Since economical reformation period from organized economy to advertise economy thirty years ago, Chinas commodity economy has mentioned a promising, prosperity trend with national purchasing ability growing incredibly. Beneath the high-speed development of China's open market and the profound impact of globalization, China has become the world's second greatest luxury product usage country, surpassing america, only after Japan (Zheng, Z. , 2011). As shown by "China Business Development Report", the consumption of luxury goods amounted to 9. 4 billion us dollars, creating of 27. 5 % global show in 2009 2009 (Lu & Fang, 2011).
Twenty years ago, the idea of luxury was still unaware and undeveloped for Chinese people and "luxury" was considered to be usually related to negative aspects, such as corrupt or wasting in traditional Chinese culture (Shen, 2011). Two decades later, however, the Chinese language luxury goods market has broadened, from small to big, from arbitrary to constant and China has become celebrated luxury consumption country. Giving the type of luxury fashion market place is highly competitive, local market for each and every brand is bound because of its special economic requirement of customers. This leads to the growing intension for those companies seeking for opportunities for global market enhancement. As the decrease of sales in Europe and America through the depression period begun in 2008, China has surely become the most appealing market for those companies' income generation in the future not only because its increasing purchasing power, but also the top population bottom part (Lu & Fang, 2011).
While numbers of global luxury fashion brands joining growing China market in various settings, the impact of China's fashion industry on the neighborhood market is bound. In fact, the planet luxury fashion industry continues to be dominated by european luxury giants, such as LVMH, Gucci etc. Nearly all luxury fashion brands obtain worldwide excellent sales volumes belong to these groupings from France, Italy, and America (Kendall, 2009). Based on that China owns vast textile production base and is among the most largest apparel exporter on the planet, it is immediate for Chinese language to dispose the impression of low-end. With important traditional inherited stitch skills and splendid culture background Chinese language corporations keep making efforts on establishing Chinese language luxury fashion communities occupied with global respected reputation.
1. 2 Research Objective
Previous work shows scholar's affinity for China's luxury market, customer attitudes which gives guide to international luxury giants to build up strategy in China (Shen, 2007; Degen, 2009; Zheng, Huang & Chen, 2010; Lu & Fang, 2011; Penna, 2011). Also, some also paid attention to the introduction of Chinese language local luxury brands and their branding strategy (Li, 2008; Tu & Yang, 2010; Sunshine, 2011; Tu & Yang, 2010). However, each one of these studies concentrate only on China market, missing of a global prospection, and few have described the abroad strategies undertaken by Chinese local brand. New vision should be studied for local luxury venture' international development strategies.
The objective of the thesis is to recognize the existing situation of world luxury fashion industry with a give attention to Chinese companies' performance, to explore the competitive strategies Chinese companies utilize in building and growing luxury fashion brands and stepping into global market as well as to propose suggestions for these companies in future route in research with successful cases from leading companies within the industry.
1. 3 Research method
To complete the objective of this research paper, research study strategy will be utilized as main research method and various qualitative methods will be performed to gather data. Documentary research on earlier work will be summarized in advance. In-depth interviews with employees and management in China luxury fashion industry are conducted during the summer 2012 for detail information. Questions are developed based on literature review. Open-ended questions will be commonly used. Ethnographic observation is also a source of data gathering as the author used in this industry. After data collection, content analysis strategy will be adopted to evaluate data and attract findings.
1. 4 Organization of the thesis
This paper is organized as pursuing guide for the others parts. First, a literature review on the development of world's luxury fashion industry will be presented, including industry characteristics, marketing and branding uniqueness and typical leading companies' advantages. Second, a broad summary of China and Chinese enterprises' global enlargement strategies will be taken insight on. Third, an assessment of Chinese luxury fashion enterprises' attempts to contend in global software industry will be examined. Furthermore, research methods including sampling method and way of data collection is adopted. Afterwards, studies and managerial implementations will be mentioned to present the consequence of this research. And finally, final result will be attracted with directing out limitations of this newspaper and future research guidelines.
Chapter Two: Overview of world's luxury fashion industry
2. 1 Origins of luxury fashion industry
The word "luxury" originated from Latin words "luxus" and "luxuia", meaning extravagance and excess and rankness (Stegemann, 2006). The term luxury obtains an optimistic value of splendor while in a social context as well as known as negative meaning of decadence when relating to "private" and "excess". It is evident that luxury relates to high price owing to its limited resource. In addition, it concerns about way of life, which is filled with pleasure, perfection, flexibility and admirableness. Stegemann (2006) cited Dubois, Laurent and Czellar (2001)'s work, who possessed proposed a description of the nature and features of luxury, categorized in six aspects as following,
"1) excellent quality, 2) high price, 3) scarcity and uniqueness, 4) appearance and polysensuality, 5) ancestral traditions and personal record, and 6) super fluousness".
Luxury goods were thought as exclusive products which is not commonly possessed or used but conspicuous than essential necessities (Boume, 1957, cited by Stegemann in2006). The primary motive for customers to purchase luxury goods in primary price is to meet their increasing psychological needs of esteem while its sensible functions appear to only act as a secondary role in their decision-making process (Arghavan and Zaichkowsky 2000; Nueno and Quelch 1998). People in different cultural positions differs in interactions with other sociable entities, thus maintain different view of luxury as they develop different conception of luxury brands relating to mixtures of needs based on prices, among which, pursuit for sociability and self-expression are fundamental point (Vigneron & Johnson, 1999).
Luxury shows beauty, which is more a skill applied to functional items than typical commercial goods (Vigneron & Johnson, 2004). Very much like light, luxury is glowing and enlightening. Along with offering practical usage, they also provide guide to advantageous life-style and research of good flavor. It explains the reason that luxury brands' management develop products not only rely on customer goals. They may be always activated internally by advanced global eye-sight, the pursuit of specific preferred style and make sure of excellent quality requirements. It is believed that the marketplace would be colorless without luxury brands (Okonkwo, 2007).
