Traditional Big Cards Are Hard To Control, Light And Extravagant, And Fast Fashion Suits The Present.

After years of silence, the world's luxury consumer market began to rebound.

In 2017, China's luxury goods sales amounted to 142 billion yuan (US $22 billion 70 million), an increase of about 20% compared with 2016, the biggest increase since 2011.

Looking at the world, Chinese consumers account for more than 3 of the largest luxury consumer groups.

This does not include the hot sea and shopping.

Chinese enterprises are aware that if we can introduce overseas luxury brands into China through a reasonable and feasible way, we can expect considerable market and profits.

Moreover, the driving force of China's economic growth has shifted from investment to consumption. The government has not strictly controlled the overseas acquisition of the mass consumption field from regulation.

On the other side, European and American brands are also interested in introducing capital into the Chinese market because of the impact of economic downturn and sluggish consumption.

Thus, including Shandong Ruyi, Fosun, wolf, song and Hongyi investment, a large part of Chinese capital turned to luxury brands, and mergers and acquisitions continued.

After the completion of the acquisition, how to manage and dock the domestic market is a new test.

(Xin Ling)

"Why do Chinese young people prefer to spend 20 thousand yuan on" Canada goose down clothing "rather than 2 thousand yuan for domestic down coats? Because of the brand difference!" the chairman of the Shandong Ruyi holding group, chairman of the board of directors, Qiu Yat Fu sent this feeling at the two sessions this year.

As a matter of fact, since 2010, Shandong has started buying the "foreign" brand, and the foreign media has been crowned its "Chinese version of LVMH". It also said that the group has broken into the top 20 fashion and luxury groups in the world from the point of view of revenue.

Qiu Yafu said that international mergers and acquisitions are aimed at achieving brand pformation and upgrading of the group.

In the first ten days of February, Swiss luxury brand Bally became the latest "foreign" brand in Shandong's Ruyi income capsule.

Then in February 22nd, Fosun International announced the acquisition of Lanvin, the French fashion brand.

For the logic of acquiring Lanvin, Fosun has previously said that when China is experiencing a global upgrading of consumption, Fosun is looking for brands that meet its investment standards in the global fashion and consumer goods sector.

Logic: consumption upgrading, frequent mergers and acquisitions in this field.

"One reason is that this corresponds to the trend of domestic consumption upgrading.

Since the third quarter of 2016, China's

The market has markedly recovered. Last year, the mainland market grew by 20%.

In China

In the field, there are not many industries that can grow at a rate of 20% and have a good profit. A good return on investment is also a factor in attracting all kinds of capital.

Bain, global partner of the company and chairman of Greater China and merger and acquisition business, Zhou Hao told the twenty-first Century economic report.

After a few years of silence, the consumption of personal luxury goods in the Chinese market began to rebound in the second half of 2016.

The report released by Bain in January showed that China's luxury goods sales in 2017 reached 142 billion yuan (about $22 billion 70 million), up about 20% in 2016, the biggest increase since 2011.

Looking at the world, Chinese consumers account for more than 3 of the largest luxury consumer groups.

"The main driving force behind this round of growth is young people, especially the millennial generation. We see two changes. First, former consumers like to buy accessories and leather goods, and now they are buying products with higher gross margins such as garments.

Another trend is that consumers' preference for brands has changed from traditional big brands to light luxury or niche brands.

Take a French leather company as an example. Last year, 10% of its sales in the Chinese market came from a sale of customized and limited edition products.

Zhou Hao said.

Like domestic hot consumption upgrading, it seems that all kinds of capital have switched to the "buy buy buy" mode of luxury goods.

Ruyi group has acquired overseas brands through overseas mergers and acquisitions for many years. The most notable paction is the acquisition of French light luxury group SMCP in 2016 at a price of 1 billion 300 million euros.

According to Qiu Yafu's two sessions, the group now has more than 30 international brands and 5000 brand stores covering 110 countries.

According to the data provided by Thomson Reuters to the twenty-first Century economic report, over the past ten years, a total of 125 overseas Chinese textiles and clothing have been disclosed.

Mergers and acquisitions of retail targets.

Owing to the fact that there is a certain amount of undisclosed amount of pactions, the total size of the total amount is more difficult to statistics. According to Michael McKenzie, Shanghai partner Shi Miao, explained to the twenty-first Century economic report, because some well-known international brands are controlled by families and have more complicated ownership structure, such pactions are usually not carried out in the form of publicly listed companies.

The change of market demand has prompted local enterprises to meet the needs of industrial upgrading.

"For a long time, the domestic fashion enterprises have started with the mass consumer market, from the perspective of industrial upgrading.

The industry has huge market space in China.

The introduction of foreign brands by local enterprises helps to expand the market space and pform from a member of the textile and garment industry to a fashion industry.

The driving force of the acquisition boom is that Chinese enterprises are facing competition pressure from international brands, and the survival space of local brands is squeezed.

The acquisition of international brands can also be seen as one of the strategies of Chinese local enterprises.

Shi Miao told the economic report twenty-first Century.

Fosun is another Chinese enterprise that actively active in mergers and acquisitions or investing in overseas fashion brands. In 2011, it invested in Folli Follie, a Greek Jewelry Group. In 2013, it invested in St John Knits, a high-end knitting brand in the United States, and invested in Italy luxury Menswear Caruso. In 2014, it bought shares of the German fashion brand Tom Tailor 23% and increased its shares of Caruso and TomTailor in 2017.

This year, after gaining Lanvin holding power, in early March, Austria's high-end underwear brand Wolford announced that its major shareholder has agreed to sell the controlling stake of the company to Fosun's company.

