Cultural Revolution: A Chinese Functionary Creates His Own Luxury Label
Countless products are manufactured in China and then sold in the West under European or U.S. brand names. A new clothing venture is looking to turn that model inside out, hiring Italian tailors to make top-end suits for sale in China – under a Chinese br
SORAGNA - Two things made Umberto Angeloni realize that his client wasn't kidding around. For one thing, Jie Zhang had Angeloni's company thoroughly researched and was apparently impressed by what he found: he placed an initial order for 100 hand-made suits.
The other thing was that the People's Daily, the Chinese Communist Party paper, carried the story prominently, as did State television. Angeloni was left with the impression that the man is not only serious, but also has the support of the Party for the billion-euro state company he heads and for his plan to create a Chinese luxury label in men's fashion. Angeloni's northern Italian company was to make the suits.
Many Chinese in the People's Republic buy clothes that have fantasy Italian labels. Some buy up Italian clothing companies that aren't doing so well. And there are of course high-end Italian tailors aiming to grab a slice of the Chinese market – a vast market, already accounting for 20% of worldwide luxury product sales and growing faster than any other market. After all, the number of Chinese millionaires has reached three million – and they want nice things.
But what Jie Zhang was doing was different from all that. He was venturing into uncharted territory by creating an original Chinese label for clothing made in Italy. So Angeloni's team produced and delivered the suits, and Angeloni – CEO and majority shareholder in the men's fashion company Caruso in Soragna, near Parma in Italy – sat back, awaiting further developments with "great interest."
Angeloni has been in the high-end garment trade for a long time, and he follows the rules that have always stood him in good stead when it comes to dealing with new business partners: "We don't do joint ventures. We produce, they pay. But the way we're set up doesn't exclude something much bigger. To start out it will be small and local, but it could become a success all over China."
The name of the brand is SheJi-Sorgere, a combination of Mandarin and Italian words. And it has real potential for growth. "Sorgere is made in Italy, but it's not an ostensibly Italian brand. It's a Chinese brand," Angeloni says. The company is in no hurry to expand, but already has a target clientele: "bankers and politicians," says Yingjie Zahn.
Yingjie Zhan is the general manager of China Garments, a company that manufactures uniforms and turns over the equivalent of 260 million euros. It belongs to the Chinese state holding Hengtian Group, and it is the company for which Caruso will be producing the SheJi-Sorgere brand. "We're aiming for the top of the pyramid – men who stand out through their education and success, gentlemen who know was real luxury is," she says.
Turning the production stream on its head
Umberto Angeloni says he feels like the lucky one among Italy's top-end tailors, for whom business hasn't been that great since the bankruptcy of Lehman Brothers. His own company made some 61 million euros in turnover last year. In his opinion, what is happening now is not a question of a bit of renewed growth but a sign of something much bigger and previously unimaginable: a reversal of global production streams.
Italian textile manufacturers used to be afraid of the cheap labor in China, he says. Analysts and economists were prophesying their imminent doom. "But now the exact opposite is happening. The Chinese are coming to us, spending a lot of money, ordering suits made of the best materials, seeking the best of the best in terms of tailoring skills," says Angeloni. "It's a revolution that I don't think most people have cottoned on to yet."
And it's one he played a role in. In October, Angeloni attended a congress in Beijing and told Chinese trade customers: "Your client is now a mature, developed man not about to be taken in as far as quality goes or be easily impressed by fancy names. You make enough cheap stuff, and by now your customers have entirely different expectations. Create a Chinese brand, but do it right, make it a good one."
He got the call not long after that. One hundred suits to be delivered by Dec. 20 for a private show. Could he handle it? No problem. Angeloni's team got to work: narrow-cut suits, black tie evening wear cut from silk jacquard – all with logos discernible only to the connoisseur: on the sides of buttons. This was followed by an order for 300 suits for a March fashion show in Beijing.
Zhang, head of the Holding and creator of the label, had a simple Mao jacket made for himself which he then sent to a Chinese firm of craftsmen that used to cater to the emperor "s court to have the inside richly embroidered. "Nationalists who want clothes made in Italy, Socialists who spend out for luxury others can't see – it may be hard for us to grasp, but it's not contradictory in China," says Angeloni.
The Italian clothier is used to discretion. While Caruso does produce a collection under its own name, it also produces men's clothing for labels at the topmost end of the price scale that give nothing more away about their producer than a "made in Italy" label.
It's an open secret in the sector that Caruso is producing the new men's line for Berluti, and that some 600 of its employees work on producing brands from Lanvin to Dior. The boss, however, has nothing to say about all of that. He has no qualms, however, speaking at great length on the subject of his new Chinese client and business partner, about whom he raves. Angeloni sees Jie Zhang as the rescuer of the "made in Italy" label and his business model as the future of the luxury market.
"The consumer wants to know where something comes from and how it's made," says Angeloni. "A brand label alone is not enough."
A Mao suit made in Soragna
Angeloni says that he can adjust to the fact that rules in the future may well look very different from what they do today. The negotiations over SheJi-Sorgere so far have not been exactly simple. "The man speaks only Chinese, and he starts the answer to every question you ask him with ‘Confucius say" ..."
Zhang once invited Angeloni to a very sophisticated restaurant in Beijing where he had arranged for a multicultural meal to be served: Dom Pérignon, followed by an Italian wine with Pata Negra ham from Spain. This was followed by a 200-euro portion of fish, whose virtues Angeloni failed to appreciate because it was full of bones. "Then they brought the bones back to the kitchen, and not long after that they came back to the table as crackers."
But, Angeloni says, he went on bravely eating. To be successful in China is the dream of every producer of luxury merchandise. Which is why the French are there as well, knocking on doors along with the Italians. According to Claudia d'Arpizio, a partner in the global management consulting firm Bain & Company, luxury goods in China will turn over an estimated 16 billion euros this year. D'Arpizio produces a study of the global luxury market every year.
The new edition came out this week, and shows up to 22% growth in China, which is to say more than in any other economic area in the world and 10 times more than in Europe. But d'Arpizio also says that the figures of the big luxury firms active in China are flattening out: she sees the "first faint signs of saturation."
These may have to do with the government-ordered slowdown in growth, but Angeloni has a further explanation: "Many luxury brands in China just want to milk the cow. But China doesn't want to be milked anymore." In other words, the newly rich customers in the People's Republic have cottoned on to just how dependent the fashion industry has become on them.
So little by little, just the way fashion itself is created, the future for the moneyed elite may not be about hunting down western status symbols but – this is what Angeloni hopes – a Mao suit made in Soragna.
A certain officially-stoked mistrust of western brands could help that along, he believes. Since last year, certain terms are taboo in advertising in Beijing – "upscale," "exclusive," "luxury," are not allowed to be used in association with "foreign cult products." The same holds true in other big Chinese cities.
SheJi-Sorgere hasn't gotten as far as advertising yet. Nor are there any stores, just a workshop for private customers at the China Garments headquarters. Since the order for the March show there have been no further large orders.
"But we created some suits for clients who know our business partner," says Angeloni, adding that they heard about Caruso via word of mouth. The next step that's been agreed on is that the Chinese are going to send a tailor to Soragna so he can learn how clients are measured for suits.
The slow tempo is part of the business model, meant to suggest exclusivity as opposed to instant availability. This "fine art of luxury" must be carefully developed, Angeloni says, step by step, unaccompanied by some noisy campaign.
"But in the second half, China Garments should be able to tell us where the first shop will be," he says. Curiosity coupled with a last hint of uncertainty about his new partner seem to be making Angeloni just a tad bit impatient.
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