Shandong Ruyi Holding Group'S Acquisition Of Swiss Luxury Goods Company Bally International AG

Renown, a Japanese clothing group, said it had suffered an annual loss due to failing to recover 5 billion 300 million yen (340 million yuan) outstanding debt from its parent company, Ruyi group, Shandong.

In March 2nd, Renown said that after the end of the fiscal year ended December 2019, the group's combined net loss was 6 billion 700 million yen (about 430 million yuan), and the loss in the first fiscal year ending February 2019 was 3 billion 900 million yen (about 250 million yuan).

In 2019, Renown adjusted the statistical time of earnings. Jinbo Kako, President of Renown Yoshiyuki, said: "because of the Sino US trade war, we can not get any compensation."

The main reason behind this is that Shandong is located in Hongkong's subsidiary Forever Winner International Development (Hongkong Heng Cheng International Development Co., Ltd.). Hongkong Heng Cheng is a supplier, Renown provides cotton and textiles purchased from the world. Hongkong Heng Cheng will resell these raw materials to clothing companies and wholesalers.

Because of the financial problems of terminal customers, Hongkong Heng Cheng failed to recover the loan and eventually spread to Renown. According to the agreement, if Hongkong Heng Cheng fails to perform its duties, Shandong will pay for it. However, Shandong Ruyi first paid its own corporate bonds which expired at the end of 2019.

Jinbo Kako pointed out that Shandong's "willing to pay, but did not give a clear time to pay."

In 2010, Shandong Ruyi reached an agreement with Renown, based in Tokyo, to acquire the 41.53% stake in the market at a price of about $44 million. In this regard, Ruyi became the largest shareholder of Renown. For Renown at that time, marriage with Shandong means "get the ticket to restore profits". Up to now, Shandong has a total stake of Renown 53%.

According to the strategic plan reached by both sides, Shandong Ruyi will help Renown group and its men's brand D 'urban and other businesses expand rapidly in the Chinese market, so as to promote performance growth. At the same time, Renown provides Shandong with expertise in retailing. But unexpectedly, a series of "costly mistakes" followed.

In 2011, Shandong Ruyi and Renown set up a joint venture in China, hoping to open 1000 stores in China in ten years. In 2014, the joint venture company halted, and the number of stores in real operation was less than 100.

Shandong's lack of retail experience and Renown's ignorance of the Chinese market led to the failure of both sides. "We don't have to choose the gold position," Jinbo Kako pointed out.

Subsequently, the two sides decided to be responsible for Renown's sales network in Shandong, but the result was unsatisfactory. In 2016, Renown began offering D 'urban suit service. However, due to poor performance, the service was stopped in 2019.

Starting in 1902, the development of Renown for more than a century is an important part of the development of Japanese fashion industry. The name of Renown came from the cruiser RENOWN in 1922, when the prince of England (Duke of Queen Windsor) visited Japan.

At the beginning of Renown, Sasaki, a fiber supplier in Osaka, registered the Renown trademark in 1923. Renown official website shows that the company currently operates 35 brands.

China Shandong Ruyi holding group has been committed to building the global fashion empire. In recent years, it has spent billions of dollars to acquire a series of international luxury brands and fashion brands, including the French fashion brand Sandro, Maje and the British windbreaker brand Aquascutum.

But since the end of last year, the company has been facing huge refinancing pressure, mainly due to the company's debt obligations for many takeovers, and almost missed the deadline for repaying bad offshore bonds in December 19th last year.

　　 Note: offshore bonds refer to the bonds issued by the borrower in the overseas market at the face value of their own currencies. Offshore renminbi securities, for example, are Renminbi denominated bonds issued outside the mainland of China.

A few days ago, Reuters quoted people familiar with the matter as saying that due to the failure to raise the required funds, the acquisition of Bally International AG, a luxury luxury company in Shandong, China, failed to complete the acquisition.

Attachment: Renown performance in recent three years