Italian Fashion Designers Look to China for Salvation
Italy's top designer brands are looking to China for salvation this year with revenues falling due to a debt crisis that has cast an air of gloom as Milan Fashion Week kicks off on Wednesday.
With Italians hurting from budget austerity and fears that an debt-laden Rome could follow Athens into the mire, the National Chamber of Fashion said the situation was "worse than in 2008" when the global financial crisis began.
Italian fashion's hopes that last year's revenue trend -- up 5.5 percent from 2010 -- could be sustained, were dashed last week when the industry forecast a 5.2-percent drop for 2012 to 60.2 billion euros ($79 billion).
Revenues went down 4.0 percent in 2008 and a record 15 percent in 2009.
"It has become essential to focus attention on Asian and American markets," said Mario Boselli, head of the chamber which organizes fashion week.
In fact, bleak results in Italy are being offset largely by gains in non-European countries, particularly in Russia, Hong Kong, Korea and China.
"The situation is dramatic. The Italian market is a disaster, just like the French market. No one is buying anything! In Europe, there is a real crisis," said a manager at a top fashion house who spoke on condition of anonymity.
Milan has responded accordingly: for the first time buyers attending the shows and fashionistas unable to attend the whirlwind of parties this year will have access to the fashion chamber's website in a Chinese language version.
Seventy-two fashion houses take their autumn-winter 2012 collections to the catwalks in palaces, monuments and parks across the city until Monday.
The show opens its doors with Gucci on Wednesday, followed by Prada and Fendi on Thursday, Versace on Friday, Jil Sander and Bottega Veneta on Saturday, Missoni and Dolce & Gabbana on Sunday and Giorgio Armani on Monday.
"This year will be complex and full of uncertainty, while 2011 was positive overall," said Silvio Albini, the head of the international textile association Milano Unica, adding that there were already signs of a slowdown in orders.
"This is a time for our companies to have a global vision and to focus on exports to countries where the values of Made in Italy count a lot," he said.
Albino said Italian textile imports by China went up 27.2 percent in 2011.
Fashion giant Gucci in particular has been performing so well in Asia that it buoyed up the 2011 results for the French luxury group PPR which owns it.
PPR last week posted a net profit up 2.3 percent to 986 million euros in 2011 with revenues up 11.1 percent, and the group said it was "very optimistic" that Gucci would continue to perform well in Asia and sales would increase.
Exposure to the higher-margin retail business in Asia also boosted profits at Salvatore Ferragamo. Revenues for the Italian house, which listed on the Milan stock exchange last year, climbed 26.2 percent to 986.5 million euros.
With the exception of tsunami and earthquake-hit Japan, the group posted a growth in revenue close to or higher than 30 percent in every region, while the fashion house's retail chain registered a vast 44 percent jump in China.
A wealth of brands are expanding in the region, including Armani, Roberto Cavalli and Jil Sander, which has just opened a new branch in China.
Versace has even come up with a jeweled handbag with hand-painted golden dragons on the side panels in honor of the 2012 Year of the Dragon.
"China's retail market will grow at a rate of 14 percent in 2012 and 2013, and luxury retail will grow at an even higher rate of 20 percent over the same period," said Isabel Cavill, luxury expert with Planet Retail research group.
"China is the most tangible emerging market for growth, we're talking about major investments where brands are prepared to set up stores in Hong Kong despite incredibly high rental rates for shops," she said.
Source: Agence France Presse
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