Giorgio Armani plans aggressive expansion into China

Asian Economic News, Sept 23, 2002

HONG KONG, Sept. 18 Kyodo

Leading Italian fashion designer Giorgio Armani is planning to open 20 to 30 stores for his brands in China over the next three to five years, the Armani Group said Wednesday.

Armani himself will visit Beijing, Shanghai and Hong Kong, his first trip to the country, next month to demonstrate his commitment, the group said.

The internationally renowned designer will also officiate at the opening of a new multimillion-dollar megastore in Hong Kong, the world's second-biggest Armani store, after one on Via Manzoni in Milan, by the end of next month, the group said.

''He sees Hong Kong, Shanghai and Beijing as three cities of great importance all in their own ways, and all will play a very important part in the strategy of the Armani Group as we expand in China,'' said Robert Triefus, the Armani Group's executive vice president of worldwide communications.

Triefus told a press conference in Hong Kong that the group will partner with local companies in opening their future shops in mainland China, as required by the Chinese authorities.

He said the group will look for potential retail locations at major Chinese cities such as Chengdu, Dalian, Guangzhou, Hangzhou, Shanghai, Shenyang, Wenzhou and Wuhan.

So far, the Armani Group has a store, Armani Collezioni, in Shenzhen, a Chinese special economic zone neighboring Hong Kong.

Its Beijing shop, Giorgio Armani boutique, will be reopened after renovation next month when Armani visits the Chinese capital.

The futuristically styled megastore in Hong Kong, with 2,000 square meters of retail space, is located at a new prime office building in the downtown Central district and will open for business Nov. 1.

The store will house all Armani brands of clothing, accessories, eyewear, watches, jewelry, cosmetics, fragrances, books, flowers, home furnishings and cafe under one roof.

Triefus refused to say how much the group has invested into the Hong Kong project, but said it is a ''significant, symbolic and multimillion-dollar'' investment that underlies the faith it has in the markets of China and of Asia in the future.

''A question that (Armani is) asked many times: Why Hong Kong for an investment of this scale? His answer is that Hong Kong is one of the most cosmopolitan and fast-pace cities in the world today. He believes this new style of retailing...a new way of shopping and entertainment that today more and more people are looking for,'' Triefus said.

He sidestepped questions about how the group sees the possible impact of Hong Kong's sluggish economy on the new megastore's business, but said the new concept of retail environment and shopping will work in the territory.

Many people in Hong Kong have tightened their purse strings and look for discount sales as the economy remains weak and the number of unemployed stays high.

Retail sales in Hong Kong declined 4.0% in July over a year earlier to HK$15.02 billion (about US$1.93 billion), while the number of personal bankruptcies hit a record high of 14,847 for the first eight months of this year, surpassing the total figure of last year.

Triefus said the Armani Group has a well-balanced distribution of revenues that generate from various products and from different parts of the world.

The Armani Group posted a 5% increase in consolidated net revenues to 653 million euros (about US$618 million) for the first half of this year.