Guo Guangchang, chairman of Fosun Group, also said publicly in 2016 that the group also wanted to buy Prada and Moncler.

Fosun set up a fashion group recently to manage Fosun's current fashion related asset business and find opportunities to invest in all kinds of global brands.

In addition, seven wolves, Song Li Si and Hongyi investment are also quite active.

The accumulated experience of "going out" for many years has also given the Chinese capital the right to operate the fashionable assets.

The main value of fashion label is brand, which belongs to light assets. It is more prone to reduce risk than heavy assets.

Over the past few years, Chinese capital has acquired more and more light assets such as mergers and acquisitions because our overall acquisition capability is improving.

China's economy and the market have now developed to a certain stage. If the high-end brands are bought five or six years ago, it will be more difficult to integrate them. "

Yuan Yudong, DDT's China financial consultancy partner and director of cross-border mergers and acquisitions financial advisor, told the twenty-first Century economic report.

"Besides, the popularity of Hai Tao and purchasing business has made us aware of the huge demand of Chinese consumers for overseas fashionable consumer goods. If we can introduce these products into China through a reasonable and feasible way, we can expect considerable market and profits.

In addition, the driving force of national economic growth has shifted from investment to consumption, and the government's regulation of overseas acquisitions in the mass consumption field is not so strict.

Wang Qing, partner of global trading team, told the twenty-first Century economic report.

From the perspective of overseas sellers, what kind of abacus is it to accept Chinese shares or sell controlling rights? In the past few years, under the digital impact of macroeconomic slump, brand image aging and electricity providers, some brands are not having a good time, which increases their willingness to accept external funds.

In the seller's market, especially in Europe, the previous debt crisis has a greater impact on the local economy. Under the macroeconomic deterioration, consumption is also not very prosperous. This, to a certain extent, has hit the sales volume of the brand, and the brand side may be more willing to sell or introduce external investors.

In addition, some funds come to the exit period, and the European IPO market is always unsmooth and can only be withdrawn by selling, which is indeed a good opportunity for Chinese capital.

Yuan Yudong said.

For sellers, the Chinese side can help them open the door to the Chinese market, that is, the synergy effect of the market.

"Chinese enterprises can help international brands further explore and deepen the Chinese market, accelerate their pace of expansion in China, and seize the China centric Asian market to resist the decline in performance and promote their international development.

Besides, Chinese enterprises also have advantages in raw materials and production, which can bring vertical synergy to international brands.

Shi Miao said.

In addition, "some small and medium-sized brands themselves do not have the ability to expand the Chinese market, but also have practical needs to cooperate with the Chinese side."

Zhou Hao said.

Mode: garment enterprises expand and strategic stake is the main.

So how can we classify the Chinese capital that is active in the acquisition of overseas vogue? Can we conclude several M & A modes?

"We see three types, one is horizontal parallel expansion, that is, in the domestic already mature clothing or fashion enterprises, to overseas mergers and acquisitions brand or product line, for example, men's clothing is strong, and then went abroad to buy Women's clothing brand or children's clothing.

The second is to start from the logic of the development of the upstream and downstream industries, such as the upstream, but the profit is limited.

The third is pure diversification.

Generally speaking, we are more optimistic about the first kind, and the management and coordination will be better. "

Yuan Yudong said.

In addition, it can also be categorized from the perspective of paction structure.

"One is the" overseas acquisition "of the brand operation right acquisition mode.

Under this mode, Chinese enterprises only buy the Chinese operation rights of overseas fashion brands, which have the advantages of low cost and light assets.

For example, in 2010, Shanshan bought Japanese women's clothing brand IORI. "

Shi Miao said.

The two is the mode of strategic shareholding. Shi Miao analysis said that this mode is the most common form of cross-border mergers and acquisitions among garment enterprises. The acquisition of 75% stake in Shenzhen's Vivian Tan (Fashion) Co., Ltd., the acquisition of Swiss luxury Bally control stake by the Ruyi group, and Fosun becoming a Lanvin controlling shareholder are all the models.

"Three is a wholly-owned acquisition mode.

Under this mode, the acquirer has absolute control over the acquired enterprises, and is decisive in late paction processing. At the same time, the acquisition side will face greater challenges and risks in the management and resource integration when it directly shares the management experience of the fashion industry directly from the outside world.

Shi Miao said.

Target: traditional big cards are hard to control, light luxury and fast fashion are better suited to the present.

From the purchase target, it can be divided into old luxury brand, light luxury, niche brand (or fast fashion label).

In an interview with the economic news reporters in twenty-first Century, it was found that the industry was not optimistic about mergers and acquisitions of luxury brands. The latter two could be more suitable for investment targets at this stage.

"For the current Chinese enterprises, when investing in high-end brands, they still lack certain control ability in brand culture and post investment management.

We are optimistic about fast fashion and light luxury. We recently helped A shares of a listed company buy a brand, which is a famous French medium-sized luxury brand, which will be announced in the near future.

The acquirers have been very successful at home. Now that the French dress with distinctive brand image and design is included, the market increments are easy to make. We are very optimistic.

Yuan Yudong said.

"We are more interested in fast fashion and niche brands because they match Chinese capital capabilities. Besides, some small and medium-sized brands do not have the ability to expand the Chinese market, and there is also a realistic demand for cooperation with China.

For fast fashion brands, China can also provide resources in the supply chain. The layout of light luxury and industrial chain is more difficult to digest than fast fashion, and luxury brands are even more difficult because Chinese consumers tend to prefer pure and heritage luxury brands abroad.

Zhou Hao said.

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