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China’s Own Mega League: Fosun Fashion Group Ties With Baozun and Activation

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LONDON – It’s a first in the Chinese fashion industry – Fosun Fashion Group, the Chinese owner of Lanvin, Wolford, St. John, and Caruso, has formed a strategic alliance with e-commerce firm Baozun, Activation Group and other industry players to strengthen its ability to capture China’s fast-growing demand for luxury brands.

As a part of the partnership, Baozun and Activation will both become minority shareholders in Fosun Fashion Group, and the preferred partners for all brands in FFG’s portfolio, as well as in exploring new business models and solutions for brand expansion.

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Sources told WWD that it only took a few months of talks for the three to agree on the partnership, and several projects have been lined up for the rest of 2021.

For example, Fosun Fashion Group last week unveiled “Bond on Bund,” a fashion ecosystem-building initiative in partnership with Activation and Shui On Land’s Xintiandi retail concept to connect local creatives with business leaders and incubate new projects. Activation both organized and delivered the production of the event.

Fosun’s unprecedented alliance in China is also a sign of further consolidation in the luxury sector that’s been accelerated by the pandemic. Traditional competitors are now joining hands to protect their shared interests.

Last November, Farfetch inked a mega partnership deal with Alibaba and Compagnie Financiere Richemont. Kering’s Pinault family is also putting funds into the new luxury retail venture that’s targeting China’s online luxury market.

After the acquisition of Tiffany, LVMH Moët Hennessy Louis Vuitton recently upped its stake in Tod’s to 10 percent, and multiple sources said private equity fund L Catterton, which is partially owned by Bernard Arnault, has expressed interest in acquiring a stake in the family-owned Italian brand Etro.

Also last week, LVMH, Prada Group, and Richemont joined forces in the LVMH-backed Aura Blockchain Consortium, which will promote the use of a single blockchain solution open to all luxury brands worldwide.

Faced with tougher competitive barriers, Fosun said the new consortium aims to serve the global luxury market by developing an ecosystem of its own to promote additional operational value in China and increase its leverage in future brand acquisition negotiations.

In light of the ongoing global pandemic, the group is trying to get as much help as it can get to make its fashion business work.

Joann Cheng, the chairwoman of Fosun Fashion Group, previously told WWD that it’s been “a challenge” during the pandemic, as its brands were facing widespread production delays, order cancellations from multiple wholesalers, not to mention a general plunge in retail sales.

Multiple sources told WWD that Fosun’s crown jewel Lanvin is suffering big losses and mulling substantial layoffs in Paris, even as sources said that the brand’s Chinese Valentine’s Day May 20 capsule sold out online in the country within hours. Lanvin did not respond to a request for comment at press time.

Founded in 2007, Baozun is a Hong Kong and Nasdaq dual-listed company that has grown significantly over the years with China’s booming e-commerce industry. It is one of a dozen “six stars” service partners, rated by Tmall.

Baozun set a new record last Singles’ Day with a total order value of 16.50 billion renminbi, or $2.55 billion, a 54.8 percent jump year-over-year, from its wide range of international clients, such as Farfetch, Nike, Gucci, Burberry, Coach, Zara, Maison Kitsune and Victoria Beckham Beauty, as well as Microsoft, Adobe, Tencent, Nintendo, Bayer and Burger King.

The Hong Kong-listed Activation is one of China’s most prominent marketing solutions providers that serves a wide range of international luxury brands. Since 2016, the group has also tapped into the sports and entertainment intellectual property development sector.

Fosun’s Cheng said: “As the global landscape of e-commerce and digitalization changes, there is no doubt that it is changing faster in China than in any other market. We made a strategic decision to form this consortium through a capital transaction so that we can leverage the operational experience our partners have built over the years.”

“We believe this strategic alliance is the first step in a deeper and broader long-term relationship with Baozun, Activation and others, while continuing a successful journey with our brand partners in China,” she added.

Vincent Qiu, chairman and chief executive officer of Baozun, said the alliance helps to extend “our value chain in the luxury segment, taking advantage of Fosun Fashion Group’s strong understanding of the brands, and track record in brand building.”

“China is on its way to becoming the main growth driver of the global luxury market. We believe our unique position in the sector will bring added value to our brand partners, while at the same time contributing in a healthy and sustainable way to our top and bottom lines within the next three to five years,” he added.

Activation’s joint-chairman and CEO Steve Lau Kam Yiu said the group’s “rich experience and expertise in providing comprehensive sales and marketing solutions can add value and create more business opportunities for this strategic alliance and assist brands under the Fosun Fashion Group to successfully penetrate the China market and eventually become a leader in the fashion trend.”

Fosun Fashion Group is the fashion arm of the Chinese multinational conglomerate Fosun International. In 2018, the group entered the luxury game by acquiring a majority stake in Lanvin from Shaw-Lan Wang, and appointed Bruno Sialelli artistic director in 2019.

Under FFG’s management, Lanvin has been pivoting toward a new direction and doubling down on China expansion. The brand hired Shanghai-based Calvin Luo as a consultant in late 2020 to work with the Paris-based design team on merchandising and product development as well as market and cultural insights.

Related:

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Farfetch and Gucci’s China E-commerce Partner Baozun Buys Competitor

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