According to Tungate (2005), there is no fashion before end of 19th century when the world's first developer label was made by an Englishman in France. It had been Charles Frederick Price that set up the new rules of the clothes industry. Dressmakers before did not build-up style or dictate fashion before Worth's make an effort. They were only suppliers for rich clients to make them copies of journal illustrated gowns or appreciated dresses from contemporary society gatherings. Elements of making dress from fabric to colors to looks of the dress were all chosen by clients themselves. However, Value was the first couturier to implicate his own desire and taste on women. Having in keeping with today's most gifted designers, like Galliano, McQueen, Worth came from a comparatively humble background. He started his design from dresses for his bride-to-be and soon his fashionable work was found by customers and his business expanded not only because creative stylish design and handwork, but also his genius on marketing. By gathering his clients to sit back and providing them with just a little show of dressed attractive young women, the concept of fashion model was created. Although in today's fashion marketing, more materials have been matured and added, Worth's pioneer impact founded a patter for all the designers to check out. Fashion from its blessed is not only nearly clothes and accessories but more related to highly important routine of society's culture, id and lifestyle. The impact of luxury fashion is even more to stress and promote the trend of world (Okonkwo, 2007).
2. 2 Ideology in luxury fashion industry
In prior notions, fashion development and business intellect have been regarded as two parallel lines with no conference point. In luxury fashion industry, this view was more reinforced since emphasis has been put on design and creative imagination there. Nevertheless, these assumptions are not insisted nowadays because the business enterprise of luxury fashion today calls for sophisticated management techniques and a continuous high level of creativity and innovation. The best progress of business strategy facet of fashion management and its harmonizing action with the changeable world orders an study of luxury fashion strategies (Okonkwo, 2007).
This fast-developing industry is powered by numerous complex marketing and branding techniques, that happen to be worth evaluating. Luxury fashion brands have been considered as "experiential", which means that it is difficult to tell apart one product for another before trial (Aaker, 1995). Hence, branding in this industry helps differentiate nondescript products through expressing the experience as a whole and making intangible quality and brand idea efficiently get across to the customers(Kendall, 2009).
Tungate (2005) distinguishes traditional marketing with fashion branding in their product creation process. The previous is based on need, this means, a product is established to satisfy the existing demand in the market and make an effort to compete others to become the best in its category. However, on contrary, fashion is to create a new need in reality there is certainly nonexistent. Hence, according to Tungate (2005) "Fashion is a stock that companies desire. "
Luxury Fashion brands make various initiatives for achieving creativity, differentiation and attractiveness. It is because the main element to fashion business is forward-thinking (Kendall, 2009). Fashion always affiliates and integrates days gone by and the future nonetheless it is scarcely preoccupied with the present. By drawing creativity from days gone by, it generates the desire for the future. The present is merely a temporary level for the reason that if fashion is here now today, it has already been old-fashioned. This is why the role of branding has extreme importance for luxury fashion business since it ensures the ongoing desire of luxury products despite the continuous changes of fashion (Okonkwo, 2007).
2. 3 World's luxury fashion industry
The broad notion luxury nowadays refers to not only tangible products, including automobiles, watches, clothing, food, wines but also intangible services.
Market researcher Mintel suggested that value of the global luxury is probably to be worth 100 billion US money by 2008 (Tungate, 2005). The attire sector including fashion and leather goods accocunts for 42 % of sales, taking the major proportion of the marketplace. On top of that, Perfumes and beauty products, which usually licensed under the name of fashion designers, take into account 37 per cent. The others part is used by designer watches and jewellery.
Recently, the planet luxury industry has developed into new level, changing into an oligopoly dominated with a few large multi-product organizations. The expansion strategy of many organizations has been typified by an identical pattern: brands in specific product lines was established primarily by all successful companies, for example, both Gucci and Prada, two among most major groups on the market started their business by producing and selling leather goods. After specific development and customers' attention captured, they invested on their brand names and expanded business to other areas. They then varied into clothing, shoes or boots, accessories, and perfumes and so forth. (Rabellotti, 2003). Eventually the new trend recently has suggested that they started out to expand through acquiring other regarded brands that happen to be relatively older and repudiated. From 1997 to 2000, mergers and acquisitions in the style industry have almost doubled yearly from 31 in 1997 to158 in2000 (Rabellotti, 2003). Moreover, discussing Wendlandt (2010), the weaker Euro offers opportunities for potential buyers from China, Japan and other growing markets to purchase Western european luxury brands to retailing in rapid growing market or develop a global expansion make an effort. Meanwhile, big organizations keep their spree in mergers and acquisitions to consolidate their important positions in world market (ibid).
The financial rationale behind these expansion strategies is a need for scale and scope economies running a business activities, somewhat than manufacturing, but for branding, marketing, and advertising as well as the increasing bargaining power to open mono-brands outlets in the most exclusive and expensive locations on the planet. According to Kaplinsky (2000), the accessibility barriers to developing has decreased but profits focused on other non-production activities such as branding, marketing, advertising, which require high capital cost, meaning high obstacles to accessibility. Therefore, it's very expensive to build and maintain an international well-known brand in support of those with usage of global financial marketplaces are able to afford the charge. Top companies are subsequently growing via mergers and acquisitions, capitalism on the core competencies like design, brand naming, marketing which are not sector specific. Therefore the reasoning of luxury fashion industry here comprising all clothing, shoes or boots, accessories and even aesthetic companies as sub-system of global fashion system.
Chapter Three: Review of Chinese language Luxury Industry
3. 1 Difficulties encountered by local luxury fashion industry
3. 1. 1 Environmental constraints
3. 1. 1. 1 Traditional perception limits
Affected by traditional culture permeation, Chinese language are proud of being diligent and thrifty but pity of extravagance and waste material. When talking about luxury, it is always related to the capitalist class's extravagant life and people would easily contemplate it as exactly like waste. Furthermore, on usage model, saving is a popular method for Chinese language to arrange for the future. (Sunlight, 2011). There, it is quite undesirable for Chinese to invest a large amount of money, even the amount of money tomorrow using one solo luxury product. These notions slow the growth of local Chinese language luxury brand, leading to a white webpage for a long period.
3. 1. 1. 2 Consumers' prejudice
Chinese consumers do have awareness for luxury brands, but too much for international brands. Many Chinese contain the view that brought in goods is better than produced locally. Actually this phenomenon is not common in foreign countries, but particularly for Chinese language (Shen, 2007). After becoming a custom to buy international luxury fashion product, it is hard for them to accept a new local brand considering as similar value.
