The Chinese textile magnate pushed into fashion, then ran into trouble


That ambition is now waning, dragging down iconic brands he acquired along the way, including Parisian fashion house Cerruti 1881 and London-based Gieves & Hawkes, the Savile Row tailor who dressed British royalty for more than 200 years.

The owner of these brands, Trinity Group, a Hong Kong subsidiary of Mr. Qiu’s Shandong Ruyi Technology Group Co., went into liquidation in January. Liquidators want to sell Trinity’s brands together, but so far potential buyers are only interested in separate brands, according to people familiar with the matter. This led to a stalemate, these people said.

Mr Qiu was also ousted last month as chairman of French luxury group SMCP SAS after unpaid creditors took control of the company from him last year. Once a jet-setting ambassador for dealings with Chinese companies, Mr. Qiu has kept a low profile in recent months. He and Ruyi did not respond to requests for comment or interview requests.

Ruyi said he was unable to repay some of his debts in a December 2020 statement, the latest to be posted on his website. The company then said it would negotiate with creditors to rearrange repayment schedules. He also said the company’s main textile business was stable.

Trinity, in a January securities filing in Hong Kong related to its liquidation, said its brands continued to operate as normal. A subsidiary of Ruyi that controlled SMCP challenged the right of other shareholders to hold the January board meeting at which Mr. Qiu was ousted as chairman, but lost in court. A spokesperson for SMCP said the company was not a direct party to the legal dispute between its shareholders.

Executives and analysts familiar with Mr. Qiu’s approach say Ruyi took on billions of dollars in debt between late 2016 and early 2019 by acquiring well-known but sometimes tired brands that needed more investment. to invigorate and develop them. When the Covid-19 pandemic hit, buyers dried up, further straining finances.

At the end of 2019, the government of the Chinese city of Jining took a 26% stake in Ruyi. The company’s revenue in 2020, the latest year for which data is available, fell by half from the previous year. The company defaulted on a $156 million bond at the end of 2020. It has more than $6 billion in debt on its balance sheet.

“They bought aggressively,” said Jason Basmajian, Cerruti’s former creative director. “There was so much optimism.” But Ruyi’s promises of a big investment in Cerruti never materialized, he said.

For years, Mr. Qiu has been the face of China’s ambitions to become a global luxury player. In a 2018 speech to the National People’s Congress in Beijing, he complained that young Chinese were happy to spend 20,000 yuan, or more than $3,000, on a Canada Goose coat, but would not spend 2,000 yuan for the same type of coat with a Chinese label. Ruyi, who was previously a mainly China-focused textile manufacturer for many global brands, would change all that, he said, “We will create a new image for Chinese quality and for Chinese brands.”

Mr. Qiu’s roots go back to Jining in Shandong Province, a coal-producing city of 11 million people best known for its close association with Confucius. The 63-year-old started his career at a state-owned wool factory, according to Chinese media profiles. In the 1990s, he sewed Ruyi from a collection of small fabric producers to create one of China’s largest textile groups.

He then turned abroad. He helped fund new nuclear power plants and a textile factory in Pakistan, according to Chinese state media at the time. He bought Australia’s largest cotton farm in 2013.

During a trip to Arkansas a few years later, he met Governor Asa Hutchinson and pledged $410 million to convert a disused electronics factory into a state-of-the-art textile factory. In 2019, he bought Wilmington, Del.-based Lycra Co., the maker of the stretchy fabric, for $2.6 billion, borrowing $1 billion of that amount.

He also began buying luxury retailers, espousing an integrated business model that would include not only cotton farms and textile mills, but also the brands that designed and sold the most high-end garments in the industry. .

Mr. Qiu acquired SMCP, whose brands include Sandro, Maje and Claudie Pierlot, for $1.5 billion in 2016, and added Trinity and its brands the following year. There have been other luxury acquisitions in Israel, Japan and the UK. Ruyi said he took a majority stake in Swiss luxury company Bally in 2018, but a deal was never reached, according to Bally owner JAB Holding Co.

After the deal with Trinity, Mr. Qiu went to the Cerruti studio, where the staff “welcomed him on the red carpet”, said a former executive present. “We thought he was our saviour.”

Cerruti was moving out of its flagship store in Paris’ Place de la Madeleine, opened by its founder, the late Nino Cerruti, in 1967 to save money, according to former executives. Mr Qiu said the move would be stopped and money was no obstacle to maintaining the historic site, one of the former leaders said.

Mr. Qiu told Cerruti staff that his dream was to be the next LVMH, some of those present recalled. Cerruti’s enthusiastic team worked on a new strategic plan for the brand at Mr. Qiu’s request, but was never given the go-ahead to execute it, said Mr. Basmajian, the former creative director. “They had no game plan,” he said. “They were only interested in buying all the brands they could get. After that, there was no development, no investment and no growth.”

The Cerruti flagship in Place de la Madeleine closed shortly after Mr. Qiu’s visit. The brand now only operates stores in China. “We never heard from him again,” the former executive said.

The other brands acquired by Ruyi have stagnated. Aquascutum, a tailor founded in 1851 and once famous for its raincoats, has closed all its stores and now only sells on the Internet in China. Gieves & Hawkes laid off much of its staff during the pandemic when sewing demand plummeted. Aquascutum and Gieves & Hawkes did not respond to requests for comment.

Work on the Arkansas textile factory never started, according to a spokeswoman for the state’s Commerce Department. She said the Ruyi project was on “indefinite hold”.

This article was published from a news agency feed without text changes

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