XTEP CFO Ho Rui Bo Detailed Explanation: XTEP'S Investment And Income Trade-Off Way

On February 23rd, in the Expo Park of Shanghai, tens of thousands of cordial "cabbage" were active. This is the nickname of volunteers in Shanghai World Expo in 2010.

Because they wear green and white volunteers.

In the office building of the Ruian center in Wan Chai, Hongkong.

Cross border marketing, beachline two or three lines

In January 2010, XTEP became the first Chinese sports.

He Ruibo said that XTEP's positioning has always been the brand of fashion sports. Its emphasis is on the concept of "entertainment marketing", with the premise of entertainment and sports.

We will sponsor events and international events, such as the National Games and the World Expo; second, entertainment and fashion can not be separated from sports. XTEP has been promoting the running market from the end of last year. We feel that running is a challenge for ourselves. There is no space, time and age restriction. This market is very large, and XTEP shoes have a history of 20 years. This will be promoted as the core, such as sponsoring juvenile marathon and Xi'an marathon. Third, in terms of advertising, the ratings of Hunan satellite TV are the highest, so XTEP will concentrate on putting resources here, naming sponsorship "day to day" and other programs, and also including the TV programs of Southeast China's pop music list. "We have three directions in the promotion of time division, the first is the large scale.

In He Ruibo's view, even across the board of cross-border marketing, XTEP's direction in sponsorship and advertising is also very clear, not "wave" investment.

"Most of our products are priced between 100 yuan and 300 yuan, and the target market is mostly concentrated on young consumer groups, and most of them have this spending power. This is the key to highlight brand positioning."

He Ruibo believes that in the face of strong competitors such as Nike, Adidas and Lining, XTEP is very difficult to apply the past sports brand marketing mode, so take another road, from the preferences of the target consumer groups to cut, for example, young people like to listen to music, watching entertainment programs, so XTEP has made some popular celebrity endorsements.

"Even looking at us, LOGO is a contrasting" X ", which is a very important image positioning.

In his view, the positioning of XTEP's fashionable sports brand has caught the mentality of young people very well.

On the choice of regional market share, XTEP also avoided competition in the first tier cities, but chose China's developing provinces such as central China.

It is reported that most of the retail market of the first tier cities is close to the saturation point of the sports goods industry, while the two or three tier cities are subject to the economic growth brought about by the continuous urbanization in China, and the growth rate of their consumption capacity has steadily increased.

According to the National Bureau of statistics, the growth rate of GNP in China's two or three tier cities in recent years has been consistently higher than that in the first tier cities such as Beijing, Shanghai and Shenzhen. Especially the growth rate of over 13% of Hunan, Hubei and Anhui provinces has become the leader of the national economic growth.

The rapid economic development has driven the pfer of capital and labor to the two or three tier cities, and consumer demand has increased rapidly, thus creating greater market space. XTEP has also chosen to take the lead in the two or three line market.

According to the 2009 financial report, XTEP's revenue in 2009 was 3 billion 545 million 300 thousand yuan, an increase of 23.7% over last year, gross profit margin increased by 2 percentage points to 39.1%, and net profit margin increased 0.6 percentage points to 18.3%.

When it comes to how to balance the relationship between investment and income in brand promotion, He Ruibo laughs, "many investors will ask."

He Ruibo admits that it is difficult to decide which advertisement the product's revenue comes from.

But XTEP has a set of strategies in putting advertisements into practice. First, do market research to determine which media information the target consumers will tend to; then do target budgets. Too much investment will affect profit margins. Too little investment will affect future earnings. The percentage of advertising revenue before XTEP will be a single digit, and after the launch, the advertising budget plan has reached 12% of the total revenue.

"Being the exclusive sponsor of the Bermingham football team and becoming the principal partner of the volunteers in World Expo, Shanghai, is the best proof of XTEP's brand effectiveness."

Despite the success of China's light asset operation mode in the field of "fashionable sports", XTEP still insists on the "vertical integration" mode.

He Ruibo believes that every company has its own background. XTEP chairman Ding Shuibo has 20 years of experience in the industry. She used to be a OEM manufacturer and help some European companies to make OEM processing, so XTEP has the technology and plant like precipitation.

XTEP itself has production capacity, so there is no need to give up the production line. The cost of manufacturing itself is certainly cheaper than outsourcing.

In addition, this production capacity has great advantages in the face of market growth, and does not cost much in the supply chain.

He Ruibo is very optimistic about XTEP's vertical integration mode, that is, not entirely 100% of its own production, but a certain production capacity can withstand the unknown crisis.

The road of IR under difficult IPO

From Heng An to Anta and then to XTEP, the Jinjiang plate of Hongkong stock market is known far and wide.

In June 3, 2008, XTEP landed on the main board of the Hong Kong stock exchange. Although the first day of listing suffered a small embarrassment from breaking the issue price, in the atmosphere of Beijing Olympic Games, XTEP's listing still attracted enough eyeballs in sports and consumers.

Before joining XTEP in 2007, He Ruibo had enjoyed two successful IPO successes in CFO's life, so he was very familiar with the operation of Hongkong's capital market.

After studying and working in the UK for some time, He Ruibo returned to Hongkong in 1994 and served as an audit manager in the Ernst & Young. In the 10 years after that, he served as a finance major in the new world group, Founder Digital and Gulf holdings, and participated in the backdoor listing of Founder Digital and IPO of the Bay holding company in Hongkong.