3. 1. 2 Professional limitations inside Chinese language enterprises
3. 1. 2. 1 Lack of knowledge about luxury fashion
Most of Chinese language entrepreneurs get to know about luxury fashion only since financial revolution generations ago (Degen, 2009). Not everyone knows what's luxury about, the insight of every brand, and the attitude and lifestyle it try to express. How to manage an extravagance company, how to do product design, to find concentrate on customers, find their needs and keep a ecological relationship, all these questions issue inexperience Chinese enterprises (Sunshine, 2011).
3. 1. 2. 2 Insufficient marketing connection with luxury fashion brand
It takes long time to create a luxury brand and people need time to establish awareness to luxury brand as well. International luxury fashion brands usually have long history, for instance, Armani was founded in 1970s, Dior created in 1946 and Gucci were only available in 1921 (Gucci, 2012). On the other hand, Chinese luxury fashion brands are brief of both historical accumulated deposits and practical experience.
3. 1. 2. 3 Shortage of individuals capital for luxury management
Currently, few home higher education organizations have set up special major for branding or luxury management. In addition, nearly all branding elites at present have a non-luxury branding academic background (Sunlight, 2011). In addition, despite overseas returnees and international branding elites are occupied with professional management skills, they still insufficient knowledge about Chinese language enterprises' status and context, resulting in hindering the internationalization of Chinese language brands. Many brunches or flagship outlets of foreign brands also find that it is difficult to recruiting senior management team in China. In these conditions, inadequate professional management workers make it hard for Chinese enterprises to make a local luxury brand.
3. 2 Three basic abroad expansion methods for Chinese language luxury brands' internationalization
In general, organizations can put into action their overseas enlargement strategies through exporting, licensing, jv and green areas. None of the entry modes, however, guarantees smooth growth. Choosing among the many modes involves inescapable trade-offs as it determines the level of control, resource determination and risk. Discussing related entry-mode choice theory and Chinese language luxury organizations' individuals, three main international market entry method have been summarized (Tu & Yang, 2010), these are, exporting, OEM; joint venture through merger and acquisition and immediate investment by creating new ventures.
3. 2. 1 OE Manufacturer exporting
For Chinese luxury enterprises which are absent from renowned international competitive brands or intellectual property protection under the law, taking good thing about its comparative strengths have been critical important. The top population base resulting in a relative low labor cost have seduced international brands to outsourcing techniques their developing in China for many years. Some regional economies have been outfitted with capacity to provide auxiliary items, fresh material cost clipping, flexible market mechanism and fast logistic flow (Zheng, C. , 2011). Each one of these evade China luxury fashion's shortcoming such as making and branding. Through combining comparative advantages had by local Chinese businesses and multinational companies' branding durability, luxury products made in China then go into the global market.
Hangzhou Sunshine Hong is the greatest maker for Italy luxury brand Giorgio Armani, Maximum Mara in China (Tu & Yang, 2010). These clothes have been sold at top quality price.
Expansion through exporting as oe manufacturer can scale down investment risk to some extent, meanwhile, previous creation and management experience can be obtained through close cooperation with world top luxury companies. Nevertheless, the disadvantage for 100 % pure exporting is to slow down Chinese luxury companies' own brand building route and leading brands' key competence like making cannot be learned through OEM. (Peng, 2011). Hence, this entry-mode is usually implemented initially level lacking of mature conditions. And through using exporting as development strategy, it is important to build up resources and experience and keep building own luxury fashion brand.
3. 2. 2 Merger and Acquisition
Economic globalization has made international merger and acquisition as the most popular investment method as it allows the firm to obtain immediately the entire set of resources necessary for competitive advantage in a industry (Colley, Doyle & Hardie, 2004). In 2000, international merger and acquisition increase to the very best with a complete amount reached 1143. 8 billion us dollars, creating 82% of foreign direct investment (Tu & Yang, 2010). Along with the guiding of the government policy "venturing out", a number of Chinese enterprises have considered international M & A as the speediest pathway for internationalization, leading to a influx of M & A in global market, in order to luxury fashion market.
Chinese famous sneakers manufacturer Red Dragonfly has purchased an Italian brand with over a century history to enter luxury market (He, 2008). Obviously, M & A allow companies to gain new distribution stations overseas immediately, or ensure sufficient source and diversifies new business areas. Despite these advantages, acquisitions can have serious downsides. As an extremely expensive way to get into a market, risk seem high in making adjustment for organizational culture dissimilarities between existing businesses and human resource management, which will directly have an impact on the performance of new company(Colley, Doyle & Hardie, 2004).
3. 2. 3 Creating own brand
Since 1990s, in order to gratify various needs from international markets, increasingly more Chinese companies started to go abroad, creating overseas manufacturing crops and distribution channels, to understand international development (Tu & Yang, 2010). Chinese luxury brand can send the development pathway of home machine pioneer companies like Haier, TCL and take advantages of strong cultural qualifications and its impact, present local brands to the earth market, staying away from peer competition faced in domestic market and conditioning the global status (Zheng, 2011).
In 1998, Chinese language designer Yifei Chen created Layefe clothes brand, recorded in Shanghai and NY at the same time, getting into the world's top shops (Tu & Yang, 2010). Local luxury brand's success requires Chinese businesses should be prepared with strong synthesis vitality, including economic ability, risk control potential, brand awareness so as to obtain market control and permanence and realize further earnings.
Chapter Four: Research Methods
4. 1 Specific research questions:
What will be the major motives for Chinese language entrepreneurs to devote into luxury fashion industry?
How do they create a Chinese luxury fashion brand? Explore one or several typical pathways.
How they broaden their market overseas? What exactly are the entry settings do they utilize when heading abroad? And just why do they choose these methods?
What complications do they run into during the extension process?
How do they expect the continuing future of Chinese language luxury fashion industry? What exactly are the immediate support they eager to obtain?
4. 2 Methodology
Multiple circumstance studies will be used to complete this research. Relating to (Yin, 2003), other ways of doing communal sciences research include experiments, surveys, histories, and the evaluation of archival information. The selection of each strategy rely on three conditions, they may be, (a) the kind of research question, (b) the control an investigator has over actual behavioral incidents, and (c) the focus on contemporary instead of historical phenomena. Case study, as a study method, receives a distinct advantages when "a "how" or "why" question has been asked in regards to a contemporary set of events, over which the investigator has little if any control". In this particular research, questions are more likely to be in form of "how" "why" "what", and research field relates to current luxury fashion industry in China, over which has gone out of researcher's control(Yin, 2003).
