YGM wins Jaeger Lion production line and will leave China
A few days back, Fu Chengyin, the Deputy Director and General Manager of YGM Trading (00375, HK), shared some significant updates with the "Daily Economic News." He mentioned that YGM had recently acquired the prestigious British apparel brand, Aquascutum, and plans to shift its production from China to European countries.
Just last week, on the 8th, YGM inked a deal with Jager Lion to purchase Asian intellectual property rights for £13.7 million (approximately HK$174 million). Following the acquisition, YGM will fully own all rights, titles, and interests in Jager Lion’s Asian intellectual property, along with the associated goodwill tied to business ventures involving this property.
Simultaneously, YGM secured exclusive rights to manufacture, distribute, and promote Jacob garments across Greater China, Singapore, Malaysia, and Thailand.
Interestingly, this news coincided with another announcement where Harold Tillman, Chairman of the British Fashion Association, and Belinda Earl, CEO of the Jaeger Group, successfully took control of Jacob's brand from Japan's Renown. Their negotiations began in June this year, marking the return of Jaeger Jacob, a 158-year-old luxury British brand famous for its raincoats, into British hands. This event has been humorously dubbed as "Jaeger going home."
With many high-end foreign brands setting up production facilities in China, the move of Jaeger Jacob returning to Europe is certainly aligned with current socio-economic trends. However, the decision to relocate production out of China has been somewhat unexpected.
"We are planning to move our production from China to European countries," stated Fu Chengyin. Before the acquisition, approximately 20% of Jacob Lion's products were manufactured in China.
Fu Chengyin expressed his belief that "European-made" products are more appealing to Chinese consumers, despite the fact that Chinese manufacturing is renowned for its quality. Even though production costs in Europe are higher than in China, Fu emphasized that consumer psychology plays a crucial role in this decision.
Moreover, due to severe financial losses in European markets like the UK, YGM did not acquire the brand's European operations but instead focused on expanding its presence in Asia.
In Fu's opinion, even if the cost is higher in Europe, he would still opt for European production because it resonates better with consumer perceptions.
This strategic shift underscores YGM's commitment to enhancing brand value by aligning with consumer preferences, ensuring that the brand remains relevant and desirable in the competitive global market.
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