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High-profile luxury brands from Europe and the US have for years relied on little-known companies such as DKSH, Fairton, Xinyu Hengdeli and Peace Mark to get their products into the hands of Asian consumers.
Now these distributors are seeking to move up the value chain by acquiring brands themselves, rather than just distribution rights. They aim to capture a bigger slice of the rapidly expanding Asian luxury market at a time when the economic downturn is expected to hit the sector's sales in Europe and the US.
Luxury goods sales in Asia excluding Japan are expected to grow by about 20 per cent this year, compared with a growth rate of 4-5 per cent for Europe and the US, according to Thomas Chauvet, a Citigroup analyst.
Chasing that growth is China Dongxiang, the sportswear company that was originally a franchisee of Italian sportswear brand Kappa in China, and which has acquired ownership rights to the brand in China and Japan. Peace Mark, Asia's biggest watch retailer, bought Swiss watch brand Milus.
Xinyu Hengdeli, the biggest luxury watch retailer in China, bought a 90 per cent stake in Italian hand-crafted pen brand Omas from LVMH in October for $3 million.
Others are on the prowl. Fairton, one of the largest and oldest agents and distributor of brands such as MaxMara and Jean Paul Gaultier in China, recently appointed investment banks to help it make its first brand acquisition, says Eric Ng, director.
Privately-held DKSH, which earns $8.8 billion in revenues annually from sourcing, distribution, marketing and other outsourcing services, is also looking to acquire luxury brands, says Joerg Wolle, chief executive. While DKSH is a 140-year-old Swiss company, it derives 95 per cent of its sales from Asia.
- Financial Times
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