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Metersbonwe is clearly aiming to position its sister brand, ME&CITY, as a high-end international label. However, the journey hasn’t been smooth. Despite significant investments and expectations, ME&CITY struggled financially in 2009, failing to meet its financial targets and remaining in a loss-making state. In the first quarter of 2010, the company reported a sharp 90% drop in net profit year-on-year, raising serious concerns about the brand’s performance.
Zhou Chengjian, the CEO of Metersbonwe, admitted that his initial optimism about ME&CITY was misplaced. He acknowledged that the market didn’t respond as expected, and the brand was still far from meeting its goals. This was particularly disappointing given that 2009 marked the first time in 15 years that the company experienced negative growth in the third quarter. Zhou expressed his dissatisfaction with the results, signaling the need for a strategic rethink.
In 2009, Metersbonwe generated 4.8 billion yuan in sales, while ME&CITY only managed 350 million yuan. The company invested heavily in store development, spending 820 million yuan on store purchases and leases, plus over 50 million yuan on renovations—most of which were allocated to ME&CITY. These costs were especially high, as the brand focused on direct operations rather than franchising, opening over 70 stores in major cities across China. Most of these stores were large, exceeding 300 square meters, which significantly increased operational expenses.
The decision to operate ME&CITY independently and avoid linking it with Metersbonwe was intentional. According to Hao Yingli, this "racial segregation" approach is common in the fashion industry, where companies aim to create a new brand without associating it with an existing one. This helps maintain the perception of exclusivity and high-end positioning. A successful example is Seven Wolves and its subsidiary, Mark Waffe, which has grown into a leading casual men's brand without confusing consumers about its origins.
Similarly, Uniqlo, known for its affordable casual wear, also owns Theory, a more premium brand. However, few consumers are aware that both brands belong to the same parent company. This strategy highlights the importance of maintaining clear brand identities to avoid diluting their value.
For Metersbonwe, the challenge remains: after pouring so much money and effort into ME&CITY, why hasn’t the market responded? The answer likely lies in the complexities of brand positioning, market readiness, and effective execution. As the company moves forward, it will need to refine its approach and ensure that ME&CITY can stand on its own as a true high-end brand.