MORGAN China Story: A Breakthrough Path For French Luxury Brands

How does the French aristocracy make romance in China? The French fashion brand MORGAN has MADEINCHINA on the back of the high price tag. It can be said that she is trying to solve the textile trade dispute in an adventurous way.

Adventurer MORGAN

In June 17th, Antoineo Piva (Mr.An-tonioPiva) hurried back to Nanjing from the end of France's holiday. He was the managing director of Morgan (MORGAN) Nanjing Garments Co., Ltd. (hereinafter referred to as "Nanjing Morgan").

At present, China's Ministry of commerce is encouraging textile enterprises to invest overseas and build factories to avoid the "special safeguard" in Europe and America.

The French fashion retailer, MORGAN, invested in a production line in Nanjing three months ago, which looks like a huge bet.

In the clothing market of France, from the high fashion to the middle and low grade clothing, we can see traces of Chinese made everywhere.

However, it is clear that only a few Chinese brands or MADEINCHINA are identified in the products. More Chinese clothing enterprises are only OEM or OEM for foreign brands, and their products are in the middle and low grade.

Now, MORGAN is willing to abandon some products' European blood, invest in China's production line and label the origin of China, which has surprised many industry analysts.

Some analysts believe that this may be because MORGAN initially considered China's labor cost advantage and expected that China would have considerable export prospects after the abolition of textile quotas in January 1, 2005.

In March 10, 2005, Nanjing Morgan officially started to become the largest production center of MORGAN fashion in Asia.

The business registration data show that the company, a legal representative of the Hongkong people named Yue Xinyu, is a cooperative project between MORGAN and Hongkong Heng Bao Li International Holdings Limited (hereinafter referred to as "hang Bao Li"). Heng Baoli provides a factory building, each side invested 1 million 500 thousand US dollars, and MORGAN and hang Bao Li accounted for 49% and 51% of the shares respectively.

Morgan in Nanjing is not only a production base, but also a comprehensive procurement center in his CEO high spirit.

Qiu Yongjie, executive manager of Heng Bao Li Nanjing company, has repeatedly stressed to the first Financial Daily reporters that Nanjing Morgan will be the MORGAN design, production, procurement and supply chain management center in China.

According to the original plan of MORGAN, Nanjing Morgan will meet 50% of the global supply of MORGAN in three years, and its annual output will reach 5 million to 6 million finished garments, equivalent to half of the expected annual sales of MORGAN in 2008.

"Our shift to China is mainly about low production costs."

Mr. Gao Rui made it clear.

It is reported that the workers in the French clothing industry earn $15.87 an hour, ranking seventh in the world textile industry (lower than Denmark, Switzerland, Belgium, Japan, Holland and Germany).

A domestic manufacturer with a French brand told reporters that in France, the cost of workers' wages has already accounted for 60% of the cost of clothing production.

Moreover, French workers can only work 35 hours a week, and Chinese workers can not only work for 45 hours, but also work overtime regularly.

"Under the same production capacity, our domestic effective working hours will be longer, while the cost of labor in foreign countries will be higher."

On June 19th, when the Ministry of Commerce announced the "Interim Measures for the management of textiles exports (Provisional)", Yue Xinyu, chairman of the board of directors of MORGAN, opened the board of directors at MORGAN headquarters in France and rushed to Shanghai to attend the meeting.

Sitting in front of reporters, Yue Xinyu's eyes were bright, and his expression was somewhat tired.

According to Yue Xinyu, the current global purchasing volume of MORGAN is around 11 million garments, of which 20% are purchased in Asia, including India and China (mainly in China); 40% in Europe, including France and Eastern Europe; and 40% in Tunisia in North Africa.

This time, MORGAN put the major pfer measures in China, rather than those in India, Africa and other countries with much lower labor costs which many domestic relocation enterprises value.

The difference lies in "qualitative considerations". Yue Xinyu said, "this pfer is in line with the development strategy of MORGAN and expands the share of procurement in China. We plan to increase it to 60% by 2007."

North Africa or other areas are only processed by MORGAN's own purchasing fabrics, which lack the ability to develop products, so it can't match China's MORGAN supply chain.

Helper's upgrade

It is understood that the main business of Heng Bao Li is to produce and manufacture internationally famous brands in China, and is responsible for purchasing in China. Occasionally, some brands are also managed by supply chain.

Prior to the joint venture with MORGAN, Heng Bao Li also played the role of MORGAN supplier, supplying more than 10000 garments to MORGAN in 2003.

Heng Bao Li also makes OEM processing to ARMANI, BENETTON and so on.

And this cooperation between Heng Bao Li and MORGAN is "a breakthrough from OEM to ODM", Yue Xinyu said.

According to the relationship between Heng Bao Li and MORGAN, OEM is the so-called OEM (OriginalE-quipmentManufacturer), which is designed by French MORGAN designers. After drawing the drawings and identifying the materials, the samples are sent to the domestic suppliers by the product manager.

"In short, the design, fabric, color and other processes are confirmed in France and then copied to China."

Huang Mingyang, executive director of MORGAN, is so general.

And according to the current mode, Heng Bao Li is also responsible for the development of tasks, the nature of ODM (OriginalDe-signManufacturer), by MORGAN drawing a good picture, to determine a certain idea, Heng Bao Li according to this concept to find the fabric that can be used, design and play the plate, completes the sample after the MORGAN product management team, finally through the two sides unified, order the production.

"The biggest difference between OEM and ODM is that the links in ODM involve design and development, making products more value added and, of course, higher profits."

Yue Xinyu added that this is the North African Tunisian and other places do not have the advantage.

From "world workshop" to "world factory", WTO textile trade agreement negotiator Li Yueyin also thought it would be