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October 19, 2009

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Fashion icon faces 'furious' city firm

A LEGAL war is brewing between a Shanghai firm and Pierre Cardin, the international fashion giant.

Shanghai Century Star Imp & Exp Corp reached an agreement in June with Pierre Cardin, the 87-year-old founder of his namesake company, to buy its Chinese licenses.

The local company said this would give it sole rights to use the Pierre Cardin label on its products in China.

Shanghai Century said yesterday the French company was in breach of the deal by selling part of the licenses to another firm.

Pierre Cardin initially agreed to sell Chinese licenses for all its products, including clothing, leather goods and bags, to Shanghai Century.

However, the Shanghai company said Pierre Cardin also sold Chinese licenses for leather products to a firm based in Wenzhou, Zhejiang Province.

The Wenzhou company, which Shanghai Century has not identified, signed an agreement with Pierre Cardin in early July.

Shanghai Century said in a statement that it launched an investigation and found that the Wenzhou company had transferred 33.3 million euros (US$49.17 million) to Pierre Cardin by September.

Shanghai Century said the first batch of money was transferred as early as May.

Earlier media reports identified the Chinese firm in question as a consortium led by Wenzhou businessman Sun Xiaofei, chairman of Cardanro, a private shoemaker.

Shanghai Century is a unit of the state-owned China National Garments Group Corp.

"Shanghai Century is shocked and furious," the company statement said.

Other media reports hinted that the domestic firms may unite in buying the licenses but Yao Yuming, a legal representative for Shanghai Century, said this course of action had not been considered.

"We buy whole licenses so we can develop brands to a new stage under our plans," he said. Yao said a partial purchase made no sense.

He said Pierre Cardin's behavior was not in line with business ethics and potentially illegal.

"We expect Mr Cardin to respect Chinese laws and provide us with an explanation," he said.

The company may sue Pierre Cardin if it does not receive a proper response, Yao said.

Pierre Cardin has yet to officially comment.

The Shanghai company first announced in August that it was buying the licenses, after media reports said several Chinese firms from Zhejiang and southern China's Guangdong Province planned to acquire the brand.

Shanghai Century said it won approval from the National Development and Reform Commission in August, which made it the only qualified licensee for Pierre Cardin under domestic regulations.

Any overseas investment exceeding US$50 million needed the NDRC approval and the amount in the Pierre Cardin case surely surpassed that level, said Tang Jue of French law firm Thieffry & Associes, legal counsel for Shanghai Century.

Tang declined to say how much Shanghai Century planned to pay for its license rights for Pierre Cardin.

Shanghai Century has a long association with Pierre Cardin.

The French group entered China in the 1970s with the assistance of China National Garments, making it one of the earliest international fashion brands in the country.


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