Mulberry's new Asia co debuts next week, rides new wave of Chinese luxury growth

By

Sandra Halliday

Published
Mar 28, 2017

UK-based luxury label Mulberry said Tuesday that its new Asia-focused company will launch next week with its April 3 debut coming after the recovering company announced last December that Asia growth would be a key priority.

The launch of Mulberry (Asia) Limited is a new business agreement with Challice Limited that will operate the group's business in Hong Kong, China and Taiwan. It will start trading in Hong Kong next Monday with a subsidiary in China and a branch office in Taiwan expected to be operational during this year once it gets the relevant business licences for those territories.

The launch will also come along with “significant” marketing investment in North Asia.  In addition to local marketing initiatives, Mulberry plans to invest around £3 million in additional support over the next two years.

As an immediate priority, the brand's store network will be added to with a new location in Shanghai as well as the relocation of its existing stores in Hong Kong and Beijing.

Interestingly the new investment is not just about boosting sales within Greater China but also about making sure Chinese consumers, who are increasingly doing their luxury shopping elsewhere, have Mulberry on their hit list when they travel abroad.

The company said its new spend is designed “to build brand awareness in the region and capitalise on international tourist flows to the UK, Europe and North America.”

Mulberry owns 60% of the share capital of the new venture with Challice holding the other 40%. Challice already owns 56% of Mulberry’s share capital and is under the same ultimate shareholder control as Mulberry's ‘previous’ distributor in the region, Club 21.

It will initially operate four stores (two in China, one in Hong Kong and one in Taiwan) and manage the brand’s regional wholesale ops, which are supported by the group's Chinese language mulberry.com site and omnichannel platform throughout the region.

Mulberry CEO Thierry Andretta said the firm sees significant growth opportunity in the region. This sentiment echoes that of Jimmy Choo recently as the luxury footwear label also makes Chinese growth a key part of its strategy.

Mulberry and Choo are both part of a second wave of Western luxury firms aiming to exploit what is a potentially giant market for luxury goods. They may not have had the resources earlier this century to snap up the best and most expensive retail sites, but in some ways that was not a bad thing.

As the big names of global luxury retail rode the wave of Chinese consumer spending growth, some expanded too fast and found their stores were in malls with little visitor traffic.   And China’s official crackdown on conspicuous consumption also hurt business while specific issues in Hong Kong saw luxury stores struggling there.

Prada, for instance, last summer reported an almost-25% drop in Greater China revenues. Burberry also found Chinese growth elusive, although the market has strengthened in recent periods.

And with that strengthening, the ‘latecomers’ to the Chinese party have enormous potential. They have largely avoided the over-expansion problems of their bigger peers and now have a market back in growth mode, as well as some good examples both of what to do and what not to do to learn from when seeking China growth.