IPO Shanghai Stock Exchange Announced The Prospectus Of Zhongqiao Sports

A company that has been involved in a trademark lawsuit for 10 years decided to fight IPO again.

Recently, the Shanghai Stock Exchange announced the updated prospectus of Zhongqiao Sports Co., Ltd. ("Zhongqiao Sports" for short), 13 years after the last impact on listing.

In 2010, Zhongqiao Sports (renamed in 2021), also known as "Jordan Sports" at that time, submitted a prospectus, which was approved by the Development and Review Committee of the CSRC in November of the next year. However, at the last critical moment, Michael Jordan, a former American professional basketball player, filed a complaint, which plunged Jordan Sports into a lengthy trademark dispute, and the listing process came to an abrupt end.

Finally, Michael Jordan won the case of "boots landing". Jordan Sports changed its name, apologized and compensated, and quickly restarted its IPO. According to the prospectus, Zhongqiao Sports will generate revenue of 5.9 billion yuan and net profit of nearly 700 million yuan in 2021. As of June 2022, there are 6269 offline stores of Zhongqiao Sports, second only to Li Ning and Anta.

However, over the years, China's sporting goods track has undergone tremendous changes. New consumers' admiration and support for Guochao culture have made Anta and Li Ning, who are actively seeking change, far surpass Zhongqiao Sports.

"World Online Business" found that Zhongqiao Sports, which had missed dividends, still had more hidden worries. For example, the gross profit rate is less than 30%, far below the industry average. Although part of the reason is attributable to the epidemic, the key is that its business model is not healthy. It relies heavily on dealers, which reduces its profit margin for profit.

In the track surrounded by powerful rivals, can China Jordan Sports catch up with the pace of industry development and shorten the gap opened in 10 years by relying on the "transformation" of listing?

　　 "Jordan Sports" Lost "Jordan"

Like Anta, Tebu, Peak and other well-known sports brands, Zhongqiao Sports was also born in Jinjiang, Fujian Province, the "shoes capital of China", mainly producing and selling sports shoes and clothing. Ding Guoxiong, the founder of Fu Jianren, is 56 years old. Before the IPO, he held 31.72% of shares, and his wife Ding Yizhi held 33.01%. The couple are the actual controllers of the company.

The prospectus shows that the predecessor of Zhongqiao Sports was the Second Daily Necessities Factory by Chendaixi, Jinjiang, Fujian, which was founded in 1984. In 2000, it was restructured and changed to "Jordan Sports". In 2002, Ding Guoxiong, who has a keen sense of business, registered several trademarks, including "Jordan" and "QIAODAN", and even two trademarks, "Jeffrey Jordan" and "Marcus Jordan", whose names are the same as those of Michael Jordan's two sons.

At that time, Michael Jordan was "killing all sides" in American basketball, and he was named the greatest North American athlete of the 20th century by ESPN in 1999. In 2002, with the entry of Chinese basketball player Yao Ming into the U.S. Rockets to start his career, consumers in the Chinese market paid more attention to the NBA, and the "Jordan Effect" continued to expand.

Without signing any spokesmen, "Jordan Sports" has made rapid progress. In 2008, the company's revenue exceeded 1.1 billion yuan, reaching nearly 3 billion yuan two years later, which was equivalent to Li Ning, Anta and Tebu at that time.

Also soaring is the "doubt" from consumers. Is "Jordan Sports" related to Michael Jordan? According to the 2011 prospectus, there is no commercial cooperation between the two parties.

In 2012, when "Jordan Sports" was about to win the "A-share * * * share of sporting goods", Michael Jordan on the other side of the ocean took the company to court, accused it of infringing the right to name, asked the Trademark Review and Adjudication Board to cancel 79 registered trademarks, and claimed 50 million yuan of emotional damages.

At that time, "Jordan Sports" issued a statement on its official website, saying that "Jordan" in Chinese was a registered trademark that the company applied for registration in accordance with Chinese laws and enjoyed exclusive rights. The legal use of the registered trademark was protected by Chinese laws.

The two sides launched an eight year lawsuit in this regard, and fought all the way to the People's Court of China. Until 2020, the * * * Court made a ruling on this trademark infringement case, and the "Jordan+Graphics" trademark of "Jordan Sports" was revoked.

At the same time, the Shanghai Second Intermediate People's Court made a judgment on Jordan's name right dispute case, and found that "Jordan Sports" constituted infringement. It needs to clarify the relationship with the plaintiff Michael Jordan, publicly apologize, compensate the plaintiff 300000 yuan, and stop using the "Jordan" trade name in its enterprise name and the trademark related to "Jordan".

Enterprise survey data shows that on January 12, 2021, "Jordan Sports" will be renamed as Zhongqiao Sports. Later, the company appealed, but the Shanghai Higher People's Court made a final judgment in March 2022, rejected the appeal and upheld the original judgment.

　　 Net profit rate and gross profit rate fell year after year

According to the resubmitted prospectus, Zhongqiao Sports still has a lot to lose.

Look at a set of data: in 2010, the annual revenue of Zhongqiao Sports, which was in the highlight, was 2.9 billion yuan. At that time, Li Ning, the industry leader, had an annual revenue of 9.5 billion yuan, followed by Anta's revenue of 7.4 billion yuan and Special Step's revenue of 4.5 billion yuan. There is still room for imagination among the major domestic sports brands.

