Territory Expansion: Chinese Enterprises Are Still Thinking About Buying And Buying Overseas.

Recently, self-portrait, a Chinese clothing company, has attracted the attention of the British fashion brand. According to the announcement, in August 6th, Shenzhen's Limited by Share Ltd has signed a joint venture agreement with St. Paul's Intellectual Property Ltd, which invested 30 million yuan to set up a joint venture and managed self-portrait in mainland China.

In the past few years, many such acquisitions have aroused concern. For example, Shandong Ruyi bought the French fashion group SMCP, in one fell swoop to SMCP's Sandro, Maje, Claudie Pierlot and other light luxury brand income capsule; Fosun international bought the Lanvin at low ebb; the self-portrait, who took self-portrait, also bought Laur, l, Vivienne and other brands.

In the fashion industry, overseas buyers and sellers of Chinese enterprises are still going on. Zhou Ting, director of the Research Institute, told reporters that for such acquisitions, it will take 3-5 years to enter a stage where we can evaluate the quality of the brand development or the success of the acquisition. The internationalization of local fashion enterprises is becoming more and more important, but the added value of "foreign brands" is still high. But what we can see is that the enthusiasm of capital for acquisition is cooling down.

　 Territory expansion

Shandong Ruyi was once called China's LVMH, from textile vertical enterprise to multi brand fashion group, and it has been used for nearly ten years. In 2010, Ruyi made the first prudent and bold step, and invested about 4 billion yen to acquire shares of Renown41.53%, a Japanese garment giant, to become the largest shareholder of Renown. Renown operates 23 garment brands, and Renown has been losing money for 5 consecutive years at the time of acquisition. Through this acquisition, it has accumulated experience in brand management, but how to pull Renown out of the quagmire is also being tested.

After the first attempt, the next few years will open up the "global sourcing" mode. In 2014, it bought a majority stake in Peine Gruppe, a German men's suit manufacturer. In 2016, it purchased SMCP from France's light luxury group at a price of 1 billion 300 million euros; in 2017, the British brand, Aquascutum, was purchased for 117 million dollars (Aquascutum). In the same year, it announced the acquisition of its apparel and senior textile business in the United States, and holding the high-end men's clothing group Li Bang holding by HK $2 billion 215 million. In 2018, it completed the acquisition of a majority stake in the Swiss luxury brand Bally. After several years of acquisition, Shandong Ruyi has laid out a more diversified fashion layout in light luxury, luxury goods, fabrics, senior men's clothing and other fields.

Fosun international started late, and began to enter the fashion industry in 2013. It invested in the high-end women's clothing brand St John, Italy's high-end men's wear manufacturer Caruso and Germany's fast fashion brand Tom Tailor, but its role was limited to minority shareholders.

In 2017, Fosun began to forge ahead in the field of fashion and became the controlling shareholder of St John and Caruso. In 2018, it acquired the French fashion brand Lanvin and the high-end underwear brand Wolford of Austria. In the same year, it founded Fosun fashion group.

In the fashion map of the acquisition, Fosun is also trying to develop a broader brand management and operation business. In February this year, Fuxing fashion brand management company was set up to provide retail, wholesale, e-commerce and other operation services to expand its business in the Greater China market. The service object is not limited to the brand purchased by Fosun. At present, Fuxing fashion brand management company has reached a strategic cooperation with Marquee Brands, will help the latter part of its brand to carry out the operation and development business in Greater China, involving brands including Ben Sherman, Bruno Magli, Dakine, BCBGMAXAZRIA, BCBGeneration.

The difference between the two big companies is that it is a clothing enterprise. Before transformation, the company has only a single brand, ELLASSAY. Since its listing in 2015, the company has opened its way of acquisition. In 2015, it acquired the design rights, usufruct and ownership of the German fashion brand Laur L in the mainland of China. In 2016, it bought the French fashion brand IRO. In the same year, it bought the brand ownership of the US tide brand Ed Hardy in mainland China and Hong Kong Macao Macau. In 2017, it purchased the Vivienne Tam 75% stake in 37 million yuan, invested 8 million yuan in 2018, and established a joint venture with the Belgian designer Jean Paul Knott, managing the brand in Greater China, and recently invested 30 million yuan to establish a joint venture with self-portrait.

