China’s LVMH wannabe to slow M&A after RM16.8b spree

HONG KONG • Ruyi Holding Group Co Ltd, the Chinese apparel rm that’s taking over Bally International AG, will slow its dealmaking after announcing more than US$4 billion (RM16.76 billion) of overseas acquisitions in the past three years.

The company will focus on integrating existing brands and ease its merger and acquisition (M&A) pace in the short to medium term, chairman Qiu Yafu (picture) said in an interview yesterday in Hong Kong. In the future, Ruyi will only consider buying labels that are profitable and have high growth potential, according to Qiu.

“Some of the brands that we bought, although they’re heritage brands and enjoy very high consumer recognition, their business performance was far from ideal,” said Qiu, 60. “We need to give them time — say five years — to turn those brands profitable.”

The group needs to inject new, trendy elements into underperforming brands and boost their e-commerce offerings, according to Qiu. It plans to invest more to revitalise labels owned by Hong Kong-listed unit Trinity Ltd, which controls British bespoke tailor Gieves & Hawkes, Qiu said. Ruyi sees Trinity’s profit improving significantly next year after increasing online sales in China, he said.

Ruyi is shifting gears after declaring earlier this year its ambition to develop into the LVMH of China. The company, previously a little-known Chinese textile manufacturer, now owns several European luxury brands after purchases including UK trench coat maker Aquascutum and SMCP SA, the French fashion retailer whose labels include Sandro, Maje and Claudie Pierlot.

“We have a clear M&A strategy: We stay very focused on building Ruyi into a leading fashion group,” Qiu said. “Unlike some other companies, we don’t blindly buy brands just for the sake of acquisitions.”

Luxury companies such as Gucci owner Kering SA and LVMH Moet Hennessy Louis Vuitton SE are counting on increasingly wealthy Chinese shoppers for the lion’s share of their growth. Consumers in the second-biggest economy spent €105 billion (RM498.61 billion) on luxury purchases last year, almost a third of the worldwide total, a proportion expected to reach 40% by 2024, according to Boston Consulting Group. SMCP’s brands have increased online sales in China by 40% to 50% this year, Qiu said.

Ruyi targets similar growth rates for Trinity following recent partnerships with some online platforms, he said. It took control of Trinity in April, surpassing billionaire brothers Victor and William Fung as the company’s biggest shareholder.

Trinity operates more than 250 stores in Greater China and Europe for Gieves & Hawkes, British clothing label Kent & Curwen, Paris-based Cerruti 1881 and licenced brand D’urban. Ruyi aims to complete its purchase of Invista’s Apparel & Advanced Textiles unit, which owns the rights to materials including Lycra and Coolmax fibres, by year-end, Qiu said. It’s paying more than US$2 billion to buy the business from Invista, which is an arm of Koch Industries Inc, Bloomberg News reported last year.

The Chinese group wants to learn from LVMH’s multibrand approach, which allows a company to harness synergies while preserving each label’s individuality and market niches, Qiu said. It also wants to match LVMH’s pursuit of high-quality products, he said. — Bloomberg