THE PERPETUAL PIONEER - YGM GROUP

With its recent acquisition of French couture house Guy Laroche, Hong Kong's YGM Trading has stylishly responded to the growing sophistication of the mainland China market

The pioneering spirit is woven into the fabric of Hong Kong's YGM empire. When Chan Sui Kau set up Yangtzekiang Garment Manufacturing Co Ltd with 20 sewing machines in 1950 to make shirts for the local market, the company helped kick-start Hong Kong's textile boom. It was an early member of the Hong Kong Stock Exchange and among the initial joint venturers in mainland China at the outset of Deng Xiaoping's open-door policy.

As business thrived, Yangtzekiang's interests expanded. The company's original Michel Rene formal and city wear line, launched in the mid-1970s, was one of the first Hong Kong labels to utilise the brand-building concept. It ventured into retailing in Southeast Asia, it went into licensing, and in 1988 the company spun off its retail and wholesale business division into the separately listed YGM Trading Ltd. Both companies have gone on to become major international players with OEM/ODM manufacturer Yangtzekiang reaching 20,000 employees and annual revenues of US$150 million and YGM Trading encompassing more than 500 owned and franchised retail outlets and 2,500 employees.

Now the Chan family, which still controls the two enterprises, has taken perhaps the most striking step yet. In the summer of 2004, YGM Trading swooped on French couture house Guy Laroche and bought it for US$17 million. "Thirty years ago when we first started retailing, who would have thought we would be able to do this," said Shirley Chan Suk Ling, deputy managing director of YGM Trading, a director of Yangtzekiang and daughter of the original founder.

But indeed they have and last October, YGM Trading celebrated the successful showing of the first Guy Laroche collection produced by newly employed French designer Herve Leroux during Paris Fashion Week. Leroux's Spring/Summer 2005 women's wear offered a sleek, sophisticated line of figure-hugging outfits including gowns in silk jersey and viscose and high-waisted trousers.

The acquisition is a bold move to capitalize on the burgeoning mainland China market. Borne of 25 years' cumulative manufacturing and retail experience in the country, Yangtzekiang set up its first joint venture in Wuxi in 1980. When the mainland retail market began to take off in the 1990s, YGM Trading had already forged the way with Michel Rene outlets in major Chinese cities. In the late 1990s, the company became the Greater China licensee for mid-to-upper-market brands Ashworth and Aquascutum from the US and UK respectively, using Hong Kong and its international shopping cachet to secure recognition in the mainland market via the growing number of affluent Chinese visiting the city.

It had been a Guy Laroche licensee for just a few months before buying the prestigious global label. But good business sense and an eye for the rapid changes taking place in the mainland market propelled the deal forward. "People in the mainland are travelling all over the world now and the country is becoming much more sophisticated, particularly landlords and department store buyers," Ms Chan said. "They are knowledgeable about brands and this means a recognized label is easier to develop. In addition, they particularly like products from France. So rather than pay lots of money as a licensee, we thought why not own the brand and also earn royalties from around the world?"

The company launched its Guy Laroche women's wear line in Greater China in the autumn and already has six outlets in mainland China and two each in Hong Kong and Taiwan. Last July, it also became licensee for Charles Jourdan ready-to-wear, which will be introduced during 2005. YGM plans to ensure the labels' arrival is as visible as possible with fashion shows and a large presence at TDC's attention-grabbing 'World Boutique' in Hong Kong in this January followed by?#39;Style Hong Kong'?in Beijing in March.