Zara'S Parent Company'S Tax Avoidance Is Lawful Under The Existing Law.

The tax avoidance behavior of multinational corporations has been a topic of European Union and European Union in recent years. After the financial crisis, Italy and the United Kingdom are actively investigating the tax avoidance problem of their enterprises, especially Italy. Luxury goods The group was almost investigated and fined separately for different amounts. In addition, technology giants Amazon.com inc., Google Inc., Apple Inc. were accused of tax avoidance and fines.

In Thursday's report, the EU green party also admitted that the Inditex SA Indo Textile Group's tax avoidance act was legal under the existing law, but the organization insisted that the Spanish group actually operated in the company's business. Tax situation The problem is increasing. For the European Union Green Party's criticism, the Spanish Group believes that the organization's report is based on erroneous premises that the wrong conclusion, and that the group in all markets, comply with the local tax law.

In Thursday's report, the EU green party also admitted that the Inditex SA Indo Textile Group Tax avoidance behavior It is legal under the existing law, but the organization insists that the tax situation of the Spanish group in the actual operation of the company's business is increasing. As for the Inditex SA India Textile Group's tax avoidance problem, it is not only in the near future.

As early as 2014, Bloomberg published a deep investigation article, which means that the group avoided tax through brand management companies. In fact, in the retail industry, there are always cases of tax avoidance through trademark and rentals. The way is to register companies that have brand trademarks and properties in low tax countries, and companies in actual operation countries need to pay a lot of royalties and rents to these low tax countries.

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The brand competitiveness of ZARA is not imitated by all fashion brands in the world at present. Without scale, after all, it is possible for everyone to achieve scale. The mode used by ZARA is VerticalIntegration, vertical shipment. Greatly shorten the shipment time: an average of 2 weeks, so the fast fashion brand represented by ZARA can have 15-20 Collection a year.

In comparison, the whole process of ordinary brand shipment takes 4 to 6 months, with only two Collection in a year. However, due to the adoption of the VerticalIntergation mode, ZARA can control the whole process better and faster than other fast fashion brands (from market research, design, plate making, sample making, bulk production, spanportation, retail) to 5 days faster than H&M, also known as shipping speed.

In pursuit of speed, ZARA can sacrifice a lot of costs.

1> in the production process, ZARA relies on the countless handicraft shops and family factories in La Coruna where headquarters are located, and many products are directly produced locally. It has not been outsourced in recent years. However, in the past few years, H&M has made 75% of its products in Asia, and has now outsourced production. However, for this reason, the price of H&M is about ZARA 50%-70% (without considering the cost of raw materials).

2> all long-distance spanportation is an aircraft, instead of a cargo ship, willing to pay high freight charges and unwilling to spend advertising and marketing expenses, ZARA's marketing expenses account for only 0.3%-0.4% of the total cost, while other brands account for about 3%-4%. Despite the high cost of pursuing fast, ZARA's gross margins and net interest rates are still comparable to those of H&M, and ZARA is unwilling to save the cost in order to increase profitability.

Therefore, ZARA has reached an unprecedented height in all fashion brands and retailers. My teachers in Milan never call ZARA brand, because it focuses more on production and retail links, and never uses the design to locate the style of brand products, nor does it have a BrandIdentity that a fashion brand should possess: (1) all clothes in ZARA headquarters warehouse will not stay for more than three days. Stores will order products two times per week to replenish products, and inventory turnover rate is 3-4 times higher than that of other brands. 2. On average, only 15% of the clothes per quarter need to be discounted, while the other brands are 50%.

3> customers spend an average of ZARA17 times a year, with only 4 other brands. At the same time, ZARA's credit is also attributed to their "inverted" design concept. When I was in the ZARA interview, HR told us that the core of ZARA is shops, because only when shops can really reach customers can we understand the needs of customers.

Therefore, stores provide sales data and submit it to storefront managers. The storefront manager collate the results and submit them to the design department. The design part designs the style according to the needs of customers, and then submitting it to the commercial sector to evaluate the cost and price. After that, it starts to plate, sample production, spanfer it to the factory production, and finally store it in the ZARA super logistics warehouse (9 times as much as Amazon). There will be countless freight cars on the doorway of the warehouse to spanport products to other European areas or airports two times a day.

In this process, on average, 20 minutes for a design, a garment can be designed, and more than 25 thousand new designs can be designed each year, 4-6 times that of H&M. Because customers' demand for fashion is changing, the data collected from shops are timeliness, so fast is the most fundamental and important magic weapon for this model.

It is precisely because of ZARA's unique mode that the rest of the existing brands can not be emulated, because if they imitate, designers will no longer play a decisive role in the design, or even rebuild the designer team, logistics system, production process and so on.

But there are drawbacks to this pattern:

1> because of the control of the whole process, the operational risk is increased. If there is economic decline or industry downturn, pressure can not be spanferred to suppliers (such as requiring suppliers to reduce prices).

2> can not integrate the advantages of all countries and achieve maximum benefits.

3> shops are directly managed by brands, unable to expand rapidly through proxy and other forms (such as Benetton in Italy), and some of the property also needs to invest in new shops and renovation of existing shops, which reduces the turnover rate of assets (ZARA's AssetsTurnover is 1.4, GAP is 1.8, H&M is 2.4).

As we all know, the plagiarism problem, ZARA has been copied for many years, you told me to sue, the lawsuit lost money, I can earn money anyway, (unlike the United States Forever21 after being charged with a hubbub) in short, ZARA is creating a new business model, a completely based on customer demand business mode. Therefore, ZARA's current enemy is only itself. Only by fully recognizing and controlling the pros and cons can we achieve long-term, stable and sustainable development.

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