YGM wins Jaeger Lion production line and will leave China
A few days back, Fu Chengyin, Deputy Director and General Manager of YGM Trading (00375, HK), made headlines when he revealed to the "Daily Economic News" that YGM had recently acquired the prestigious British clothing brand, Aquascutum. He mentioned that the company plans to shift its production from China to European countries.
Just this month, YGM reached an agreement with Jager Lion to purchase Asian intellectual property rights for £13.7 million (approximately HK$174 million). Once completed, YGM will gain full ownership of Jaeger Lion’s Asian intellectual property rights along with the associated goodwill tied to these businesses.
At the same time, YGM secured exclusive rights to manufacture, distribute, and promote Jacob Garments across Greater China, Singapore, Malaysia, and Thailand.
On the same day, news broke that Harold Tillman, Chairman of the British Fashion Association and a prominent retail entrepreneur, alongside Belinda Earl, CEO of the Jaeger Group, took control of Jacob's brand from Japan’s Renown. Their talks began in June this year.
Thus, Jaeger, a luxury British brand with a history of 158 years, famous for its raincoats, has now been returned to British hands, a move that many found amusingly referred to as "going home."
When global high-end brands have established production facilities in China, this return of Jacob Lion could be seen as a strategic decision aligning with current socio-economic trends. However, the surprising aspect was the decision to "leave China" during this "homecoming."
"We are planning to relocate our production from China to European countries," said Fu Chengyin. It is reported that before the acquisition, Jacob Lion produced approximately 20% of its products in China.
However, due to significant losses in the European markets like the UK, YGM did not acquire the brand's European operations but instead focused on the Asian market.
In Fu's opinion, despite the higher costs in Europe compared to China, the psychological appeal of "European-made" products would resonate better with Chinese consumers.
For Fu, the choice to produce in Europe stems from the consumer mindset, even though manufacturing in Europe might be more expensive.
This move highlights a growing trend where brands are reconsidering their production locations to cater to changing consumer preferences and perceptions.
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