Oct. 19 (Bloomberg) -- Brunello Cucinelli, the Italian maker of cashmere sweaters worn by Prince William, plans to add stores and boost investment in China in a bet that demand from the wealthiest shoppers will hold up in a slowing economy.
The Solomeo, Italy-based company will invest 10 million euros ($13 million) in China in the next three years after spending 7 million euros since its 2010 entry, Brunello Cucinelli, founder of the namesake clothier, said in an interview.
“China is our light house,” he said yesterday in Hong Kong. “This is going to be the Chinese century. China is very important for us.”
Cucinelli, which sells 1,140-euro cashmere sweaters, joins Hermes International SCA, PPR SA and Prada SpA in expanding in the world’s fifth largest luxury market. China’s so-called absolute luxury segment -- the priciest goods -- where Hermes and Cucinelli compete, is the fastest-growing part of the market and will keep outperforming until at least 2014, Bain & Co. has predicted.
Cucinelli and other so-called absolute luxury companies will grow more than 10 percent this year, buoyed by demand from Asian and Latin American consumers, the executive said in a Sept. 22 interview.
China yesterday reported third-quarter economic growth eased to 7.4 percent from a year earlier, the seventh straight deceleration, and the International Monetary Fund last week cut its estimate for 2012 expansion to 7.8 percent from 8 percent.
Cucinelli plans to open four to five outlets per year in the world’s most populous country over the next three years, while keeping the brand’s exclusivity for long-term growth, he said. China is the world’s fifth-biggest luxury market, accounting for 92 billion yuan ($15 billion) of sales in 2011, according to London-based research company Euromonitor.
The company currently operates eight stores in China, two in Hong Kong and one in Macau through local distributors.
Attracting Chinese tourists to stores outside the Asian nation is also part of its growth strategy, said Cucinelli. Such sales have more than doubled in the past two years, he said.
Sales from stores in China, which accounts for 4 percent of the group’s total, are expected to increase to 10 percent of the total within three years, he said. Another 10 percent of sales will probably come from Chinese tourists outside the country in three years, an increase from about 1.5 percent currently, Cucinelli said.
Overall outbound travel numbers from China may rise to 100 million a year by 2020 as economic growth makes travel affordable to more people, according to the World Tourism Organization.
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