Hong Kong, a gateway for mainland China? Examining the impact of luxury fashion retailers’ ownership structures on expansion strategies

Abstract

PurposeThe purpose of this paper is to examine luxury fashion retailers’ ownership structures at their internationalisation strategies in Hong Kong and mainland China.Design/methodology/approachThis study adopts a pragmatic mixed methods approach, comprising a quantitative mail survey and ten qualitative executive interviews.FindingsThis study found that group-owned luxury fashion retailers usually encounter fewer difficulties when internationalising into mainland China than their individually owned counterparts because of parenting advantage, particularly functional and service support. However, the success of some individually owned brands has demonstrated that branding strategies, management culture, international experience, financial power and local partners’ know-how are as important as parent company support and although the luxury market in mainland China has become developed, many foreign luxury fashion retailers still enter Hong Kong prior to mainland China. However, in relation to post-entry management and expansion strategies, the importance of Hong Kong has weakened because the emergence of capital cities, the growth of the middle class and fewer political restrictions.Research limitations/implicationsThe research findings are generated in the context of Hong Kong and mainland China, they are therefore limited in explaining luxury fashion retailers’ internationalisation strategies in other markets. Despite the challenge of the sample size, 63 out of 130 survey respondents (48.5 per cent response rate) and ten interview participants are felt to be sufficient to represent the market.Practical implicationsThis research can be used by practitioners when assessing appropriate entry strategies to the Chinese luxury fashion market.Originality/valueThis is a pioneering study of the Chinese luxury market from the perspective of international retail strategies. It differentiates between Greater China (including Hong Kong, Macau and Taiwan) and mainland China, and examines the impact of luxury fashion retailers’ ownership structures on their internationalisation strategies.