Is Ruyi Group Able To Plough The Luxury Market?

Ruyi group has been active in acquiring company all over the world.

Since 2010, it has been digging up foreign fashion brands, and perhaps hopes to become an Asian version of LVMH luxury group.

The total price of Ruyi group buying up the frenzy is as high as 4 billion 600 million US dollars, including strategic acquisition, such as French fashion company SMCP, Australia's largest cotton farm CubbieStation, NVDA (nylon, spandex, polyester, etc.), as well as traditional brands Bally and Aquascutum.

In view of this, the group tried to prove that its development focus is not only on acquiring excellent assets, but in building vertically integrated textile and fashion businesses.

In response to these high-profile acquisitions, He Zhuoxian, chief strategist of Ruyi group, told JingDaily: "in the short and medium term, Ruyi group will focus on integrating existing brands in order to maximize the synergy of our fully integrated business models.

We will only consider acquiring a brand with strong profitability and high growth potential. "

In addition, Ruyi's overseas investment is in line with the overall strategy of the Chinese government's support for acquisitions, which can further enhance China's competitive edge, and is also in line with the authorities' suppression of overseas investment in large asset types.

Even so, the investment described above has not prevented the group from expanding its business in Africa to ensure that its cotton supply chain has invested more than $2 billion in Nigeria, Egypt and Mali.

Through this plan, Ruyi group is trying to overcome supply risks, such as the cotton ban imposed by the United States on cotton products in Turkmenistan and Uzbekistan.

In addition, their recent strategic cooperation with the consumer goods supply chain giant Feng's group is another example of how the group seeks growth opportunities in the emerging African market.

With the expanding global business, Ruyi group must continue to improve efficiency and integrate all its internal business departments.

"Our strengths and footprint in Asia can provide strong support for us," he said of the company's brand, which has its own unique characteristics and reputation.

For example, since the acquisition of SMCP in 2016, "[SMCP] has expanded to more than 100 stores in more than 20 cities in China, and in 2018, China's online sales increased by 40% to 50%."

The group takes advantage of its strategic advantages to achieve market development by adopting the management mode of giving greater autonomy to the company.

Foreign companies who want to increase their position in the Chinese market are facing unique barriers (such as lack of reliable market research, strict ownership restrictions, etc.).

At the same time, Ruyi group is thriving in familiar environment. In addition, the group has an important competitive advantage for its in-depth understanding of the fastest growing market segments in the world - Chinese consumers.

Ruyi group understands its value.

"We have more than 30 international fashion brands and over 5800 stores, and have been doing business in 81 countries and regions. Ruyi group is committed to maintaining its leading position in China's textile and garment industry," he said.

"[Ruyi group] is eager to become a world-famous light luxury brand holding group."

Perhaps this desire may be achieved in the light of the increasing demand for light luxury brands in China today.

In the west, the market share of light luxury brands has been declining, and the success of the middle end brands is China's paradox.

It also proves that high-end international brands need to rethink their strategies when they are approaching the Asian market.

With the debt laden Chinese Millennial Generation turning to high and mid-range brands, Ruyi group sees an opportunity to build its own fashion empire.

Ruyi Group Chairman Qiu Yafu recently announced that they will pay more attention to the middle end and light luxury brands because they still have growth potential under unfavorable economic conditions.

By focusing on China's growing middle class, Ruyi group is trying to eliminate some of the risks of meeting the needs of the prosperous millennial generation.

It is generally believed that lack of consistency will bring more and more obstacles to high-end luxury brands, and companies like Ruyi group hope to overcome this difficulty by attracting the impression of "mature" consumers.

But even with so many successes, targeted efforts and ambitious goals, Ruyi group is still chasing LVMH's footsteps.

If you want to challenge LVMH, maybe you can buy high quality traditional brands such as Dior, Herm s or Burberry, or keep going according to the current development trend.