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Understanding cultural differences in Asia

Fidinam Hong Kong

Gian-Luca-TraversoWe had the pleasure to interview Gian Luca Traverso, former CEO of Philipp Plein. Gian Luca was born in Italy and has been living in Asia for the past 28 years. He has always worked for European fashion and luxury brands, developing the business in the region. Currently, he lives in Hong Kong with his family.

 Could you tell us more about your experience in Asia's fashion and luxury industry?

The markets, dynamics, main levers, and everything related to the industry have changed so much in the past 28 years I have lived in Asia.

When I first moved to Hong Kong, Japan was the only strongly fashion-oriented market in Asia. Hong Kong was just a promise and Korea was trying to imitate Japan – with department stores and alluring Japanese customers to their duty-free/casino network. But most significantly, China was not even in the picture. We all knew that the Chinese market would eventually open and the mirage of reaching its massive population could become a reality.

In the meantime, not only China has evolved: markets like Singapore, Thailand, Indonesia and Vietnam have all become interesting realities for luxury and fashion brands. As a result, the central role of Hong Kong as a regional hub surged to a new level of strategic relevance. Having an office in Hong Kong, not only as a stepping stone for China but also to reach the entire region, became almost an obligatory passage.

What I liked the most in all these years has been the cultural learning, understanding the differences between different countries, identifying the strategic approach for each market, and so on. This, I think, is the real asset that I have acquired in all my time spent here in Asia.

 

What are the major challenges you faced in opening the Asian market for European brands?

I always say that my role – representing European brands in Asia – is first and foremost to be a storyteller. It does not matter how popular the brand already is in the region, whether it is a well-established label or a new brand that is approaching a new market: my most significant task has been and still is "to send the message across". You need this if you are looking for a new partner in a certain market or negotiating with a landlord about a location for opening a store. Or even simply if you need to explain to your local staff why the headquarters in Europe is deciding something that might not be necessarily obvious to them. These are just simple examples of how crucial and sometimes difficult our role here can be.

As human beings, we tend to take for granted what we have been growing up with, sometimes forgetting that cultural differences play a significant role. I have always tried to challenge myself in not doing that, trying to find solutions or alternatives, as much as possible "out of the box" or that in any case could be understood by a local perspective. I think many Western brands sometimes fail in their approach to Asia simply because they disregard the importance of this point. You must be humble and realize that Asia is not only China.

fashion-and-luxury-industry-in-asia-and-chinaWhat is the current situation of your industry in China, considering the restrictions caused by the COVID-19 pandemic?

COVID-19 has been a devastating experience globally. It has changed so much of our daily life, affecting it to a level that none of us could have expected or prepared for. However, it has also forced us to find new ways of doing business and grabbing opportunities. Many brands have grown stronger and bigger in China, taking advantage of the travel restrictions of the Chinese consumers, who were forced to shop domestically. Brands like ours, Philipp Plein, saw the opportunity to take back control of the market by switching from a franchise model to a direct-operated model.

Even though I could not travel, in 2021 I was able to negotiate the opening of nine new store openings in China – thanks to the experience I have gathered during so many years in Asia. I know the cities very well, the malls, the locations and most importantly, have a good relationship with all the main landlords. So, even during a terrible experience such as COVID-19, there are still ways to grow or develop the business.

What will be future threats and opportunities for European brands already present in China?

I would say that the main threat right now is the deteriorating relationship that China has with the US. We might not see it, but some of the restrictions that the Chinese Government is implementing right now will have a strong impact on the consumption trend of the Chinese for sure. Nevertheless, I am still moderately optimistic about the future, especially when COVID-19 is defeated.

The fact that the Chinese are not traveling at the moment forces all brands already present in China to focus 100% on the domestic market. It is an opportunity to study the Chinese consumer more deeply and pay more attention to what they really like, considering that they are no longer followers but have acquired their own, strong discerning taste.

Digitalization and e-commerce are becoming more relevant than ever before, forcing retailers to be more creative and innovative. The traditional brick and mortar shops will not disappear, but they are meant to become the natural complement of the e-commerce channel. The whole retail game is already played at the omnichannel level, where everything becomes an integrated platform, tailor-made to interact with the consumer needs.

 

Will the inclusive growth strategy of China cut off foreign investors or will it open the market to new players (e.g. affordable luxury)?

I don't think China will close off to foreign investors, but it will simply change the rules of the game. Think for example of the Metaverse and the NFT phenomenon. With the control on the internet that the Central Government is applying, how can this new reality find a way to expand in China? Probably through new rules and new agreements, but it would be exciting to see how different players will approach this. Also, the growing middle class is creating great opportunities for new affordable luxury products, opening new market segments. But there will also be Chinese brands finally expanding outside China. For example Shein, the Chinese fast fashion brand that is rapidly becoming a threat to Inditex and H&M. 

Want to know more about the fashion and luxury industry in Asia? Reach out to us now