Building Curiosity
By Lauren Hilgers
Hovering over the chic sweaters, coats and jackets that line the walls of Valerie Touya’s Curiosity clothing boutique on Shanghai’s trendy Julu Road, are giant images of the clothing designers featured inside. On one wall, Singaporean designer Nicholas peers down broodingly at his dresses; from the other, Li Hongyan, of the brand InSh, glances over her shoulder to watch over her wares. At Touya’s stores, customers are sure to know not just what they are buying, but who.
Introducing talented up-and-coming regional fashion designers is a new bold concept among clothing retailers in China, a market in which designer clothing has, up to now, meant mainly big name international brands or knockoffs. In her carefully designed displays, Touya is transferring her unique business acumen to her customers. When this Parisian 10-year fashion industry veteran (CEIBS EMBA 2002) launched her fashion retail business in China in 2005, she used a formula that relies not only on smart negotiations and number crunching, but also on creativity, timeliness and, most importantly, relationships - with designers, suppliers, and clientele.
Despite the newness of Curiosity’s merchandise in China, the business strategy is a “very Chinese way of doing business,” Touya says. “The whole concept is very personal - that’s what it takes to get a store like this to be successful. I have a very personal relationship with my partners. In China, once you make a deal with someone, you know you can rely on them.”
The formula, in combination with Shanghai’s easy access to low-cost clothing manufacturers, has worked well for Touya. Her first shop quickly burst its seams; today, Curiosity has expanded to three locations: two in Shanghai and one in Suzhou.
When Touya arrived in China in 2002 to join her husband in his relocation to Suzhou, she faced the task of finding a new career track. The ideal job would put to use her experience in retail fashion design for Nike and Printemps, including overseeing the opening of a new 9,000-square-meter Printemps store in Paris. As a first step, Touya enrolled as a CEIBS EMBA student in order to both develop her business skills and find openings in Shanghai’s retail scene.
The plan worked; soon after investigating the urban retail scene, she found a lucrative niche to fill. “The department stores [in China] all sell the same brands,” she says. “And the small shops often sell fakes and their merchandise is not very fashionable.” Her strategy was to tap into the increasingly discerning taste of the Chinese consumer - the growing population of fashionistas who are not interested in wearing mass-produced brand-name labels but have a more sophisticated European fashion sensibility. Her target market, she explains, “want to look past these big, international brands to find something more specialized.”
Touya found her first opportunity in a small French label called Lady Soul, which seemed ideal for her target market. While still studying at CEIBS, friends at the brand offered her 600 pieces, free-of-charge if she could sell them on consignment via Shanghai retailers. She found several retail chains willing to take the product on consignment, and sales soon followed. “Even when the clothes were just at the back of the shop, I was selling a lot of products,” she says. “I thought, My god, I have to open a shop.”
Adding to her success was the fact that 70 percent of Lady Soul product is manufactured at a factory near Suzhou. With easy access to the product, and a name for her future stores - she chose “Curiosity” for its double meaning as an emotion and an intriguing object - she was ready to launch. “I could hardly wait for the classes on building a brand at CEIBS,” she remembers. Today, her shops enjoy solid sales with a mix of Lady Soul products plus other hand-picked designer products. Touya says the concept of offering authentic, trendy designer product in China, sold at European prices, is working among her target market of urban sophisticates. By the close of 2007, the three Curiosity stores together were selling an average of 450 high-end clothing items per month.
Lessons learned: partnership vs WFOE
One of the most difficult decisions Touya has faced was in the official establishment of the business. The legal process of registering the company was straight-forward because she opted to team up with a Chinese friend who registered the company under the friend’s name, as a silent partner. This decision made starting up quick and also inexpensive, since Chinese-owned businesses must show far less registered capital than do JVs or wholly foreign owned enterprises (WFOE).
Today, however, Touya is experiencing several downsides to her choice of registering as a Chinese company. After two years of successful operations, she faced a scenario that many startups dream of: offers to franchise or buy-out her brand. Not holding the business license herself, however, hindered her ability to make the most of these offers.
In fact, this coming summer, Touya will relocate back to France and is thus now managing the sale of her three stores. The shop in Suzhou and the men’s shop in Shanghai have already been sold to her brother-in-law and a Chinese business partner. The third store is being purchased by a Chinese couple so enthusiastic about the concept that they offered to take over operations by the end of 2007.
The experience of selling the stores has left Touya with several lessons for foreign entrepreneurs in China. Because she never registered the name Curiosity as a trademark in China, selling the shops has been complicated. For example, the two sets of new shop owners initially disputed over the use of Curiosity as a name. In the end, both new owners will keep the name. Looking back, Touya advises that operating as a WFOE or JV, and making the effort to register the brand name, do have legal benefits as the business grows and succeeds.
Before she returns to France, Touya will be assisting in the venture of another CEIBS graduate, Crystal Zhong (Beijing EMBA 2003). Zhong is recreating Touya’s success marketing foreign specialty brands in China, but this time with toys. Touya will spend her last months in China helping to establish the business, working with Zhong to launch a retail company called “Kidsland.”
Once home in France, Touya plans to continue using her experience in Shanghai to her advantage. “I can apply my experience from Europe and my local technical knowledge,” she says. “I can offer European companies a window into the China market.” She also takes back the rich experiences she learned in successfully launching and selling off a business and a brand in China.
Valerie Touya（EMBA 2002）
Hometown: Paris, France
Title: Founder of Curiosity fashion boutique
Company launch date: 2005
Business focus: Retail fashion - clothing, accessories, jewelry
Business size: Seven employees, two stores in Shanghai, one in Suzhou, offering eight designer brands
Goal for 2008: Helping European brands enter the China market
