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Asian Opportunities for UK Brands: Finding the Right Formula

Gone are the days when international brands could set up stall in China, India etc. and expect to sell their product on the basis of their international brand status alone. This is especially the case in China where “China pride”, domestic economic policies and the excellence of local brand owners is all contributing to making the marketplace ever more competitive.

However, these markets are still strong, growing, attractive and accessible to UK brands who have the right “genetic make-up”, model and local partners.

· Strong home (UK) market, heritage brand, retail concept

The brand needs to have a strong positioning in its home market - it must occupy a clearly differentiated space in the marketplace. Equally, it must have a decent heritage primarily for two reasons. Firstly, this shows longevity and, thereby, credibility to potential partners in overseas markets. Secondly, it will mean there is an archive of stories, images and, most importantly, product designs to dive into for inspiration and, where appropriate, revival/revisit. Most Asian markets require a retail concept i.e. a store concept, a full seasonal collection that fills a store and 12 month go-to-market calendar for monthly/seasonal stories that can be deployed in a physical and digital retail environment.

· Low to zero presence in Asian markets

Ideally, there will be no presence at all in Asian markets. If there is, it should be minimal. Where a brand has entered a market, failed or struggled and exited this would be a red flag but not necessarily fatal (KTB's launch of Wrangler in China was successful despite it being the third "bite of the cherry"). The "goldilocks" situation is high awareness but low presence.

· Accessible luxury positioning

True luxury positioning takes serious and continual investment in the brand, AAA locations and very high-spec product to maintain. The mid-market is squeezed and often undifferentiated. It is also unlikely to create excitement in Asia partners & consumers. The value end of the market is likewise a very tough place to operate and competition is fierce and tends to result in a "race to the bottom". Margins are wafer thin and huge volume is necessary. One of the most attractive spaces is the "accessible luxury" segment. This will allow an attractive consumer positioning and a high enough margin to enable reinvestment in the brand, as well as long term sustainable profitability.

· Under-optimised sourcing (AGM)

Given that brands are likely UK focused it is probable that their sourcing is not optimised for Asia distribution. Properly licensed factories in China for China, Bangladesh, Vietnam all enjoy preferential import/distribution arrangements in the region so we may well see margin upside as a result of restructuring the distribution for Asia. Local for local is often a possibility.

· Focus markets: China, India, South Korea

The opportunities most attractive in China, South Korea and India. With appropriate partners it is feasible to build a USD20m+ retail revenue business within 1-2 years in these markets (as I have done most recently with Timberland, Wrangler, Lee).

· Distribution Strategy

In general, it is best to establish brands on EC first before expanding into the brick & mortar channel. EC provides distribution, access to a huge consumer base and a way to connect with consumers. It also provides an opportunity to learn what works and doesn't work so the offering can be refined and model finessed before committing to B&M based partnerships.

· Expansion through partnerships

The best model will likely be partnerships rather than “FDI”/wholly owned: either franchise, outright licensing or a hybrid of the two. Local investors/partners will possess the landlord networks, capital & infrastructures to launch a brand in their territories. They will also help to improve and fine-tune season upon season the offering. Lastly, but not least, this is the capital "lite" way to access these markets. The brand is not required to establish in-market teams, distribution centres etc. The brand sells in 2-4 times per year (depending on seasons), ships the product to the partner and lets them run their business within a robust framework of brand standards and approvals possibly supplied with seasonal toolkits (“season-in-a-box”). In the case of licensing, the brand must ensure full control/sign-off on their go-to-market plans to ensure brand consistency and compliance.

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