Traditional Industries Should "Go Out" In A Timely Manner.

"The international competitiveness of China's textile industry is stronger and stronger. At the same time, schools in some developed countries have even removed the textile profession."

Li Rucheng, chairman of YOUNGOR group, said in an interview that in the process of undertaking international industrial pfer, the dominant industries formed by China are just some traditional industries.

Under such circumstances, the realization of the internationalization strategy through mergers and acquisitions will be able to better enhance the international competitiveness of China's dominant industries.

In fact, just as most traditional industries such as textiles are considered to be the sunset industry, financial capital has begun to sneak into this field, and has been waiting for the high-tech industries such as the Internet, which are long and keen.

It is understood that after the burst of the Internet bubble and the flashy of high technology, venture capital began to turn its attention to traditional industries in recent two years.

Especially in the country, small fat sheep and other catering enterprises, Joyoung soya bean milk machine and other small household electrical appliances enterprises have become the pet of venture capital.

It is believed that the "big change" of venture capital that has always pursued a high return rate shows that the potential of China's traditional industry development is enormous.

It is also understood that through the acquisition,

The group gained 14 production bases distributed in Sri Lanka and Philippines.

Li Rucheng said he could consider expanding factories in places like Sri Lanka in the future.

It is not difficult to find that while undertaking the industrial pfer in developed countries, YOUNGOR has begun to consider the next development strategy.

To say that having a production base in Southeast Asia will help YOUNGOR avoid exchange rate risks and trade barriers.

However, insiders pointed out that with the increase of domestic labor costs and other factors of production costs, the layout of industrial chains in the international scope is an inevitable choice for the internationalization of Chinese enterprises.

Efficient integration of industrial chain, the advantages of traditional industries in M & A

"After the completion of the merger, we are the world's first clothing company from cotton to weaving, logistics, and sales to cover the whole industrial chain."

YOUNGOR people concerned, although involved in a number of industries, but YOUNGOR's most notable is its main business - Textile and apparel industry in a whole industry chain.

Starting from the upstream cotton planting, YOUNGOR bought and invested a series of related enterprises and reached the coverage of the whole industry.

Xin Ma group CEO Xu Jingbo introduced that 60% of the cost of garment enterprises came from fabrics. As a company without fabric production, the development of new Ma group was restricted, so he was very optimistic about the prospect of the acquisition. "Many enterprises' Mergers and acquisitions in that year can not see too many direct benefits, and our cost reduction and efficiency improvement will be reflected in 2008."

Insiders pointed out that in traditional industries, Chinese enterprises have comparative advantages in the most basic links. Therefore, through mergers and acquisitions, management, sales channels and technology supplement, it can better reflect the integration advantages of the entire industrial chain.

The basic R & D, component patents and core technologies of some high-tech industries are controlled by foreign companies, and it is difficult to get them through mergers and acquisitions.

Li Rucheng said that after the completion of the acquisition, YOUNGOR has 43 thousand employees at home and abroad, with an annual production capacity of 80 million, becoming the world's largest garment manufacturer.

However, this is not what Li Rucheng values most.

In the interview, Li Rucheng repeatedly stressed, "in traditional industries, competition is becoming increasingly fierce, and the competition of enterprises is not the competition of single products, but the competition of the whole industry chain."

Li Rucheng said that through mergers and acquisitions, YOUNGOR has obtained more than 20 well-known brands of ODM (original design manufacturer) processing business, with Nautica, Perry Ellis and other five authorized licensing brands; a top team of international brand management and design experience with decades of experience; a sales channel for hundreds of department stores in the United States; and a powerful logistics system to ensure the smooth flow of these products into the department store.

This undoubtedly greatly improves YOUNGOR's industrial chain and its layout in the global market.

"Going out" should be based on stability.

We have contacted the internationally renowned enterprises at 4 billion euros in price, but after the investigation, they found that it was not what YOUNGOR wanted.

The internationalization strategy of domestic enterprises should be based on stability and not blind expansion.

Li Rucheng said that for the international development strategy, YOUNGOR has made many preparations and attempts. For example, after hearing that Lenovo and TCL acquired foreign enterprises, they learned a lot of information through various channels, and analyzed the advantages and disadvantages of overseas mergers and acquisitions and the feasible ways.

"A few years ago, the two sides contacted the acquisition of new Malaysia, but some of the conditions were not mature enough.

When it comes to the merger, Li Rucheng is not proud to say that $120 million is not a big investment, even less than the net assets of the new Malaysia group.

In addition, 90% of the new Ma group's products are sold in the US market, which is a good complement to YOUNGOR, who has not really entered the US market yet.

At the same time, the new Ma group has strong R & D capability and high value-added products, which are really needed by YOUNGOR.

Speaking of M & a risk, Li Rucheng believes that cultural integration is the biggest risk, but this does not exist in this merger.

It is understood that after the acquisition of the new Malaysia group by the US KELLWOOD company, its headquarters is still in Hongkong, and has maintained relatively independent operation.

And Xu Jingbo said that Hongkong enterprises are more familiar with the international operation, and the countries of Southeast Asia generally have a good sense of the Chinese mainland.

Informed of the success of YOUNGOR's merger and acquisition, employees from Philippines and other subordinate enterprises also held their own congratulations.

He said that the new Ma group has had many years of cooperation with YOUNGOR, and there are many similarities with YOUNGOR in terms of corporate culture and development philosophy.

Therefore, there is no question of cultural integration between the two sides.

"Cheap acquisition price, cultural similarity and business complementarity make our acquisition" zero risk "M & A.

Li Ru Cheng said.

"Our acquisition comes from loans, and it is US dollar loans. The annual interest rate is about 6%.

At present, experts predict that the RMB appreciation will be 8% to 10% this year.

When it comes to the capital operation of the merger, Li Rucheng counted the accounts for reporters.

It is not hard to see how meticulous Li Rucheng calculates for such a big overseas acquisition.