Clothing Industry: An Analysis Of The Causes Of Capitalization Operation

Domestic business resources are accelerating at an unprecedented rate. The reshuffle of the garment industry has intensified, and capital operation has become indispensable. The Matthew effect brought about by the capitalization operation has been concentrated.

In 2007, with the endogenous growth of the domestic market and the multiple negative factors of clothing trade, the growth rate of China's clothing trade increased for the first time in 15 years, and the growth of foreign trade for the first time was lower than that of the previous year. The domestic garment market has entered a new stage of development.

Venture capital flows into garment industry

With the rapid development and maturity of China's clothing market in recent years, various venture capital have begun to strongly intervene in this traditional industry.

The new business model of garment management represented by PPG and ITAT has attracted a large number of venture capital, and once achieved the ultra normal development speed, which has a strong impact on the industry.

In addition, even the market which has not attracted much attention such as baby pregnancy clothing has attracted the interest of capital.

Such as maternity dress brand "October mommy", has more than 20 private equity funds (PE) and Vc firm (VC) and its contacts.

In 2004, the "red child" used the e-business platform of the Internet to creatively sell products of pregnant and infant babies on the Internet, and achieved a balance in a short half a year. In 2007, it won a $10 million venture capital.

Because of the strong involvement of external capital, these new business models and market segments have been rapidly ripened. Relying on the traditional mode of self accumulation and development, they are facing more and more challenges.

The integration of garment industry and capital market is changing the competition pattern and competition mode rapidly. The financing function and resource allocation function of the capital market play an extremely important role in the clothing industry.

With all kinds of external investment, clothing enterprises are frequently throwing out olive branches, and clothing enterprises are beginning to see an unprecedented trend of listing.

Motivation analysis of garment enterprises listing

Obviously, in this world, there is no love without cause, and domestic clothing companies are actively competing to embrace the capital market. The driving factors are manifold. In summary, there are eight main points.

1, the capital reason is that the domestic market segments are becoming more and more concentrated. Especially in men's wear and sportswear market, the market concentration is higher and higher, the number of competitors gradually decreases, and the intensity of competition is greatly enhanced.

When the terminal is king, the product is homogeneous, and even the decision-making is homogenized, the competition of clothing brand is concentrated on the competition of the terminal resources. With the increase of the cost of the shops year by year, a street store with good location and large area will often need hundreds of millions of dollars.

For many garment enterprises, listing is no longer fashionable. Only with the help of listing, can capital operation be bigger and stronger to survive and develop.

2, financing difficulty has always been a major factor affecting domestic clothing enterprises to become bigger and stronger. In particular, more than 90% of garment enterprises are private enterprises, and the financing difficulties they encounter are more.

Listed companies belong to equity financing and direct financing. Compared with indirect financing methods such as bank loans, they have obvious advantages: the funds that are incorporated into the stock market are permanent and do not need to be returned. They can significantly reduce the financial cost of enterprises and avoid the impact of financial policies such as the national contraction of money, and so on.

If an enterprise issues shares at 20 times price earnings ratio, it means that the funds accumulated in 20 years can be raised through a single listing. After the listing, enterprises will get a continuous financing channel in the capital market, and they can get more financing through the rights issue, issuance and issuance of convertible bonds.

If the enterprise has the conditions and the project needs a large amount of capital, then the listing can rapidly expand the scale and influence of the enterprise.

For example, in 2007, 800 million of the seven wolves fundraising fund was devoted to upgrading the sales network. It plans to develop 20 "seven wolf wolf men's living room" in Beijing, Shanghai, Guangzhou and Xi'an, and build 200 wolves flagship stores with an area of 300 to 800 square meters and 600 stores of seven wolves, carrying the functions of image display, new product distribution, service demonstration and staff training in the region in 200 areas of 800 square meters.

With 8 billion to upgrade sales network, this is the general enterprise through primitive accumulation can not be compared.

3, the direct stimulus factor is the A bull market which began at the end of 2006, which stimulated the desire of the clothing enterprises to go public. Although the stock market experienced a big fluctuation from the end of 07 to the beginning of 08, however, the judgement on the long-term good of the Chinese stock market has not changed.

4. The demonstration and Inspiration of the successful clothing companies.

YOUNGOR, Shan Shan, Hong Kong and other companies before the listing, there are only 600 thousand sets, 300 thousand sets, 250 thousand sets of annual production capacity of men's suits.

But at the moment, the annual capacity of 1 million 500 thousand, 600 thousand and 570 thousand sets has been formed, with an average increase of about 2.5 times.

Most of the listed companies in the textile and garment industry had a good performance in 2007.

In the first three quarters of 2007, the main revenue, main profit, gross profit and net profit of the listed companies in textile and apparel industry increased by 12.07%, 19.17%, 80.86% and 77.18% respectively.

In the first three quarters of 2007, the weighted average gross profit margin, profit margin and net profit rate of the listed companies in the textile and garment industry were 14.06%, 8.07% and 5.53% respectively, much higher than the average level of the domestic textile industry as a whole, up 0.83%, 3.07% and 2.03%, respectively.

Because of the increase in production capacity, the expansion of sales scale and the increase of unit price, the increase of net profit of Listed Companies in textile and garment industry is much higher than the increase in revenue. The main reason is the sharp increase in investment income.

Data show that industry investment income increased by 913% in the first 9 months of 2007, accounting for 55.29% of total industry profits.

5, improve the internal corporate governance structure, so that enterprises can develop to a higher level.

The listing of enterprises helps to improve the corporate governance structure of enterprises and give full play to management advantages and institutional advantages in market competition.

Listing is also a good way to make the rights between shareholders clearer. After the listing, the company's financial operation is open and pparent, which can promote family businesses to modern enterprise management system.

At the same time, it is also convenient for enterprises to issue welfare stock and incentive options to employees such as stock options, so that the enthusiasm of employees and management is closely related to the interests of enterprises.