Seven Wolves Purchase Luxury Agency &Nbsp; Invest Big Profits Without Advantages.

Since the 2008 financial crisis, most of the international brands have been kicking the Chinese agents away from their own businesses, even at the expense of unilaterally tearing up the agreement.

When international luxury brands are blowing up "solo flying", many agents have to find a way out, or even choose to take the road of their own brands.

It is in this case that they already own their own brands.

In March 29th, the seven wolves announced the official purchase of Hangzhou Kenna Garments Co., Ltd. at the fair.

The company has the agency rights of top clothing brands Connally (Canali), Versace (Versace Collection) and famous jewellery brand George Georg (Jasmine).

Meanwhile, Zhou Shaoxiong confirmed that the listed company of seven wolves will pay 70 million yuan for the purchase price.

Xiong Xiaokun, a light industry researcher at CIC, told reporters: "some international brands look forward to finding new agents in China to open up the Chinese market. Therefore, the number of domestic brands in the textile industry is very large, and has gained a large share of the market."

Seven wolves "planting trees"

Luxury brands "enjoy the cool"

Since 2010, the "breakup" trend between brands and agents has intensified. Some luxury brands such as LV and Hermes have begun acquiring property in Chinese cities and involved in commercial real estate.

As a result, Chinese agents who made great contributions to the development of luxury brands in those days seemed to be a burden. In order to control profits, international luxury brands tried to reduce agency links and withdraw agency rights.

For the international brand recall agent, Zhou Shaoxiong, chairman of the seven wolves also said that the international brand recall agent is the biggest risk of the seven wolves business.

Zhou Shaoxiong said that in the international brand, only a few companies have to recover their agents because of their own business structure, and the ability to operate directly is strong. However, most companies feel that the cost of sending them to China is too high and they do not understand the Chinese market. They need agents in China.

As the saying goes, "no profit can't rise early."

In fact, the fundamental reason for the massive "solo" of luxury brands comes from profits.

The latest "2009 China luxury report" shows that as of January 2009, China's total consumption of luxury goods accounted for 25% of the world's total, reaching 8 billion 600 million US dollars, surpassing the United States for the first time and becoming the world's largest after Japan.

Zhou Shaoxiong does not seem to care much about international brand recall. He said, "the key is whether you can create value for these brands, and how your management is. There will be new brands coming out of brands, and I would like to believe this."

In fact, there are agents who share the same idea with Zhou Shaoxiong.

When the previous brand contract is not over yet, seek cooperation with other new brands.

But this way is like drinking poison to quench thirst. Under the tide, the real strength of the international brand will end up alone, and the weaker brands will have to let the agent take the agency, but the market competitiveness of such a brand will obviously drop.

The practice of such agents worries the industry that China will lose the right to speak in luxury brands as more and more international luxury brands enter.

agent

Profit has no special advantage.

Most of the agents said they had invested too much in the break up lawsuit between agents and international luxury brands.

The seven wolves also take this level into consideration.

Zhou Shaoxiong said that luxury agents need a lot of cash in the early stage.

And the opening of such stores requires precision and will not expand as quickly as the popular clothing brand.

A senior member of the luxury industry said that the agency's right to obtain a brand is to set up a store. The cost of only one purchase is often as high as several million yuan. At the same time, the agent also needs to pay daily rental expenses, such as store rents and staff salaries. The high input makes the agents cautious in dealing with the opening shop, which restricts the further expansion of luxury brands.

Zhang Jianmin, general manager of Hangzhou Kenna, said in a media interview that in general, the profit margin of luxury agency industry in China is more than ten percent, and "different brands are slightly different".

As a matter of fact, this has no special advantage compared with the main clothing industry of the seven wolves.

2010 annual report shows that seven wolf main business gross margin increased to 42.85%.

But Zhou Shaoxiong is very optimistic about the profit prospects of the luxury market.

Data show that as of December 31, 2010, Kenna apparel business income of 66 million 370 thousand yuan, net profit of 7 million 840 thousand yuan.

Zhou Shaoxiong said that Kenna's development last year is very good. Now we need to strengthen the management of cash flow.

If we cultivate successfully, we believe there will be an outbreak.

Zhang Jianmin, general manager of Hangzhou Kenna, said that the number of Canali outlets will expand from 15 to 18 this year, while Versace's top clothing stores will grow from 11 stores to 4.