By 2021, the sports revenue of China and Jordan will double to 5.9 billion yuan, but it has fallen out of the * * * echelon. The industry * * * has become Anta, with an annual revenue of 49.3 billion, surpassing Adidas China in the same year; Li Ning's revenue reached 22.5 billion yuan; The special step revenue is 10 billion yuan. According to the Top 15 Domestic Sports Shoes Brands in 2021 released by the Ai Media Gold List, the comprehensive brand score of Zhongqiao Sports ranked seventh, behind Huili.

The gap between revenue and net profit is also falling. From 2019 to 2021, the company's net profit attributable to the parent company decreased from 830 million to 690 million, with a continuous negative growth rate.

Gross profit rate is more worrying. From 2019 to 2021, the gross profit rate of Zhongqiao Sports declined year by year, with an average of 29.8%, far lower than the industry average of 47.5%. In 2021, Anta's gross profit rate will reach 61.64%, while Zhongqiao Sports will only reach 27.86%, a gap of 33 percentage points.

In this regard, Zhongqiao Sports blamed the epidemic and the rising cost of raw materials. "In the first half of 2020, affected by the epidemic, the company took the initiative to reduce profits in order to improve the confidence of dealers and appropriately reduce discounts to benefit dealers." The prospectus wrote that the price of raw materials such as soles will rise in 2021, leading to the rise of direct material costs and lowering the gross profit margin of the sports shoes business.

In the first half of 2022, the gross profit rate will decline again. The company said that, on the one hand, the price of soles is rising, and on the other hand, the sales volume is increasing. The company can only spend more money to hire outsourcing teams to produce sneakers. These two factors drag down the gross margin.

World Online Business found that the crux of Zhongqiao Sports lies in its distribution model. The prospectus shows that at present, there are 6269 Jordan brand stores, "almost all of the company's offline market terminals are distribution stores".

Relying on the strength of dealers, the company quickly seizes the market and reduces the risk of * * * with less capital investment. However, in order to maintain the cooperative relationship with dealers, the company has to "delegate power", weaken the control of the headquarters over retail stores, and in special periods, it also needs the interests of * * * dealers to compress the company's profit space.

Among the top five customers, Fujian Province Bidding Network Technology Co., Ltd. (hereinafter referred to as "Bidding Network") has created 850 million sales for Zhongqiao Sports in 2021, accounting for more than 14%. By the first half of 2022, the proportion of revenue will exceed 16%, which shows that the company is heavily dependent on this customer.

Zhongqiao Sports is also well aware of the drawbacks of this distribution model, so in the purpose of raising funds, it said that it plans to build direct stores in two years, strengthen the construction of marketing network, and reduce market operation risks.

　　 Make up the gap and pursue the top brand

The prospectus shows that Zhongqiao Sports has two outstanding major litigation cases, which is bound to affect the IPO process.

However, the lawsuit is still going on and business cannot stop.

In the case with Michael Jordan, according to the final verdict, Zhongqiao Sports retained the right to use some of the Jordan brand, and the trademarks such as the logo of the independent human figure and the Chinese phonetic alphabet were not revoked. From the current official logo of Zhongqiao Sports, the official website website contains the word qiaodan, and the logo also contains the word QIAODAN. Tmall's official flagship store is called "Jordan's official flagship store".

Although the name was changed, the company did not completely "de Jordan", but caught up with peers in the time difference.

The first is signing sports stars. At the Beijing Winter Olympics last year, Anta earned a wave of traffic dividends because she signed Gu Ailing early. In October 2022, Zhongqiao Sports signed the first NBA basketball star Kelden Johnson as the spokesman; Later, Wu Qian, Sun Minghui, a basketball player, Kelvin Kiptum, a marathon runner, and others were successively signed, and spokesmen IP was deployed in basketball, running, women and other fields.

Secondly, multi brand layout. Anta was the first to acquire Italian brand Filo. Zhongqiao Sports also spent about 430 million yuan in 2020 to acquire the British classic football brand Yinbao, but Yinbao is still in a loss state.

The third is the power generation e-commerce channel. Zhongqiao Sports has caught up with the transformation of e-commerce and the "outlet" of live broadcasting e-commerce. Its e-commerce channel revenue accounts for more than 20%, and the channel revenue will reach 1.3 billion yuan in 2021. Its Tmall flagship store has 8.52 million fans, about one third of Anta's, and the popular model in the store is a pair of running shoes with a price of 159 yuan, which has a monthly sales of more than 10000 yuan.

In the early years, many domestic brands, such as Jordan Sports, made brand marketing by sticking "foreign labels" and "edging", which gave consumers an impression of international brands.

However, in the past decade, with the development of technology and culture, high-quality Made in China has emerged frequently. New consumers have a strong consumer enthusiasm and cultural confidence in domestic products, which in turn stimulates the rise of domestic brands, exports more unique Made in China, and forms a positive cycle of national trend consumption.

For sports brands, the supporting points of this cycle are brand power and product power. The brand power of Zhongqiao Sports has lost a lot in lawsuits. Now it is destined to be a lasting battle to repair the brand power and improve the product power at the same time. However, the prospectus shows that the annual R&D expenditure of the company is about 70 million, accounting for only 1% of the revenue. There are few famous products in recent years, and Feiying PB series is one of them. It has a good reputation among marathon runners.

The roller coaster experience of Zhongqiao Sports coincided with Zweig's famous saying, "She was too young at that time to know the gift given by fate, and had already secretly marked the price."