Views∣ Has Chinese Fashion Brands Triggered the Course of Internationalization?

By Christine Tsui

Translated by Rachel Wang

Much news of Chinese fashion brands recently has been covered recently, drawing much attention of the masses.

Partially, the coverage mentions many Chinese brands have acquired foreign fashon brands. For instance, Ellassay purchased part of Vivienne Tam shares; Ideal Group and Ochirly (Trendy Group) brought several foreign fashion brands. Actually almost all the listed fashion companies have either acquired brands abroad or prepared to buy one in Europe.

The acquisitions are sparked under some certain social environment elements, especially, in my point of view, the exchange rates.

The purchases would be much cheap at present, for the pound and US dollar are both depreciating and the US and European retail markets are in the valley when the Chinese one is thriving, so the merger case increased a lot.

In my opinion, it is the moment for Chinese brands following the internationalization routine. Except for the exchange rate and market elements, Chinese brands have developed for over 30 years, standing on a solid foundation to expand international business. However, the external environment indeed supplies the Chinese companies the chance, but it is not a guarantee for a smooth movement. So I bet the peak for internationalization surging after the next decade instead of now. For now, it’s just a solid start.

Why?

For one thing, there are few truly well-known brands.

Although Chinese merchants have held the shares of Karl Lagerfeld and Vivienne Tam, the corporate controls are limited in the proportion to their part of shares. Chinese brands usually do not have good genes, so it still takes times for to grow up.

For another thing, Chinese brands risk the shortage in their talent pools.

With little experience of internalization, Chinese companies need a whole generation to store international management teams. After the mergers, as a first step, it’s unlikely for Chinese personnel to stay away from management, which is a necessary result out of human natures. Meanwhile, the acquired companies must had suffered from the previous management mechanisms, or at least had disappointed the investors, which makes the acquired firms eager for new managements.

So I know Chinese people are bound to engage in the business, soon or later, which is only a matter of time. Nevertheless, to employ foreigners requires costs, the same as to the foreigners who started joint ventures in China many years before.

Setting aside the potential market gaps between the east and west, the inevitable conflicts would lie in the discrepancies of languages, cultures, and even laws. It would be a long progress to overcome the various labor laws, power of labor unions and misunderstanding of the local customers.

Hence, I believe the next ten years is not the period for Chinese brands to compete on the international stages, but to learn.

But in the perspective of employment, what is the future for Chinese professional managers. As I always stress, the most ideal platforms for them are the local companies instead of the foreign ones.

Many returned students nowadays still wish a position in the foreign companies, which is a mistake, but a hard task. In a large number, the returnees are not competitive enough, and most foreign brands hold compressed budgets.

Many of the local enterprises actually are abundant enough to recruit, but they are always considered to be lagging in management under the shadows of family business. To be frankly, it is these companies that have the most promising futures. In the coming internalization, more and more staffs of them would be dispatched overseas to study, which would form a peak 10 years later.

So if you are a this-year’s-graduate, or a fresh employee, I hope you can seize the precious opportunity, no matter in the view of career or personal growth.

In a word, the reserve of talent is an essential element for the internationalization process of Chinese brands indeed.

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