Its expansion in China is exactly like its brand spirit: ambitious and pioneering. The plan is to establish a presence on showcase shopping streets and prime locations in every important city in the country. Fashionable menswear label HUGO BOSS is certainly not pulling any punches on the Chinese market.

With over 5,000 retail shops in 102 countries, the German fashion giant sees China as one of the major driving forces behind its international business. This is why Chairman and Board Member Bruno Saelzer has set such ambitious targets. The company plans to open 10 new stores in China every year.

HUGO BOSS does not simply see Beijing, Shanghai and Guangzhou as the only important cities in China. Its ambitions extend to comparatively poorer inland cities such as Hefei in East China's Anhui Province, Taiyuan in North China's Shanxi Province, and even Urumqi, capital of Northwest China's Xinjiang Uygur Autonomous Region.

This is a brave plan, compared with many other big luxury brands, most of which only have two or three outlets throughout the country.

Saelzer says that HUGO BOSS wants to grow along with China's economic development, adding that the company sees great potential in the country's luxury market. It is the market leader in China, with 65 shops in 37 major cities.

Lars Peter Larsen, managing director of HUGO BOSS Hong Kong, agrees with Saelzer. He says there will be more and more demand from the Chinese market for ready-to-wear items.

"The economy has shown strong growth, and there are positive indications that this strong growth will continue for the next few years. This will mean a relatively broader and wealthier group of customers."

Larsen says that the major task for all international luxury brands in China is to find prime retail space.

"There is plenty of retail space in China, but they are occupied by local brands, or the brand mix is incompatible," he says.

There is a pressing need to address and change this situation to accommodate incoming international luxury brands and their requirements for suitable retail space, proper branding mixes and prime locations, Larsen says. But he adds that this situation cannot be resolved quickly.

"Through constant meetings and discussions with developers and mall management companies, HUGO BOSS, together with other luxury brands, is able to secure better locations," Larsen says.

Market competition is not a huge concern for the company. HUGO BOSS has built up a strong customer base and high brand awareness throughout its 12 years in the Chinese market.

Larsen admits that the company faces a challenge when fighting against fake products. It is working closely with local investors and the State Administration for Industry and Commerce to combat counterfeiters.

It is also quite helpful that the authorities have recognized HUGO BOSS as a 'famous brand' in China, he says. China's Regulation for Evaluating and Managing Famous Trademarks reports that famous brands and trademarks refer to registered trademarks that are well known to certain groups of people and enjoy greater visibility on the market. They can therefore enjoy both administrative and judicial protection throughout the country.

The company's men's collection now accounts for 90 per cent of total sales in the Chinese market, but the brand hopes to reinforce the identity of its rapidly growing women's label. The company was quite successful with its ladies' wear business last year.

HUGO BOSS released details from its annual report in January, posting a 23 per cent rise from last year's net income. This was driven by its booming women's clothing line, which beat the average forecasts of both the company and analysts. Net income came in at 108 million euros (US$128.77 million) last year, up from 88 million euros (US$104.92 million) a year earlier.

"The Boss Black collections were particularly successful, with sales growth of 38 per cent," Saelzer says. The company expects sales and earnings to continue to rise in 2006.

HUGO BOSS has long been famous for its innovative, quality products. The creative process behind designing new collections takes place at the company's headquarters in Metzingen, Germany. Special fabrics and materials, as well as new manufacturing technologies, are developed exclusively for the company.

After researching international trends, the creative teams produce up-to-date fashion designs based on a four-season cycle. Pattern makers then transform these ideas into prototypes with the help of modern software. Sample collections are displayed in the showrooms and manufactured in series after the company's trading partners have signed their orders. Production planning at headquarters prepares the whole process in detail and assists in implementation.

On its journey from HUGO BOSS production facilities to the retail market, the collection finally undergoes a wide range of quality tests performed by staff experts.

The HUGO BOSS group is represented in the fashion market by its brands BOSS, HUGO and BALDESSARINI. The collections behind these brands and their lines are designed to appeal to different target groups.

The core BOSS brand includes the BOSS Black, BOSS Selection, BOSS Orange and BOSS Green lines, along with their corresponding collections of accessories.

Combining creativity and individuality, the HUGO brand offers confident men and women a collection that allows them to invent their own styles.

Designer label BALDESSARINI is all about luxury infused with a unique contemporary flair, for men who accept nothing less than the very best.

Besides offering ready-to-wear products, HUGO BOSS has rounded out its collections by integrating shoes and leather products into its business. Licensed products complement its outfits, including fragrances, cosmetics, watches and eyewear.

The company also offers a comprehensive array of merchandising items, including jewellery and lifestyle accessories.

(China Daily 03/06/2006 page7)