BELLE Uses Capital Restructuring Channels

By focusing on channels and integrating channels, BELLE stands out from many shoe brands.

Seven or eight years ago, CCTV-5 was a truly "Jinjiang" channel. Dozens of sports shoes brands from Jinjiang and dozens of clothing brands on this channel, "you sing our debut."

However, in the past few years, CCTV-5 still has many brands in Jinjiang, but most of these brands haven't grown up, and they still maintain the scale of sales from several hundred billion yuan to more than ten billion yuan, and the channels are hard to expand further.

This is the reality of Jinjiang shoe brand.

The brand of Jinjiang sports shoes pformed from the international operation brand is basically based on the marketing strategy of advertising bombing + star endorsement. It should be said that this strategy really helped Jinjiang sports shoes brand enhance brand awareness in a short time.

However, advertising bombing and celebrity endorsement can not help these brands grow rapidly and stronger. Most brands can only survive in the two or three line market.

At the same time, at the same time, the shoe brand BELLE, which has rarely appeared in the media, developed more than 4000 channels before listing in May 2007, becoming the most powerful brand in the Chinese footwear industry.

"BELLE's most valuable asset is its sales network."

Industry veteran Liu Donghui said.

Take the channel as the core to open up the situation. In the view of marketing expert Li Zhiqi, BELLE's success is closely related to its strategy of capital operation, multi brand strategy and vertical integration, but these competitive advantages are gradually formed under the premise of its strong sales network.

"Channel is BELLE's most fundamental core support."

But the formation of BELLE's core channel strategy was an inevitable task in the past.

The predecessor of BELLE international is Lihua shoes industry, founded by Deng Yao, Hongkong.

In October 1991, Lihua set up a Sino foreign joint venture Shenzhen BELLE Shoes Co., Ltd.

"In the early 90s of last century, the mainland of China had not yet opened up retail business to foreign investors. Therefore, the BELLE shoe industry with Hong Kong background has not yet been able to make distribution. Therefore, under the circumstances, by hiring the general manager of the mainland, Sheng Bai Jiao, he mobilized his family members and relatives and worked out dozens of distributors and bypassed the policy restrictions before distributing the products."

Li Zhiqi, who kept watching and studying BELLE for many years, recalled to reporters the scene when BELLE shoes just started.

BELLE shoes industry did not follow the general business models and rules of shoemaking enterprises from the beginning, but expanded the channel as its core strategy.

From today's marketing rule, the terminal industry is just a better channel for brand display and dissemination. The display and promotion of brands through the terminal is more effective than advertising communication.

At that time, the core channel strategy adopted by BELLE undoubtedly laid a solid foundation for the subsequent expansion.

In this way, in the early 90s of last century, the BELLE shoe industry controlled the downstream distribution channels by the general manager Sheng Bai Jiao through the cooperation relationship between the general manager and the boss.

However, Deng Yao and Sheng Bai pepper soon discovered that the company had relatively weak control over this agency mode and had some hidden troubles for future development.

From the middle of 90s, it gradually changed to the franchise mode. By restructuring, 16 distributors were eventually retained, and the functions of these distributors also changed. The main function was to help companies develop direct chain stores and franchise chain outlets, and provide support and service for them.

After this reform, the expansion speed of BELLE footwear industry speeded up rapidly, from 1995 to 2001 in the six years, five hundred or six hundred rapid development of chain retail outlets nationwide.

However, at the time, there was no enterprise in China's footwear market that adopted such a centralized retail chain store mode. Most enterprises were dealers and terminals.

Through this fast replication chain mode, BELLE's channel size has been the biggest in the Chinese women's shoes market at that time. In 2001, BELLE shoes became the biggest brand of Chinese women's shoes sales and sales.

In July 2002, BELLE international and BELLE distributors jointly set up Shenzhen BELLE Investment Co., Ltd. (BELLE investment).

Among them, Deng Yao family members and Sheng Bai pepper members share 45% of BELLE's investment, while the other 16 distributors share 55%.

In this way, BELLE international has entered into an exclusive distribution agreement with BELLE to replace the exclusive distribution agreement previously established with individual distributors.

As the two families occupy the largest share of BELLE's investment, they are deeply involved in the company, which is mainly built up by the sales network terminal.

"Through this equity arrangement, Deng Yao and other founders obviously strengthened their control over the downstream sales terminals and held the channel's right to speak in their own hands."

Li Zhiqi analysis.

In April 2004, China promulgated the "management of foreign investment in commercial areas". It is clear that Chinese and foreign investors can establish foreign-funded commercial enterprises in accordance with the law, engage in business activities in the field of commercial circulation, relax restrictions on foreign investors' shares, and cancel restrictive requirements such as registered capital and scale of investors.

The restrictions on foreign investment were relaxed after the introduction of the management measures of foreign investment in commercial areas. At that time, BELLE investment actually controlled 1681 retail outlets in China.

By the end of 2004, at the end of 2004, BELLE's investment in 1681 retail stores began to be pferred to Off Shore Company BELLE international through the way of changing lease. The management of stores was pferred by re hiring salesmen, while BELLE's office equipment, cars and intangible assets were sold to BELLE international at a price of $61 million 200 thousand.

BELLE international terminated its exclusive distribution agreement with BELLE in August 2005, and began restructuring in August 24, 2005. In September 2005, Morgan Stanley's two fund companies and CDH investments subscribed part of BELLE international shares to HK $23 million 660 thousand.

"In the shareholding structure of BELLE international, 16 distributors accounted for 55% of the shares. After all, it interfered with the day-to-day business decisions. After restructuring, BELLE international introduced strategic investors such as fund companies and investment companies. The original 16 distributors did not quit or diluted their shares.

These strategic investors do not interfere with the daily operation of the company, but they can help BELLE better connect with the capital market. "

In the industry veteran opinion, this move is BELLE international to the capital market closer to the mark.

Besides, due to the limited financial strength of distributors, unable to meet the requirements of rapid expansion of channels and shops, timely introduction of strategic investors can also get more funds to solve the pressure of fast opening stores.

Since September 2005, BELLE's channel has started to expand rapidly. As of May 2007, the number of direct chain stores has reached 4800.

In May 23, 2007, BELLE international officially launched in Hongkong and raised HK $8 billion 660 million.

The successful listing of BELLE international proves that BELLE's model is highly sought after by the capital market.

The successful listing of BELLE international and its high market capitalization by the capital market are closely related to its capital operation before listing.

In 2004, BELLE's sales revenue and profit were only 870 million yuan and 75 million yuan respectively. However, through a series of acquisitions, BELLE international bought 1500 good franchisees and consolidated financial statements. By 2006, the two figures rose to 6 billion 200 million yuan and 970 million yuan respectively, and the profit increased by 13 times.

There is no reason why the high growth rate and good business performance will not be favored by the capital market.

In the view of the industry, BELLE's success has many factors: multi brand strategy, vertical integration mode and capital operation capability, but these elements are still built on its huge channel system.

In every development stage of BELLE, due to the timely adjustment of strategy, it has been able to meet the needs of the market and effectively promote the further expansion of the channel. In the 90s of last century, the mode of changing distribution agents was the mode of chain joining, which made BELLE's channel outlets fastest in the mainland women's shoes market. The establishment of BELLE investment in 2002 allowed BELLE to strengthen its control over downstream channels; in 2004 and 2005, the introduction of strategic investors brought BELLE enough funds and started a high-speed channel expansion again; 2007 Hongkong listed, BELLE international completely pformed into a capital predator, bringing a huge amount of funds after listing, and began a series of takeover actions.