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want a chief financial officer'," Au recalls.
Intrigued, Au researched the company,
which has a portfolio spanning brands as
diverse as sportswear giant Nike and Italian
luxury label Roberto Cavalli, then flew to
Shanghai for talks. Au took the job and now
helps the company distribute some of the
world's most popular fashion brands across
Success requires mastering different
channels: department stores, discount out-
lets, franchises, wholesale, online. "It is very
mathematical," he explains. "You have to
understand your products, your channels,
your cash flow before you can make a deci-
sion on where to put what. That's the compli-
cation of retailing," he adds.
The biggest challenge, he says, is cash
flow. UCCAL buys inventory from fashion
brands, then sells it at its own discretion.
As CFO, Au is also heavily involved in strat-
egy, helping to decide when to "harvest" a
brand -- to sell it at the right time.
Fashion is by nature a fickle beast, but the
speed at which consumer behaviour changes
in China means that UCCAL must constantly
adapt its brands -- and sell off those that it be-
lieves have reached their peak, Au says.
Nike, which he describes as his personal
favourite in the portfolio because he "loves
sport" -- at the time of the interview he was
training to run a half marathon in Shang-
hai in December -- has moved to reposition
itself from being pure sportswear to more of
a lifestyle brand in China. However, he be-
lieves that the future lies in luxury.
"When I first came to China in the 1980s
and 1990s, people would wear low-value
formal shirts and suits. Five years ago people
started to dress more casually, in brands like
Nike and Giordano. In the coming years, we
are looking at luxury because there will be
more and more millionaires," he says.
UCCAL has had particular success with
Italian designers such as Isaia and Amedeo
Testoni. "We have lots of Italian brands.
They all buy the concept, they all buy our
strategy," he says.
As Chinese consumers travel more, a lot
of luxury consumption has been "lost" to for-
eign markets, where duties on goods are sub-
stantially lower. But Au sees a bright future
for retail in China with wealth continuing to
The government's well-publicized policy
to boost domestic consumption to relieve de-
pendence on manufacturing will also help,
he adds. "What is local consumption? Retail-
ing. If you have more money in your pocket
then you can consume more," he says.
In a coup for 13-year-old UCCAL, Au has
just brokered a deal to sell the company to a
privately owned Hong Kong blue chip. Some
might see it as an opportunity for an exit,
but he is determined to stay and build the
Au says he relishes a challenge. "If you
look at my whole career, you can see that I
don't have a comfort zone. If I get too com-
fortable, I like to do something else," he says.
Taking the driver's seat
That attitude might have developed in con-
trast to Au's father. The young Au grew up in
Hong Kong as the son of a man who fled Chi-
na during the tumultuous years of civil war.
After the upheaval, his father became a
headmaster in a primary school and urged
his son to follow a secure career path, pref-
erably in public service. "The war destroyed
everything," Au says. "My father didn't have
the aggressiveness to go for his own career.
He just wanted a quiet life. He would say, 'Go
to work for the government, be a civil ser-
vant'," he recalls.
Ambitious, commercially minded Au had
other ideas. As a child he attended Chinese
schools, where he learned Mandarin and
English and discovered he had a talent for
numbers. By 16, he had decided to become
an accountant. "I was thinking, how can I put
languages and maths together? Then I found
out there was something called accounting,"
He went on to study accounting at Hong
Kong Shue Yan College (now a university),
graduating four years later. In 1984, he be-
gan his first job at Li, Tang, Chen & Co., a
family-owned audit firm in the city, where
he worked on the books of property develop-
ers, retailers and manufacturers.
"As a learning base I think auditing was
good, but as a career it's not my type of
work," he says. "I wanted to add more value
to a business."
Looking for his next move, Au received
two offers. The first was from the audit de-
partment of the Hong Kong government -- an
offer which, of course, thrilled his dad. The
second was as an accountant at Sime Darby,
a Malaysian conglomerate.
Au asked the government recruiters how
long he could expect to wait before being
promoted. "They said seven years. I said,
China's retail clothing market is now the world's second largest --
at US$110 billion in 2011, it ranks behind only the United States
(US$232 billion) and recently surpassed that of Japan (US$100
billion), according to data from McKinsey & Co, the consulting
company, and PricewaterhouseCoopers.
China is also the most attractive emerging market for
apparel retailers, says a recent study by A.T. Kearney, another
consulting company. The market has grown at a rapid pace -- at
a compound annual growth rate of more than 20 percent in the
past five years -- and this is expected to continue for the next five
years, the study concluded.
Foreign apparel brands are aggressively entering the market.
As well as Roberto Cavalli's deal with UCCAL in 2011 that will see
85 of the Italian luxury clothes-maker's shops in the Mainland by
2016, American clothing retailer Gap opened stores in Beijing and
Shanghai in late 2010, PVH Apparel Group entered China in 2011
with its Izod brand, while Italian retailer RDM plans to set up five
retail outlets in China this year.
While UCCAL and its competitors are seeing sales boom in the
branded stores they manage, other retailing models are emerg-
ing. "Retail formats in China are diversifying beyond traditional
department stores," says Hana Ben-Shabat, a partner with A.T.
Kearney in New York, who says Chinese consumers are beginning
to shop at hypermarkets, outlet stores, discount stores and online.
Meanwhile, Japan's Uniqlo has more than 100 stores in the
Mainland, while Swedish retailer H&M has 89 stores in 36 cities
and Spain's Zara has 66 stores in 31 cities. This reflects a desire by
retailers to expand in China beyond major metropolises such as
Beijing and Shanghai into second and third-tier cities. "The arrival
of such mass-market brands is particularly significant," says Tom
Miller, a Beijing-based analyst with GK Dragonomics, a finan-
cial research company. "It is recognition that millions of urban
residents in China's less fashionable cities are becoming a viable
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