Fosun International Ltd., part owner
of Club Mediterranee SA, plans investments in European luxury
brands and red wine companies to build alliances for expansion
in China, which is forecast to become the biggest luxury market.
“Many European companies have approached us and we are in
talks,” said Qian Jiannong, who manages investment decisions at
Fosun’s parent, Fosun Group. The company may seek partners in
countries including France, Italy, Germany, Spain and Greece
with “strong branding and influence” in clothing and wine, he
said in an interview today
Fosun, which bought a 7.1 percent stake in French resorts
operator Club Med in June, is increasing consumer investments as
China domestic consumption rises. The world’s fastest-growing
major economy will probably be the world’s largest market for
luxury goods in five years, according to the Chinese Academy of
Social Sciences.
“The outlook for red wine companies is rosy,” Qian said.
“Chinese consumption patterns for alcohol have been changing.
Chinese white liquor was used to be popular, then beer was the
next. Now red wine is becoming very trendy among Chinese.”
Fosun declined 1.7 percent to HK$5.93 in Hong Kong trading.
The stock has gained 9.4 percent this year compared with a 3.6
decline in the wider Hang Seng Composite Index.
Chateau Lafite
Fosun estimates red wine sales will rise by more than 20
percent every year in China, Qian said.
Fine Bordeaux red wine prices in China rose 30 percent from
a year earlier, while Chateau Lafite Rothschild increased 37
percent, according to a report from Hurun, a Chinese luxury
publishing and events group.
China overtook the U.S. as the second-biggest luxury market
last year, after Japan, with sales of $9.4 billion or 27.5
percent of the global share, according to the Chinese Academy of
Social Sciences. Sales of luxury goods in China, the world’s
most populous nation, will reach $14.6 billion by 2015, it said.
“We will help our partners expand stores in China, giving
them advice on management and employee cultural issues, as well
as the selection of property locations,” Qian said.
He didn’t give specific investment targets as talks haven’t
been completed.
Fosun plans to raise its holding in Club Med to 10 percent
and open attractions in China with the Paris-based resort
operator. It’s looking at locations including Hainan Island in
southern China, suburban Shanghai and other cities in the
eastern part of the country, Qian said.
Revenue from Fosun International’s steel business, which
accounted for more than 70 percent of the company’s sales last
year, fell to 24.6 billion yuan ($3.6 billion) in 2009 from 30.9
billion yuan in 2008, according to its annual report. Sales
declined 13 percent to 34.9 billion yuan last year.
To contact the reporter on this story:
Wendy Leung in Hong Kong at
wleung12@bloomberg.net.
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