Good morning. Today, we will explore the love language that costs the Chinese a lot, discuss why fast fashion is excessively rapid, and examine how luxury brands like Patek Philippe and Brunello Cucinelli are contributing to a better world, besides creating beautiful products.

FINANCE
Outlook: Investments in Green Fashion

The sustainable fashion industry, valued at $7.6B, is growing at a 9.46% CAGR, with the $60B sustainable fabrics market at a 12.50% CAGR. Rising demand has led to green innovation investments, including H&M's fund for sustainable startups. ESG businesses are gaining retail and institutional investor attention, with over 1,200 ESG funds holding LVMH shares and HSBC's Sustainable Supply Chain Finance Program with PVH.

Capital availability for climate innovation has stimulated the emergence of climate-tech and fashion sustainability venture funds such as Closed Loop Partners, Arctern Ventures, Style With Substance, and Alante Capital.
Though 74% of retail investors are interested in ESG and sustainability, 1/3 lack needed information and have over $33B dry powder to invest.

Key Challenges:

• Unclear future impact of climate tech.

• Data scarcity hinders sustainability measurement.

• Greenwashing and misinformation PR issues.

• Few climate-tech fashion startups have scaled.

• Complexity of circular economy in fashion.

In conclusion, there's a gap between intent and action in investing in clean-tech, sustainability, ESG, and innovation, leading to misinformed investors and unused capital. Startups and researchers need to present clear evidence and ROI to bridge this gap. 

LUXURY
Brunello Cucinelli Goes Himalaya

Brunello Cucinelli, an Italian brand, founded in 1978, promotes "humanistic capitalism", donating 20% of profits to charity, paying fair wages, and restoring over 60 medieval buildings. It recently donated 1 million euros to the Himalayan Regenerative Fashion Living Lab to support sustainable fashion and local farming in the Himalayas, addressing issues like climate change and biodiversity loss.

Co-CEO Riccardo Stefanelli aids local cooperatives in a Himalayan village, training them to produce pashmina fibre, a key material for the company. Although suppliers are Italian, raw materials are sourced globally.

FASHION
The Ugly Truth: Fast Fashion On The Rise

Shein, a $60billion Chinese online giant, ranks behind Amazon and Nike in Gen Z's favorite e-commerce platforms. Founded in 2008 for budget-conscious brides, it now disrupts the affordable garment sector, selling items like dresses and swimsuits under $9. It has a popular mobile app and active TikTok hashtag (#Sheinhaul).

Chancellor Jeremy Hunt is persuading fast-fashion giant Shein to list in the UK, potentially rivaling Amazon. The possibility of one of London's largest flotations is stirring excitement, with potentials to transform the stock market's image. However, hurdles remain. Although based in Singapore, Shein needs Beijing's approval and may still consider going public in New York, despite US-China trade tensions.

REGULATIONS
France Fines Fast fashion

The fashion industry, contributing 10% of global carbon emissions, produces around 100 billion garments annually, most being pollutant synthetic clothes. Fast fashion brands like Shein, selling items below $8, are proliferating due to customers' limited buying power.

France's parliament approved a bill imposing penalties on ultra-fast fashion products for their environmental impact. It proposes penalties up to 10 euros per item by 2030 and a ban on advertising such products. The bill, now heading to the senate, addresses the effects of fleeting fashion trends driven by companies like Shein and Temu.

RETAIL
Second Hand Is Not The Answer

From 2021 to 2023, the value of the global secondhand apparel market rose from $138 to $211 billion, and is expected to reach $351 billion by 2027. The $20 billion online resale market in 2023 saw a surge as resellers bought popular items from stores and resold them online, often at increased prices.

While second-hand shopping is gaining popularity, it alone doesn't solve the environmental issues from fast fashion. The second-hand clothing industry has surged, but the influx of low-quality fast fashion is swamping second-hand stores. only 10-30% of second-hand clothes are sold.

