Hong Kong clothing entrepreneurs, who created household brands like Bossini, G2000 and Giordano in the 1980s, may have limited room to further grow their business at home – unless they look for partnerships in mainland China as a springboard to international market.
That is the view of Bosco Law Ching-kit, who teamed up with Chinese gymnastic icon Li Ning to take control of Hong Kong-listed Bossini International Holdings earlier this year in an effort to revive the family-owned business after losses deepened due to a slump in tourist arrivals and a recession.
“When you think about expanding into the international market, you have to think about China. It is the biggest market in the world, and the one that will grow the most in the future,” he said in an interview. “If you position yourself as a local brand, then you only need to focus on the Hong Kong market. You can survive on your own, but don’t expect to become the next Uniqlo.”
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Uniqlo is synonymous with Fast Retailing Co, Asia’s largest apparel manufacturer with 2.3 trillion yen (US$21.7 billion) of sales in 2019. It was founded by Japan’s richest billionaire Tadashi Yanai in the 1960s, some two decades ahead of some of Hong Kong’s most-recognised home-grown labels in the industry.
Law and Viva China formed a 20:80 joint venture company which bought a 66.6 per cent stake in Bossini from his uncle in July in a deal that valued the Hong Kong company at HK$70 million . Bossini was founded by his late grandfather Law Ting-pong in 1987.
The local textile industry has not been spared of steep losses following the Covid-19 outbreak this year. An index tracking the sector slumped 49 per cent in the first eight months this year, according to government statistics. In wearing apparel, sales crashed to HK$17 billion in the period versus HK$33.4 billion a year earlier.
Bossini recorded a net loss of HK$367.7 million for the 12 months to June 2020. It suffered a combined HK$168 million of losses in the two preceding financial years, prompting efforts to revamp the business.
“My uncle asked if I knew how to run the business,” Law said, who separately owns garment manufacturing and property investment in the city. “I didn’t want the brand to die, but I didn’t have the experience to run the brand myself. I started looking for new investors. That is how we lined up with Li Ning.”
His decision to go with Li Ning underscores the importance of having the right partner to scale new heights in the mainland market. Bossini only derived 20 per cent of its annual 2019 sales from China, compared with 64 per cent from Hong Kong and Macau.
Bossini opened its first retail outlet in mainland China in 1993, and had 154 directly-managed stores there out of a total of 209 as of June 30. The group had a total of 982 stores, including franchised outlets, across 28 countries and regions.
Viva China, which is involved in sports business and lifestyle consumables, owns a 13.4 per cent stake in Hong Kong-listed Li Ning Company and a 10 per cent stake in Shanghai Double Happiness. The former Olympic gymnastic star is already involved in plans to restructure the Bossini brand, Law said, with initial efforts focused on “trying to save the business.”
The first step for Bossini’s new management would be to streamline its operations, he said. It would keep its presence in its existing markets as well as continue to grow its online sales.
Bossini’s future path may be in co-branding with sporting events, given what Viva China has done in the recent past. In June last year, it acquired apparel and footwear brand LNG and co-branded it with e-sports club in League of Legends online game competitions, a company filing shows.
Other Hong Kong brands have also been looking for partners to grow their markets in mainland China. One such example is A Man Hing Cheong, a high-end tailor founded in 1898.
The firm is eyeing an expansion in China via partnerships, as a growing number of suit lovers from mainland have flocked to old traditional tailor shops in the city in recent years, said director Fred Kan, who is the son of the business owner.
The idea to leverage the mainland Chinese market has been further fuelled after the suit retailer saw business shrink by about half this year due to the city’s worst economic recession and the global travel restrictions due to the Covid-19 pandemic.
“We all know that China’s economy has recovered quickly, and that is the market that we should head to,” said Kan.
More from South China Morning Post:
- Iconic Hong Kong clothing brand Bossini’s share price doubles as investors back gymnastics star Li Ning to revive its flagging fortunes
- Olympic gymnast Li Ning’s Viva China buys Hong Kong’s iconic clothing chain Bossini at massive discount
- Li Ning’s first-half profit beats estimates amid shift to online sales but warns of ‘continued uncertainty’ as Covid-19 lingers
- Li Ning says 2020 will be more profitable, even as coronavirus pandemic defers Tokyo Olympics and keeps shoppers away
This article ‘Don’t expect to become the next Uniqlo’ without China-focused expansion strategies, Bossini says first appeared on South China Morning Post