Multiple circumstance studies strategy is chosen over an individual research study because that to be able to better identifies the industry sensation, the more cases examined the greater representative the study results are. A comparative case study method is suitable since any solo case cannot stand for the complete industry. (Yin, 2003) Multiple-case studies should follow a replication, not a sampling logic, and need a researcher choose each circumstance carefully. The situations should serve in a way similar to multiple experiments, with similar final result (a literal replication) or contracting results (a theoretical replication) forecasted explicitly first of the exploration. As suggested by Yin (2003), the individual cases within the multiple-case study may be either holistic or embedded. When an embedded design can be used, each individual case study may in fact are the collection and analysis of highly quantitative data, including the use of studies within each circumstance. Nevertheless, scheduled to massive amount efforts needed to be made for every research study, two typical conditions are decided to be reviewed in this research. Some may be Redstone Haute Couture Co. Ltd, which begins its businesses by performing as companies for overseas luxury fashion brands, such as Valentino, Salvatore Ferragarmo, and Yves Saint Laurent in China and then turned to build alliance with existing Italian luxury brand GIADA, participating in brand management process and it is pursuing to generate own Chinese language luxury brand and a multi-brands luxury group enjoying world impact electricity, like LVMH group. The other is NE-TIGER, a leading Chinese language luxury brand founded in1992 concentrating on fur and leather products aiming at both local and foreign marketplaces. Chinese national tagged haute couture offering tailor-made clothing forwarding and festival and celebration occurrences as well as Hua Fu collection has been introduced.
The reason to choose both of these cases is that both of them are successful Chinese language luxury companies have global market impact somewhat. These were founded in mainland China decades ago, after increasing success domestically; in addition they began to seek foreign extension opportunities. Their techniques are representative which is interesting to checking out their implemented strategies and the motives in back of. The results may have both similarities and contrasts. Other Chinese language brand like Shanghai Tang or 1436 are not chosen because either they aren't started in mainland China, or don't have obvious overseas growth activities. Another reason behind selecting Redstone is basically because the easy usage of the data since the researcher is a present-day employee for the reason that company. The pathway of background and current strategy can be effectively interpreted as a participant observer.
4. 3 Research Process
Protocol
4. 3. 1 Release to the research study and purpose of protocol
As mentioned previously, the goal of this research is to recognize the answers to analyze questions and discover a useful way to develop a luxury fashion brand in China context at the moment. This protocol provides a guide to carry out the research following a reliable logic to carry out the info collection and evaluation for cases. It really is a standardized agenda for researcher's type of inquiry. (Yin, 2003) By using this protocol, experts' attention is keeping targeted on the subject of the research study and they'll be forced to previously consider the issues my come across during report presenting, or data gathering, steering clear of disastrous outcomes in the foreseeable future.
4. 3. 2 Data collection procedures
4. 3. 2. 1 Brands of sites to be visited
Official websites of both companies:
RedStone: www. iredstone. com, NE-TIGER, www. ne-tiger. com
Contact individuals list:
Eleven Zhu, Store Director at RedStone, 9 years length of service;
Christy Wang, Administrator of PR Office at RedStone, 24 months length of service;
Ting Zhang, Marketing Official at NE-TIGER, 2 years length of service;
Yvonne Fan, Multimedia Specialist at NE-TIGER, 6 years length of service;
4. 3. 2. 2 Way to obtain information and data collection plan
Documentation from memoranda, get together minutes, training notes as well as website magazines. Besides, formal studies on the same subjects will also be described. The benefit for using records as a sourcing method is for four reasons. Firstly, it is steady thus it can be assessed repeatedly. Secondly, unobtrusive is another feature of paperwork because it is objectively existent not created for single research study. Thirdly, it includes exact information of an event, like names, personal references. Fourthly, broad coverage of your energy spreading and incidents number boost the reliability of sources. Nevertheless, the usage of those documents may be obstructed because a few of the information is private to company. As the participant observer, the writer is able to obtain some internal documents at RedStone, much better than sources on the Internet.
Deep interviews with four contact persons are focusing on this issue of the analysis and provide insightful everyday inferences. For interviews in this analysis, a consistent type of inquiry following a protocol should be pursued. Along with the questions through the interview can be asked in impartial manner and open-ended questions are preferred. Excluding starting questions about interviewees' track record information, "why" and "how" questions encompassing on research questions should be the main part of interviews to lead the interviewees to provide satisfactory answers.
Direct observation in boutiques to raise interest of environmental relevant behaviors is useful in offering more information about this issue being investigated.
The author of this thesis is a present-day employee of RedStone, keeping a position of Helper to Store Supervisor for two years. Distinctive opportunity to approach to in any other case inaccessible data can be done through this method. Alternatively, research capability for the writer to perceive truth from the point of view to be inside the luxury fashion industry also offers been raised for two years experience working as an operating role at RedStone.
Calendar for site sessions:
Documentation: March 2012 - May 2012
Interviews: June 2012 - July 2012
Direct Observation: June 2012
Participant Observation: Sept 2010 - June 2012
4. 3. 3 Put together of research study report
A) Company review
B) Brand building strategies of every company
C) International expansion strategies of both
D) Practical implications of the case study
E) Challenges for Chinese luxury fashion companies in current level and ideas for resolving problems.
4. 3. 4 Research study questions
Specific domains to be analyzed:
Chinese entrepreneurs' desire to entail in luxury fashion industry.
Brand building technique for Chinese luxury fashion companies.
International expansion strategies followed by RedStone and NE-TIGER and their admittance methods chosen to go overseas.
Difficulties they run into during the extension process and their anticipations for the industry future.
4. 3. 4. 2 Evaluation
Content examination techniques and Rival explanations are being used to analyze the data collected to make contrast and comparison between those two companies. In this particular study competitors are history of both companies, review of cultural areas of both and other research areas. Moreover, a case description strategy may also be used when interpreting the data to give a logic report to the study.
After delivering the studies of research, suggestions for the difficulties Chinese language luxury fashion companies experience will be provide to make efforts to the near future development of the two company as well as other members in this industry.
