March 30, 2014 10:05 am

Hugo Boss taps S Korean star power in China

Claus-Dietrich Lahrs, chief executive officer of Hugo Boss AG, poses prior to the company's annual results news conference in Metzingen, Germany, on Monday, April 12, 2010. Hugo Boss AG, Germany's largest clothing maker, expects "single-digit" sales growth this year on rising demand for suits in North America and Asia. Photographer: Alex Kraus/Bloomberg *** Local Caption *** Claus-Dietrich Lahrs©Bloomberg

Claus-Dietrich Lahrs, chief executive, says South Korean celebrities 'have real reach and importance'

As Gwyneth Paltrow, the actress and face of Hugo Boss, sparked headlines about the end of her marriage last week, the German fashion house was using the allure of Asian stars to create a different kind of buzz in China.

Speaking in Hong Kong where Hugo Boss has launched two new flagship stores partly aimed at mainland Chinese tourists, Claus-Dietrich Lahrs, chief executive, says the label is increasingly tapping the international star power of South Korean celebrities to boost sales in China and other parts of Asia.

“We closely work with South Korean stars and what is interesting is that they are really famous outside South Korea,” Mr Lahrs told the Financial Times. “In this aspect, they have real reach and importance.”

Hugo Boss has already capitalised on the growing dominance of South Korean stars in the Asian entertainment market. Kim Soo-hyun, a famous actor, wore a Hugo Boss shirt in My love from the star – a South Korean drama that is so popular in China it has even attracted the attention of the Politburo Standing Committee.

“Have you all seen that trendy online drama . . . something star?” Wang Qishan, one of the seven men who essentially rule China asked this month during a big political meeting, before teasing older cadres for being unaware of the show.

On Thursday, dozens of fans camped out at Hong Kong airport for Lee Jong-suk, a South Korean actor who was a star attraction at a splash-out party that Hugo Boss was throwing that evening. Mr Lahrs also held a lunch for Hong Kong socialites with Jason Wu, the Taiwanese-born designer who catapulted to fame after dressing Michelle Obama and who is now in charge of Hugo Boss’s women’s fashion range.

Asia delivers 15 per cent of Hugo Boss’s global sales – €2.4bn (US$3.3bn) in 2013 – with China accounting for about a third of that. Mr Lahrs says the company must make an even bigger push in China despite recent tough conditions.

“This part of the world requires much more attention that we have given to it for many, many years,” says Mr Lahrs.

He says China was “challenging” in 2013 because President Xi Jinping’s austerity campaign has made consumers nervous about buying high-priced luxury products. But he adds that while the market remains tough, Hugo Boss is seeing signs from its stores across more than 40 Chinese cities that consumers are spending again.

“There is still some insecurity among consumers about spending, about the future, about what government will decide next,” says Mr Lahrs. “We see still a pretty challenging situation in mainland China . . . but we see week after week, some kind of steady improvement compared to the situation we had in 2013.”

Hugo Boss is still investing in China despite the tougher environment, in a push partly designed to capture a growing slice of purchases made by Chinese tourists.

“We have to be strong in China in order to be respected wherever Chinese customers want to buy the brand,” says Mr Lahrs. “So we cannot . . . stop doing things in China and wait until they see us and discover in other parts.”

To illustrate the spending power of Chinese tourists, Mr Lahrs says 15-20 per cent of sales in big cities around the world come from Chinese shoppers. He says Hugo Boss is toying with the idea of setting up a service that would allow Chinese tourists to shop online while overseas and have the items shipped back to China.

Although the Chinese e-commerce market is growing exponentially, Mr Lahrs says Hugo Boss – which started an online sales channel in China last year – has not yet seen a big impact on sales in China, saying they represent less than 1 per cent.

“China is a very important e-commerce market . . . but it is not as strong as what we see in Europe or the US in the full-price, high-end section of the market,” says Mr Lahrs. “This will certainly develop over time, but its still very, very small proportionwise”.

Additional reporting by Julie Zhu

Twitter: @AsiaNewsDemetri

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