LVMH acquires a stake in Chinese casual-wear

Luxury groups are always on the look-out for a new company to add to their portfolio.

LVMH are just one of them.

Whilst other luxury companies such as PPR and Richemont have a number of European and US companies in their portfolios, they haven’t looked to any companies in China, whereas LVMH are on top of their game in keeping their eye out on any potential companies there.

The Wall Street Journal reports that a private equity fund backed by LVMH has bought a stake in Chinese casual-wear company Trendy International Group, highlighting the rise of Chinese homegrown fashion in one of the world’s fastest-growing apparel markets.

It is understood that L Capital Asia invested about $US200 million for a 10 per cent stake in Trendy International Group. Based in the southern city of Guangzhou, the company owns 300 stores and hundreds of franchises of its four brands, including its largest, Orchirly.

Sales of clothing and apparel in China jumped to 460 billion yuan (AUD$6.8 billion estimate) in 2011, up 15 per cent from a year earlier, is expected to exceed 800 billion yuan by 2015 (AUD$11.8 billion estimate), according to Boston Consulting Group.

Chinais set to account for 30 per cent of the global fashion market’s growth in the next five years.

“Global investors’ attention (to the Chinese luxury market) has been strong ever since Hermes bought the Chinese brand ShangXia,” Yang Qingshan , Chairman of the China Brand Strategy Association and secretary-general of the China Brand Wealth Forum told China Daily.

“And now it’s just becoming a growing trend as more foreign capital eyes the booming market. Industry tycoons like LVMH merely need a Chinese brand that is full of potential that they can reshape and operate in a Louis Vuitton style, a plan that has been put into effect successfully in China.”

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