Pathfinder Intends To Set Foot In High-End Outdoor Leisure Brands.

The Pathfinder announced in March 1st that the company signed a joint venture letter with Jiangsu Jia Mao Commercial Co., Ltd. (hereinafter referred to as "Jia Mao commerce") in Changshou City, Jiangsu, and agreed to set up an outdoor joint venture company (hereinafter referred to as the "joint venture") by the company and Jia Mao business.

The 30 year Discovery Expedition brand and outdoor related resources (the specific categories are separately defined by the two parties) and all related rights and interests are invested into the joint venture company without authorization, and the relevant obligations, including the Discovery payable to the company's brand royalty or the deposit specified in the relevant agreements, will be pferred to the joint venture company.

This marks the Pathfinder's entry into the high-end outdoor leisure brand operation, and marks the first step in its multi brand operation.

Main joint venture company

Discovery Expedition brand

According to the agreement of joint venture letter of intent, the joint venture company's registered address is located in Changshu, Jiangsu, which is engaged in R & D, sales and operation of outdoor products.

When the joint venture was established, it was funded by Jia Mao commercial holdings.

Jia Mao business is located in Changshu, Jiangsu. Its business scope is clothing and luggage, leather goods, knitwear production and sales, as well as outdoor products, shoes and hats, sporting goods, sports fitness equipment, general merchandise wholesale and retail.

Yang Jianhui and Chen Hongqin held 70% and 30% shares respectively.

Yang Jianhui and Chen Hongqin are the actual controllers of Jiangsu Zhonghe Trading Co., Ltd. (hereinafter referred to as "Zhonghe trade").

The neutralization trade is the Nike, Lining and Anta franchising agents in 9 regions of Jiangsu. At present, there are about 1400 stores running these three sports brands, with a sales income of about 2 billion yuan in 2011.

The joint venture will take the Discovery Expedition brand as the carrier, focus on the rapidly rising outdoor leisure market in China, design and develop outdoor functional leisure products with the theme of innovation, exploration, city and fun, and enhance the Discovery Expedition brand outdoor products in China by means of the professional advantages of Pathfinder in the domestic outdoor products industry.

The Discovery Expedition brand is founded by Discovery Enterprises International (DEI), which is based on the Discovery Communications of the United States. The brand was founded in 1985, positioning high-end, emphasizing the spirit of exploration and innovation. It is the most widely released TV brand in the world. Its purpose is to help people explore the world and satisfy their curiosity. At present, it reaches more than 306 million families in more than 160 countries and regions in the world.

Although as an outdoor brand, Discovery Expedition has a short operation time, but relying on Discovery's discovery channel in the world, its brand influence and creativity are obvious.

Through the extension and integration of brands, Discovery Expedition brand has extended its high quality and professional connotation to offline outdoor fashion.

In November 2011, the European online shopping platform was established, and outdoor operations began in Italy and Korea.

The two sides clearly stated that the Discovery brand authorization scope of the joint venture company only includes resources related to outdoor activities (defined separately by the two parties) and their rights and interests. Apart from that, the other interests of the Discovery Expedition brand acquired by Jia Mao business are shared by both sides and will not be invested in the joint venture company temporarily. The rights and interests of the share part can be realized through the two sides' separate investment and establishment of the company (hereinafter referred to as the "new company").

Before the establishment of the new company, except for the agreement, without the written consent of the Pathfinder, the trade shall not use or authorize the third party to use the Discovery Expedition brand in any way.

After the establishment of the new company, the business of the 30 year Discovery Expedition brand except the outdoor category and all related rights and interests should be invested in the new company.

The joint venture company will set up an independent R & D team and introduce it.

In terms of cost, all the other brands except Discovery Expedition brand are actually operated by the joint venture company before the actual operation and earnings are obtained from the outdoor category. After the actual operation starts, the ratio of brand use fee or margin will be reduced to 50%, and the difference will be borne by the new company.

In addition, after the 3 year operation of the joint venture company has been achieved, the company can choose to sell shares of a joint venture company not less than 16% by way of the private placement of Pathfinder.

Pathfinder opens multi brand strategy and brings new profit point.

With the rapid development of the domestic outdoor products market and the continuous expansion of the market scale, the demand for outdoor products has gradually increased at various levels. Outdoor outdoor activities such as mountaineering, hiking, bicycling, skiing, camping, self driving and other relatively professional outdoor activities are continuing to flourish, and the demand for light professional outdoor products is increasing.

Pathfinder said that in order to fully grasp the development opportunities of the outdoor leisure market, the company intends to establish a joint venture with Jia Mao business and introduce Discovery Expedition brand to jointly expand the domestic outdoor leisure products market.

The joint venture will make full use of the popularity and influence of Discovery Expedition, the most widely distributed TV brand in the world, and excavate the spiritual demands of the Discovery Expedition brand and its high quality, high professional connotation, and develop a series of products that satisfy the multi-level needs of outdoor leisure activities. It will quickly promote the development and promotion of the new brand business in China, and establish the position of medium and high-end outdoor leisure brands in the minds of consumers.

Pathfinder believes that the joint venture will integrate the advantages of both parties in their respective fields, fully integrate the resources and influence owned by both sides, and build a strategic development platform to expand the outdoor leisure products market.

The development strategy of joint venture conforming to the new brand of the company to enter the outdoor leisure market is the inevitable requirement of brand positioning and consumer segmentation. It helps the company to fully grasp the opportunities for the rapid development of the outdoor leisure market, and at the same time, it can take advantage of the resources and advantages of neutralization trade in the retail channel and so on, so as to seize the market opportunity and promote the long-term development of the Pathfinder company.

Wang Wei and Sun Yu, an analyst at China Merchants Securities, pointed out that at present, the brand level of Pathfinder is more clear, and it is necessary to open up a new brand of outdoor leisure.

After years of combing, the brand of the Pathfinder has been developing rapidly, and it has taken a certain advantage in the two or three line market. With the growing scale of the brand, the company has begun to take important steps in the layout of many brands.

The introduction of Discovery Expedition will further enrich the division of company brand level. Relying on the existing channel advantage of "Pathfinder" brand and the popularity and influence of Discovery Expedition, the company will seize the initiative in the domestic high-end outdoor leisure industry, and expand the dual field with the professional brand "Pathfinder".

Although the brand has made a clearer contribution to its performance in 2013, it will take time to cultivate, precipitate and test the market in the next two years. In the short term, we should treat the release of the new brand's benefits rationally. The contribution to the growth of performance before 2015 is still more "Pathfinder", but the company's plan for Discovery Expedition is clear, and we hope to achieve an ideal scale in 5 years or so.

The multi-level division of brand is conducive to extending the company to many fields and gaining new profit points.

Ju Xinghai and Li Xin, a CITIC Securities researcher, pointed out that the Pathfinder has taken the first step in the success of the brand layout, opening up new space for the future rapid growth, and is expected to become a strong catalyst for the stock price.

Optimistic about the company's "extension expansion, scale advantage and management improvement", the company's brand layout strategy is still expected to continue to push forward, in order to support a larger and more sustained high-speed growth.