The Hong Kong company that bought global label Guy Laroche last week says it plans to use the prestigious French brand to spearhead its push into the yet untapped fashion riches of China.
YGM Trading Ltd, one of Asia's biggest textile success stories but a relative unknown elsewhere, caused a stir when it moved in on Paris-based Guy Laroche in a 17 million euros (20.7 million US dollars) deal.
The acquisition brought to world attention a company that had quietly built up a trading empire almost from scratch: it was begun with just 20 sewing machines in one of Hong Kong's multitude of garment factories when it was spun off from the well-respected Yangtzekiang Garment Manufacturing (YGM) in 1988.
Now listed on the Hong Kong Stock Exchange, it employs about 2,500 people around the world and made a net profit of 171.19 million HK dollars (21.9 million US) in the year to March 2004.
From its network of more than 300 shops and counters world-wide it retails and wholesales world-renowned apparel and accessory brands such as Michel Rene, Aquascutum and Ashworth.
The Laroche deal was made with one eye on China. "With a population of 1.3 billion and the largest GDP (gross domestic product) growth in the world, there's a massive potential in China," said Sam Chan, managing director of YGM Trading. China accounts for half of YGM's 700 million HK dollars (90 million US dollars) revenue.
"The Chinese people like Western brands, Western clothing. That is a fact. Guy Laroche is an upmarket, prestigious French brand which will certainly appeal to the affluent crowd in China," Chan told AFP.
Chan said the company has targeted a doubling of growth in the next five years and is planning to open more than 100 stores in China in the next three to four years. He believes Guy Laroche, which also owns the 'Mic Mac' brand, has the global star quality to drive YGM's China ambitions. Founded in 1957 by Laroche himself, the label has been helmed by such designers as Alber Elbaz, Sophie Sitbon and, most recently, Laetitia Hecht.
To revitalise the brand, YGM has just taken on new designer Herve Leroux, who had worked for Karl Lagerfeld at both Fendi and Chanel before launching his own label in 1985. YGM will splash one million euros (1.2 million US dollars) in a new flagship store on Paris' prestigious Rue Francois the First.
The designer, known for his glamorous evening wear, will present his first collection in October during spring-summer 2005 ready-to-wear week in Paris.
Surprisingly, the Laroche deal is YGM's first purchase since it bought US leisure apparel maker Hang Ten in 1995.
Papers were signed after only three months of negotiations.
"We'd looked at a lot of brands but they were not always available. Sometimes we negotiated for a deal for one year or two only to fail," said Chan. Chan expects the new deal to bring in further growth for the company as it pushes for sales in its target markets in Hong Kong, Macau, Taiwan and China.
YGM Trading operates a garment manufacturing plant in Dongguan, China but outsourcers most of their garment productions all around the world.