Zhang Peiying, analyst at Bank of America Merrill Lynch, told reporters that the acquisition of foreign brands by Chinese enterprises has been a common phenomenon in the industry. "Many of the foreign brands they buy are mainly niche brands, and of course there will be a lot of operations." Foreign brands are relatively standardized on the basis of brand gene elements first, so many Chinese enterprises choose to buy rather than hatch their brands. (because hatching) local brands, when growing up, the first big problem is that the whole brand can not sink from the establishment to the later stage of operation and development.

　 Heat gradually descends

The acquisition is not just once and for all. After the initial heat has passed, the follow-up development of the brand deserves more attention.

Take SMCP group as an example, its three brand positioning is light and luxurious, and its style is sweet. At the time of the acquisition, the sales volume of the three brands was less than 700 million euros. In the 2018 fiscal year, SMCP's annual sales volume has exceeded 1 billion euros, with a net profit of 50 million 200 thousand euros. In the second quarter of 2019 fiscal year ending June 30, 2019, SMCP sales increased by 10.1% to 266 million euros compared with the same period last year. All markets achieved business growth, the French market resumed growth, and the Chinese market was the most eye-catching, with an increase of over 30% over the same period last year.

Lanvin is the most popular brand of Fosun fashion. After running away from the soul designer Alber Elbaz2015, Lanvin has been faced with declining performance and frequent changes in core personnel for several years. Fosun fashion took over in the Lanvin trough, and appointed a new CEO and creative director to help Lanvin develop steadily. Prior to this interview with our reporter, the new CEO Jean-Philippe Hecquet has revealed that in February this year, the new creative director's first show series received 3.5 times the order of high-end department stores and buyer shops, and more than 70 new customers placed orders, which seemed to indicate that the brand was picking up.

The multi brand strategy of George's helps enterprises form a more balanced pattern. In 2018, its main brand ELLASSAY revenue increased by 4.32% to 1 billion 4 million yuan, while the total brand income of the acquisition and operation was slightly higher than that of the main brand. The Laur l camp included 111 million yuan, an increase of 14.05%; Ed Hardy revenue amounted to 498 million yuan, an increase of 14.16%; IRO's revenue was 567 million yuan; VIVIENNE TAM revenue was 9 million 970 thousand yuan. Among them, IRO is still growing rapidly. In the first quarter of 2019, its revenue in mainland China amounted to 16 million 808 thousand and 100 yuan, up 270.74% from the same period last year.

Zhou Ting believes that the follow-up development of acquired brands should focus on localization operation, pay attention to online, and attach importance to customer stock management.

Localization and operation are also the main force of Chinese enterprises. In the second quarter 2019 earnings report, SMCP group mentioned that thanks to the excellent performance of China's online business, SMCP digital channel business has been growing steadily. In the same year of acquisition, SMCP's Sandro and Maje have entered Tmall. In April this year, the two brands entered Jingdong in succession. In 2018, the Gieves&Hawkes, KENT&CURWEN, CERRUTI 1881 and D 'URBAN of Rb's menswear owned by Ruyi holdings also collectively entered Jingdong's main station and opened an official flagship store. Jean-Philippe, chief executive of Lanvin, has revealed that it has selected "important roles" in the field of Chinese electricity providers to cooperate. In 2016, the company has acquired the 100 year operation platform of the electricity supplier's operation platform. At present, Bai Qiu network has established long-term cooperation with more than 40 international high-end fashion brands.

Is the acquisition of foreign brands cost-effective? There are different opinions in the industry. Zhang Peiying believes that consumers and distributors still recognize foreign brands. Because of the market recognition, it is much simpler to operate, and it is still a shortcut to compare and create their own brands and buy foreign brands.

Zhou Ting believes that the brand (effect) has reached a high point, and the trend of branding is obvious. That is to say, consumers pay more and more attention to brands instead of products. Therefore, the value of brands is decreasing, and the acquisition of brands that emphasize brand awareness is not only expensive for Chinese enterprises, but also consumers may not pay.

But capital seems to have reduced enthusiasm. At the end of 2018, Qiu Yafu, chairman of Shandong Ruyi group, said in an interview with Bloomberg that after a massive acquisition of $4 billion, it would slow down the pace of acquisitions and focus on its brand matrix. It plans to revitalize the acquired brand in 5 years. Xia Guoxin, chairman of the company, also made a statement at the end of 2018. When making acquisitions, enterprises should first consider whether they are in line with their strategic objectives, and then do their best.