Mainland consumers pick up the threads on luxury consumption
Mainland consumers - long-time lovers of 'Made in Italy' and 'Made in France' tags - have surprisingly been converted to a high-end brand closer to home.
'Made in Xiamen' may not appear on the face of it to be a selling point. But for Ports Design, the Hong Kong-listed fashion house which produces from factories in the mainland city, it has worked. Ports last month posted a 41.6 per cent increase in first-half earnings to 142.8 million yuan, driven by the growing mainland appetite for quality luxury goods.
Vogue last year ranked Ports as the third most preferred high-end fashion label in the mainland, following Louis Vuitton and Gucci.
Ports chief executive Alfred Chan Kai-tai said producing locally had definite advantages: for one, the company could hire young women with 'sharp eyes' to do close work such as sewing. In Europe, it was common for senior citizens to take up these jobs and their eyesight may not be as good.
'We are not a pretentious company,' Mr Chan said. 'The way to look at our company is like the translation of our name, Ports; we call it Bao Zi, which is very Chinese. We don't pretend like other companies that have western names.'
Pierre Lu Xiao, assistant professor in marketing at Shanghai's Fudan University, said a 'Made in China' label was not necessarily a negative if the quality was the same as in Europe.
Gross profit margin for Port's retail business reached 81.5 per cent in the first half of the year, indicating that despite being 'made in China' the company can still charge customers a hefty premium for its products.
Professor Lu said other mainland brands doing well included Shanghai Tang and NE Tiger and this could tempt more luxury retailers to move production to the mainland.
Ports' pedigree is not entirely Chinese. Mr Chan's family, which owns shopping malls in North America and the mainland, bought the business from the brand's Canadian founder 18 years ago.
'Back in the early 1990s, the economies in North America and the UK were really stagnant,' he remembers. 'So my family was looking at where we should expand.'
The Chans saw the mainland's growth potential. Fifteen years later, Ports has expanded to 329 stores in the country.
'I travelled around more than 30 cities in China and saw growing consumption,' Mr Chan remembers. 'I was seeing people dedicated to working hard, getting rich and getting ahead in their lives. This is a very, very powerful force.'
And he said it was a good time for brands to starting marketing.
'Most consumers at that time were like a blank piece of paper - whoever could imprint their names in [people's] minds would reap the most benefits,' Mr Chan said. 'Maybe at that time 99 per cent of the population was not able to buy your product but we had to take a long-term view.'
Goldman Sachs says the mainland is now the world's third-largest consumer of luxury goods, accounting for 12 per cent of global sales, behind Japan's 41 per cent and 17 per cent in the US.
The brokerage forecasts that the mainland will become the world's second-largest purchaser of luxury goods by 2015, with 29 per cent of sales. Spending on luxury goods and services on the mainland will jump 134 per cent to US$44.4 billion in 2016, a MasterCard study indicates.
Made in China
In 15 years, the number of stores Ports Design has opened on the mainland is: 329
