossi, St John, and Caruso.

    Despite its ambitious growth plans, Lanvin Group has been dogged by internal challenges, notably the departure of Lanvin creative Bruno Sialelli, whose four-year tenure from 2019 to 2023 failed to recapture the brand's former glory. In the wake of Sialelli’s exit, Lanvin announced significant organizational changes. Namely, the brand introduced two new vertical structures, Leather Goods & Accessories and Lanvin Lab, alongside the main collection, reflecting a shift towards enhancing product offerings and embracing innovative partnerships, such as the appointment of rapper Future as Lanvin Lab’s first creative director in June 2023.

    That same year, Lanvin Group saw longtime CEO Joann Cheng replaced by Eric Chan amid leadership instability and underwhelming investor confidence following the company’s disappointing NYSE debut.

    Lanvin turned to rapper Future to head its Lanvin Lab in 2023. Image: Complex
    Lanvin turned to rapper Future to head its Lanvin Lab in 2023. Image: Complex

    Why Anta succeeded where Fosun struggled#

    The acquisition of Lanvin by Fosun, later rebranded Lanvin Group, serves as a prime example of the challenges encountered when a large Chinese conglomerate takes over a Western brand or group.

    Fosun’s ambition was relatively simple with its takeover of Lanvin: to rejuvenate the floundering brand and carve out market share in China’s lucrative luxury market. However, the endeavor was fraught with challenges, from integrating Lanvin’s long cultural heritage and operations into Fosun’s more centralized, efficiency-driven corporate structure to managing the brand’s unique identity amid attempts to innovate and capture new markets.

    One of the paramount hurdles was cultural and operational integration. The luxury fashion industry thrives on brand heritage, creative expression, and artisanal craftsmanship, aspects that are often at odds with the systematic approaches of Chinese conglomerates like Fosun.

    The luxury fashion industry thrives on brand heritage, creative expression, and artisanal craftsmanship, aspects that are often at odds with the systematic approaches of Chinese conglomerates like Fosun.

    Lanvin, with its deep roots in French luxury fashion, faced the daunting task of melding its operations and brand ethos with Fosun’s corporate culture without losing its essence. This challenge was compounded by the necessity of managing the brand’s identity carefully. As Fosun aimed to revitalize Lanvin and broaden its appeal, there was a delicate balance to be struck between innovation and maintaining the brand’s prestigious image, particularly as fears of job cuts and strategic changes loomed over its Parisian staff.

    Furthermore, the strategy for market expansion versus the risk of brand dilution presented another significant challenge. As Chinese companies strive to capitalize on their domestic markets to foster growth, the risk of diluting a luxury brand’s exclusive status through over-expansion or poorly aligned market strategies increases.

    In Lanvin’s case, aligning its storied heritage with Fosun’s aggressive growth ambitions without compromising its luxury stature was of paramount concern. This delicate balance of expanding market presence while preserving the brand’s core identity underscores the intricate dynamics at play in the acquisition and management of Western luxury brands by Chinese corporations, revealing a complex landscape of potential growth and inherent challenges.

    The secret to Anta’s success

    Anta Sports’ acquisition of Amer Sports starkly contrasts with Fosun International’s approach to managing Lanvin, highlighting the effective strategies enabling Chinese companies to successfully expand into Western luxury markets.

    Anta’s strategy was characterized by a more autonomous and localized approach, ensuring brand autonomy, integrity, and a keen focus on localization.

    By maintaining long-term management teams and leaving portfolio brands relatively untouched in their home markets — keeping Arc’teryx in its native Vancouver, Salomon in the same home it has occupied in the French Alps since 1947 — Anta ensured the seamless management of the Amer portfolio while helping portfolio brands steadily expand in China.

    Arc’teryx opened a new flagship store in Shanghai in January 2024. Photo: Arc’teryx
    Arc’teryx opened a new flagship store in Shanghai in January 2024. Photo: Arc’teryx

    With few exceptions, most notably the 2020 replacement of Heikki Takala with Jie (“James”) Zheng as CEO of Amer Sports, native teams continued to run Amer's portfolio brands.

    This strategy enabled Anta to adeptly navigate the nationalist wave that swept China in 2021 and adversely affected global giants like Nike and Adidas, which could have very easily caused a backlash towards Chinese-owned companies among consumers outside of China.

    By positioning Amer Sports as the head of the brand portfolio, Anta was able to largely insulate itself from potential global backlash, maintaining quiet ownership and preserving company cultures. This approach means that many overseas consumers actually remain unaware that Amer’s brands were ultimately Anta brands, helping to avoid the kind of scrutiny that could lead to a backlash.

    Meanwhile, this structure helped brands like Arc’teryx, Salomon, and Atomic expand in mainland China without facing any of the controversies that have hindered Western brands like Nike or Adidas since 2021.

    Salomon unveiled an immersive art installation at Beijing SKP-S in November 2023. Photo: Salomon
    Salomon unveiled an immersive art installation at Beijing SKP-S in November 2023. Photo: Salomon

    Anta’s timing in acquiring Amer Sports was impeccable, with the company able to capitalize on China’s burgeoning outdoor sports boom in the wake of the pandemic. According to the Chinese government’s “China Outdoor Sports Industry Development Report (2022-2023),” outdoor sports-related orders in the first half of 2023 jumped 79 percent compared to the same period in 2022 and a remarkable 221 percent compared to 2019.

    Millions of mainland Chinese now engage in outdoor activities like skiing and hiking, boosting the fortunes of brands like Arc’teryx, which has invested in its retail footprint in China. Arc’teryx’s Shanghai flagship, described as the world’s largest eco-experience flagship store, underscores Anta’s commitment to expanding in an underserved Chinese market with creative marketing and retail initiatives that resonate with local consumers.

    This expansion was further bolstered by high-profile endorsements, such as President of the People’s Republic of China Xi Jinping being spotted wearing an Arc’teryx parka in 2021 and 2022, which significantly boosted the brand’s visibility in China.

    Anta’s strategy to quietly ride out nationalist sentiments and focus on integrating Amer Sports into its portfolio without diluting the identity or heritage of its portfolio brands mirrors the successful playbook used by Geely with Volvo, rather than the more tumultuous path taken by Lanvin Group under Fosun.

    By keeping the acquired companies’ cultures intact and keeping a relatively low-profile hand in Amer’s operations, Anta managed to not only preserve but also enhance the global appeal of the global brands it owns, culminating in a successful February 2024 IPO.

    Strategic foresight and adept management of cultural and operational integration have set Anta apart, showcasing why it succeeded where the likes of Fosun faced challenges.

    • Fosun Fashion Group's ambitious acquisition of Lanvin aimed to rejuvenate the brand and tap into China's luxury market, with a hands-on approach that contrasted with Anta Sports' approach in managing Amer Sports.
    • Despite high hopes, Lanvin Group struggled to resonate with global audiences and faced stiff competition in China, leading to leadership changes and strategic shifts.
    • Lanvin Group's aggressive global expansion strategy, marked by its NYSE debut and leadership changes, aimed to strengthen its presence despite challenges.
    • Brands aiming to enter or expand in the Chinese market should consider a balanced approach between heritage preservation and innovation, tailoring strategies to resonate with local consumers and cultural nuances.
    • Looking forward, the contrasting outcomes of Anta and Fosun's acquisitions highlight the importance of cultural and operational integration, suggesting that successful global expansion in China's luxury market requires both strategic autonomy for acquired brands and a deep understanding of local consumer preferences.
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