HONG KONG — As it fans growth in Asia, MCM is about to find out what’s more important: its German heritage or its Korean ownership.
The accessories brand celebrated the grand opening of its new 10,000-square-foot flagship here Friday night. The store, its second in the city, will serve as a platform to reach more local consumers as well as a gateway for it to enter China by gaining more recognition among the millions of Chinese tourists who cross the border annually to shop in Hong Kong.
Hundreds of onlookers squished around a barricade outside the new store, located in the basement of the Entertainment Building, which is in a posh shopping district in the city. Most came to see Korean star Rain. Fans carried signs welcoming the model, actor and singer to Hong Kong. One woman, when asked whether she was familiar with MCM, replied, “Yeah, it is from Korea.”
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“I think Rain will make it popular,” the fan said, adding that she always sees Rain toting MCM bags.
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Founded in the Seventies by Michael Cromer in Munich, MCM became known for its logo-driven accessories, but fell out of fashion in the Nineties. In 2005, Sung-joo Kim, one of Korea’s top businesswomen and head of Sungjoo Design & Tech, MCM’s license holder in the country, acquired the brand and has made it her mission to reinvigorate its image.
Kim, also responsible for licensing other luxury brands in Asia, has poured $100 million into relaunching MCM, which now stands for Mode Creation Munich. More than 100 stores have been closed in the United States and Europe. Management has been restructured, and Michael Michalsky, the former Adidas global creative director, was hired to head up design and to renew the brand’s German heritage.
So far, Korea has been MCM’s major success story. MCM’s licensing business in the country was already at around $100 million in revenues when Kim acquired the brand. Today around 90 percent of MCM’s $400 million in annual sales come from Asia, the bulk still generated in Korea, where there are more than 85 MCM stores.
Now Kim is ready to conquer China. MCM already has retail spaces in Shanghai and Beijing. Soon one will open in Tianjin, and there are plans to open 30 additional locations in greater China this year alone. Over the next five years, Kim says she hopes to have 100 stores in the market and grow sales to $1 billion annually, up to 90 percent of which she says she projects will come from Asia.
But whether MCM takes off in China may largely depend on whether Mainland consumers are drawn to the brand because they perceive it as being German or because they perceive it as being Korean.
“We are a German brand very clearly,” Kim said. “Our heritage is from Munich, and we carry a German flag and also we have a German creative director, and we still produce in Germany and also Italy and Korea. We will continuously be featured as a German brand.”
Yet the influence of Korean culture, on everything from fashion to music to celebrities, cannot be underestimated across Asia. From Beijing to Bangkok, young people fawn over Korean boy bands and even undergo cosmetic surgery to try to look more Korean.
While Chinese certainly buy luxury brands because of their European heritage, MCM’s Korean connection may be one of its biggest assets, particularly since, according to Kim, there will be very few, if any, new stores opened in the West anymore.
“We are not going to really burn a lot of cash out there [in the West], let’s put it that way,” she said. “Our main focus will be Asia and maybe our next main focus will be Latin America, Russia and the Middle East.”
Designs also are becoming more Asia-centric. Accessories with MCM’s signature logo will remain a staple for Asian business, particularly in China where nouveau riche obsessively buy logo-centric luxury products.
Lines unveiled exclusively for the new store include an evening bag collection featuring clutches with Swarovski Elements as well as a line of goatskin bags with mink charms.
“I know how really sophisticated ladies carry themselves, and I want to do the same with that quality and sophistication. That is our aim, pushing our brand more and more, higher and higher,” Kim said.
The limited edition Rain for MCM Collection was also unveiled. It features messenger bags and backpacks with Rain’s signature studded onto the croco-embossed leather bags.
“Of course a lot of things are driven through Asia because that is where [MCM] is really successful,” said Michalsky, who also attended the opening. “But they are also valid for Europe.”
Moving forward, Kim and Michalsky said MCM would focus on functional, funky luxury for younger, tech-savvy generations who are turned off by more conventional notions of high-end style.
“As long as we are always open to new cultures, new things to learn about, I think that is where culture is going in the future,” Kim said. “It is very globalized. No East and West. No young and old. That is where MCM wants to stand.”