Bosideng, one of China's leading down apparel manufacturers, confirmed Thursday that the company is sacking its UK designers, leaving the Chinese team to take their responsibilities.
In a statement e-mailed to the Global Times Thursday, the company attributed this decision to its expectation of integrating more Chinese elements in the design of products sold in the UK market.
"While foreign designers have helped us thoroughly learn the overseas trends and market, we think the Chinese design team is more suited to realize this projection," said the statement, without mentioning how many employees are involved.
However, analysts said that the layoff is actually aimed at saving costs.
"Although Bosideng is a famous brand in China, its overseas brand recognition is not so high, resulting in low market reception. And the company must have invested a lot in marketing there, which likely generated some financial burdens," Yan Qiang, a partner with Beijing-based Hejun Consulting, told the Global Times Thursday.
The company set up a flagship store in London in July 2012, which cost 35 million pounds ($58.7 million), and set up its European headquarters in October.
Vivian Sun, a Chinese living in London, told the Global Times Thursday that the flagship store is located in London's busiest commercial area and has already put a lot of effort in advertising.
"But it still has low popularity among local consumers. Its core business in the UK mainly focuses on medium- and high-end menswear, but there are many comparable local brands to compete with. Chinese people here also rarely buy the company's goods, as Bosideng is still known for its line of down jackets among us and London's winter is not so cold for such outfits," she said.
The company, founded in 1975, mainly amassed its fortune from the sale of down jackets operation, and has been suffering from the shrinking demand for its core products in recent years given the global warming.
According to Bosideng's interim report, the down apparel business accounted for 62.5 percent of the total revenue during the six months ending September 30, 2013, hitting 1.76 billion yuan ($267.7 million), down 4.7 percent year-on-year.
It forecasted in late March that its total revenue in the fiscal 2013 to 2014 by the end of March will see a double-digit drop from a year earlier due to warmer weather and fierce competition.
Actually, the company has started into other apparel types such as menswear from 2009 to diversify its product ranges amid weather uncertainty.
But it still has yet to successfully stand out in other clothing segments, partly due to fierce competition in the domestic market, Li Guangdou, head of Beijing-based brand consultancy Wondersee, told the Global Times Thursday.
The interim report said that the ?revenue of businesses beside down jackets dropped 18.1 percent year-on-year.
China's traditional clothing industries are challenged by the booming e-commerce, which also had an adverse affect on Bosideng, noted Yan.
The poor performance is unlikely to dampen Bosideng's resolve to further its presence in overseas market.
It reportedly opened a pop-up shop in New York in January, planning to enter into 15 to 20 premium shopping malls before this fall.
Yan noted that it is not wise to move into the US when the performance is bad in the current markets.
"A company needs at least five years to establish its position in a new market. Before that, it should better not turn to other markets in a rush, as it may hurt its internationalization," he said.
