A dark suit, an overcoat, a pipe and a hat are the traditional elements that make up a refined English gentleman's wardrobe. A number of luxury brands offer similar product lines, but Alfred Dunhill believes that it is the definitive English luxury goods brand for men, and that they represent the best of England's rich cultural heritage.

The company has put a lot of time and effort into building its brand into one of the top luxury labels in China. These successes have led Dunhill to consider its next big step in the development of its regional operations: it plans to form a joint venture.

"We are going to launch our first joint venture in the middle of this year with China Resources (Holdings) Co Ltd, our largest franchise partner," says Tim King, managing director of Richemont Luxury Asia-Pacific, Alfred Dunhill division.

King tells China Business Weekly that the new company will control and run approximately 30 stores across 11 major Chinese cities, and that they will maintain this franchise partnership in secondary cities. Dunhill will hold a majority stake, but King refuses to reveal more details about the ownership.

Since entering the mainland market in 1994, Dunhill has opened 64 stores and department store counters in 35 different cities. All of these stores were opened through its eight franchisees.

China Resources is the largest franchisee, handling 27 Dunhill stores in North, East and South China, including Beijing, Shanghai, Guangzhou, Shenzhen, Nanjing, Wuhan, Shenyang, Dalian, Changchun and Harbin.

King says that Hangzhou is an exception.

"We will keep our current franchise partnership in Hangzhou, although the city is regarded as a primary city to almost all luxury operators."

He explains that the company has a strong partnership with its Hangzhou franchisee, and that it has no plans to change its operations there.

King says that it is the right time for Dunhill to get involved in the retail business in China, adding that the joint venture will concentrate on upgrading the existing shops.

"We believe that it is far easier to control the way a retail shop looks if we have an investment in it," the managing director says.

"For example, we have some products which are very expensive, and there are very few customers for those goods. A pure franchise store would tend to think that they would not be able to sell these products, and would therefore not purchase them from Dunhill. But when we invest in the shop, we share the risks. That makes it easier for us to control the way the shop looks" .

The joint venture will scout locations for new boutiques, but King refuses to say how many. He says Dunhill has not been involved in actual retail operations on the Chinese mainland, and that the company still has a lot of work to do before it can gain a clear understanding of the profitability of each shop.

"Once we understand profitability, we as the brand owner become much more involved in negotiating terms and conditions with landlords, and we start looking at opening new stores," King says.

He adds that that Dunhill will also close one or two of its underperforming stores. China changes so rapidly, he says, that keeping consumers can be a big challenge. Mainland shoppers can be extremely fickle, so Dunhill needs to continually assess which shopping malls to establish a presence in and which ones to leave.

"Together with China Resources, we will make the decisions regarding where to go to."

Dunhill has found that Chinese demand for menswear is different from consumers in Western countries and Japan. The company sells more casual garments in China than in any other markets.

"The majority of Chinese customers who can afford luxury products are entrepreneurs or private business owners. Because they run their own businesses, many of them dress very casually. They don't wear suits Monday to Friday. They only wear them on special occasions," King explains.

This means that the company sells a lot of polo shirts, casual shirts, trousers and overcoats in China. Dunhill's belts are also popular on the mainland.

The latest survey by the Far Eastern Economic Review shows that Dunhill is the most famous luxury brand in China, topping French giants such as Louis Vuitton and Lancme.

China is currently Dunhill's second largest market after Japan. Over 40 per cent of its annual Hong Kong sales revenues come from mainland shoppers. The China market is maintaining annual double-digit growth, a pace the company hopes to maintain.

It hopes to further push its English image through a two-year endorsement deal with Oscar nominated British actor Jude Law. This collaboration will see Law appearing in Dunhill ads starting next month. The campaign is exclusively geared at the Asian market, including Japan, the Chinese mainland, Hong Kong, Taiwan, South Korea, Malaysia, Singapore, Thailand, Indonesia and Viet Nam.

"We are proud to be working with Jude Law. Dunhill is one of the top English brands known for innovation, adventure, understated style and masculinity," says Alfred Dunhill Chief Executive Officer Christopher Colfer.

"If we had to name one person in the world who best captures those values, it would be Jude Law."

Alfred Dunhill initially came to Asia in the 1960s, by opening stores in Hong Kong and Japan. It then extended its reach to Singapore, Malaysia and Taiwan.

The company mainly designs products for men, but some products have also been aimed at women, including watches, bags, diaries, and card holders.

(China Daily 03/06/2006 page6)