Interpretation Of Lu Qiang, The Head Of The Rich Guest House: Acquisition Of Luxury Brands To Break Out

Lu Qiang, called "David Lu", One born with a silver spoon in one's mouth Born to be a shopping maniac. After the college entrance examination, he left school and followed Wong Kwong Yu into the department store. He worked for 5 companies in Shanghai Hualian Supermarket and Hongkong land Plaza. Luxury goods Buyers are spanformed into China's luxury market. Pan gold Customer. He founded Shanghai Fu se Si Industrial Co., Ltd. in 2003, engaged in foreign brand agency business, and created four Oteri J formats in Shanghai and Suzhou. Discount Store 。

If Lu Qiang's resume is only there, he and his rich guest will not enter our field of vision. What is really noticeable is his attempt to acquire the global luxury goods giant Prada (Prada).

This year's acquisition failed in July of this year, but Lu Qiang's speech on the matter is still idle. Conversely, he would be happy to talk about the introduction of the new German supermarket chains "Babyone" and the upcoming "entertainment net".

In fact, bidding for Prada shows the logic of "Lu Qiang" seeking breakthroughs, and they try to seek the right to speak in the Chinese luxury market through various means. The eventual failure reflects the double hot days of China's luxury market: a good consumer market and a great banquet in the agent market.

Young buyers

Lu Qiang is "brand control". "Every time I go on a business trip abroad, I want to buy a box of famous brand things."

This time, his appetite is a whole Prada. In August 2009, news came out that Prada was looking for "partners" because of its liabilities. Thereafter, news about Lu Qiang's participation in bidding was reported to the newspapers from time to time. In July 2010, media reports said Lu Qiang would sell the existing Prada13% stake because he could not get the controlling stake of Prada. However, Prada responded that Lu Qiang had never received any shares in Prada13%.

"I will explain it to the public in a while." Lu Qiang said that the general situation is that he invested 20 million euros to acquire a business consulting company in Italy, and through this company and Prada's lending bank, he negotiated to buy Prada's stake. This share accounts for about 30% of Prada's total share capital. At the same time, Italian company has bought about 13% of Prada's shares through other channels. But at this point, the loan bank renewed the agreement with Prada and revoked the agreement with Lu Qiang and lost him a sum of money.

According to the news of July 13th, Prada is actively seeking a $350 million loan and plans to go public. Lu Qiang also said that because the French cosmetics brand L'OCCITANE was successfully listed in Hongkong in May 7th, Hongkong fund company intends to promote Prada listing in Hong Kong.

Because there are no more arguments in Prada, many people in the industry say they can't see the link between Lu Qiang and Prada. But they believe that whether Lu Qiang has won 13% of the shares is not the most critical one. What is most worth studying is the acquisition of foreign luxury brands by Chinese enterprises.

This is obviously not an isolated case. In 2009, there was Pierre Cardin's clever "one daughter and two marriages". After several twists and turns, eventually Shanghai Zhongyi import and Export Co., Ltd. acquired the ownership of trademarks and Chinese character trademarks of Pierre Cardin Latin alphabet in Greater China, while the Limited by Share Ltd, founded by several Wenzhou businessmen based on Sun Xiaofei, formally acquired the right to use some trademarks such as leather goods, knitted garments and leather shoes in Pierre Cardin Greater China. Although Pierre Cardin has long been out of the luxury category due to business problems, he still has a large brand influence in many parts of China. "They all hope to re pack Pierre Cardan in China through acquisitions. But both of them are doing Pierre Cardan, and there are bound to be overlapping areas. " Gao Jianfeng, general manager of Boge consulting.

"People have been in business for more than 100 years, fighting against them, and Chinese enterprises are still very tender." When Lu Qiang commented on Pierre Cardin's incident, he also laughed at himself. "I failed this time, and I lacked experience."

