France’s PPR to Snatch Up Chinese Jeweler Qeelin

PARIS—PPR SA PP.FR +0.39% is acquiring Chinese fine-jewelry maker Qeelin Ltd., the French company’s first Asian label, highlighting the powerful role China is playing in the luxury world.

Gucci parent company PPR is acquiring Chinese fine-jewelry maker Qeelin, highlighting the powerful role China is playing in the luxury world. Grainne McCarthy has details on Markets Hub. Photo: Reuters.

China is « already an absolutely immense market, it will become even more so, » said François-Henri Pinault, chief executive of PPR, whose labels include Gucci, Yves Saint Laurent and Stella McCartney. « A brand whose origins, its codes, its DNA are Chinese will benefit from a considerable advantage. »

Affluent Chinese shoppers have been a growth engine for European luxury houses, with an appetite for brand-name bags and pricey trinkets fueling double-digit growth. While the market’s growth has cooled somewhat lately, the acquisition suggests that luxury executives see considerable potential in Chinese brands as the appetite for high-end products evolves in the country.

Qeelin is on a natural path to develop in China, he said, « but it has an international potential also. »

Qeelin, which was founded in 2004 by Chinese designer Dennis Chan and French entrepreneur Guillaume Brochard, has 14 boutiques: 11 in China and Hong Kong and three in Europe. The label translates mythical Chinese symbols such as the Lion Dance, used in a gem-encrusted representation of a lion, into luxury jewelry.
« There is a high probability that [Qeelin] speaks more to a Chinese clientele, given that it uses the codes and tradition of that culture, » Mr. Pinault said.

PPR didn’t disclose the financial terms. But Mr. Pinault said the deal was smaller than the company’s acquisitions last year of surf-and-skate brand Volcom and menswear brand Brioni. PPR bought the labels for $608 million and around €300 million, or roughly $390 million, respectively.

Qeelin is « a young company, which is still a modest size compared with its potential, » Mr. Pinault said.

Qeelin—the name comes from the Mandarin word qilin, describing an auspicious mythical hoofed creature—sells pieces for roughly €2,000 to €30,000.

Messrs. Chan and Brochard will retain minority stakes and remain with Qeelin after the sale. The deal is expected to close in January.

With the move, PPR follows other purveyors of high-end goods, such as Hermès International RMS.FR -0.55% SCA and Cie. Financière Richemont SA, CFR.VX -0.41% that are investing in prestigious Chinese names to broaden their footholds in the country’s luxury market.

Hermès recently said it has plans to invest tens of millions of euros over the next five years to develop Chinese boutique label Shang Xia—selling traditionally inspired apparel, jewelry and furniture—in which it bought a majority stake in 2008.

Richemont, which has owned fashion line Shanghai Tang since the mid-’90s, has plans to expand in China. Shanghai Tang has more than 50 shops globally.

Mr. Pinault said that when he began looking to invest in a Chinese luxury brand, he focused on jewelry rather than fashion. « Clothing as a means of expression was born in Latin cultures, in France, in Italy.…When you look at jewelry, there is a strong tradition in Europe, but also in Asia, in India and China, » he said.

Mr. Pinault compared Qeelin with Bottega Veneta or Balenciaga in the early 2000s, when the two brands were bought by Gucci. Bottega Veneta reported 2001 revenue of €34 million. Last year, the Italian brand posted sales of €682.6 million.

Mr. Pinault said he came across Qeelin in August 2008, when shopping for a gift for his baby daughter. A shopping expedition in a Qeelin store in Hong Kong, where he purchased a small panda bear pendant for his one-year-old, led to another purchase in Paris shortly after, he said.

« I arrived with a gift that was so appreciated by [my wife], that I then bought her the larger version made for adults, » said Mr. Pinault, who is married to the actress Salma Hayek.

While luxury-goods companies posted strong sales gains last year, that has slowed in recent months as China’s economic growth has cooled. U.K.-based Burberry Group BRBY.LN -0.38% PLC warned in September of slower sales and lower profit, citing a slowdown in China. Diamond merchant De Beers SA projected that sales growth in China would slow to 10% this year from more than 20% last year.

In PPR’s luxury division, sales growth, excluding the effects of currency exchange and acquisitions, came in at 16% over the first nine months of this year, cooling from 24% a year earlier.

« Growth was so phenomenal in 2011. To believe that it would continue exactly that way, you would be a bit of a dreamer, » Mr. Pinault said.

But he said he remained confident in the long-term growth potential of China’s luxury market.

Qeelin is being acquired not only because of its strong presence in China, but also because it would fill gaps in the company’s portfolio of offerings.

« We’re not doing it to plant a little flag in China, » Mr. Pinault said.

Write to Nadya Masidlover at

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