Group seeks to build premium fashion center

Shanghai Zonfa Commercial Management Group is partnering with leading Italian luxury exporters to build the first "Asian Premium Fashion Distribution Center" in Shanghai's Jinshan district.

The center, to be completed and open to the public in the first half of 2014, will contain retail and distribution spaces and a fashion school in a space of 16,000 square meters. More than 200 brands, ranging from top luxury labels to fast fashion, will be available at the center.

The center will also take advantage of its location in China's pilot free trade zone to seek to become a supplier of luxury retailers to other East Asian countries. The "outletmart" — a word coined by the Zonfa to differentiate its retail business from common outlets — will target the millions of middle-class consumers in China who pay "two or three times" the price of their foreign counterparts for such luxury goods as LV bags or Gucci shoes, while often earning only one-third of the salary. The offerings at the "outletmart" will be from previous seasons.

"We are skipping middlemen like real estate developers and second- or even third-tier distributors by working with Italian exporters directly," said Ding Haozhou, CEO of the Zonfa Commercial Management Group.

Ding said he believed the market for "discounted luxuries" remains lucrative despite a strict ban from the central government on buying gifts with public money, which used to contribute a lion's share to the market.

"There is a general misunderstanding about the word 'luxury' in the country, which translated into Chinese becomes the equivalent of waste. On the contrary, its English original, 'lux', is all about light and bringing good things," Ding said.