China is hot on the radar of many luxury brands, as they look to take back control of the growth and operations of their stores. After 5-10 years of learning from their distributors, licensees and franchisees of the in’s and out’s of the local culture and market risks, luxury brands such as Burberry and Coach are sweeping in and cutting out the middle man, so to speak. As they now plan to manage the operations via their own subsidiary directly, they have essentially had a ‘try before you fully invest’ approach.Burberry has been a key player in this new strategy who recently announced plans to buy its network of 50 China stores. This leaves the distributors in a risky situation. Whilst being a distributor in an emerging market can be wonderful in the early days with growth and market position leading to success in sales they risk losing the cream to the owners of the brand once real success starts to show.
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