Last year was a landmark in China for the British fashion brand Dunhill.
After operating 13 years in the country through local franchisees, the company has taken over its largest distributor, China Resources, in a bid to strengthen its Beijing and Shanghai retail business.
Now the firm's strategy is clear - directly operate its retail business in the two core markets and leave the wholesale sector to local franchise partners in smaller cities.
The brand currently has 71 points of sale in China. Thirty-three of them are directly operated, and 38 are franchised and operated by eight local dealers.
Because of the enormous market potential of Beijing and Shanghai, its CEO Christopher Colfer says the company will open at least 10 new shops in those cities in the next two years.
"We have more opportunities when we can take control of our own stores. We can get our own message straight," he says, while declining to reveal financial details of the recent move. "It is an investment for the future."
Since the deal was completed about four months ago, Colfer says there are still many things to straighten out. "We went from seven people in the past to 250 now. The company has changed operationally and culturally."
"We have just made our bed, we are going to sleep in the quilt for a while and see how it goes, and then we will make another bed very shortly," he says, revealing to China Business Weekly that the company will further acquire franchise partners if the current business goes smoothly.
The company opened its first new concept store in the Asia-Pacific region at Beijing's new shopping mall Shin Kong Place.
The store is an evolution of Dunhill's retail stores, blending the brand's core elements in one elegant environment of Englishness, masculinity and luxury.
It makes extensive use of strong masculine materials like oak, nickel and bronze. Mustard yellow and taupe colors set a sophisticated '30s tone that is complemented by the light oak, dark leather and natural linen used to furnish the interior.
Cost to outfit the 172-square-meter shop was 250,000 to 300,000 euros.
Colfer notes that costs are increasing in China, both for real estate and operations, although still below well levels in New York. He notes that "the cost here is still 20 to 30 percent cheaper than other major Asian cities, but giving it 18 months, the gap will be much closer".
In Shanghai, Dunhill plans to transform a villa into a Dunhill complex, including not only its own fashion boutique, but also restaurants, a coffee shop, a pub, hair salons and a spa, all under the design guidance of Dunhill. The company believes the mansion of around 2,000 square meters, scheduled for completion next spring, will be a popular destination for men.
It is all part of Dunhill's plans for three landmark buildings in the important fashion capitals of London, Tokyo and Shanghai. The Tokyo complex is planned to open at the end of this year. The London site is scheduled for completion next February.
Colfer says Dunhill takes a modest attitude toward China. "We came in here with big ears, and are learning from everyday practice," he says.
The company's key merchandise in China is men's wear and leather goods, but it recently introduced a tailoring service. Its more expensive products account for big percentage of sales.
Though it is famous for formal attire, Dunhill recently placed more emphasis on casual wear, as evidenced in how Jude Law, its brand ambassador, dresses. For the past few seasons, the British movie star has dressed much less formal than before on the brand's posters.
Last year Dunhill embarked on a partnership that would realign the company's product and designs with customer in the 21st century - making it more relevant to today's men, yet keeping its quintessential British character.
The services of the renowned designer Giampiero Bodino have been recruited to lend his expertise and creativity to Dunhill's ready-to-wear and accessories collections.
