Can House of Fraser crack China?

Having a Chinese owner can't hurt.

by Rachel Savage
Last Updated: 15 Jun 2015

China is for Western companies what America is for British business: a potentially hugely lucrative market, but one that many have struggled, or completely failed, to crack (c.f. Kingfisher, L’Oreal, Revlon). That hasn’t deterred House of Fraser, though, which is planning to open three stores there in the next couple of years – a gamble that will no doubt be less risky given its new Chinese ownership.

The company, which was bought off the stock market by Chinese conglomerate Sanpower last autumn, will open department stores in Nanjing in a year’s time. That will be followed by Chonqing later in 2016 and Xuzhou in 2017, chief executive John Oddy, who took over in February, told trade magazine Drapers.

Those so-called ‘tier two’ cities might not ring many bells with people outside China, but they had a combined population of almost 50 million in 2010, with almost 33 million in the ‘supercity’ of Chonqing (give or take – population estimates in China are notoriously dodgy). Plus Beijing and Shanghai are ‘over-shopped’ anyway, according to Oddy.

Everything will be very British – from the ‘premium’/‘aspirational affordability’ prices equivalent to those back home to the brands. ‘We want to play on our heritage, our Britishness,’ Oddy said. ‘There could well be some local brands to complement the Western ones, but the focus is very much on being a quintessential British department store in the way it looks and the brands it stocks.’

Blighty does sell like hot scones in Asia, but that doesn’t mean there aren’t risks for House of Fraser, even under the protection of its new Chinese parent. Burberry, Mulberry and Diageo with its Scottish whiskeys all play up their Britishness, but have struggled as the economy has slowed and Xi Jinping’s government has cracked down on corruption and official excess. Meanwhile, pharma giant GSK has been embroiled in hugely damaging bribery allegations.

More recently Jaguar Landrover has been forced to recall cars over complaints about its gearboxes that could well have been blown out of proportion on purpose by state TV, which often targets Western companies over safety. Luckily there’s not a lot that can wrong with clothes, but House of Fraser had better hope its zips are up to scratch and Sanpower is in the Communist Party’s good books.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Upcoming Events

Subscribe

Get your essential reading delivered. Subscribe to Management Today