ASIAN BRAND SOUNDS ITALIAN, LOOKS AMERICAN : GIORDANO SUCCESSFULLY COPIES OTHERS BUT FUMBLES IN CHINA

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Giordano might seem like an Italian copy of retailer Benetton, but this casual clothing chain definitely has Asian roots. Flamboyant rags-to-riches Hong Kong entrepreneur Jimmy Lai, who founded Giordano 16 years ago, knew that a European-sounding brand name would sell well in label-conscious Asia-particularly if its Asian-made jeans, T-shirts and sweaters were among the least expensive, best-made garments in the region.

Today, Giordano-inspired by the name from a New York pizzeria-operates more than 450 Asian outlets in 12 countries while sales have skyrocketed from $92 million in 1989 to $450 million as the ubiquitous outlets spring up on main streets and in shopping malls from Singapore to South Korea.

With brightly colored merchandise folded into neat stacks of styles, Giordano stores decidedly look like Benetton outlets. But here, a pair of jeans costs a mere $20-considerably lower than Benetton prices.

Asian consumers often don't like to admit when they're wearing Giordano. In fact, in Hong Kong, the brand is most popular with Filipino maids. No wonder Giordano is seeking to upgrade a downscale image by investing approximately $12.9 million in advertising.

Giordano shamelessly copies The Gap's advertising approach, playing up a trendy youth culture image to reach the chain's customer target of 15-to-40-year-olds.

Witness the recent "A World of Strangers" campaign, created by Giordano's in-house agency that pictures different races playing together or embracing each other. Or see the latest pitch called "No Gimmicks," which plays visual jokes such as comparing a friendly Labrador retriever to a fur coat, suggesting Giordano isn't for fashion victims.

New products such as wrinkle-free cotton trousers get supplemental ads. Currently, Giordano is airing a silent TV commercial that shows a woman being liberated from an ironing board.

TV gets most of Giordano's ad dollars, shared by regional satellite broadcaster Star TV and local TV channels. The rest is divvied up among magazines, newspapers and outdoor boards. Sales promotion is rare because Giordano items are already seen as low-priced.

But as Giordano's success has attracted Asian copycats such as Bossini and G2,000, the retailer's infrequent three-for-the-price-of-two offers are likely to become more frequent.

Throughout Asia, Giordano strives for uniform regional marketing, but finds it must cater to local sensitivities, said Terry Ng, director of the regional office in Hong Kong. He noted that in Malaysia government rules require TV commercials to star local actors, not foreigners.

Climate also affects the merchandising mix. In Korea and China, which experience wintry conditions, more heavy sweaters and coats are marketed, while equatorial Singapore gets cool cottons. Colors are blended for local tastes, too. For instance, red sells well in China because it means good luck and prosperity.

Giordano doesn't overlook courteous customer service as an important factor in its success. Other contributors include "just-in-time" ordering so that little inventory is wasted, as well as manufacturing just a few, basic styles unlikely to go out of fashion overnight.

With markets outside Hong Kong already accounting for 70% of Giordano's turnover, expansion beyond Asia is being considered. But the company wants to master its own turf before trying Europe or the U.S., possibly within the next five years.

"We don't want to develop too many markets at one time," said Mr. Ng, reached in Bangkok, where Giordano is opening 13 stores. "We just want to focus ourselves on markets that are close to us for the moment."

But even in nearby China, where Giordano wants to expand from 150 outlets to 1,000 in four years, marketing missteps have been made. Giordano has lost money expanding in China, admitting that its early product positioning was wrong.

"The Giordano items are not that cheap in China for people to want to buy them for that reason," said retail analyst Oona McNeil at brokerage Peregrine. "And they're not expensive enough for those who can afford it either."

Giordano has recently forged a link with a Chinese state-owned enterprise that may lead to lower prices.

Meanwhile, Giordano has encountered messy political troubles.

In a highly publicized move, Giordano's stores in Beijing and Shanghai were shut down last year as officials blamed "licensing" problems. Local retail analysts pointed the finger at Mr. Lai, who once printed T-shirts protesting China's Tiananmen Square massacre in 1989 and more recently raised China's ire again by using one of his own magazines to publish insults about Chinese Premier Li Peng.

Mr. Lai has tried to distance himself from Giordano to downplay the controversy. In recent years, while Mr. Lai has sold off his interests in Giordano and relinquished his directorship, his vision has lived on.

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