In 2000, he began to work in the mainland for the first time and joined the founder group of Peking University, just in time to catch up with his two subsidiaries to plan to go public in Hongkong.

This valuable experience of running in makes He Ruibo realize for the first time that there are many differences between the management of mainland enterprises and the operation of Hongkong and western enterprises.

Starting in 2005, He Ruibo, who is more and more adapted to the mainland's corporate culture, has joined the Gulf holding company with the largest market share in the field of fire fighting equipment in China, and has spent two years helping Gulf holdings to list in Hongkong.

In 2007, through the recommendation of friends, He Ruibo came into contact with XTEP, who is actively preparing for listing in Hong Kong.

He Ruibo, who has rich experience in investment and financing, has been interested in this industry rapidly.

In He Ruibo's view, China's future retail industry is able to share the best industry in its golden growth cycle, while sportswear products are also healthy, with a large customer base, and public prices can also withstand and purchase.

At the same time, He Ruibo very much agreed with XTEP's fashion movement position, so he decided to join XTEP immediately and take over the preparations for the listing.

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Although it took only nine months to start preparing for listing, the market environment at that time impressed He Ruibo, who brought the company to IPO successfully.

After the management team answered tens of thousands of nearly tricky questions of investors, and after tens of thousands of universal roadshows, lucky XTEP rushed to appear on the market in June 3, 2008 on the eve of the global financial turmoil, raising about HK $2 billion 100 million.

He Ruibo recalled the financial crisis of 2008, and XTEP was just the last successful listed company in that period.

"In front of us, there are some strong brands of the same kind, such as Lining and Anta, which are already well known to investors. We must take the initiative to find strong funds to promote XTEP's bright spots. In a relatively bad investment atmosphere, we can still complete the listing target. It is really not easy, especially in the road show, facing many difficulties and investment circles' doubts.

But in the end, IPO was completed by hard work and strength.

When communicating with investors, He Ruibo emphasized the idea that "XTEP is the integration of sports into life".

Because many industries are declining in 2008, while leisure sports products can be regarded as a part of clothing consumption, the impact of the financial crisis on XTEP's target consumer groups is limited.

He Ruibo said that when the roadshow was open one day, there were eight meetings, each meeting for one hour, and some introductions in the front. We should grasp 30 to 40 minutes in the middle, and clearly tell the investors such as business orientation and competitive advantage.

The core is the manager, how can it be expressed? First, through language, second, by showing PPT, the most important thing is not to "empty cheque".

When speaking, you must be sincere and have confidence to cash in. You can't go beyond three months' performance, and establish trust relationship with investors.

When it comes to how to manage investors' expectations, He Ruibo admits, "there is no absolute answer or model, which is just like art."

The key is to explain to investors how the whole industry will be affected, how the company will position and its future strategy, and how the management will implement the strategy. What's more, what are the strengths and weaknesses in the execution process? What's the difference with the investors? Because every company has its own advantages and disadvantages.

And tell investors how the company will make up and improve the team or other aspects.

"Investors need to know your industry first. He wants to know what your future strategy is. Only if you agree with them, can you make investment decisions."

When it comes to the topic of such a sensitive stock price after listing, He Ruibo confidently said that when the whole capital market was poor, every company would face such a process, but this is not a question of XTEP's performance. The management of the company is still very concerned about the business level and doing its part well, and the stock price will be reflected in the essence of management upgrading one day.

"So we still bow to what we should do, straighten out our business and do well in investor relations.

After the financial turmoil, our share price rebounded, from 1 yuan to 6 yuan now.

Paratroopers in family businesses

As a professional manager, does He Ruibo adapt himself to the private family businesses in the mainland? Does he communicate with Chairman Ding Shuibo?

He Ruibo said that every enterprise has its own culture, and the attitude of the boss of private enterprises to executives is a very important core.

If the boss keeps an open mind to accept a person's opinion, he also agrees that "every field has experts". After all, even the president of the United States should listen to all opinions.

"Fortunately, Ding always has this vision and charm to communicate with professional managers. He came to Hongkong very early and traveled through many countries. His ideas and vision are very wide."

It is reported that at present, XTEP (China) Limited, a dozen directors and nine vice presidents, belong to only four of the Ding family, and the rest are all professional managers who are promoted internally or recommended by headhunting companies.

They have an average of more than 10 years of industry experience and play a mainstay role in company management.

In the three years of XTEP, He Ruibo was happy to see that investors were very positive about the whole team.

In his view, Ding Shuibo is a very good leader, because it is easy to accept others' opinions, and the whole team will respect the ideas put forward by Mr. Rui Bo.

At the shareholders' meeting in April this year, he appointed any director as executive director and announced that Chen Wei, former chief financial officer of Li Ning Co, became a non-executive director.

He Ruibo comforting to say, "after all, a domestic private enterprise can accept people who are not members of the family to enter the board of directors, which is a relatively small example. This is Ding's trust in me, and also represents Ding Zong's willingness to join others who contribute to the company to grow his team.

And Mr. Chen Weicheng is willing to join XTEP to become a non-executive director, which is also very supportive for us.

After all, he has been doing CFO for so long in Lining, he knows the market very well and expects him to give us some strategic advice based on his past experience.