Playboy Enterprises' intention to spearhead business in China by licensing its iconic bunny logo on lifestyle products such as apparel may not work well in the long run, an expert said Thursday.
"Playboy needs to invest (in China) to build a high-end image, rather than relying on agents to distribute labeled products," said Tang Pinghua, a partner with Adfaith Management Consulting.
Media recently reported that 2011, - the Year of the Rabbit - could be an auspicious year for Playboy Enterprises.
The company in November opened a 12,000-square-foot (1,115-square-meter) nightclub in Macao and inked a 5-year $50 million deal with Chinese company Glory Rabbit to boost its presence in China.
Its Chinese partner, Glory Rabbit Investment, has exclusive rights to use Playboy's rabbit head logo on men's and women's apparel, and plans to open at least 2,000 Playboy-branded retail stores in China, the Associated Press reported Sunday.
The Chicago-based company aims to double its China sales to 20 percent of total li-censing revenue within three years, according to a November 20 Bloomberg report citing Playboy's CEO Scott Flanders.
Based on Playboy's filing with the US Securities and Exchange Commission (SEC), China sales should have contributed about $2.8 million in licensing income in the first nine months of 2010.
"Brand awareness for Playboy in China is high, but it is not regarded as a luxury brand. In fact, its high-end brand image is declining since the glory days of the 1990s," Tang told the Global Times.
Domestic copycats and a lack of brand reinforcement initiatives are the major rea-sons for it, he claimed.
Playboy should invest more in China, for example by establishing proprietary stores to reinforce a high-end brand image, Tang said.
Playboy had net losses of $33.8 million in the first three quarters of 2010, after posting a $23.5 million loss for the same period in 2009.
Given that its licensing business is the only segment where revenues continue to grow, Playboy is understandably keen to expand its licensing business in China, and in Asia as a whole.
