In The Face Of Policy Constraints, Where Is The Way Out For BELLE?

"BELLE" is named after the French Belle (beauty). Her classic, loud advertising words, "100 million women, 100% BELLE", presumably male compatriots are not strange, right? At that time, in the early 70s of last century, it was only a small shoe store in Hongkong. Today, it has such a strong appeal that it really makes people shocked. It is worth our summary and effective imitation and reference.

BELLE first created a franchise mode to circumvent the policy restrictions skillfully. Then when the policy was liberalized, it introduced PE to help channel integration, and built up retail business. Then, it returned to Hongkong IPO, fought the capital market from the industrial market, and finally expanded the capital to expand the multi brand.

　　繞過政策妙施連鎖計

At the beginning, BELLE was mainly used for the processing of Hongkong brand. In 1998, BELLE introduced Staccato brand, rearranged the Hongkong market, and set up StaccatoFootwear company, which is responsible for Hongkong's retail business. However, at that time, the retail industry in the mainland only limited opening up to foreign capital and Hong Kong, Macao and Taiwan, which made it encounter bottlenecks in the mainland.

According to the "pilot scheme for foreign-funded commercial enterprises" promulgated in 1999, a foreign joint venture who applies for the establishment of a joint venture commercial enterprise engaged in retail business must meet the requirements of an average sales volume of more than US $2 billion in the first three years. It was impossible for the BELLE to profit from the profit margins that it had made at that time. It could not have its own retail network in China.

In the face of this policy restriction, where is the way out for BELLE?

However, "sleepy" thinking changes, retail can not be changed. wholesale Is that right? BELLE has signed an exclusive distribution agreement with 16 individual distributors. wholesale The form is sold to the latter. In this way, through cooperation with individual distributors, BELLE has skillfully circumvent the policy restrictions, and has also increased the share of its own brand in the Chinese retail market.

By 2001, these distributors have opened more than 600 retail stores, and BELLE has made significant progress in brand building and market penetration. This year, BELLE woman leather shoes Won the double champion of sales and sales of similar products in the country.

In 2002, when the mainland's retail policy was somewhat relaxed, BELLE decisively pushed 16 individual distributors to concentrate and merged into Shenzhen BELLE Investment Co., Ltd. (hereinafter referred to as BELLE investment) to undertake the exclusive operation of BELLE products. At the same time, BELLE also obtained the actual control power of the distribution channel.

By 2004, the management of foreign investment in commercial areas was implemented, and the retail industry in the mainland was completely open to foreign investment. In the same year, the policy on Closer Economic Partnership Arrangement between the mainland and Hongkong was also formally implemented. After obtaining the permission of the retail business, BELLE then launched the integration of the distributor system.

PE helps build its own retail network empire.

At the same time, the mainland shoe enterprises grew stronger, more and more followed the franchise mode, and the domestic retail market competition accelerated. Although BELLE has a certain advantage in the big cities of the first tier cities, its market share in the two or three tier cities is seriously insufficient and its profit is very small.

In 2004, BELLE registered in the Cayman Islands Off Shore Company Belle International Holdings Ltd (hereinafter referred to as BELLE International), headquartered in Shenzhen. This is the main body of listed companies later. As a result, with the rapid popularity of overseas capital markets, there are more PE investors behind BELLE. In August 2005, BELLE international terminated the exclusive distribution arrangement of BELLE investment and stepped into the era of self built retail network.

The key to action is to raise funds and integrate the original distributor system.

Under the guidance of this idea, in September 12, 2005, BELLE international first introduced the two fund companies of Morgan Stanley (MSI, MSII) and CDH of CDH investment. The two party, as a financial investor (PE), invested HK $23 million 660 thousand to subscribe for 9860 shares of BELLE international redeemable stock, accounting for 4% of the total share capital.

On the integration of distribution channels, BELLE international continued to hire retail shops previously operated by BELLE, and invested 61 million 200 thousand yuan to BELLE to buy assets such as depreciable decoration, office equipment and other assets. Meanwhile, it retained the management and sales staff of BELLE investment. Afterwards, these initiatives contributed most of the revenue and profit growth to BELLE international.

Then, the founder Deng Yao family controlled ProfitLeader also pulled together the Handy and Essen controlled by the individual distributors. The three invested a total of HK $448 million to subscribe for 186610 shares of BELLE international redeemable stock, accounting for 75.7% of the total share capital. In addition, the three parties entered into a transfer agreement with PE, and PE agreed to acquire additional 16610 redeemable shares at 288 million Hong Kong dollars. After the completion of the agreement, both sides held 69% and 10.7% of the total share capital respectively. As shown in Figure 1.