Lu Qiang's lack of experience means underestimating his opponent and not keeping the media secret. He said that there were overseas Chinese competing for Prada, and when the domestic media found him, he had to admit it. "Foreign enterprises hope to arouse dissatisfaction with shareholders or related parties and then raise their prices."

But in Gao Jianfeng's view, it is not so simple as "lack of experience". In his view, first of all, Prada is still in the hands of the family. Selling shares is not an established strategy, but an emergency. Secondly, this round of early recovery of the luxury goods industry is not very serious, especially in the strong growth of emerging markets, which gives Prada great confidence and makes the power of equity spanfer greatly reduced. In addition, Lu Qiang and its rich guest holdings obviously do not have the experience of brand owners' trust in the field of luxury goods. {page_break}

The president of Italy fashion president also said that the current Prada controller is the founder's granddaughter Miuccia Prada and her husband, who are deeply interested in the brand. Even if they want to sell part of their equity, they also attach great importance to whether the purchaser can help Prada develop better. This is different from those brands that have changed over the years.

It is worth mentioning that Geely has successfully acquired Volvo and recently acquired 7.1% of the world's famous tourism resort enterprise "Mediterranean club group", thus becoming one of the largest strategic investors of the company. "The acquisition of high-end brand shares is not unattainable. From the current situation, many luxury companies will not deliberately avoid Chinese buyers." Grim.

However, there is still controversy about the impact of Chinese buyers on the value of luxury brands. A serious analysis of the president of Italy fashion is that there is another possibility that the Prada is being negotiated and is not suitable for selling to the Chinese people. After all, China's luxury market is still very low. According to statistics from the global luxury report, 86% of Chinese customers are reluctant to continue buying or even return products because of the word "Made In China".

rush out through the line of besiegers

One thing common to Prada and Pierre Cardin is that most of the bidders are Chinese agents of the luxury brand. From another point of view, this means they are trying to "break through".

As early as the end of 2008, Lu Qiang was invited to communicate by luxury magnate Armani, which is almost a kind of no objection consultation. Armani will directly run the company and will withdraw all the agency rights in Shanghai, Beijing and other places. Of course, it also includes Armani's dealership for Oteri J (OUT LETS, brand direct shopping center), but it will consider giving some financial compensation to agents.

To the delight of luxury companies, even under the financial turmoil, China's luxury market has maintained a growth rate of over 20%, which makes them increasingly strong in "direct business". Agents are very frustrated, these "market advance army" will become a history, become a luxury goods company directly battalion tide "interest impaired".

"Luxury brands are very strong, and for future cooperation, we will not ask them for a lot of compensation." Lu Qiang said. As a result, more and more luxury brands such as Hermes, Prada, Gucci and Coach have become direct battalions, extending from the first tier cities of Beijing, Shanghai and Shenzhen to more two or three line cities. The benefits are self-evident. The profits of the agents will be spanferred to the luxury companies, and the company will have more control over the channels.

At this point, some dealers really feel the importance of having a brand. Lu Qiang is a typical dreamer. "If I can control some luxury brands, I will better fit them with the Chinese market and even hatch a luxury brand in China." At the same time, the acquisition of first-line luxury brands can also give them a strong sense of achievement. These are perhaps the driving force of Lu Qiang's acquisition of luxury brands in Italy and France.

Fegaule, partner of Britain's Weida law firm, which has studied similar mergers and acquisitions for a long time, said that from the current situation, Chinese people still have certain acquisition opportunities. First, their understanding of the Chinese market can arouse great interest in foreign luxury brands; secondly, the Chinese have money.

But it is hard to believe that if the intention is to acquire the brand of luxury goods in China through heavy gold purchase, the bend will be a bit far away. Nowadays, the industry has generally agreed that as long as there is enough money to pack and have enough good marketing, it is possible to build a brand new luxury brand in the short term, and no longer need it for decades or even a hundred years. {page_break}

Lu Qiang is still negotiating with several luxury companies. He still tends to buy luxury brands that Chinese people are familiar with. Mr Fei said that for some two or three line luxury brands, Chinese buyers had more opportunities. But for some strong and young luxury brands, they can become partners with the brand to control the management of the brand in China or the Asian market, and leave the management power of the western market to the brand owner.

