PARIS (Reuters) - Longchamp, one of France’s leading handbag makers, plans to increase its presence in China, its chief executive said, in sharp contrast to retrenchment by rivals and despite the economic slowdown and changing consumer culture there.
Many leading luxury brands such as Kering’s (PRTP.PA) Gucci and LVMH’s (LVMH.PA) Louis Vuitton have put the brakes on further store openings in China as part of campaigns to preserve their exclusive image.
“We are far from having fully tapped China,” Jean Cassegrain, chief executive of the privately-owned group, told Reuters in an interview.
“The brand is starting to be increasingly appreciated by the Chinese, both at home and abroad.”
Founded in 1948, Longchamp, known for its logo of a jockey on a race horse, is one of the last remaining independent family-owned leather goods makers in France with a global presence.
It competes against brands such as Italian leather goods maker Furla and France’s Lancel, owned by Swiss luxury group Richemont CFR.VX.
Cassegrain, whose family founded and owns the brand, said he felt Longchamp had not been affected by China’s crackdown on exchanging gifts for favours. Such gifts usually involved spirits and watches, he said, rather than bags and clothing.
Longchamp’s core business is women’s handbags, with its best-selling Pliage bag starting under a 100 euros and leather handbags starting at around 370 euros.
Cassegrain said Longchamp, present in China since 2006, ran about 20 shops there, and was looking to open more in the years to come. He would not give a specific target. Longchamp closed two shops in China last year and opened six.
He said finding the best spots was difficult because new malls were constantly being built, sometimes rendering obsolete those that opened just three or four years ago.
Cassegrain said Longchamp’s sales in mainland China, Taiwan and Hong Kong rose 26 percent last year, but remained somewhat sluggish in Europe after years of strong growth.
The brand has 60 percent of its turnover in Europe and sales of 462 million euros last year. Growth slowed to 4 percent last year from 16 percent in 2012 and 20 percent in 2011.
Cassegrain is hoping for double-digit growth in 2014 and said the year had started well, helped by recovery in Europe and expansion in Asia.
He said that last year Chinese buyers, including those from Hong Kong and Taiwan, had become the brand’s second most important customers behind the French and before the Americans.
Longchamp had just opened a permanent office in Moscow and is more concerned about red tape there than the Ukrainian crisis.
“Maybe I should be worried but I am not still for the moment,” Cassegrain said. “We expect things to be complicated in Russia anyway, with or without the Ukrainian crisis.”
Longchamp recently bought back three franchise boutiques, one in St Petersburg and two in Moscow.
Russians are the world’s No.2 spenders while overseas after the Chinese, and their top three destinations are Rome, Paris and Milan, a study by VAT-refund company Global Blue showed this week.
Writing by Astrid Wendlandt; Editing by Andrew Callus and Mike Collett-White