Retail in Asia

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Icicle Fashion Group buys the Parisian fashion label


Icicle Fashion Group has beaten out a phalanx of bidders to buy out French fashion brand Carven. The financial terms of the deal were not disclosed.

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Despite Carven’s difficulty carving out a place in the modern fashion firmament, Icicle founder Shouzeng Ye told BoF that the label offers considerable value to Icicle as a vehicle for global expansion, access to European design expertise and international luxury brand credibility.

“Our strategy is to expand internationally,” he said. “We started in 2013 by opening our design centre in Paris. We are going to open our first international flagship store in Paris next Autumn 2019. Carven is our third large-scale international investment. It helps us to accelerate Icicle Group’s expansion and development.”

Hung Huang, a long-time fashion identity in China, who last year wrote a book marking Icicle’s 20-year anniversary, sees overwhelmingly positive outcomes for both investor and investee as a result of the deal.

“So many Chinese companies are buying luxury brands from overseas, but this is the most promising of these acquisitions. Because Icicle is already a successful fashion brand in China, they have a deep understanding of manufacturing and operating in the Chinese market,” she explains, adding that Carven will benefit from the fact that Icicle is not acquiring the brand purely as an investment project, but has value beyond the monetary injection to offer the French brand.

Little known outside China, Icicle, known as Zhi He in its homeland, was founded by Shouzeng Ye and Shawna Tao in 1997 and has been a leading proponent of sustainable fashion in the country for more than two decades.

Turning over more than 1.6 billion RMB (a little over $231 million) annually through its network of 200 stores in Mainland China and e-commerce operations, the privately-owned Icicle is headquartered in Shanghai and has a workforce of more than 2,000 in China, but also opened a design centre in Paris back in 2012, where its top-tier collection is conceived.

On the other hand, according to Brock Silvers, managing director of Kaiyuan Capital, a China-based multi-asset advisory, a multitude of questions remain as to whether the partnership will indeed be a win-win for Icicle and Carven, especially given the premium price Icicle is paying and its reported promise to keep key Carven structures and people in place as part of the deal.

“Is China ready to manage French fashion? Is Icicle prepared to expand beyond its eco-friendly mandate? A successful bid may not translate into an easy victory and Icicle management may soon be put to the test,” Silvers says.

Icicle is among several peers from China ramping up their fashion portfolios through overseas acquisitions. Conglomerate Fosun Group purchased a majority stake in French brand Lanvin and textile giant Ruyi Group owns Bally, Aquascutum and Gieves & Hawkes.

“[This] will continue because the Chinese consumer is fuelling the growth of the luxury sector. Therefore, Chinese companies can acquire an international brand and extract its potential in China, leveraging knowledge of successful approaches to marketing, pricing and distribution in the domestic market,” says Mario Ortelli, managing partner of luxury advisors Ortelli & Co.

The Boston Consulting Group (BCG) estimates Chinese consumers already make up 32 percent of the global luxury market – a number predicted to rise to 40 percent by 2024. Data from McKinsey & Co. shows revenue growth in China’s luxury segment was around 15-20 percent for the first half of this year.

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Another major factor is the urging of China’s government for corporate leaders to help push China’s economy towards a consumption model, away from its traditional manufacturing base, which continues to weaken due to lower-cost competitors elsewhere in Asia, rising wages, and more recently, pressure from China’s trade conflict with the US.