Taking U.S. Designs to China
China is the next frontier for U.S. designers.
At least that is what Frank Yuan thinks. The Los Angeles–area businessman—best known for organizing ASAP Show Inc., the semi-annual sourcing show in Las Vegas—is searching for 30 designers who want to brand their name in China and set up retail-store prototypes that would be franchised across China.
“The best way to distribute is through franchises because most Chinese like to own their own businesses,” Yuan explained. “This will help international fashion designers and brands enter the Chinese market.”
Yuan was approached by Wei Huang, a developer in Wuxi, China, who is opening the new International Textile and Fashion Mega-Mall in late March. Wuxi is about one hour from Shanghai.
The mega-mall will have 13 million square feet of showroom space, which is about four times the size of the California Market Center in downtown Los Angeles, Yuan said. Huang is willing to pay the costs to build out 1,000-square-foot store prototypes that would also serve as showrooms in his mall. The prototypes would help sell the designer-store concept to franchisees.
Designers are being guaranteed a yearly royalty fee of $60,000, which is reduced by the 30 percent management fee charged by Yuan and an initial upfront $10,000 deposit that will be returned after six months, Yuan said. Annual royalties increase up to $130,000 for the fifth year.
The designers have to register their name or brands in China, which costs between $500 and $1,000, come up with a store design and ship the sample line. Everything must be done by March 28, in time for the mall’s grand opening.
Janet Stahnke, vice president of merchandising and product development for Morning Sun Inc., a Tacoma, Wash., firm that buys blank sweat shirts and T-shirts and adds its own designs, said she is about 80 percent sure she will participate in the retail franchise concept. “I really don’t think there is any risk. We just have to make sure that in the contract we sign we stipulate that no one can sell our product outside of China, so it doesn’t come back to the United States and compete with us,” Stahnke said.
Susan Dunn, whose Susan Dunn Inc. in Rancho Santa Fe, Calif., makes spawear, said she is considering it. “The proposal is enticing and challenging. If we can work out the details where it is mutually satisfactory, we’re in,” she said. More information can be found at www.fashionforchina.com. —Deborah Belgum