Given that most people use only 20% of their wardrobes most of the time, the most effective solution to address garment overproduction is to shift consumer behavior towards consuming less and reusing higher-quality goods.

MARKETING
Sustainability: China vs. The West

Chinese and Western consumers have different understandings and behaviors towards sustainability, according to Deloitte’s latest study, “The ‘Sustainability’ Difference between China and the West from Consumers' Perspective.”

Chinese consumers prioritize environmental aspects such as resource conservation and recycling in sustainability, while Western consumers additionally consider social and governance issues. Both value sustainable packaging, carbon emission reduction, and waste minimization. However, Chinese consumers place more weight on a product's sustainability during purchase decisions, indicating a deeper regard for sustainability in their choices.

SUSTAINABILITY
Patek Philippe: Low Scores

Patek Philippe's focus on longevity aligns with sustainability by promoting long-term use and reduced consumption. Most Patek consumers don't sell their watches but rather collect them and eventually give them as gifts. The circularity of products has always been part of the strategy. The limited production of the pieces also supports sustainability. One could argue that Patek is the only sustainable luxury watch brand.

But Patek Philippe's sustainability has garnered mixed reviews, with a rating of "Not good enough". They've been criticized for not using eco-friendly materials, a limited approach to waste reduction, and excessive packaging. Their labor practices, while conducted in low-risk Switzerland, lack worker empowerment initiatives and living wage assurance. Their use of leather and exotic skins without animal welfare policies has also drawn criticism.

Patek Philippe, Rolex, Audemars Piguet and Chopard have been ranked lowest in a sustainability study by WWF, focusing on transparency and sustainability in the supply chain of jewellery and watch brands. The study highlights the environmental and social impacts of mining activities for precious metals. Brands under Kering, Richemont, and LVMH have shown improvement due to group-level sustainability efforts and are more transparent about their goals and achievements.

I don't believe that Patek’s sustainability should be viewed negatively due to their lack of providing information about their manufacturing processes. However, it would be beneficial for the company to be more transparent and provide insights into their sustainable practices.

MARKETS
China’s $170 Billion Romance Economy

China's Gen Z is a major force in the "romance economy," making up 54% of related orders, per the 2022 "Romantic Economic Big Data Report".

China's gifting market grew from $111 billion in 2018 to $170 billion in 2022, set to reach $225 billion by 2027. The romance economy, including gifting and related expenses, features popular items like jewelry and beauty products. Love is celebrated three times with Valentine's Day (Feb 14), 520 Day (May 20), and Qixi Festival in August, prompting luxury brands to launch special products and activations.

White Day, though less popular, is a reciprocal gifting day a month after Valentine's Day. Singles' Day on November 11, originally an anti-Valentine's event, has become the largest online shopping event globally.

INVESTING
China’s Gen Z Invests in Gold Beans

Amid economic uncertainty in China, young consumers are investing in gold beans and other forms of gold jewelry. Despite the high cost, which is often 10-30% higher than the commodity's spot price, these items are seen as a safe investment. Branded as an investment entry point the gold beans are sold at $113 per gram.

ARCHITECTURE
Building of the Year 2023

Huizen, a Chinese boarding school designed to let students unwind and “waste time mindfully” has been named World Building of the Year. Known for its rooftop park, treehouses, and "floating forest," won 2023's World Building of the Year at the World Architecture Festival.

ARCHITECTURE
Airport Rooftop Wineries

By 2026, Florence Airport plans to introduce the world's first airport winery on its new terminal roof. This 19-acre vineyard will blend into the Tuscan landscape, with a local vintner producing wine to be aged in a terminal cellar. The terminal will be fully completed by 2035.

CHINA
Herr Ober: A City Guide

PURE NFTEA, a Shenzhen-based tea brand owned by a young entrepreneur with a family history in tea, aims to reinterpret tea culture to appeal to younger generations. The store design, featuring diverse seating options and socializing functions, maximizes space usage and blends seamlessly with the environment. This place is worth a visit for those who appreciate tea and architecture.

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