BEIJING — Having cleared the market of copyists, and attracted by rising income levels in China, Valentino is at last ready to roll out its women’s collections on the Mainland.
The fashion house will open its first freestanding women’s wear store in China later this month, in Hangzhou.
Valentino executives visited here a few weeks ago to launch Valentino Women and take part in the opening of the “Italian Art & Italian Life” exhibition at the National Museum of China. The exhibition, part of the “Italy in China Year,” showcases the best in Italian art, design, jewelry and fashion, including 23 of Valentino’s signature red dresses.
“Four years ago, China had a lot of fake Valentinos — not counterfeits, but fake brands — so from 2002 to 2004, we worked to clean them out legally,” explained Michele Norsa, chief executive officer of Valentino Fashion Group.
The company introduced its men’s wear in Mainland China in 2004.
“Valentino uses his first name, not his surname, so it’s more common, and we have to fight more than brands using both,” added Norsa. “Once the right product is on the market, the difference is so big that people definitely know when they’re buying fakes. Asians want the real product, and want them produced in Italy.”
Valentino has three men’s wear stores in China, the oldest at Oriental Plaza here, and one each in Shenzhen and Nanjing. The brand opted to begin with men’s only because it required less initial investment and effort than women’s, said Norsa, plus Valentino’s original joint venture partner was a tie manufacturer. The company is now switching its partnership to Hong Kong’s Tiara Group, which in China is also partners with Cartier, Guess Accessories, Vartu phones and Argatta jewelry.
“Having a Chinese partner is important, plus the people you work with have an understanding on their side of the luxury market. Retailing is the key to the market, along with location and how to keep staff, plus chemistry,” explained Norsa. “We opted against direct ownership because we do not have enough experience. You don’t know everything or everywhere at the beginning.
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“Women’s…is the soul of the brand,” he continued; men’s wear accounts for only 10 percent of Valentino’s global sales. “It’s doing well, but not better than expected”; polo shirts, ties, and other casualwear are selling better than suits.
Norsa described Valentino’s core customer as a Chinese businessman in his 30s to early 40s; he expects female customers to be in their mid-30s.
“In China, our target customers are entrepreneurs, and then the growing middle class and office staff, with things like eyewear and jewelry giving different ways to experience the brand,” added Valentino’s Asia Pacific ceo Giovanni Di Salvo. “We imagine that going in with accessories will allow us to reach more customers. Also, we have the Red Valentino casual lines, to appeal to younger customers.”
Valentino’s initial women’s store will open later in September in a 5,380-square-foot, three-story space in Hangzhou’s Euro Street, along the famous West Lake and adjacent to the Dolce & Gabbana and Giorgio Armani flagships.
“Hangzhou is a very interesting city: Retail is growing fast there; all the major brands have already opened there,” said Di Salvo. “It has a lot of high earners there.”
Three more women’s stores are slated to open soon here: a 5,060-square-foot store in the Oriental Plaza, with windows on Chang’an Jie; one at the Park Life mall in the Park Hyatt, and another, which will sell the men’s and women’s collections, at the Mitsukoshi department store opening near China World, a shopping mall.
“We believe in Beijing. Its potential is the same as Shanghai’s,” said Di Salvo. “We’re also confident in northern China. It’s an area that’s growing very fast, and people here have a passion for fashion. We’re also positive about Chengdu; it’s another major city for the China market. We’re not that confident with the south, because it’s so close to Hong Kong. People can go shopping there, where it’s cheaper and has better selection — duties add 20 percent to 23 percent to Mainland prices.”
Valentino expects to open a Shanghai store early next year in a street-front location on Nanjing Xi Lu, near Plaza 66 on a stretch becoming popular for freestanding apparel boutiques, including Zara and Lacoste.
“Plaza 66 is the only place doing well in Shanghai, but it’s impossible to get ground floor space,” claimed Di Salvo, adding the lack of professional management is what keeps the supply of luxury retail space low in China. “The Bund has a lot of places going in, but those won’t be ready for two or three years. We’re not presently looking at the Bund: It’s an investment in advertisement, but business there is poor.”
Regardless of location, Valentino recognizes that only now is the Chinese market becoming wealthy enough to afford the brand. “Valentino is very exclusive, expensive, occupying the top part of the market, so China is not an ideal market,” explained Norsa.
“Our products are three times the price of Louis Vuitton or Prada, so our customer base here is smaller, while other luxury brands are more mass,” added Di Salvo, who in a previous position helped introduce Prada to Mainland China. “Valentino’s very exclusive, not affordable by everyone; only now is China mature enough of a market.”
Norsa nonetheless expressed optimism about China’s luxury market. “There are not too many brands in China; there is room for everyone here,” he said. “Big brands all have their uniqueness, and I am in favor of luxury malls, and department stores with five to 10 top brands together; there is no competition. China’s price difference [from Hong Kong] must be reduced. It is due to difference in operation size plus duties, but those will decrease, and scale of business will increase.”
As Di Salvo observed: “China is the market of the future, but of course it is challenging. One cannot expect a return right away, but one must be here. It takes two or three years to see returns. Everybody worldwide is looking at China, and all the brands are coming here. Some are expending very fast, but I’m not sure if the market is ready for them all.”
The China launch is part of Valentino’s larger push into the Asian market, said Di Salvo. “Asia is still underexposed, including Japan. It is now 15 percent of global sales, but it’s 30 to 40 percent for most brands. We had a late entry, but now it’s growing fast and so also has big potential.”
Japan contributes 60 percent of Valentino’s Asia sales, with 25 stores, followed by Hong Kong at 15 percent to 20 percent. Mainland China accounts for only 10 percent of Asian sales. “Hong Kong is doing extremely good, with 30 percent growth per year, and this year will also be in the double digits. In 2006, our turnover is up 50 percent, both from organic growth and new stores.”
The company recently made its debut in Bangkok, Kuala Lumpur and Macau. “Accessories are growing fast — they’re 20 percent of sales internationally, but 25 percent in Asia.”
India is also a growing focus — Valentino opened its first store there last August in the New Delhi Shangri-La.