The Overseas Merger And Acquisition Of Chinese Garment Enterprises Is Still In The Ebb. The Operation Is Not Entirely Optimistic.

Chinese garment enterprises are still in the upsurge of overseas mergers and acquisitions. However, mergers and acquisitions always have some risks. How to operate depends on the strength and strategy of the enterprises themselves.

From YOUNGOR, the new Malaysia clothing group has created the first case of overseas Chinese clothing brand acquisition, and has completed many luxury acquisitions in Shandong, becoming the "China Version LVWH". Until now, the Chinese clothing business has been taken over by the founder of Qiao Bo international, and Chinese enterprises are buying and buying overseas.

However, the completion of the acquisition of foreign brands is only the first step in the magnificent upgrade. How to manage these brands is undoubtedly the most concern for buyers.

In the case of the merger and acquisition of clothing enterprises, there are not only the enterprises that get more space for development, but also the failure of investment and the cases that are not favored by the outside world.

Regarding this, Durbin, general manager of RET ruitede leasing business department, believes that the acquisition of foreign brands by Chinese clothing enterprises is a good thing after all. It not only embodies the strength of Chinese brands, but also promotes the international popularity of their brands, helps the main brands to enter better business projects and promotes group profits, and there is a certain gap between the results of acquisitions, mainly in the different strategic positioning.

However, senior executives of a senior apparel company in China revealed that there may still be many Chinese enterprises buying foreign clothing brand actions in the future, but their warning still needs to be gradual, based on the strength of the market and brand positioning.

Multi brands enhance profits

There are many reasons for acquiring foreign brands, and the most common one is multi brand development strategy.

After buying many overseas brands, he said that to enhance the market influence of their brands and products, M & A is a necessary means. Overseas brands have a history, a good brand image and a unique style. However, influenced by the overseas sales market, some overseas brands have low sales and lower valuation, which is a good acquisition opportunity for Chinese enterprises.

La Natsu Bell's acquisition of Naf Naf, Semir clothing and acquisition of Kidiliz group and Shandong Ruyi purchase of France fashion group SMCP also have many intentions.

From now on, Anta sports's acquisition is quite effective.

According to the financial report, Anta sports realized revenue of 16 billion 690 million yuan in 2017, an increase of 25.1% over the previous year, of which FILA revenue grew by more than 50% over the same period last year. The estimated revenue scale exceeded 5 billion. In the first quarter of 2018, the retail sales of Anta brand products (calculated by retail value) increased by 20%-25% compared with the same period in 2017, while the non Anta brand (FILA+DESCENTE+NBA+Sprandi) increased by 80%-85% compared with the same period in 2017, of which FILA grew by more than 70%, and DESCENTE achieved 7 times growth.

In the same way, he bought many overseas brands, and in 2017 he handed in a good pcript.

According to the inspection announcement, in 2017, the annual revenue of the company was 2 billion 53 million yuan, an increase of 81.35% over the same period last year. ELLASSY, LAUREL, EdHardy and other brands all maintained a high growth rate.

Among them, the main brand ELLASSAY achieved operating income of 962 million yuan, an increase of 20.76% over the same period last year; Laur Ji l achieved a business income of 97 million 743 thousand and 700 yuan, a significant increase of 230.46% compared to the same period last year; EdHardy realized 436 million yuan, an increase of 79.15% over the previous year; the French luxury designer brand IRO also recorded a 395 million yuan income in the reporting period, and in 2017, a total of 5 terminal shops were opened in Shanghai port Hui square, Beijing SKP and Nanjing de Chi.

Another garment company, in 2014, invested 310 million yuan in the company's investment in the famous Korean children's clothing listed company Akbar. In the first half of 2017, Akbar contributed 430 million yuan in revenue to the group, accounting for 40.69% of the company's total revenue.

The "haze" of mergers and acquisitions

There are always risks associated with "buy and sell", and every acquisition is not all smooth sailing.

Taking song as an example, shortly after the acquisition of German high-end women's clothing brand Laur L, there was news of bankruptcy and reorganization of Laur L's parent company LAUR L GMBH 2016 in the market.