Of course, even after the completion of the acquisition, Chinese businessmen will also face a great challenge -- do they have the ability and experience to operate luxury brands?

China has yet to breed famous luxury brands. Fagle believes that the era of Chinese people's establishment of global luxury brands will eventually come. Chinese brand owners will learn quickly, but this is not a short-term gain. For example, foreign luxury brands attach great importance to creating images rather than creating items for commercial promotion, but a lot of related expertise is not popular in China.

Previously, Japan has also set off a boom in the acquisition of luxury brands in Europe and America. But unlike China, Japan has developed economically and has already produced some luxury brands. This is not only easy to persuade sellers, but also to develop the brand that they buy. Nowadays, Sun Xiaofei and others are still in the stage of re establishing and packaging the brand of Pierre Cardin, and the difficulty of localization is imaginable.

More active methods

The acquisition of luxury brands is only one way to break through. Apart from brand agents, Lu Qiang has been trying more business models.

While bidding for Prada, Lu Qiang told the media that he wanted to build a retail super kingdom with many formats. In the two conversation with Chinese entrepreneur, he seems to have got rid of the shadow of defeat, confident and high-profile. No wonder people say that the biggest benefit of Prada incident to Lu Qiang is to instantly enhance the popularity of him and Fu's.

Indeed, Lu Qiang has shown some courage and intelligence in the past 7 years. He claims to be the first person to do the industry in China. In 2003, he needed to convince the luxury companies that only made a fortune in the department store to enter his outlets. "For example, Armani, they were not interested at first. I tell them that any advanced business format will develop at an amazing speed in China. You have no reason not to do this market.

Now, Lu Qiang is building Shanghai's flying guest international and Xujiahui to build a wealthy guest house in the town of Hui Nan in Nanhui District, Shanghai. The famous village of Douglas is built in Suzhou town of Hui Nan. The famous brand village is built in Suzhou. The area of famous village is about 100 thousand square meters, and only 2000 square meters of Nike store in the village.

In fact, once more players participate in competition, Lu Qiang's resource advantage is not so obvious. In 2006, the completion of Shanghai Bailian Qingpu outlets became the most popular orbits of Shanghai. Pei Liang, Secretary General of China Chain Store Association, said that Shanghai Bailian has many brand resources, so it can make the most recognized Oteri J in the industry. Due to the intensification of business competition, the Xujiahui store in Cartire has gradually withdrawn luxury brands such as Zegna and Zegna, which is more like the regular "famous discount shop".

On the other hand, due to more luxury brands, Lu Qiang's short-term pressure has increased. Among the more than 200 brands in the city, only 5 luxury brands, including Ai Oscar DA and Escada, are exclusive agents in the Chinese region or even in the Asia Pacific region. The other 4 brands are not exclusive agents, but only the Diesel are doing so, and the other "non exclusive" agency rights are also decreasing. Lu Qiang's active acquisition of foreign luxury brands is obviously related to this.

"In the long run, luxury camp has positive side to Oteri J's format. With the increase of luxury goods entering China and the spanition from distribution to direct operation, there must be a large backlog of commodities to digest, which will spawn more Oteri J. " Pei Liang believes that there are more than 300 outlets in the United States, and China has very little market potential. But the real European outlets in Europe and the United States are directly supplied by manufacturers, and there are products specially designed for Oteri J format, and the discount is very low. But these have not yet been realized in China.

At the time of Oteri J's maturity, Lu Qiang began to run more business models. To create luxury BtoC website "entertainment shopping network", the introduction of German mother and child products supermarket chain brand Babyone, also involved in commercial real estate.

Lu Qiang told reporters that in two months, three foreign fund companies will inject $12 million into it.