In the 14 years from 1992 to 2005, the total number of retail outlets increased to more than 2400 in BELLE international, with an average annual growth rate of 170. With the support of PE, BELLE international has increased 1419 stores in 15 months. In just a few months, BELLE international managed and integrated the footwear retail business successfully.

Obviously, the timely intervention of PE has played a great role in promoting the upgrading of BELLE. Not only did BELLE international have enough capital and strength to integrate the distributor system, but also helped to improve the ownership structure and complete the transition from industrial expansion to capital expansion.

Following this, BELLE international has integrated into the retail business of sportswear.

In June 30, 2006, BELLE international bought Fullbest, a wholly owned company of Deng Yao, at a price of 831 million yuan, and won the sportswear business. The deal was carried out by issuing new shares to Deng Yaoqi under the company's ProfitDiscovery, without cash, and ProfitDiscovery got 12.9% of BELLE international. Later, Deng Yao transferred some of BELLE's international shares held by ProfitDiscovery to financial investors. Since then, financial investors have held 11.6% of BELLE's total international share capital, and Deng's family and distributors share 70.8% of the total share capital. As shown in Figure two.

With the help of PE's fist and continuous integration, BELLE International's total assets rose from 1 billion 600 million yuan in 2005 to 4 billion 445 million yuan in 2006. At the same time, the capacity of Shenzhen's Longhua and Dongguan bases increased from 7 million 300 thousand in 2004 to 11 million 500 thousand in 2006.

According to the statistics of China industry and enterprise information center, the sales share of BELLE brand reached 8.2% in 2006, ranking first in women's shoes. Its Teenmix, Staccato and TATA ranked fourth, eighth and tenth respectively. Over the same period, the market share of domestic women's shoes is becoming more concentrated, with the market share of the top ten brands reaching 40.1%.

By the end of 2006, BELLE International's retail network reached 3828 (excluding Hongkong, Macao and the United States 35), covering 150 domestic cities, with an annual revenue of 6 billion 239 million yuan, an increase of 260.2% over the previous year, a profit of RMB 977 million yuan, an increase of 13 times compared with 2004.

Returning to port IPO to fight for capital market

In May 23, 2007, BELLE international was officially listed on the HKEx.

Before the IPO, BELLE international has undergone a series of equity optimization. The shareholding structure of Deng Yao and his family was 43% and CEO holding directly and indirectly holding 8.4%. In September 18, 2006, Deng family signed a concerted action agreement with Sheng Bai Jiao, so both sides had absolute control over BELLE international. The week before the formal offering, LV's parent company GroupArnault spent HK $235 million to subscribe for 2.7% of BELLE's IPO, while the Cephei fund subscribed for $10 million. The two held a 4% stake in BELLE international and promised to hold at least 6 of the shares.

When it came to the market, BELLE international had the Chinese concept of "China's largest female shoe retailer". With the help of PE and the brand effect, it had made investors crazy. It had been over subscribed 60 times in the Hongkong market, and over 10 of the international placement was also over subscribed. As a result, BELLE international has also set two records: the maximum amount of frozen funds available in the Hongkong stock market is up to $446 billion 400 million, and the market value of the first day of the Listed Retail Companies in Hong Kong is the highest on the basis of the closing price of the day, and its total market value exceeds HK $67 billion on the first day.

BELLE international plans to sell 1 billion 396 million shares of H-shares, plus the full exercise of 15% of the excess allotment rights, and over allotment of 209 million shares, issued at a price ceiling of HK $6.20, together with a total fund-raising of HK $9 billion 950 million. The equity structure after listing is shown in Figure three.

BELLE international moved from the industrial market to the capital market, which led to the transformation of the footwear market from the industrial economy to the rapid growth of the capital economy, and the market share became more concentrated. By the end of 2007, BELLE international has 6090 self operated retail outlets in mainland China (excluding the retail and retail stores that will be described below), and has 53 self retailing stores in Hongkong and Macao. In 2007, its annual turnover reached 11 billion 672 million yuan, an increase of 87% over the same period last year, with net profit of 1 billion 979 million yuan, an increase of 102.7% over the same period last year.

