Swiss luxury group Richemont is going to offer its products on the booming Chinese market through a joint venture with Alibaba. Subsidiary Yoox Net-a-porter gains access to a billion consumers this way, while Alibaba basks in the luxurious glow of the Swiss.
Middle class buys online
Richemont wants to take advantage of the enormous Chinese market, and in particular the booming demand for luxury via e-commerce. Where earlier only the richest Chinese could shower themselves with luxury during trips to Europe, the focus is now increasingly on the middle class who can afford more and more luxury items - but without those long journeys. And who speaks of luxury often thinks of Richemont, the owner of Cartier, Piaget and Montblanc.
To that end however, companies simply have to work together with Alibaba or its competitor JD.com: they are ubiquitous in China with all sorts of platforms and apps. "Quite frankly there’s not a luxury goods group in the world that can catch up with where Alibaba is at in terms of so many of its ecosystems", Richemont chairman Johann Rupert told Reuters: "when we’re entering a place, a market as vast as China, (where) we simply don’t have the tools." Still, exactly that was the aim of the acquisition of the specialized Yoox Net-a-porter group earlier this year.
Luxury strike for Alibaba
Alibaba provides the technological side of the collaboration with two separate apps: one for the general fashion store Net-a-porter and one for men's brand Mr Porter. The conglomerate wants to give some extra cachet to its luxury offer through Luxury Pavillion, and also deal a blow to arch-rival JD.com's similar Toplife.
Alibaba, which will get 49% of the joint venture, is still struggling to get its grips on the luxury market: many luxury producers still refuse to sell on the Chinese platform for fear of counterfeiting. Rupert however is not afraid of that: he already calls the efforts that Alibaba has already made in that area sufficient to assume a "low risk of counterfeiting".