Sep 10, 2012
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Italian fashion houses ask for greater Chinese cooperation

Sep 10, 2012

MILAN - Italian fashion executives have called for China to improve business conditions for European companies seeking to expand in the world's fastest-growing luxury market.

China is on the track to become one of the world's biggest markets for luxury products, but European companies face high import duties and high levels of counterfeiting in the country.

"We would like China to lower import taxes and improve conditions on product testing, which in China are the toughest in the world, as well as ease visa restrictions and boost protection of intellectual property," Gianluca Brozzetti, chief executive of Italian fashion house Roberto Cavalli, told the Milano Fashion Global Summit on Friday.

China is the world's third-biggest market for personal luxury goods, with total sales of about 160 billion yuan ($25 billion) a year. In the next three years, it is expected to leapfrog Japan and the United States to take the top spot.

European luxury goods companies such as LVMH and Salvatore Ferragamo are sailing through the euro zone turmoil thanks to steady demand from Asian shoppers coming to Europe to snap up the likes of Gucci handbags and Prada shoes.

However, difficulties remain when it comes to expanding in China.

Vittorio Missoni, head of the eponymous Italian fashion house, said he had to cut ties with Chinese franchise partners because they didn't understand the brand. Missoni is now looking for a new partner to sell its colourful knitwear in China.

China's ambitions to develop its own fashion brands can pose a competition problem if rules are not fair, Italian executives said on Friday.

"We want to be partners with China, not sub-contractors," said Cleto Sagripanti, president of the Italian shoemakers' association. He called for Chinese investors to take stakes in Italian companies and help them to expand in foreign markets.

China needs to revive weaker domestic consumption and boost exports that have been hit by the euro zone crisis. High cotton prices are also hurting Chinese manufacturing.

This has prompted China to import more textile from Italy than finished clothing as Chinese companies aim to create their own clothing lines. Chinese fashion brands have become regular guests at the fashion weeks in Milan, London, Paris and New York as they try to develop a better reputation for quality and branding.

A Chinese delegation of fashion representatives was visiting Milan this week to foster dealmaking and capture opportunities for Chinese entrepreneurs.

"China wants to acquire new technology and products to improve growth in the Chinese market," Roger Vickery, head of the International Brand Growers consultancy, told the summit.

Du Yuzhou, honorary president of the China National Textile and Apparel Council, offered reassurance on Chinese reliability as a partner. "I think that Europe should recognise China as an important commercial partner, and not see it as a problem," the former textile minister told Reuters.

However, Italy cannot survive without China and vice versa. The Italy-China Association, an Italian organisation that promotes ties between the countries, estimates that Chinese shoppers will spend 1 billion euros ($1.28 billion) in Italy next year, while domestic consumption is falling because of the recession.

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