Chapter Five: Company Review
5. 1 RedStone Haute Couture Ltd.
RedStone Haute Couture is a world-renowned management company for luxury brands. Because the founder Yizheng Zhao began the company in 1995, it has successfully presented international brands like Salvatore Ferragamo, Yves Saint Laurent, and Valentino into China market by behaving as an international luxury agent in its early on years (RedStone Haute Couture Ltd. , 2012).
With appropriate development strategies, business procedure and employees management, RedStone has enlarged its business and founded boutiques in main locations in the Greater China area. After getting experience in luxury retail industry as being an international agent for years, with strong operating network and reliable older management team, 53 GIADA boutiques have been create from 2006 to 2012 (ibid). GIADA can be an Italian luxury brand which is the fastest growing luxury brand in the Greater China area. RedStone has made a large capital investment into GIADA S. p. A. in November 2011 under agreement of Development and Reform Percentage and Team of Business of People's Republic of China. Through this action Redstone became the certified operator of the Italian luxury brand GIADA, and thus by buying the brand aiding the company make a complete preparation and solid basis for GIADA's further expansion internationally in Italy, France, UK and USA. Moreover, Hua Qin Fashion Co. Ltd, as a subsidiary of RedStone, has exposed 6 stores of an Taiwanese fashion brand, Angel Enthusiast in towns such as Shenzhen, Guangzhou, Chengdu etc (ibid).
It is the development in product and business design that ensure RedStone a remarkably swift development and amazing successes as well as its control in luxury industry in China and growing efficiency globally.
The company has explained its quest on website as,
"We strive to become an important fashion possessing company in the world's fashion realm through professionalism and ethnical cohesion, in order to donate to the peaceful rise of China. "
Following with this mission, the company makes efforts to accomplish its goals through various functional methods, from being an agent, to dominate an existing overseas brand, and also to eventually create a wholly managed brand itself. Experiences came from tactics of failure.
According to the interview with Zhu, store administrator in RedSotne, when cooperating with Valentino, a world famous luxury garment brand, whose product obtains excellent quality and reputation worldwide, problems happened because RedStone had not been the only real agent in mainland China. Valentino's headquarter in Italy possessed licensed too many district agents and some of them started out to use this Italian brand to manufacture imitation products or even to register a Chinese language label in advance. The brand image in China then became less valuable. Customers considered the brand as a famous foreign brand but not too much related to luxury. Imitation products can be seen everywhere. RedStone then terminated the firm contact with Valentino.
Zhu also has given another exemplory case of the RedStone's co-operation with Salvatore Ferragamo. Dissimilar with Valentino's decentralized strategy, Ferragomo hired a centralized international enlargement strategy. After licensed mainland China's syndication management, it still performed the limited control over brand management details, not only the advertising, campaign campaigns, but also inventory and sales data. That made the RedStone less control over the brand management. Experience for luxury brand management is not easy to be gained due to limited work can be done by just as an agent and it is thereby unhealthy for the company's own development.
After getting through troubles being a clean agent, RedStone is also seeking ways to create a Chinese language own luxury brand. However, condition is not ready. Another way emerged up to RedStone's management. Working with Italian designer who has not make a name for himself/ herself yet, then buy part of collateral of the initial company and eventually have the control over the operation privileges and realize the management practice. It's the report of successful experience of GIADA brand.
A brief launch of most brands held by RedStone presently, GIADA and AngelLover are provided as below.
GIADA, to be presented briefly, can be an Italian luxury brand in pursuit of style and caliber. In Italian, GIADA is a common name for gal and this term formerly means "beautiful jade", which is just exactly same so this means as RedStone (Hongjue, Pinyin for Chinese brand name) stands for in Chinese. As being the brand specialist in GIADA store, the writer has found that Rosanna Daolio, the brand founder, and her partners are all appealed to the precious rock, jade, from the Orient. In their views, jade isn't just like precious stone which obtains commendable character, enjoyable bright luster and frequent vitality, but also expresses the tender electricity of women. It will always be presumed by Rosanna Daolio that "Elegance is soft power". In 2000, Ms. Rosanna Daolio relocated GIADA creative studio from Florence to Milan (RedStone Haute Couture Ltd. , 2012).
Nowadays GIADA's creative team consists of users of world talented specialists in their own domains, which may be seen clearly in the following desk. Rosanna Daolio started out her profession in Emanuel Ungaro and then got did the trick in MaxMara as a stylist for 13 years. She was encouraged by her family and friends to start out her own brand and combine her gift in drawing art to fashion design. Her design is known as to be more practical. Fabio Piras was graduated from London centered Central Saint Martins University of Fine art and Design and was hired as Creative Dirctor of Brioni's Women's wear Department. His design strengthens artistic idea of clothing. This sort of relationship determines that GIADA style is placed between functional and stylish, which is more acceptable for daily fashion wear. (Training Material in GIADA boutique, 2012)
Position
Name
Brand Founder
Rosanna Daolio
Creative Director
Fabio Piras
Window Displayer
Bruno Bambara Vetrine
Boutique Designer
Patrick Bruce
Art Directing
David James
Art Directing
Doug Lloyd
Another brand possessed by RedStone is a multi Taiwanese designer brands chain, AngelLover. Initially of 21th century, discussing the state website of RedStone (2012), the brand creator got chance to learn many Taiwanese friends. Taiwan's distinctive aesthetics that combines the social essence of the Orient with the Western world, which have affected the designs of Taiwanese style, was valued by the creator. With full capital support from RedStone, then made a decision to open multi-brands buyer string to generate fashionable high-end Taiwan brands into mainland China. A number of fashion-forward customers were fascinated by this stylish brand.
The brand name AngelLover comes from a beautiful story in Taiwan. You will discover five boys, who were influenced by the name of love, made up their brains to help every woman they found and offer them with genuine soft care like using their company enthusiasts. These five young boys, acting just like angels, spread seed products of "goodness" throughout the world, letting the women they dished up even more appealing and beautiful. This story is merely right in consistent with the founder's expectation of brand,
"To be the angel fan for many women, genuinely nurturing about their beauty and life. "
RedStone has also has shared its 5-calendar year Plan on website (RedStone Haute Couture Ltd. , 2012). First, to keep develop GIADA brand both in China market and the international, on the other hand to boost its global impact in luxury fashion industry. Second, it'll attempt new partnerships with French or Italian luxury brands to replicate the successful way of GIADA's management and market development pathway. Third, a new haute couture brand created by Chinese language designers will be launched to showcase the essential of oriental cultures. Last but not the lease, wholly-owned subsidiary of RedStone, Huaqin is expected to enlarge AngelLover's market in mainland China with a speed-up development.
