When Yuan Yafei, 52, was growing up in communist China, he was curious about how business was done elsewhere. “We always thought that Great Britain represented old-fashioned capitalism,” he recalled in 2014. Its culture was “quite mysterious and fascinating” to Chinese people.
That year Yuan cemented “the biggest Chinese foreign retail deal in history” when he paid £480m for House of Fraser, a British department-store chain founded in 1849, which “in better times had also owned Harrods”, as the FT put it. His plan was to take the group global and to use the brand to “gild the lily” of his existing Chinese retail operation, Nanjing Cenbest – rolling out 50 new stores in China under the name “Oriental Fraser”.
On 21 December, somewhat behind schedule, the first shining exemplar of the tycoon’s vision opens its doors in Nanjing, says The Sunday Times. The big fly in the ointment is that, after five straight years of losses, House of Fraser’s future is looking increasingly precarious back home in Blighty where the strains on the department-store model have been laid bare by an increasingly tough retail environment. A recent revamp at the chain doesn’t seem to have stopped the rot. The most recent sales figures suggest it was “struggling at the start of the crucial Christmas trading season”.
Critics charge that the group’s problems have been exacerbated by Yuan’s “autocratic style” and a string of broken promises. These included some £75m of investment cash that hasn’t materialised, fuelling “doubts about his real wealth”, which Forbes puts at $2.1bn: as well as being the largest shareholder in Nanjing Cenbest, Yuan’s Sanpower conglomerate also has interests in “finance, real estate and collectibles”.
Yuan, who was the son of an engineer in the People’s Liberation Army, began his career as a local government auditor. But his path changed when Deng Xiaoping launched China’s economic reforms in the 1980s. He made his first fortune building DIY computers and then moved into business property in Nanjing, the capital of his home province of Jiangsu.
When told the school has a tendency to produce slightly odd people, he lights up. “Good! Only strange people can succeed… I’m very strange.”
He is certainly mercurial. During takeover talks in 2014, House of Fraser executives observed the “59-minute rule” – Yuan’s concentration and patience rarely lasted more than an hour; after that, “he tended to snap spectacularly, bawling at his terrified lackeys”.
Since he took charge, House of Fraser has lost two chief executives, a finance chief and a chief customer officer. The store remains at the centre of Yuan’s game plan, but it’s not clear how long that will last, says The Sunday Times. Reports of the group’s troubles have reignited old rumours about a merger with Debenhams and private-equity groups are prowling. A poor result this Christmas “may force his hand”.