Chinese Yuan to enter the european fur retail business

24 April 2012Markets

Emneord Kopenhagen FurTorben Nielsen

In Europe, the fur retail business suffers from the economic downturn and lack of serious investments. In China, the fur retail business has both the ambition and the means to expand beyond China. We will invest in Europe, the Chinese says ─ but the time is not quite right yet.

 

While the fur market is booming in China and large fur shopping centers pop up in major Chinese cities around the country, the situation is rather different in Europe. The global economic downturn has hit Europe hard, and at the same time the European fur retail sector is characterized by small scale businesses without the financial power to take on the investments needed to develop the trade.

─ Europe is going toward a recession and the specialized fur stores are not renewing their businesses. They are busy just surviving, Torben Nielsen, managing director at Kopenhagen Fur, says. He sees an opportunity for Chinese fur manufacturers and retailers to establish their businesses at a rather weak European market.
─ The competition within China is hard and in any event, it is Chinese manufactured fur goods that are sold in Europe. Why would a Chinese manufacturer not want to be directly present at the European market? Torben Nielsen asks.

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JUST A MATTER OF TIME

According to Chinese manufacturers, the introduction of a Chinese fur retail chain in Europe will happen.

─ It is just a matter of time. It is very possible for Chinese companies to enter markets outside China. The prices are low at our local market and the government encourages companies with the capability to enter foreign markets to do it, says Stanley Chen, owner of Hong Kong-based Cadano Fur & Fashion Co Ltd. The times however, are characterized by uncertainty and that takes the edge of the Chinese willingness to spend venture capital outside China.

─ It is hard to say something about the time perspective. The world economy is changing. People are waiting for the right moment, Mr. Chen says.

Mr Sek-Lung Ng, owner of Ottino Internation Ltd, agrees that Chinese companies eventually will enter Europe, but he believes that it will take some time because the structure on the Chinese market has not been settled yet.

─ Chinese companies will be interested in moving to Europe but it will take 5-10 years. At the moment there is a development going on in China where the large companies are taking over the smaller ones. But within 10 years there will be companies with the strength to go outside China, Sek-Lung Ng says.

ACCESS TO DISTRIBUTION IN EUROPE

However, Torben Nielsen is confident that the Chinese move will happen faster than that. He points to the fact that Kopenhagen Fur is about to build a creative cluster in Copenhagen in cooperation with Danish Fashion & Textile and the Danish Jewellers Association. The partnership represents Danish companies exporting for some 10 billion USD and the vision for the creative cluster, already nicknamed the Creative Valley, is highly commercial.

The fact that Kopenhagen Fur's two partners have extensive distribution networks in Europe makes Copenhagen and the Creative Valley a perfect starting point for entering the European fur retail market. Establishing the European headquarter in Copenhagen will give Chinese pioneers in Europe access to this network which, according to Torben Nielsen, will prove a major advantage in establishing business in Europe, and the Chinese manufacturers are positive about the prospects of the creative hub. But neither Sek-Lung Ng nor Stanley Chen are jumping into Europe at the moment.

─ It is a very good idea to build a bridge between China and Europe. Gaining access to the distribution network will provide additional value, but we need to balance the costs and the value of money. First step of the vision