That ambition is now faltering, embracing iconic brands including Paris fashion house Cerruti 1881 and London’s Gives & Hawks, Seville Row Tailor, who has dressed British royalty for more than 200 years.
The owner of those brands, Trinity Group, a Hong Kong subsidiary of Mr. Qiu’s Shandong Rui Technology Group Co, entered liquidation in January. According to people familiar with the matter, liquidators are looking to sell Trinity’s brands together, but so far potential buyers are only interested in separate labels. This has led to a deadlock, these people said.
Mr Qiu was also removed as chairman of French luxury conglomerate SMCP SAS last month after outstanding creditors took control of the company from him last year. Once the jet-setting ambassador for Chinese corporate deal making, Mr. Qiu has kept a low profile in recent months. He and Rui did not respond to requests for comment or interview requests.
Rui said he has been unable to repay some of his debt in a December 2020 statement, last posted on his website. At that time the company had said it would be in talks with creditors to restructure the repayment programme. It also said that the company’s core textile business is stable.
Trinity said in a January Hong Kong securities filing relating to its liquidation that its brands continued to operate as normal. Rui’s subsidiary, which controls SMCP, challenged the rights of other shareholders to hold a January board meeting, in which Mr. Qiu was removed as chairman, but lost in court. An SMCP spokesperson said the company was not a direct party to a legal dispute between its shareholders.
Executives and analysts familiar with Mr. Qiu’s approach say Rui took on billions of dollars in debt between late 2016 and early 2019 to acquire well-known, but sometimes weary brands, to reinvigorate them. More investment was needed to do and develop. When the Covid-19 pandemic hit, buyers dried up, squeezing finances even more.
At the end of 2019, the government of the Chinese city of Jining took a 26% stake in Rui. In the last year for which data is available, the company’s revenue in 2020 fell by half compared to the previous year. The company defaulted on the $156 million bond at the end of 2020. It has more than $6 billion in debt on its balance sheet.
“They bought aggressively. There was a lot of optimism,” said Jason Basmajian, Ceruti’s former creative director. But Rui’s promises of big investments in Cerruti were never fulfilled, he said.
For years, Mr. Qiu was the face of China’s ambitions to become a player in the global luxury business. In a 2018 speech at the National People’s Congress in Beijing, he complained that young Chinese were happy to spend 20,000 yuan on a Canada Goose coat, the equivalent of more than $3,000, but would not spend 2,000 yuan on the same kind of coat. Chinese label. Rui, previously a mostly China-focused clothing maker for several global brands, will change all that, he said: “We will create a new image for Chinese quality and Chinese brands.”
Mr. Qiu has its roots in Jining in Shandong Province, a coal-producing city of 11 million people known for its close ties to Confucius. According to Chinese media profiles, the 63-year-old started his career with a government wool factory. In the 1990s, he sewed together rui from a collection of small clothing producers to form one of the largest textile conglomerates in China.
After this he set his eyes abroad. According to Chinese state media reports from that time, he helped fund new nuclear power plants and a textile facility in Pakistan. He bought Australia’s largest cotton farm in 2013.
On a visit to Arkansas a few years later, he met Gov. Asa Hutchinson and pledged $410 million to convert a disused electronics plant into a state-of-the-art textile factory. In 2019, he bought Wilmington, Dell-based Lycra Company, a maker of stretchable fabrics, for $2.6 billion, borrowing $1 billion of that amount.
He began buying luxury retailers, advocating for an integrated business model that would include not only cotton farms and textile mills, but also brands that designed and sold the industry’s highest-end clothing.
Mr. Qiu acquired SMCP—whose brands include Sandro, Mezze and Claudy Pierlot—in 2016 for $1.5 billion and added Trinity and its brands the following year. According to JAB Holding Company, owner of Bally, there were other luxury acquisitions in Israel, Japan and the UK, with Rui saying it was taking a controlling stake in Swiss luxury firm Bally in 2018, but a deal was never completed.
Following the Trinity deal, Mr. Qiu visited Ceruthi Studios, where employees “welcomed him to the red carpet,” a former executive who was in attendance said. “We thought he was our savior.”
It was in the process of vacating its flagship store in Paris’s Place de la Madeleine in 1967, which was opened by its founder, the late Nino Cerruti, in order to save money, according to former executives. Mr Qiu said the move would be halted and that the money had no purpose in maintaining the historic site, a former officials said.
After Mr. Qiu told Ceruthi’s staff that his dream was to be the next LVMH, some of them were remembered. The excited Seruti team congratulated Mr. Qiu worked on a new strategic plan for the brand but never got the green light to execute it, said Mr Basmajian, former creative director. “They didn’t have a game plan,” he said. “They were only interested in buying the brand they could get. After that there was no growth, no investment and no growth.”
The Cerutti flagship took off at the Place de la Madeleine shortly after Mr. Qiu’s visit. The brand now only operates stores in China. “We never heard from him again,” said the former executive.
Other brands that Rui has bought have stagnated. Aquascutum, a tailor founded in 1851 and once famous for its raincoats, closed all its stores and is now sold only on the Internet in China. Gives & Hawkes laid off many of its employees during the pandemic, when demand for sewing fell. Aquascutum and Gives & Hawkes did not respond to requests for comment.
According to a spokesman for the state Department of Commerce, work on the Arkansas textile factory never began. She said the Rui project was on an “indefinite halt”.
This story has been published without modification to the text from a wire agency feed
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