BELLE International's high-profile listing has led to a sense of crisis for the footwear industry to enter the new era of "lion eating tiger". The lion is the king of animals, and indeed it is. At this time, BELLE is not satisfied with the status quo of "women's shoes", but plans to reach the throne of "shoe king" through capital expansion.

Combination of capital acquisition and merger achievement "BELLE" shoe king

First, in January 1, 2005, with the actual cash outflow of 4 million 500 thousand yuan, the remaining 50% of BelleGroupUSALLC of the joint venture company was acquired, and at the end of that year, it brought a net profit of 4 million 524 thousand yuan for BELLE international. Then, in July 1, 2006, in the form of new shares, the acquisition of Fullbest, wholly owned by Deng Yao, not only expanded the retail business of sportswear, but also immediately obtained 215 million yuan of liquidity, which also brought 1 billion 577 million yuan income to BELLE international at the end of that year, with a net profit of 87 million 810 thousand yuan.

BELLE International's integration capability has been confirmed before IPO's reorganization. Now listed, as a new capital operation company, the choice is to expand the product line and expand the brand portfolio through rapid mergers and acquisitions.

Therefore, in less than 5 months after the listing, BELLE international opened the prelude to capital expansion and staged the first acquisition of "debut show" since its fund-raising in Hong Kong. BELLE international has acquired Miaoshi business through its wholly owned subsidiary, FullBrand, at a cost of HK $600 million, that is, the acquisition of all equity interests of OSS (Hongkong) Limited and OSS International (Hongkong) Co., Ltd. However, what is more noteworthy is the payment method of HK $600 million.

Of which HK $400 million is payable to the seller in cash by the buyer (the original shareholder of OSS), while the remaining 200 million of the Hong Kong dollar is conditional on BELLE International's interest free loan to the Austin series company, which is used to repay the related debts owed to the bank and the seller by OSS and its working capital. This additional condition is that if the aforesaid enterprises in 2008 had a net profit of more than HK $30 million, BELLE international would have to pay no more than HK $200 million to the other party, otherwise there would be no need to pay any more.

The two companies are mainly engaged in the distribution and retail business of Millie s brand footwear in Hongkong, Macao and Mainland China. They have more than 150 chain stores in the mainland and Hong Kong and Macao. The acquisition has increased the number of BELLE international chain stores. It seems that BELLE international has said that the plan to open 1000 new stores a year is not a joke.

While the remaining heat of the "debut show" is still in the air, in November of the same year, BELLE International launched another "lion eating tiger" to acquire the brand name of the men's shoes.

BELLE international has entered into a series of agreements through its wholly owned Affiliated Companies, new beli and Jiangsu's group. According to the agreement, at the cost of 1 billion 600 million yuan, Xin Bai Li bought some assets, businesses and company interests of the company. It is a merger acquisition target, including 5 companies, including Jiangsu's shoes, Zigui shoes, Three Gorges shoes, Shanghai's bath shoes, Shanghai's Vuitton international trade and so on.

According to the agreement, Jiangsu's San Da will inject capital into one of the 5 companies prior to the acquisition and transfer some trademarks and intellectual property rights related to the other brands owned by sun Da, Bai Shi, Hao Ren Yuan, and the other two brands, and sign a number of leasing, franchising and franchise agreements before the transfer is completed, so as to grant the Licensee the right to use the trademarks and intellectual property rights exclusively.

Our business is mainly in China. Women's wear Footwear manufacturing and retail business has been gradually transferred to BELLE from January 2008 to May 2008. Moreover, the acquisition of net assets does not bear debts. So by the end of 2008, it had brought about 1 billion 150 million yuan of revenue to BELLE, with a net profit of about 100 million yuan. Through mergers and acquisitions, BELLE international has not only increased its layout in the domestic footwear industry, widened its brand portfolio, but also become the leader of men's shoes in China.

Looking back at BELLE international, IPO got the attention of ordinary investors and got rid of it at one fell swoop. clothing The bondage of shoe industry. These follow up actions after IPO seem to be a promise to investors when they deliver their IPO. It can be predicted that BELLE has made a fortune from footwear manufacturing, and from retail channels, and gradually expanded to most brands through acquisitions. BELLE has not only got rid of the plight of China's traditional manufacturing industry, but also made a real capital operation enterprise. In the moment, under the leverage of mergers and acquisitions, one clothing The shoe industry king in shoe industry is rapidly shaping.