Overseas Luxury Brands Can Easily Dominate The Profitability Of New Brands Of Chinese Enterprises.

Following the purchase of the French light luxury fashion brand Sandro, Maje and Claudie Pierlot by Ruyi group, a Chinese textile producer in April of this year, recently, it was reported that Shandong Ruyi group plans to acquire the British windbreaker brand Aquascutum (Jagle Dan).

Unlike previously acquired brands, the British luxury brand has not developed in the UK market and in China.

According to the insiders, when Chinese enterprises acquire overseas brands, they will face many risks, such as being unfamiliar with overseas markets. Today, with the rapid spread of information, Chinese consumers will hardly be attracted by such gimmicks as foreign brands.

Overseas luxury brands are easy to dominate.

According to the world clothing shoes and hats net, Shandong

It is planning to buy Aquascutum from YGM trade Limited (hereinafter referred to as "YGM trade") for about $120 million and is currently conducting a due diligence survey.

According to the source, Ruyi group hopes to reach a final agreement in the next few weeks.

In October 17th, YGM trade announced that it was planned to sell.

The manufacturing and sales business of the brand products and related intellectual property rights involve a paction amount of US $120 million, and the selling price is up or down by no more than US $5 million, but it does not indicate the identity of the buyer.

This is not the first time that Shandong Ruyi group has launched overseas operations.

Mergers and acquisitions.

In April of this year, Shandong Ruyi group spent 1 billion 300 million euros on Sandro, Maje and Claudie Pietro.

Before the frequent acquisition of famous foreign brands, Shandong's more business focused on fabric R & D and production.

According to the world clothing and shoe net, although Shandong has a certain position in the fabric manufacturers, but Ruyi has not done much in the end product clothing. In the clothing business, Shandong is willing to do more OEM business.

The acquisition of foreign brands can not only enhance the influence of Shandong Ruyi in the field of clothing, but also bring more benefits to Shandong.

Unlike the previously acquired $1000 luxury brand that is popular among consumers, the London brand Aquascutum, which has been around for over 160 years, is famous in the UK for making waterproof clothing for the army in World War I, but its brand development in the Chinese market and in the European and American markets is not satisfactory.

New brand profitability

The US financial crisis has led to a sharp fall in sales in the Aquascutum and European markets, and the brand has not grasped the luxury consumer market in China.

Reporters learned that the brand last year closed 29 stores worldwide, while the mainland of China as a serious disaster area, closed 2015 stores in 25.

In addition, reporters in the brand Tmall flagship store to see, Aquascutum sales are only single digit.

Aquascutum's parent company YGM trade revenue also fell below HK $1 billion mark.

According to the YGM trade annual report, last year, the group's net loss was HK $87 million 871 thousand, with a turnover of HK $894 million, down 18.7% from the same period last year.

Among them, the sales volume of garment sales fell by 19.8% to HK $775 million 930 thousand, a loss of HK $92 million 798 thousand.

YGM trade said that last year, the retail business of the group's main business was shrinking, especially in the mainland and Hongkong markets, leading to a marked decline in retail sales and wholesale prices of clothing, leather goods and clothing.

YGM Group believes that the two markets remain challenging this year and the group will face difficult circumstances in the coming years.

In addition, high rental and other occupancy expenditures are pressing profitability.

In order to increase cash flow to make up for losses, YGM trading sold a property in August this year to HK $66 million 800 thousand.

According to the world clothing and shoe net, in 2012, YGM, whose Asia Pacific region control power had already acquired its Aquascutum, declared bankruptcy.

YGM trade hopes to expand its brand product category and actively expand its sales network in the Asia Pacific region for its "revival", but from the current performance and operating conditions, the result is not satisfactory.

Enterprise management as a development problem

In recent years, there has been no shortage of foreign high-end clothing brand investors in China, but there is only a lack of managers who can operate foreign brands and local enterprises culture well.

In the face of the downturn of the garment industry, whether the future development of Aquascutum can be integrated with the local corporate culture has become a problem to be solved.

Cheng Weixiong, general manager of Shanghai Laoqi Brand Management Co., Ltd., in an interview with reporters, said that when Shandong Ruyi group was undertaking overseas mergers and acquisitions, in addition to complementing resources, the deeper reason was that it hoped to merge brand resources at a more favorable price in the context of continued cold market.

Shandong Ruyi group, as a fabric manufacturer, needs to expand its business, so that the fabric can be further made into garments to gain more profits.

"But as a Chinese enterprise in the international fashion industry docking process can not help but worry."

Cheng Weixiong, frankly speaking, on the one hand, Shandong Ruyi group is a productive enterprise itself. In the process of merger, brand thinking is different, and the trend of this trend is bound to weaken.

In the process of docking between enterprises and enterprises, the collision between local customs and cultures is inevitable. The integration of national culture on management teams is also very important.

In addition, brand diversification also needs a certain positioning. Before the active layout, it must be clearly positioned. In the process of acquiring brand, we should consider the complementarity between these brands and enterprises. We must have a certain grasp of how to control the enterprises in the process of mergers and acquisitions. The problems encountered in the process of pformation and merger may lead to poor effect on the main business.

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