On the other hand, the global competitiveness of the acquisition of brand is also not optimistic.

According to the preliminary data of the Laur fiscal year l in the 2015 fiscal year ended April 30, 2016, the Laur l l is expected to have a loss of 2 million 400 thousand euros, a loss of only 2 million euros in the same period last year, and a 10.5% to 36 million 500 thousand euro decline in sales compared with last year.

Further evidence is that the stock market has been hit hard by's blind acquisition. In 2016, after buying Ed Hardy, IRO and Pak Qiu e-commerce, the price of song's shares dropped to 33.67 yuan from the highest 52.79 yuan per share in 2015, and the cumulative decline was more than 35%.

It is noteworthy that Shandong Ruyi, known as the "Chinese version of LVWH", is also inevitably questioned in the acquisition.

It has been learned that SMCP has been listed before its acquisition, and that its stake has brought a greater potential for China's market development, and its valuation has naturally lifted.

In the first half of 2017, the sales volume of SMCP, Sandro, Maje and Claudie Pierlot in the Asia Pacific region increased by 51%.

In October 20, 2017, SMCP successfully landed on the pan European stock exchange in Paris with an estimated value of more than 2 billion euros, but there was a certain gap between the valuation of the 14 billion yuan in the merger and acquisition of Ruyi group.

What's more hot is that the acquisition of SMCP equity price is equivalent to 200 times the net profit of Ruyi group in the past year, while the current market value of Ruyi group is still less than 5 billion yuan.

Carrying out overseas brands is a long way to go

In Durbin's view, it is still a good time to buy. After the acquisition of overseas brands by Chinese clothing enterprises, whether the operation is successful depends on its strategic positioning, operation methods and understanding of the Chinese market.

Looking back over the past few years, the success of Anta sports lies in brand positioning and marketing.

Each brand has a clear positioning in Anta's sports acquisition territory, such as FILA positioning is a high-end sports fashion; Dal J Pandey, aiming at middle and high income and light sports crowd; KINGKOW is mainly for children.

As we all know, Anta sports BELLE group from the hands of FILA is in a state of loss, called a "hot potato", Anta sports at that time, in international business is also quite depressed.

At the same time, Anta sports invited a lot of stars to endorse it, and also focused on brand implants in major sporting events and popular variety shows.

When foreign brands enter the Chinese market, if they want to take a long-term development, they will still have to "do in Rome as the Romans do".

Take SMCP group as an example, the group was acquired by Ruyi group in April 2016. Shortly after its entry, Tmall's Sandro, Maje and Claudie Pierlot entered the flagship store of Singapore, and quickly gained a large number of consumers, stimulating SMCP group's sales volume to rise by 104% in the first half of last year.

Subsequently, Sandro Men and Claudie Pierlot first debuted in the 2017 Tmall double 11 Fashion Festival in November last year, and received more than expected response. They plan to hold more activities in the double 11 Shopping Festival this year, and will also carry out strategic cooperation with Tmall.

What can not be ignored is that Anta sports and Shandong have found the right path. Some companies are still groping.

According to McKinsey's April 2016 Pocket Guide to cross-border mergers and acquisitions, whether the target set by the two sides of the paction has been achieved, nearly 60% of the past 300 single cross-border mergers and acquisitions have not created real value for Chinese buyers, and the total volume of pactions in this part is about US $300 billion.

"The upsurge of acquisitions is not limited by time, but rather by the number of high-quality brands abroad, plus the gradual expansion of Chinese brands. There is still much room for overseas mergers and acquisitions," Durbin said.

At the same time, it also means that Chinese clothing enterprises still have a long way to go to make full use of foreign capital brands.

From the "China Version LVMH" of Shandong Ruyi group, to nearly 20 La Natsu Bell of clothing brand, and then to Anta sports, Semir, Hai Lan home, seven wolves and so on, Chinese dress enterprises are increasingly keen on "buy and buy".

For these enterprises, what does it mean to acquire foreign brands? What are their strategic intentions? Can they operate these foreign brands after the actual acquisition? Through the major acquisition events in recent years, we explore the strategic layout of Chinese clothing enterprises to foreign brands.