Red Star, &Nbsp, Listed As Investment.

As the largest home chain store in China, the red star is really a little annoyed lately.

In order to get the recognition of consumers and investors, in the 2010 CCTV advertising conference called "China's economic barometer", a large number of furniture and building materials enterprises represented by Red Star Mei Kai long had smashed more than 400 million yuan into the 2010 CCTV home advertising, the overall growth rate exceeded 200%, and seized the limelight of traditional industries such as automobiles and household appliances for a time. At the same time, red star Kai Lung has also hired S as its brand spokesperson for the first time, and this trend has been interpreted by the industry as the signal released by China's domestic enterprises into the "fast track" market.

Boycott of strategic agreement

Since its establishment in 1986, red star has maintained its high expansion.

Just as the red star is more and more close to the successful listing of Longmen, the "business door" and "joining the trade gate" that have broken out in recent years have made people have to reconsider the 5 top 50 top 500 private enterprises in China. Che Jianxin, chairman of the company, once expressed confidence that he would sell furniture like jewelry.

In December 2009, Guangdong and Beijing furniture and building materials manufacturers received a 2010 strategic partnership agreement issued by Shanghai Red Star Group.

According to the agreement, manufacturers should pay 2 million yuan deposit and 800 thousand yuan promotion fee if they enter into strategic alliance partnership with "Red Star".

In other words, if "join", we must "pay tribute" and pay "Royal grain", otherwise it will not be "alliance".

According to this calculation, "Red Star" and 200 home furnishing enterprises (furniture and building materials) become strategic partners, and each household is worth 2 million 800 thousand yuan, and it can get 560 million yuan.

The 2 million commercial margin means that after entering a new store of Red Star Mei Kai Long, the red star will be pferred to 100 thousand yuan to invest in the new store as part or all of the deposit.

If the supplier breaks the contract, a deduction of 100 thousand yuan will be paid accordingly.

The promotion fee of 800 thousand yuan is the activity cost of joint promotion.

That is to say, only when the supplier enters 20 new stores, the commercial margin can be fully recovered.

The result of this bundle of Chinese domestic manufacturers can be imagined: the boycott of the seven furniture associations and the boycott of thousands of enterprises, the strong resistance and strike of tens of thousands of merchants.

On the evening of December 20th, when the major furniture associations failed to communicate effectively with the Red Star Group, the furniture industry associations, chambers of Commerce and Guangdong furniture Merchants Association of Dongguan, Shenzhen, Hongkong, Zhongshan, Foshan and Shunde issued a boycott notice, which indicated that the associations and chambers of Commerce jointly called on the member enterprises to maintain the harmonious development of the market by maintaining the strategic vision of the long-term development of the furniture industry, conscientiously resisting the Red Star Group's improper demands with a high sense of social responsibility, and not signing the alliance agreement with the red star group without paying the relevant funds.

In the end, red star announced that the plan was suspended.

In 2009, B&Q, which was rapidly expanding in the home industry, finally had difficulty in holding its own doors and closing many stores to protect itself.

At the moment, the red star, the United States, and the expansion of behavior, will not lead to too long the front line, resulting in the breakup of capital chain and the betrayal of business tenants, thus repeating the mistakes of B&Q?

"Red Star" claims to be the leader of China's household circulation industry. At present, there are nearly 60 shopping malls in the country, with tens of billions of sales each year. It is a "heavyweight" sales platform for furniture manufacturers.

However, in recent years, the rapid expansion and development of all parts of the country has led to "Red Star" breathing heavily, and some of the shopping malls are performing poorly or even losing money.

Because of the high risk of commercial real estate investment in China, "Hongxing" is facing new problems in the new stores in China. Due to the problems of management mode, marketing method, cooperative franchisee mode, and some new stores in terms of talent reserves, the "Red Star" is facing the pain of capital chain tension.

In December of 2009, Nanjing red star, the price of rente rose increased by 40%.

This is followed by incidents of beating people and interruption of lighting in commercial booths.

The tenant of a red star, Mei Kai Long, revealed that the rent increase of red star is also nationwide and regular, especially in the year before last and last year when the financial crisis was more serious, it also raised rent in the market, causing protests and conflicts in many cities throughout the country.

But because the red star has mastery of the power of the channel and does not agree with the withdrawal of the rent, it will lose this important marketing channel, so they will sometimes muddle along, do not care too much, go up and go up, and still be able to manage it, but for many small brands or agent operators, the rising rents and expenses are really unbearable.

Rapid expansion meets capital bottleneck

In the first few days of 2010, the two major home chain stores in China came out with heavy news.

In January 7th, unexpectedly, the family expansion plan was launched this year, and just two days ago, red star Mei Kai long wanted to buy another chain store, Jisheng Wei.

There is no conclusion on the marriage of the two home circulation giants, but retailers of home building materials are beginning to worry about future survival.

At other home stores, rent and subsidies increased.

It is reported that some red star mall stores will adjust their rents in 2010 and increase the rent by 20% in Shanghai.

A red star, the Shanghai supplier, expressed its concern to the media: the Red Star Mei Kai long already has some advantages in the channel. If we succeed in the acquisition of Yoshimori Ikuni, we will have more voice, and the supplier's living space will be affected.

Shanghai furniture industry association related personnel pointed out that the rapid expansion of furniture stores in recent years has led to a situation of oversupply, which is also one of the reasons for the decline of sales in Shanghai stores.

A data from Shanghai furniture industry association shows that over the past 2 years, the sales rate of all kinds of super large stores based on furniture sales has reached 20% to 30%. Up to now, Shanghai furniture sales area has reached 2 million 800 thousand square meters.

Insiders revealed that at present, the vacancy rate of part of the red star business is close to 20%.

Red Star Mei Kai long does not deny the existence of an empty shop, and explains that "brand access to shopping malls is a normal phenomenon."

Reporters learned that in the red star, the rental of some stalls has reached more than 200 yuan per square metre per month. Dealers often complain that rents are too high and can only be sold to commodities through price increases, so that the prices of their products are becoming less competitive.

The expansion of stores has led to the "follow suit" of brand businesses. They are following the store to open new stores, hoping to take the lead.

One side is desperately expanding, and the other is sales decline.

At present, the average profit rate of the furniture industry is only around 3%. If there is a slight carelessness, the merchants will lose money.

At the same time, the rapid expansion of home stores has brought many problems to itself.

At present, the frequent adjustment of the red star and the internal adjustment of the wide range of job mobility also give the industry many conjectures about its internal management problems.

At present, the red star is at a stage of rapid expansion. According to its chairman and CEO vehicle construction, red star plans to open 20 new stores in 2010, and the number will reach 80 by 2012.

This undoubtedly requires a lot of capital to support this rapid expansion, but from now on, capital has become a stumbling block to its rapid expansion.

This is indeed a big gamble for Hongxing Mei Kai Long and Hua Ping investments.