Outlet villages are the new 'in' for shopping

"Total retail sales at the asset are impressive and there is no evidence to suggest they should not be robust going forward."

Many Chinese relish the virtual day trip to "Italy", snapping photos by reconstructed relics－an imitation Coliseum, for example－while enjoying 30-70 percent discounts on last season's stock.

"We offer a different Italian shopping experience," said Lupi. "The first reason people come is still the environment. We have been able to use precious materials ."

The outlets are considered such a sightseeing sensation, especially abroad, where Chinese now do two-thirds of their luxury shopping, that Value Retail claims 75 percent of Chinese tourists to the UK visit its Bicester Village outlet in Oxfordshire.

In May, Value Retail opened an outlet center in Jiangsu's Suzhou, also with an Italian theme.

The big gamble for Silk Road now is the second stage of their China pipeline.

The new outlet, located five minutes from Pudong International Airport, is a no-brainer, but plans to extend into Guangdong's Foshan in 2015, Chongqing, Chengdu and cities like Wuhan and Qingdao are more of a risk.

The group aims to have seven up and running by December 2017.

"We conducted market studies for several years before finally launching in Tianjin," he said.

"We have to approach the second- and third-tier cities more carefully, with a smaller size and phased investment, and of course ask the brands if they are interested in opening in these cities."

The first phase of the Pudong center, which is 5 minutes from the closest subway station and 30 minutes' drive from downtown, was based on a planned investment of $200 million.

"We ensure all the goods sold in our outlets are genuine. Our research showed this was the main concern of visitors."

In a rapidly changing market, the relatively flexible relationship outlets have with their anchor and other tenants can give them an extra edge.

"We have a clause in the contract to immediately kick out tenants who are not principals if we discover any counterfeits," he said. "So far, we can say we have never had any fake products."

Q&A|MAURIZIO LUPI

Who is your role model?

People who follow principles of integrity and honesty. You have to listen to everyone and make the decision that, hopefully, can make the majority happy, with good teamwork. That is my style of management.

How many languages can you speak?

English, French, Spanish, obviously Italian, and I can manage in Russian－it's much easier than Chinese, believe me. I can't even order a coffee in Chinese.

What are your most recent luxury purchases?

I like tailor-made things. So I label it myself, in a sense. My last purchase was an IWC Portofino watch (3,500 euros).

It was a gift for myself. I also bought some Gucci bags last Christmas, and some Prada gifts, which are also very appreciated, quality-wise. I bought some in Italy, and also two bags here in China.

How do you spend your leisure time here?

I go to shows. There are lots of opportunities to do this in Shanghai. I saw the Rolling Stones here this year. I also saw them in Rome in June, by the Colosseum.

What do you value most in a business partner?

Reliability.

How does China compare to other emerging markets where you have worked, for example in Eastern Europe?

It is much easier and quicker to find opportunities here, especially if you find the right people.

The infrastructure is amazing－from airports to trains and communications. The environment is friendly and it helps you make the right choices and have the right partners.

What is your greatest achievement?

It will be to have seven outlets open and running by 2017. Half of them have already met our targets.

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