As mentioned by Wang, supervisor of Public Relations Department at RedStone during the interview, employees at RedStone are called RedStoners, and they're regarded as the key competitive advantage for the business. They are anticipated to be faithful to our motherland China and become courageous to spend themselves to noticing their dreams. The company also anticipates RedStoners work hard and fight for remarkable achievements in order to satisfy personal value while accomplishing the ideal of RedStone. RedStone aspires to encourage those exceptional, motivated individuals who are full of faith and hope, and seeking to overcome complications encountered along the way through active attempts.
Furthermore, RedStone is the world's only company which is continually taking part in charities through employees' effort regular donation. As observed by the author, each worker voluntarily has made denation to "RedStone Finance" monthly since he/ she joined the firm and gradually convert charity into a habit. More religious fulfillment and joy through charity proposal can be received by them. Charity, assumed by RedStoners, is not equal to the offering of riches, but a change of love and wish. The majority of donations are used to help destitute students to visit university thereby continue their dreams.
5. 2 NE·TIGER
NE·TIGER, an original Chinese luxury brand, occupied a leading position of Chinese luxury fashion, was founded in 1992 by Mr. Tiger Zhang. The design idea of "Integrate Antiquity to the Present, Converge Chinese language and European" is rooted from the fascination of Chinese clothing culture and heritage, smoothes the way to revitalization of Chinese luxury culture and the international emergence of Chinese language luxury brand.
Having started the business from the look and produce of fur selections, NE·TIGER soon proven its top status in China's fur industry. It has subsequently introduced evening dress, western bridal dress, Chinese traditional bridal dress and its Haute Couture brand - Huafu before 20 years. NE·TIGER positions its product style as nobility, style and luxury, and devotes itself to offering successful women with reputable and convenient experience.
In historic China, the assortment of beautiful dresses was called "Hua", while Chinese language character "Xia" means a precious traditions of great manners of China. Huaxia's dress is how Huafu result from, representing the main and spirit of China's culture and history. For that reason, Huafu is also called as China's Country wide Dress.
Five major features of Huafu's design notion have been generalized by NE·TIGER,
" 'manners' as the spirit, 'jin (traditional royal silk cloth)' as material, 'embroidery' as the workmanship, 'five coulors' as the core, and then 'Huafu' as the icon of China. "
Huafu gathers the clothing cleverness of a large number of years by various minority teams and develops a distinctive dress image of modern China.
Tiger Zhang, the founder and artistic director of NE·TIGER, is the co-President of Asian Fashion Union China Presidium, Vice-President of China Popular Colour Association. He's also acclaimed as "China luxury NO. 1" with the concept of "Integrate Antiquity to the Present, Converge China and European" creating NE·TIGER's noble, elegant, and sexy luxury style. The introduction of NE·TIGER was originated from its viewable fur series in 1992, and proven its high-end fashion setting since that time; after ten years' development, creative haute couture night dress collection started out the China nighttime dressing Original Yr in 2003; progressive western wedding dress then brought on a domestic wedding dress revolution in 2005; another calendar year, ideal traditional Chinese bridal dress facilitated the revival and emergence of Chinese traditional clothing culture; the latest event occurred in 2008 was that the symbolic haute couture "Huafu" became modern day Country wide Dress. Zhang has effectively led NE·TIGER to an international luxury fashion brand which congregates Huafu, hair, night time dress, and wedding dress to full series of Chinese language style luxury fashion.
"Ne" as part of the brand name is brief for northeast, making the brand NE·TIGER a primary meaning translation for Chinese brand name "Dongbeihu". At the same time, NE also includes a profound value that N stands for noble, E means elegant, and Tiger identifies the great king manner the brand always pursues. This brand properly expresses the noble, chic tiger which is also extremely female.
On March 27th, 2010 the 2nd Sino-Europe Top Brand happened in Shanghai, concentrating on the topic "China, world luxury's blessed place". Zhang reviewed the existing development of Chinese luxury market and difficulties of competition with foreign brands faced by domestic luxury companies. He has also suggested that Chinese luxury brands should take courage to break the existing fashion discourse right, in the mean time create and lead new guideline. The deepen revival opportunity for Chinese luxury industries was approaching.
NE·TIGER published "Chinese language luxury's Dawn". In this particular paper, three stairs was indicated as procedure for reaching the contemporary situation of world's luxury industry. Hundreds of years' background made Europe the first stair for luxury; after the Second World Conflict, the United States is just about the leading current economic climate and made it the second stair for luxury due to its half century's growth current economic climate; Japan and China's economic takeoff should make East Asia the 3rd stair, but the fact is not. However, Chinese language luxury market has achieved a annual growth around 20 to 30 percent during worldwide luxury sales major depression.
Since the foundation of NE·TIGER, the annals and culture of luxury from the Eastern and the American has been explored by the business. The research discovers that Chinese luxury has managed a long history and has conquered the planet since historical time. In Han Density, Zhang Qian went to the Western Areas with diplomatic mission and built Silk Road, brought lovely beautiful silk to the Roman Empire, leading Western lifestyle then. Also in Tang Thickness which is 1300 years ago, it was not only the world politics, economic and ethnical centre then, but also is the world fashion centre, which still has a definite influence so far. As to the Ming Thickness, Zheng He was delivered to deliver renowned silk, jade, china and tea to all of those other world through Maritime Silk Highway, which experienced just built luxury culture base in the European. It is the Feudal system that hindered the introduction of Chinese language luxury brand as well as enterprization and branding of Chinese language luxury creation. Nevertheless, this will not imply that China lose the chance to create its own luxury brand permanently. The globalization has pressed culture mix to the highest level, and the desire to spread Chinese luxury to the whole world motivates NE·TIGER to understand their Chinese language luxury fashion fantasy.
