US Apparel Brand COACH Will Shift From 50% To Capacity In China

Recently, American clothing brand COACH announced that as China's labor costs rise, it will shift half of its capacity from China to lower production costs and increase its presence in China. Sale Quantity.

Since 2000, COACH has been closed to factories in Europe and the United States. More than 90% of the factories have been transferred to low labor countries, such as China, Indonesia, Thailand and Vietnam.

According to the financial report, in 2001, the gross profit margin of COACH reached 63.5%, and it soared to 77.7% in 2006. Although the financial crisis has gone through, the gross profit margin of COACH is no less than 70%. The gross profit margin of LV is only 62%, and the gross margin of GUCCI is around 70%.

"We are being affected by the rapid rise in wages in China's manufacturing sector." Chairman and CEOLewFrankfort said.

Frankfort said it will reduce COACH's capacity in China from 85% of its global capacity to 40%~50% in the next five years and shift its production capacity to low wage countries such as India, Vietnam and Philippines. Meanwhile, COACH plans to raise sales to 500 million US dollars in 3 years.

While China is catching up with Japan as the second largest luxury consumer market, COACH is looking to China. Leon Negotiable securities The Asia Pacific market development company, a subsidiary of Asia Ltd., points out that in the next ten years, the growth of China's luxury market will account for 50% of the global luxury market growth.

In order to enhance its popularity in China and Asia, COACH also announced that it would complete the two listing in Hong Kong by the end of this year. At present, COACH has 9 stores and 44 stores in Hongkong and the mainland, with sales volume of 100 million US dollars in 2010.

COACH, which is always associated with LV, leaves consumers with the same impression as LV. "COACH is not a luxury brand, but this mode of operation makes the luxury COACH popular among Chinese consumers." Cui Hongbo, senior partner of the brand strategy management joint venture group, said.

Lu Qiang, Fawkes holding chairman of luxury brand, pointed out that beside LV, GUCCI and other big brands, there is a brand with a price tag of only 1/3 and a fashionable brand. COACH is easy to attract young white-collar workers.

"The European plot of luxury goods is extremely serious." Dr Zhou Ting, deputy director of the Daxiang Qi luxury Research Center, pointed out that once the industrial line extends to Asia and other places, although the cost reduction, "but the brand will face the risk of weakening core values."

"Even if some of the processes or accessories are completed in China, the leaders of these luxury goods will never declare that products are made in Asia, and most of the sensitive topics are silent." Zhou Ting told reporters that COACH will further shift the production line to the surrounding countries with lower production costs, which will bring greater risks to the brand's value.