California Apparel News

Last summer, Frank Yuan, organizer of the ASAP Global Sourcing Show, held twice a year concurrently with the MAGIC Marketplace in Las Vegas, took 87 apparel buyers on a sourcing trip to China. Now, ASAP wants to help 100 American brands penetrate the Chinese market with a new show, Fashion International Trade Show (FITS).

Set to take place at the Hangzhou Peace International Convention Center June 29–July 1, the show is geared toward helping apparel manufacturers explore licensing opportunities in China.

“China has the fastest-growing consumer market in the world,” Yuan said during a press conference announcing the show. “There are very few international brands in China—and they want them.”

Ilse Metchek, executive director of the California Fashion Association, agreed that there are plenty of opportunities for local brands in China.

“It’s a slam-dunk for California brands to enter the Chinese market,” she said. “They are hungry for product in our price points and with our fashion looks. The challenge is doing it right.”

According to Yuan, the way to enter the Chinese market is via licensing agreements with Chinese manufacturers, known as “master licensee operators,” and distributors. To that end, FITS’ focus will be to facilitate such partnerships.

At the show, all the participating American brands will exhibit their products, from apparel to footwear to accessories, for an audience of 2,000 pre-registered Chinese manufacturers. “We’ll only be letting established, reputable master licensee operators into the show,” Yuan said.

According to Steve Wasserman, an attorney with Tarzana, Calif.–based Wasserman, Comden, Casselman & Pearson LLP, who specializes in licensing agreements, a license agreement with a Chinese manufacturer can take an average of six months to complete. “The most frequently asked question by U.S. brands is how to enter into a licensee agreement with a Chinese master licensee/ franchisee/distributor,” he said. “There are many types of licensee agreements, either based on gross sales, net sales, territory, product specifications, etc.”

At FITS, consultants will be on hand to help brands choose the best licensee option for them, Yuan said.

The average licensee fee is 10 to 15 percent of the wholesale value, with a minimum guarantee.

For the opportunity to make connections with Chinese manufacturers and distributors, FITS exhibitors will pay $5,800 for a package that includes a 200-square-foot booth, production of graphics for the booth, travel and hotel accommodations, and a personal translator.

The show will include seminars on understanding the Chinese distribution system, how to promote brands in China, licensing brands in China, how Chinese department stores select brands, and how to protect and manage brands in China.

Counselors for FITS exhibitors will be:

bull; Ilse Metchek, CFA executive director bull; Greg Gardner, president of Los Angeles–based labor and safety consulting firm CSCC bull; Attorney Steve Wasserman, of Wasserman, Comden, Casselman & Pearson LLP, which specializes in licensing agreements bull; Bobby Hines, international trade specialist with the U.S. Commercial Service and the U.S. Department of Commerce bull; TukaGroup, Los Angeles–based makers of CAD/CAM technology bull; Retail group Ernst & Young Foreign brands trying to penetrate the Chinese market must learn the country’s distribution system. “China’s distribution system is totally different than that of the Western markets,” Metchek said. “It is very hard for California brands to expand their business into China by themselves.”

When looking for a Chinese master licensee or distribution partner, brands must be very careful in their selection. “The thing to keep in mind is that the Chinese master licensee buys your pattern and your brand—after that you have no control,” Metchek said. “They can change your designs or create some of their own, so you have to be very selective about who you work with and the terms of the license.”

Entering the Chinese market also requires an ongoing investment. “Doing business in China is just like doing business here,” Metchek said. “You have to build the team and invest the money and provide the vision, because you’re in it for the long haul.”

—Erin Barajas