Chapter Six: Brand Building Strategy
6. 1 RedStone's Brand Building Strategy
As created before, RedStone has adopted a intricate brand development strategy through various trials. First, it was set up as a global luxury agent company to acquire management experience as well as capital foundation. During this level, RedStone, as a corporate and business brand, was generally multiply to the global market. Second, along the way of progress, it attempted to find proper associates to create an original Chinese language luxury brand, but failed. And discover such partner, it sponsored "RedStone Cup" of Haute Couture Design Competition to find genius ethnic Chinese designer, however the condition was not ready then. Therefore, RedStone constructs a fresh way of brand development.
As understanding Italian brand growing process and regarding to their features, it has been discovered by RedStone that there are a lot of high quality Italian personal garment factory. Due to Italian business laws and traditional poor lifestyle they enjoy, most of them lack of motivation and ambition to develop their business to large level, although the designers are talented and stitch work is fantastic. RedStone then cooperated with GIADA's founder Daolio Rosanna, brought GIADA into China market, little by little bought the show of GIADA Spa. , and took over circulation right in Asia Pacific area and lastly the complete brand management privileges. An Italian brand handled by a Chinese language company, this innovative action creates a new method for luxury brand developing.
GIADA is just about the quickest growing luxury brand in China market, attaining good reputation within industry and RedStone in addition has received great expectation by international competition. Presently, RedStone is considering set up an original Chinese language brand with the same name as the business. The planning process is nearly finished, which is believed that the public get the chance to see an original China luxury fashion brand in the near future.
Briefly speaking, RedStone's brand building strategy is different based on the industry and the customer. For the industry, it concentrates on corporate brand development while to the general public, specific brand impact is more immediate benefit them. It is because the industry customers tend to be knowledgeable and complete than consumers in the market.
Focusing on GIADA brand process, it was created as an Italian brand in China, making it acceptable for Chinese language consumers to trust the quality and value of products. Choosing only good locations in top shopping mall or five-star hotels ensures the grade of consumers and superior position in their heads. Relying on sophisticated and well-trained sales, a warm and pleasant atmosphere is built in the selling process with consultancy service provided which is very different from other international luxury boutiques' chilly profession. Top quality apparel as well as kind professional service is the primary impression GIADA leaves to consumers. Increasing investment in public areas relationships also helps strengthen the brand position in market place.
By successfully owning a young luxury brand, GIADA now could be confident to take actions in future steps to build its luxury fashion empire, not only buying brands from other companies, but also create an own one. The management is well-prepared for the troubles.
6. 2 NE·TIGER's brand building Strategy
The branding technique for NE·TIGER is more standard. Without buying or borrowing, it was at first set up brain to build its own brand. In 1992, the founder Tiger Zhang registered the brand NE·TIGER, and put his eye into global possibility. Subsequently, NE·TIGER established global design & marketing centers in France, Italy, Russia and Hong Kang, starting the procedure of Chinese luxury fashion brand building separately. According to Tiger Zhang, in those days, NE·TIGER's recycleables, designs and purchasing are all equal to global standard. The only shortcoming is the degree of internationalization of its brand.
Before NE·TIGER was founded, he had had a long career in garment industry from a tailor to stock owner. His factory's main business was OE Manufacturing for foreign brands, waiting for international clients to make orders and make clothes as their requirements. After witnessing the purchase price difference between made-in-China non-labeled clothes and international top quality ones in the same quality, he made up his brain to create a Chinese language originated fashion brand. Gifted learning capacity motivated him to keep working his manufacturing factory on one side, at exactly the same time, to set off for learning foreign brands development techniques.
In his research, it was uncovered by him that american luxury brands also has distinct operating systems, especially in syndication of products. American luxury brand mainly use shops as their circulation route while in Europe, boutiques will be the key method. Some European boutiques can do not need big operating area, but it could have existed for centuries of years, their special hand-made skill to make suit was passed on from one era to another which is how these brands originates from.
Rather than a procedure for learning American brand building strategy, it is much like making comparison between the Oriental and the European to be able to absorb the fact of both. As stated by Tiger Zhang, he was thinking about examining the history of each brand to find his own advantages and drawbacks. In this manner, proper setting would be settled according to what should be maintained and be left behind.
To move attentiveness back to China is to punch root domestically to realize the idea of "Integrate Antiquity for this, Converge Chinese language and European". Tiger repositioned his company strategy and placement since the brand NE·TIGER was started out, cleaned out industries it had included but having no connection with fashion, going back to give attention to the industry he really loves. He slowed his step to extend business just for earning revenue and being varied. It is not a highly effective brand building strategy only enlarging creation size by increasing the amount of factories and employees. Motivated by traditional Chinese culture, NE·TIGER committed itself into Chinese language luxury fashion brand creation and culture rejuvenation.
It is more profitable for NE·TIGER to register an overseas brand in foreign countries and then market back again to China or simply being Original Equipment Manufacturing. Still, insisting creating a Chinese own luxury fashion brand is the most effective way to satisfy the dream. Detail by detail, NE·TIGER started out from fur series, then expanded its fashion design to haute couture nighttime dress, western bridal dress, traditional Chinese bridal dress and latest "Huafu" as countrywide dress, consistently create wonders in Chinese language luxury fashion industry through solid mind and work.
Chapter Seven: International Strategy
7. 1 RedStone's International Exploration
It needs years for RedStone to start its overseas development. GIADA is the brand the business decides to advertise in foreign countries, though it can be an original Italian brand. When the business helped bring this brand into China, as stated above, has rarely boutiques overseas. China is always the biggest market for GIADA and RedStone has been patient to hold back because of this essential market to develop mature. In RedStone's future plan, boutiques in Milan, New York, London, Paris and Tokyo are all expected to open up around the year 2013. Up to now, Milan and New York's boutiques' location has recently been chosen. Mr ZHAO Yizheng, the creator of RedStone explained in Annual Training, it needs massive amount capital investment in each overseas boutique in main representative luxury neighborhood. For example, employing complex sales and high lease of hot real estates, not discuss the precious adornment within boutiques. An individual boutique should cost around 100 million money investment. GIADA won't expand its abroad market without full planning. Now it's the time for GIADA to take flight to depends upon.
