China is the backbone for luxury and fashion growth

China is the backbone for luxury and fashion growth

China is becoming the most important single market for luxury and mostly fashion items are sought by Chinese customers

No wonder that luxury manufacturers are also investing in China. Recently L Capital Asia a private equity fund backed by LVMH Moët Hennessy Louis Vuitton bought for around USD 200 million an almost 10 % equity stake in Chinese casual wear company Trendy International Group based in Guangzhou and owing directly 300 stores and disposes of several hundred franchisers for its four brands and the leading one is Ochirly (see also e-paper issue TextileFuture of December 2011).

Already in 2011 IDG Capital Partners, a Chinese investment firm bought a stake in Beijing Eve Fashion with more than 500 franchisers across China.

2011 Sales of clothing and apparel in China jumped 15 % to CNY 460 billion (around USD 73 billion) and should amount by 2015 to over CNY 800 billion according to Boston Consulting Group and this would mean that China will account in the next five years for 30% growth of the global fashion market. Up to 21020 the China’s retail fashion market size is estimated at CNY 1348 million.

One of the largest Chinese apparel companies by sales and store numbers is Meters Bonwe Group Shanghai & Co. owning 3’938 stores generating in the first half of 2011 sales of CNY 3.79 billion (around USD 601 million) or almost doubling sales and profit was CNY 452.5 million (CNY 62.5 million) resulting into a profit margin of 12 %.

2010 Chinese consumers were eagerly spending on fashion. Less than 20 year olds spent annually CNY 2826 or around 48% of their income, the age bracket of 21 -25 spent around 12% or CNY 3330, those 26 – 30 nine percent or CNY 3841, 31 -35 almost 11 % or CNY 4173 and 36 -40 years 8 % or CNY 3174 whereas those over 40 years were spending close to ten percent or CNY 3148.

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