Companies launch new brands for Asia markets

HONG KONG -- Foreign companies are going after the disposable income of Asia's consumers with jeans, shoes, even phones designed especially for this developing market.

Last year, U.S. jeans maker Levi Strauss launched its Denizen denim brand in China and Singapore. U.K.-based Burberry sells its Blue Label brand of men's and women's clothes and shoes in Japan. French designer Christian Dior markets a sapphire-encrusted cellphone in Shanghai. And Parisian fashion house Hermes has teamed with Chinese designer Jiang Qiong Er to sell the exclusive Shang Xia brand.

The growing number of foreign retailers who are launching products or even brands for Asian economies is a sign of this region's increasing buying power.

Retail sales are growing faster in Asia than in many developed economies: From 2010 to 2014, retail sales in this region will increase an average of 6% a year, significantly higher than the global growth rate, PricewaterhouseCoopers predicts. In China alone, retail sales more than doubled to $1.1 trillion from 2006 to 2010, according to Access Asia, a market research firm.

"If the fashion and luxury markets are big enough, more foreign companies will (want) to launch their own brand" for Asia, predicts Sun Yimin, an associate marketing professor at Fudan University in Shanghai.

Creating distinct brands for one region of the world is an increasingly popular, yet risky, strategy. Foreign companies spend years building their reputations in emerging markets.

So the question is whether launching a new line will detract from the parent brand, says Andrew Lam, associate director for retail and lifestyle in greater China for Synovate, a market research firm.

Companies that are already household names in Asia may also find it tough to gain traction for new brands, Lam says.

For Levi Strauss, the question of whether Asian consumers would embrace a line of lower-price jeans from a well-known brand was top-of-mind in its deliberations about whether to launch Denizen.

"There's always the risk that when you try to be all things to everyone, you end up being nothing to nobody," says Aaron Boey, president of the global Denizen brand.

But the success of retailers such as Zara in selling jeans made Levi Strauss realize there was an "unmet need" for high-quality, low-price denim in Asia, Boey says. While a pair of Levi jeans starts at $95 in China, the Denizen line starts at about $55.

A year after its launch, Denizen — which Levi claims will elongate Asian bodies and give them a perky butt — is sold in 390 stand-alone Denizen stores in seven Asian countries.

The brand has also expanded to Mexico and the U.S. Levi doesn't break out sales for the Denizen brand, but the company says it's "pleased" with how consumers have responded.

In general, it makes sense for foreign companies to launch brands specifically for Asian markets, says Tan Heng Hong, a research analyst at Access Asia. "It increases your brand awareness, and you can position your product at a different price level," he says.

As Asian economies expand, consumers in the region will tire of Western designs as they embrace their unique culture, Tan says. That's why such brands as Hermes' Shang Xia — highlighting Chinese craftsmanship in clothing, accessories and furniture — are finding a market in Asia. Shang Xia's first store opened in Shanghai last year.

Asian consumers' tastes in clothing may already be changing. Traditionally, Asians have preferred Western to local brands, but educated consumers are increasingly realizing that much of the foreign-brand apparel they buy is actually made in China, Sun says.

Today, "people don't pay so much attention to where (clothing is) made, but whether it's tailored to them," she says.

With jewelry, however, Asian consumers still prefer Western to local brands, Sun says.