Since the outbreak of the pandemic, China has fallen in love with its own fashion. Domestic brands have benefited enormously from this “national tide” — a trend driven by growing patriotism amongst the young. The kids want to buy Chinese. But consumer sentiment can never be sustainable enough to rely on for long-term growth, especially under the retail gloom from the recent COVID spike. Given this, major players like Peacebird have been betting on emerging brands and signing the hottest new talents to keep Gen Zers on their side.
Now, Peacebird has upped the ante by offering investment over an opportunity to collab, disclosing a $1.6 million (10 million RMB) investment in Chinese designer brand 8ON8: an acquisition of a 20 percent stake, which values the company at $8 million (50 million RMB).
Founded by Central Saint Martins’ Fashion MA graduate Gong Li, 8ON8 debuted at Shanghai Fashion Week in 2017 and has been showing at London Fashion Week since SS 2020. The brand fuses British tailoring with casualwear to present a sporty yet sophisticated men’s wardrobe, and it has already collaborated with sportswear labels like Asics, Puma, and Kappa. Additionally, it was the first Chinese brand to partner with the Italian luxury menswear brand Canali to launch a global capsule collection.
The Canali Travels With 8ON8 capsule launched in Canali’s boutiques and Tmall flagship store in October 2021. Photo: 8ON8’s Weibo
How it works
The two companies are set to launch their first collaborative capsule collection later this year, featuring sustainability methodologies dedicated to saving energy and reducing emissions. As Gong shared with Jing Daily, the investment from Peacebird is “more of a commitment than merely financial injections.” He noted that, while traditional Chinese fashion labels need forward-looking visions and stronger determinations (like sustainability), what designer brands require is more mature operations and organizational structures. The relationship can be symbiotic: emerging upstarts have the agility and creativity to inject new blood into large companies and so refresh and rejuvenate them. Under this partnership, 8ON8 will retain its operational independence and continue to be led by the designer.
Why it matters
8ON8 is the first designer brand that Peacebird has invested in. However, before that, the company has collaborated with a host of Chinese talents such as Shushu/Tong, Calvin Luo, and Susan Fang. But these were one-offs, more for the sake of marketing, which offered a more affordable entry to designer clothing while attracting a broader range of consumers.
Betting big on marketing is not an organic solution, however, as shown by Peacebird’s 2021 financial results. It just reported a 16.3 percent year-on-year revenue growth for 2021, which has seen the group reach $1.71 billion (10.92 billion RMB). In that year, Peacebird’s sales expenses were $0.61 billion (3.9 billion RMB), an increase of 20.65 percent over the same period the year before, accounting for 36 percent of its revenue (and 26 times the research and development expenses). This ratio is also a reflection of how the company’s strategy to leverage young talents fell short: it merely took advantage of their social influences, while barely making any product developments.
And, though 2021 marks the first time Peacebird has achieved the $1.57 billion (10 billion RMB) milestone, its Q3 and Q4 performance indicated a growth slow-down compared to H1. As of April 6, the market value of the Ningbo-based company was $1.56 billion, which was only half of the same period the year before (over $3.14 billion). This significant shrink should be a wake-up call to Peacebird that only structural reform can yield long-lasting results.
The bottom line
This investment is not just a benchmark figure. In some ways, it’s better: an alliance between local fashion giants and designer brands which could potentially spark further similar partnerships and strengthen the cohesion of the homegrown fashion ecosystem.
Though the dividends may not show up in Peacebird’s financial numbers immediately, this move shows it has the patience to envision long-term prosperity — for itself and its community.
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