Medium And High Grade Clothing Sales Enterprises, Chinese Garments Are Expected To Be Listed On The Main Board Of Hkex.

China

Multi brand strategy and direct control retail mode bear fruit.

In June 19th, China Fashion and apparel Holdings Limited officially announced the details of this mature and high-end clothing sales enterprise in Hongkong.

Unlike the previous men's retail enterprises listed in Hong Kong, they mainly sell sportswear and formal costumes. Chinese apparel is the first retail enterprise in Hong Kong to focus on middle and upper class men's casual wear market.

The main shareholders of Chinese clothing include a number of powerful funds and companies, including the famous private equity fund China Enterprise Capital (CEC), Hongkong financial tycoon, Li Jiacheng close friend Liang Botao investment company, CHANEL family fund MOUSSERENA and famous international investment fund Lan Xin Asia (ORCHID), IDG capital and so on.

China owns many well-known international brands in China, such as SANTA BARBARA POLO & RACQUET CLUB, SBPRC, Jeep and London Fog.

According to the Euromonitor survey, Chinese apparel monopolized two seats in the ten top brands of China's high-end men's casual wear market in 2010. The Jeep and SANTA BARBARA POLO & RACQUET CLUB (SBPRC) brands were also the two fastest growing brands in the ten largest brands.

Different from the starting mode of garment processing in general Chinese clothing enterprises, Chinese apparel has gone through a completely different development path of "brand first". From the initial stage of its establishment, the brand strategy has been established and gradually developed into the "multi brand strategy" of the company.

Unlike garment manufacturers and agency sales enterprises, China apparel is a clothing enterprise integrating clothing design, production, marketing and sales. Its sales network is distributed in 227 cities in 31 provinces, autonomous regions and municipalities directly under the central government. Retail outlets are located in major shopping malls of major cities, and are self-contained and fully managed. Therefore, they have higher bargaining power and stronger channel strength.

With the rapid growth of London Fog brand and so on, the brand synergy effect has been further demonstrated.

The sales pattern of Chinese clothing is also different from the general clothing retail enterprises.

The company insists on direct control retail mode, that is, there is no redundant intermediate links with consumers, directly managing all retail terminals, so as to maintain a unified brand image, quickly collect market information, ensure seamless links between the company and all retailers, and better serve consumers.

China's clothing industry has benefited from the successful implementation of multi brand strategy and direct control retail mode, and is firmly based on China's high-end clothing market.

Zhang Yongli, chief executive officer and executive director of the company, said: "for many years, Chinese clothing has adhered to the multi brand strategy, the direct control retail mode and the continuous improvement of the efficiency of the supply chain, and has its own characteristics in terms of management.

We will continue to provide high-quality clothing products to attract high-end consumers, and launch new brands for different specific consumer groups to increase the richness of products and business.

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Compared with other mainland men's clothing sales companies already listed in Hong Kong, the unique advantages of Chinese clothing are obvious.

In terms of brand, the industry is mainly based on single brand, while Chinese apparel brands have many brands in different life cycle, and famous brands and growth brands complement each other, so that the company can achieve connotative growth.

In terms of products, the listed companies in Hong Kong basically attacked sportswear and formal clothing market while Chinese apparel dominated men's casual wear.

Casual wear is the mainstream of current and future clothing. It is also the main growth area of China's clothing market, and the market prospect is more extensive than other kinds of clothing.

In terms of channels, unlike many "multi channel modes" adopted by many industries, China's apparel industry adopts a flat "direct control retail" mode, which has 393 self operated retail stores and 493 third party operation retail outlets with effective and strong control. It can not only control retail terminals better in the medium and long term, but also produce greater synergy effect, help new brands penetrate into the existing network quickly and low, and help mature brands extend their lifecycle.

In terms of supply chain, China's apparel industry adopts a highly efficient and low-cost mixed production mode. Most of the production is outsourced, so the company can reduce investment and build large-scale production facilities and concentrate resources on brand selection, design and sales management.

And the company also owns production facilities in Dezhou, Shandong Province, one of the main products of the company's trousers.

This way of mixing not only reduces the production cost effectively, but also increases the flexibility of operation. This is particularly important in the fast consumable clothing industry.

Like many consumer goods companies, Chinese clothing is also a high cash flow enterprise.

In addition, because the company's production and marketing channels are sound, it is possible to carry out the principle of "first payment after delivery" and completely avoid the problem of long accounts receivable for production enterprises.

As the first Chinese high-end consumer casual wear retail business in Hong Kong listed in China, the Chinese apparel market is about HK $2 billion 50 million, which will mainly be used to introduce more international brands to enhance the brand portfolio of the company, continue to promote existing brands, develop new brands and new product types, and enhance logistics and warehousing capabilities.

The selling price ranges from HK $1.9 to HK $2.5 per share. It is expected to start trading at the Hongkong stock exchange in 2011 and June 30th, with a stock code of 1146 and 2000 shares per hand.

"The listing of Chinese apparel marks a milestone in the company's business development," said Lu Jia Xing, chairman and executive director of the company.

Through listing in Hongkong, China's clothing industry will enter the international capital market.

This will not only strengthen the capital base of our company, but also consolidate our leading position in China's high-end men's wear industry, further expand our competitive edge and promote the development of our company.

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About China Fashion Holdings Limited

China apparel Holdings Limited is a high-speed growing company specializing in clothing design, production, marketing and sales in China. Its business is focused on men's wear.

The company operates a number of internationally renowned brands, providing a variety of men's casual wear to middle and high income consumers, including gentlemen's leisure, outdoor leisure, casual wear and accessories.

Our popular brands under franchise include Jeep, Santa Barbara Polo and Racquet Club, Sideout and Hallmark.

According to the total retail sales, the Jeep and Santa Barbara Polo and Racquet Club brands are among the top ten brands in China's mid 2010 men's casual wear market (data source: Euromonitor).

In addition, we also sell our own Doright brand men's clothing and get the right to use London Fog brand to sell clothing products in China.

We are also authorized retailers for Koyo Jeans brand clothing products in China.