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China is 'No 1' opportunity for Coach

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Coach Inc was among the first luxury brands to come to China, selling its handbags and accessories.

Customers line up to enter a Coach Inc store in Tianjin. [Photo/China Daily]

"China is our No 1 geographical opportunity in the world," Jonathan Seliger, Coach China president and CEO, said.

The country is the world's second-largest market for luxury goods. It is Coach's third-largest market by revenue, after its home base of the US and Japan.

In fiscal 2013, Coach's sales on China's mainland, Hong Kong, Macao and Taiwan reached $430 million, a 40 percent year-on-year increase.

The company was established in a Manhattan loft in 1941, its founders inspired by the supple leather of a worn baseball glove. Today Coach has stores in over 30 countries. It is still headquartered in New York.

Coach entered the Chinese market via distributors in 1998, six years before the country joined the World Trade Organization and opened to foreign companies.

China is the world's second-largest economy.

In 2009, Coach took back its business from franchisees on the Chinese mainland. Business has increased ever since.

Coach, along with peers, such as Swarovski, Calvin Klein and Levi's, is among the top eight brands in China, according to domestic media.

Seliger spoke to China Daily in Coach's two-floor flagship store in Shanghai. Alongside, luxury brands abound.

Opposite Coach's building are the more imposing and glitzy logos of Tiffany and Louis Vuitton. Less than five minutes away, Maison Hermes erected its signature orange billboards after more than four years spent renovating a century-old compound

At end-2012, China's government banned "any form of extravagant spending".

The aim was to curb the tradition of giving gifts bought with public money. That practice made up the lion's share of growth in luxury-goods sales.

Prima facie, the move ought to have harmed Coach. It hasn't and may prove beneficial, Seliger said.

"A sure answer is no, not yet," Seliger said. "The policy is leading people to shift to value. It's my theory, though not yet been proven."

We sell "a bag, for example, that a woman can wear in public without concerns".

Seliger, a former managing director of Alfred Dunhill China, calls Coach "an alternative to the European traditional luxury brands".

The company sells well-made, handcrafted goods from the same fabrics and leathers as European rivals but at 40 to 60 percent cheaper.

Inclusive, accessible and relevant - the three "pillar words" Seliger uses in opposition to Europe's exclusivity, tradition and classicism.

Most European luxury boutiques have their doors closed, staff white-gloved, and products shelved high above.

"At Coach, any one of our stores has the door widely opened, and customers can come in and touch any product as they want," Seliger said.

"As we have built the category, other American brands have slowly entered the marketplace," he said. "We welcome competition, as it creates more awareness of the category and interest."

Competition from counterfeits, particularly online, is not welcome, he said.

So in 2011 Coach agreed with Alibaba Group Holding Ltd, owner of Taobao.com, that fake Coach goods would be removed. Taobao.com is China's largest online sales platform.

The agreement was renewed last year.

"We actually bring down thousands a month from taobao," Seliger said. A dedicated Coach team checks the website daily.

He refuted the possibility that lower-priced Coach goods sold online could have come from contracted Asian manufacturers. That's been argued by sellers who say they're offering real value for money. "We have very tight compliance control," Seliger said.

Coach is tapping China's "600-million" e-commerce market. In 2011 it was the first luxury brand to have a store on taobao.com. A year later, it launched its own online sales platform in Chinese.

"The majority of business is coming from where we have physical stores," Seliger said.

In Shanghai, Coach's store is a "dual-gendered concept" with sleek spaces for women's wear on the first floor and men's on the second. It opened in 2010 and there are now 122 Coach stores on China's mainland.

Seliger said business is "very successful" and declined to give specifics.

"We see a huge opportunity to expand our male products and offering in China," Seliger said.

Men globally constitute 15 to 18 percent of the premium handbag and accessories market. That's worth about $6 billion. China is "a very male-dominant market", Seliger said. There men account for close to 40 percent of sales.

Seliger has led the company for three-and-a-half years. The biggest challenge in China is keeping staff "in the most competitive market in the world", the 45-year-old said.

He claimed "one of the lowest turnover rates in the industry, more than half of the industry benchmark" for his company. "If I were to leave a legacy behind when I leave, I think it's leave great people," Seliger said.

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