The entry mode for GIADA's international growth is direct investment in targeted countries. Knowing evidently about shortcomings of licensing and franchising, GIADA will not take the chance to lose control over its abroad extension quality and future brand placement by taking good thing about short-term monetary benefits. Not only the product quality, the chance of experiencing the brand and reputation ruined by the useless spouse is also well worth worried. Additionally, the foreign spouse can also turn into a rival by retailing the father or mother company's garment where it already in. Both of these modes do work for the company to enter the countries where stringent political risk is accessible and a new business market it will develop.
The ambition RedStone to be a world leading luxury corporate prevent it to use exporting as foreign accessibility method, neither do other luxury brands utilize it. Because luxury industry's characteristic determines the least control over global quality control, superior degree of service is the part of its product. By using exporting, overseas importers directly purchase luxury goods from the business and sell them through their syndication channel in those countries. Exporting method can perform fast market gain access to with little or no financial commitment, in that way low risk is present and the management team is not sidetracked. On the other hand, economies of range can be came to the realization by concentrating the sources of production. However, this mode is not proper for those companies who wish to gain experience in how to use overseas and inappropriate selection of market and marketers may cause insufficient marketing feedback influencing global success of the company. In addition, the price tag on each little bit of clothes is uncontrollable. In case the selling price is too high, potential revenue are missed by the company so when eventually the business decide to enter in the market directly, it is difficult to set the right price. Alternatively, if the purchase price is too low weighed against in domestic market, such as low discount to remove advanced on inventory, injury to the brand value will be resulted in. In general, this mode is employed by the business considering their domestic market more important and still requires large amount capital investment in research and development, marketing or sales.
Joint venture is a common way for international extension, with the purpose of market accessibility, risk writing, joint product development and conforming to federal government regulations. The lovers of jv are usually have limited size, market ability, and resources weighed against market leaders and they're able to learn from the other while restricting access to their own proprietary skills. Problems also can be found when there is issue over asymmetric new opportunities or distrust over proprietary knowledge and other benefits issues. Different commercial culture of companions may cause ethnic clashes, leading to inefficient procedure of the cooperation work. Nevertheless, the type of jv decides it struggles to meet RedStone's needs. In jv, the companions should intend to maximize the advantage of both, but they also want to maximize their own competitive position. Additionally, jv is did the trick through negotiations and coordination functions, while every company wants to have a hierarchical control. RedStone would not allow the share of control of business to another and it is capable of growing to abroad alone. For these reasons, setting up wholly owned subsidiaries is the only option for RedStone.
However, without a encouraging brand to be marketed, it is meaningless to discuss the international extension strategy. GIADA is the brand choice for RedStone to market internationally. The first step for RedStone's international strategy is to obtain part of GIADA Spa. 's show. After acquisition of GIADA, RedStone was then allowed to create subsidiaries in foreign countries.
GIADA has began its international recruitment since 2010, intending to find suitable prospects, who are prepared to have confidence in value and enjoy the culture of RedStone in these countries. Some of the candidates are China who has been studying or worked in another country for a long time, obtaining an abundant knowledge of local customs and culture, as well as outfitted with trained professional knowledge or luxury management experience. After selecting international specialists, all of them are required to come to Shenzhen, headquarter of RedStone, to learn and research the brand knowledge.
Some of them in retail position are asked to go to the boutique to learn about the advertising skills, retail management skills, and staff training skills in practice. The advertising style in GIADA is exclusive compared with other luxury brands. You will find three distinct features of GIADA's selling style, warm, professional, and love. Every customer will be warmly welcomed as long as they enter into GIADA shop, suited clothes would be advised and they are incredibly welcome to visit the fitted room. In addition, all GIADA sales females, also name brand consultants, are well trained of brand knowledge and product information including colors, materials, maintenance method, and dress collocation. All of them are profession popular. Last but not minimal, love, originates from a center of charity. They consider each advertising process as a potential for dispersing charity to the customer, not only a simple process of earning money by completing the offer. To decorate a female, making her own elegant appearance and confident at heart is merely like a large charity to the contemporary society. During the selling process, the customer was carefully cured, and her needs and inclination are taken into account by brand consultants and finally only the best appropriate ones will be advised to the customers and a pleasant long-term romantic relationship with customer is expected to be created.
After studying in-store advertising skills in China and boutique management experience, they'll be sent to international countries to take fee of international procedure of GIADA. They are the key recruiting for RedStone's international growth. Along with sufficient capital resource and luxury management experience, RedStone is positive on its future in world luxury market.
7. 2 NE·TIGER's Global Attempts
NE·TIGER as an extravagance brands, it has not begun its international growth formally, though its hair products has been sold internationally since early years. It have participate in amounts of international effective incidents. In the end of 2008, NE·TIGER successfully released its Huafu series in Tokyo at 2nd China-Japan-South Korea Super Model Competition. NE·TIGER viewed this model competition as a perfect possibility to help the brand show all of those other world of the time-honored tradition of Chinese garment as well as the surge trend of Chinese language luxury. Through the fashion show, the international members were highly impressed by the ethnical richness, leading design and fashionable charm showed by NE·TIGER's Huafu. It had been NE·TIGER's Huafu series' first overseas showcase after its debut show at this year's 2009 China International Fashion Week in Beijing. This manner show exhibited the fantastic tradition of Chinese language garment production, implying NE·TIGER's ambition in reviving the Chinese luxury tradition.
On October 21th 2011, NE·TIGER was asked to Chinese Culture 12 months in Italy to take part in Chinese Garments Exhibition. Six bits of basic Huafu was chosen to statically be exhibited in museums located in Rome and Milan; five bits of Chinese traditional clothes was determined to take part in the showcase in the Starting Ceremony of this event. The three in Rome's design ideas was from essential icons of Chinese culture, including Chinese language national flower, peony blossoms, grand and magnificent ink landscape painting, and auspicious phoenix. On the other hand, the three pieces exhibited in Milan was designed according to the calendar year 2010, 2011 and 2012's pet indicators of the Chinese language horoscope, tiger, rabbit and dragon. Each one of these design implies that NE·TIGER was using its unique apparel vocabulary to express the past, present and future and China. Individuals and audience in Rome and Milan were deeply impressed by Huafu's amazing stitch work plus strong ethnic base, exactly like wearing China's record and civilization.
It is because of NETIGER's own historic build up that has received a superior understanding from the Italian. On October 25th in the same season, the first fashion show in China International Fashion Week needed the puzzle out
