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Cardin takeover poses challenges for Chinese firms

By Li Jiabao and Elgin Toh (China Daily)
Updated: 2009-07-02 08:04

French designer Pierre Cardin along with children at the Tian'anmen Square in Beijing in this file photo. Chinese firms have evinced interest in taking over the luxury brand. [Wang Yao]

The ongoing attempt by Chinese companies to take over the licenses of the world-renowned Pierre Cardin brand is a sign of the growing strength of Chinese apparel firms, say analysts.

But analysts are skeptical whether the Chinese firms have the management skills to ensure the long-term success of a brand that has become too "scattered", due to the parceling out of rights to too many different agents.

Meanwhile, a survey on Sina.com found that 78.2 percent of Chinese consumers would not buy products by the label after the takeover.

News first broke this week that a number of Chinese companies - including Jiansheng Trading from Guangdong and Aokang Group from Zhejiang - were in talks with Pierre Cardin to buy the French fashion label's 32 licenses in China for 200 million euros.

"The bidding by the Chinese firms is a sign of maturity in China's apparel industry," said Wang Zhuo, secretary-general of China National Garment Association. "They possess the prowess to accomplish the takeover, so I am not surprised at hearing the news."

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But other analysts expressed doubts over the prospects of the label after the takeover.

"The brand's current business model in China is too scattered," said Wang Hongjun, an agent of Pierre Cardin women's apparel in China.

Too many agents have been authorized to develop various products under the brand, said Wang, which "limits the development of each product". Whether the takeover will solve this problem remains to be seen, she told China Daily.

Another analyst, Peter Lu, founder of research firm China IntelliConsulting, said "the buying of the permanent use of the brand is worthy", but added that the "greatest challenge is the operation and management of it".

He added that the Chinese companies might not have the suitable business model and necessary management skills to ensure the brand's long-term success.

Meanwhile, consumers have added their voice to the debate.

Responding to an online survey by Sina.com, 66.3 percent of netizens said they were against the takeover. Nearly, 78.2 percent said they would not buy clothes made by Pierre Cardin after the takeover.

Yu Li, a 25-year-old secretary from Shanghai, said she was looking for imported designs and brands, and hence would not buy from the "new" Pierre Cardin.

"Once the brand is taken over by Chinese companies, it will feel like its class has dropped by one level. If I'm going to spend the same money, why not go for other famous brands?"

But some consumers were more willing to give the Chinese companies a chance. "Foreign brands are already manufactured from Chinese factories anyway, so there should be no difference after the takeover" said Lu Tao, 24. "I'm willing to give it a try."

On Monday, the 87-year-old designer Pierre Cardin - who single-handedly created and developed the firm - confirmed rumors about the sale in a telephone interview with AFP.

"I don't have to sell, it's a question of age. I'm going to sell Maxim's, I'm going to sell Maxim's textile, I'm going to sell everything I own," he said, referring to the other brands under the Pierre Cardin Group. "Given that China offered to buy the brand, I'm starting with China."

Pierre Cardin's Beijing office also revealed that companies already acting as agents for the brand would be given priority in the takeover negotiations, but declined to provide any further details.

Pierre Cardin was the first Western designer to enter the Chinese market after the reform and opening-up, and held his first fashion show here in 1979.

Cardin's worldwide fashion empire has an estimated annual turnover of six billion euros.