If you can't beat them, join them. Or better still, take their money.
Only five years ago, Italian fashion houses were wringing their hands over copy-cat frocks and footwear made in Chinese sweatshops. The tiny family workshops of northern Italy that service the Milanese rag trade have been decimated by the strong euro and Asian imports, but Prada is now looking East, not just for cheap labour but cheap money. Patricio Bertelli, Prada's chief executive, and his wife Miuccia Prada are once again thinking about floating Prada stock on the market and the choice of venue isn't Milan, Paris or London but Hong Kong.
This should come as no surprise to followers of the Hong Kong and Shanghai capital markets. The queue of Chinese public offerings continues to lengthen. While the rest of the world festered last year, Hong Kong was the world's biggest IPO market, raising almost $250-billion (Hong Kong) in new money for companies. PriceWaterhouseCoopers expects another $330-billion this year and in August, Agricultural Bank of China set a world record for primary issues, raising $22-billion (U.S.) on the Shanghai exchange.
Prada is following in the shoes of Rusal, the aluminium giant controlled by Oleg Derispaska, which became the first non-Chinese company to list in Hong Kong. The Russian firm found the Hong Kong regulators easier to deal with than their counterparts in London, but money and ambition also talks and Rusal is bent on using its platform in Hong Kong to gain better access to Chinese markets for its metal. The allure of a different kind of Chinese consumer attracted L'Occitane in May, when the French perfume and toiletries company chose Hong Kong for its flotation, raising $5-billion (Hong Kong).
L'Occitane's quintessentially French world of Provencal evenings scented with lavender and rosemary oil doesn't quite gel with the hard glitz, steel and bling of Hong Kong or Shanghai. The really frightening message is that the owners and promoters of L'Occitane and, it appears, Prada, no longer believe this matters. Prada has recovered its poise, with rising revenues and earnings and if Chinese investors can provide the cash to pay down its €485-million in debt and build up capital for expansion, so be it. The question for London, New York and Milan is where do we go from here.