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Metersbonwe is making a clear effort to position its subsidiary brand, ME&CITY, as a high-end international label. However, the path has not been smooth. Despite significant investments and strategic planning, ME&CITY struggled to meet expectations. In the first quarter of 2010, Metersbonwe reported a sharp 90% drop in net profit compared to the previous year, with ME&CITY failing to reach its 2009 financial goals. The brand remained in a loss-making state, raising questions about the effectiveness of the strategy.
Zhou Chengjian, the company’s CEO, admitted that he had been overly optimistic about the launch of ME&CITY. He acknowledged that the market response did not match initial expectations. This was especially painful for Zhou, who had never experienced negative growth in over 15 years. His frustration was evident, as he expressed dissatisfaction with the performance report.
In 2009, Metersbonwe generated 4.8 billion yuan in sales, while ME&CITY only managed 350 million yuan. The company invested heavily in store infrastructure, spending 820 million yuan on shop purchases and leases, and over 50 million yuan on store decoration. Most of these costs were allocated to ME&CITY, which operated through direct retail rather than franchising. By the end of 2009, more than 70 stores had opened across major cities, many of them large-scale locations exceeding 300 square meters. Such an aggressive expansion came at a high cost, and many stores were operating at a loss.
The company attributed some of the challenges to the early stage of its multi-brand strategy. Both leadership and operational teams lacked experience, and there were issues with planning, cost control, and resource efficiency. The decision to keep ME&CITY separate from Metersbonwe was intentional, aiming to avoid any confusion between the two brands. This approach is common in the fashion industry, where companies often create new brands without linking them to their existing ones to maintain a distinct identity.
Experts like Hao Yingli explain that this “racial segregation†strategy is crucial for success. High-end brands must be positioned independently to avoid diluting their image. A successful example is Seven Wolves and its subsidiary, Mark Waffe, which has grown into a top casual men's brand. Many consumers mistakenly believe it is an international label. Similarly, Uniqlo’s parent company, Fast Retailing, also owns Theory, a premium brand that has entered the Chinese market. However, few outside the industry know that both brands operate under the same company.
For Metersbonwe, the challenge remains: how to successfully build ME&CITY into a globally recognized high-end brand while managing the financial and operational risks involved. The journey is just beginning, but the road ahead is still uncertain.