CHINA. Chinese textile and garment producer Shandong Ruyi Group has been an active player in fashion industry mergers and acquisitions in recent years, says Jing Daily (partner in an information-sharing alliance with The Moodie Davitt Report).

Its acquisition of luxury brand Bally, which was completed on 9 February, represents a vital piece of the puzzle in its strategy to build a luxury group in China.

Jing Daily says Bally is “an important piece of the puzzle” for Shandong Ruyi

The transaction details have not been disclosed publicly, but an insider told Bloomberg the price paid was around US$700 million. Bally was officially put up for sale in August 2017 by its parent company JAB Holding Co. and attracted many interested bidders, especially from China. In addition to Shandong Ruyi, Fosun Group, menswear brand Septwolves, and Hemei Group were all interested bidders, according to Jing Daily.

The main reason for this is because of how established Bally is in China. Bally entered the Chinese market in 1986, and now has about 60 stores there. According to Bally CEO Frédéric de Narp, Chinese consumers are the most important buyers of Bally’s products.

Bally has maintained double-digit growth in China since the beginning and, in 2016, Chinese customers contributed over half of the brand’s sales. In June last year, Bally opened a Chinese e-commerce site and introduced celebrity Tiffany Tang as its Asia Pacific brand ambassador.

Shandong Ruyi Chairman Qiu Yafu called Bally “one of the most important shoe and leather goods brands”. He said that Bally would complement Ruyi’s existing resources in terms of both brand culture and product offerings.

In 2016, Ruyi completed the acquisition of SMCP, which owns the brands Sandro, Maje, and Claudie Pierlot, for €1.3 billion. In 2016, SMCP’s sales increased +16% to €786 million, and the company was listed on the Paris stock exchange in October 2017.

Ruyi also owns British brand Aquascutum, and has bought a controlling stake in Hong Kong menswear group Trinity, the owner of bespoke suit makers Gieves & Hawkes.

Jing Daily said that when asked whether Ruyi was aiming to build or acquire any Chinese luxury brands, Qiu Yafu was cautiously optimistic.

“It’s hard to build a high-end fashion brand in the short-term,” Qiu Yafu told Chinese media. “The Chinese garment industry is still falling behind Western companies in both innovation and design capacity. Without 30-50 years of development, it’s impossible to achieve such a task.”

He believes that Chinese consumers are not yet ready for a Chinese luxury brand, but hopes that “through cooperation with foreign teams, we will slowly accumulate the power to develop our own brand in China”.

Click here to read the full article on Jing Daily.

*This article was originally published by the much-respected JING DAILY, a Moodie Davitt Report content partner.