Yesterday, French luxury goods conglomerate PPR announced that it has purchased a majority stake in Hong Kong-based fine jewelry and watches label Qeelin. The brand currently operates 14 boutiques worldwide, with 11 located in Hong Kong and China. PPR’s CEO Francois-Henri Pinault says that Qeelin “shows strong potential in China and beyond” and plans to accelerate the brand’s expansion with more store openings. The jewelry company is the only Chinese label in PPR’s portfolio but the conglomerate says that it will continue to look for more investment opportunities in the market. In recent years, other luxury goods companies such as Richemont, Hermès, and LVMH have also invested in Chinese luxury brands.
Affluent Chinese consumers have traditionally favored Western labels but that may be slowly changing as their tastes evolve. In 2010, Hermès created a Chinese lifestyle label, Shang Xia, which sells apparel, jewelry and furniture inspired by the country’s heritage and culture. Patrick Thomas, CEO of Hermès International, says that the company will invest “tens of millions of Euros” into developing Shang Xia and even expects it eventually to overtake Hermès sales in China. Earlier this year, LVMH paid $200 million for a 10% stake in Chinese high-street label Ochirly, it’s first investment in a mainland Chinese fashion company. In 2007, LVMH also acquired Chinese distillery Wenjun.
Investors in Chinese companies are not trying to change them or Westernize them — rather they expect the “Chinese DNA” of the brands to be the main appeal for the domestic market. More than half of Qeelin’s clients are mainland Chinese and Pinault says that he expects the brand to do well because it “speaks more to a Chinese clientele, given that it uses the codes and tradition of that culture.” Pinault may be right, if he expects Qeelin to perform anything like Richemont’s Shanghai Tang. The Hong Kong-based luxury clothing label, which is also heavily inspired by traditional Chinese aesthetics, sees its Mainland customers vastly outspending the global average.