news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Interface News reporter | Zhu Yongling
Jiemian News Editor | Lou Qiqin

Those domestic bag brands that have been labeled as "substitutes for big brands" or even involved in plagiarism controversy may be doing better business than you think.

The domestic brand FION is such an example. The "Qiao Jin Kaiwu" series of tote bags launched by it in 2022 are still a hit in the store, with sales of tens of thousands of pieces on the Taobao platform in the past year.

FION's tote bag has become a hit brand

Although this series of tote bags, priced between 1,000 and 1,500 yuan, claims to use the brand's independently developed three-dimensional brocade fabric and is woven entirely by hand by craftsmen, many netizens still point out that it is highly similar to the Book Tote series of handbags from luxury brand DIOR, which was first launched in 2018.

DIOR is not the only brand that has been copied by other brands. Many other products launched by FION also have the shadow of big-name bags, so it is even directly called "little LV" by some netizens.

Discussions about FION on Xiaohongshu

However, it would not be accurate to view FION as a purely informal brand that only “skims the line”.

According to FION's official website, this brand, which was born in Hong Kong in 1979, does have its own history. The brand's founder, Cheng Rongzhong, was born into a family of leatherworkers in Hong Kong. As early as the 1980s, FION opened stores in Macau and Taiwan, China, and also entered overseas markets such as Japan, Singapore, Malaysia, and Indonesia. In the 1990s, FION entered the Chinese mainland market and opened brand counters in Beijing, Shanghai, Chongqing and other places. In 1992, FION also established a production base in Huizhou, Guangdong. In 2005, FION established its mainland China operations headquarters in Shenzhen and began to expand into the mainland market.

From 2012 to 2014, Chow Tai Fook, a local jewelry company that was already listed at the time, gradually acquired 100% of FION's equity in order to expand its business scope and brand portfolio, with a cumulative transaction price of nearly 1.4 billion yuan.

However, FION did not achieve leapfrog expansion and growth after being acquired by Chow Tai Fook.

According to public reports, FION had 256 sales outlets in mainland China, covering more than 80 cities by the end of 2012. The brand's official mini program shows that FION's offline sales network has now shrunk to more than 90 stores, which are highly concentrated in cities such as Wuhan (24 stores), Chengdu (21 stores), and Chongqing (16 stores). Among the four first-tier cities, there are only 7 stores in Shanghai and 2 stores in Shenzhen.

According to Chao Hongji's financial report, FION achieved a record revenue of 447 million yuan in 2021, but compared with 294 million yuan in 2015, the average annual compound growth rate during the period was only 7% - for a brand with a volume of only a few hundred million yuan, backed by a listed company, and with online and offline channels, this is not a high-speed growth. After 2021, FION's revenue fell again, with revenue of 375 million yuan in 2023.

Image source: FION official Weibo

However, FION has been able to occupy a corner in the market over the years and maintain relatively stable income in this comfort zone. This can be seen from the fact that FION has been able to create hot-selling products and its revenue level has not shrunk significantly over the years.

Du Bin, chairman of commercial real estate management company Hanbo Commercial Shanghai, told Jiemian News that competition in FION's price range is not fierce. Above are light luxury and luxury brands, and below are more affordable fast fashion brands and Taobao brands. In between, consumers don't have many options.

Du Bin believes that although FION has the problem of lack of originality, considering that many light luxury and fast fashion bag brands have been criticized for this, this will not cause much hindrance to it. Especially for some consumers in second- and third-tier cities who are not familiar with international brands and pay more attention to style and quality, FION, which has chain stores offline and emphasizes its 40-year history, is enough to make people think that it is a "branded product."

However, judging from FION’s current store image and location, it is still positioned as a second-tier brand - it is not difficult to enter ordinary-grade shopping malls, but it cannot squeeze into high-end shopping malls. Its customer base is mostly business white-collar workers in second- and third-tier cities. The purchasing power of these people is slightly lower than the price of light luxury brands, but they are also willing to pay for bags priced at thousands of yuan.

FION's IP co-branded bags Image source: FION official website

In recent years, FION has actually begun to plan to move forward.

At an investor relations event in 2023, Chao Hongji stated that its brand strategy in the past two years has been to improve the brand tone. Therefore, product research and development, management and operation have become more refined, and the relevant results are reflected in the improvement of customer unit price, store image, product display, etc.

In addition, FION had the intention of targeting younger people earlier. It started to collaborate with artists from different fields around the world in 2016, and collaborated with IPs such as Minions, Jurassic Park, and The Secret Life of Pets in 2018. Although these initiatives rarely go viral, in terms of marketing, we can see that FION has collaborated with KOLs on social media to promote its products in the past two years.

According to Chao Hongji's financial report, FION officially launched its brand image upgrade in 2023, finding inspiration for the brand upgrade from its own hand tools, and redesigning the brand logo, super symbol, monogram and color design. FION also opened its first Qiao Handicraft Art Flagship Store in Chengdu Tianfu Art Park this year, integrating multiple functions such as art exhibitions, interactive co-creation of handicraft workshops, retail shopping, and catering in a curatorial retail space.

It is worth mentioning that craftsmanship and durable quality are FION’s proudest brand traditions. For example, the slogan it created for its monogram bags is “Still as good as new after 10 years of use.”

FION is also trying to support its international brand positioning by expanding in the Southeast Asian market. At an investor relations event at the end of 2023, Chao Hongji said that FION's sales in Hong Kong and Singapore have increased rapidly in recent years, and it will continue to expand in the Southeast Asian market in the future.

Du Bin believes that considering that FION originated in Hong Kong and has a presence in overseas markets, these are all resources it can use to package its brand. In addition, the current retail investment in shopping malls is relatively quiet. If FION wants to move further upscale, it still has a chance, but the key lies in innovating its image and doing it in one step.

"If you want to enter mid- to high-end shopping malls, it is best to have a completely different image, or completely change the brand name; in addition, the design must also go high-end. The first and second stores are particularly important. You can choose to open them next to brands that match your own positioning. If you can enter two or three high-end shopping malls in a row, this road will be opened." Du Bin said.

The key lies in how determined FION is to transform. After all, changes cannot be made without initial investment, and in recent years, perhaps due to increased brand investment, FION has not been able to make money for Chao Hongji. Chao Hongji's financial report shows that in 2022 and 2023, Chao Hongji's subsidiary and FION brand operating entity Chao Hongji International Co., Ltd. has lost tens of millions of yuan for two consecutive years.

Looking at the overall situation of Chow Tai Fook, its R&D expense ratio has gradually decreased in the past few years, from 1.89% in 2018 to 1.06% in 2023.