The fashion company Desigual has decided to strengthen its presence in China by fully entering the Asian market with a local partner, the firm E-Shine. The agreement establishes the creation of a joint venture to boost online sales and open 60 stores in the Asian giant.
It is the first time in the 38-year history of the Catalan brand that it has chosen to expand into an international market hand in hand with a local company. According to the company, this strategy provides knowledge about the habits and preferences of the Chinese consumer, especially since it is an operator that has a strong position in China and is accustomed to representing other international fashion brands. In fact, E-Shine is one of the partners of Septwolves Industrial, a fashion company listed on the Shenzhen stock market, one of the most recognized in the Asian fashion industry.
Desigual aims to achieve a turnover of 40 million euros in five years in China, half of that amount thanks to online business and the other half in physical stores, starting with the opening of flagships in Shanghai and Beijing. The general director of Desigual, Alberto Ojinaga, has assured that they not only want to develop the business in China, but also in other parts of the Asian market, such as Japan and South Korea.
China, however, is not a totally unknown market for the brand founded and directed by Thomas Meyer. In the years of maximum expansion of the company, in the first decades of the 21st century, Desigual landed in the Asian giant with two stores in Shanghai and online advertising campaigns. But the experience lasted only two years. In 2014, it withdrew from direct sales and focused on the e-commerce platform Tmall, the country's main retail website, coinciding with a period of contraction in international consumption.
Asia accounts for 6.5% of Desigual's international business, but with the prevalence of Japan, which until now is the first market outside Europe and the fifth by sales volume worldwide.
The group's strategy is to ensure that, by 2023, sales generated through the digital channel and those from geographies outside Europe jointly represent 60% of turnover. Right now, "this percentage is at 49%," Ojinaga specified.
The company resumes expansion after in 2021 it had to recover from the drop in sales recorded the previous year due to the pandemic, which led to its first negative balance since its market launch, with losses of 83 million. However, it closed the 2021 fiscal year with a turnover of 371 million euros, only 3% more than the year of Covid-19 and 37% below 2019 figures. It managed to return to profit: three million, half of the 2019 profit.