Following the purchase of French luxury fashion brands Sandro, Maje and Claudie Pierlot by Chinese textile manufacturer Shandong Ruyi Group in April this year, it is reported that Shandong Ruyi Group plans to acquire the British windbreaker brand Aquascutum. Unlike the previously acquired brands, the British luxury brands are not doing well in the UK and China. The industry believes that when Chinese companies acquire overseas brands, they will face many risks such as unfamiliarity with overseas markets. Today, with the rapid dissemination of information, Chinese consumers have been hard to be attracted by such gimmicks as foreign brands.
Overseas luxury brands are easy to change to Chinese enterprises
According to informed sources, Shandong Ruyi Group plans to acquire Aquascutum from YGM Trading Co., Ltd. (hereinafter referred to as “YGM Tradingâ€) for approximately US$120 million and is currently conducting due diligence. The source disclosed that Ruyi Group hopes to reach a final agreement in the next few weeks.
On October 17, YGM trade announced that it plans to sell the manufacturing and sales business of the Jager Lion brand products and related intellectual property rights, involving a transaction amount of 120 million US dollars, and the sale price is raised or lowered by no more than 5 million US dollars, but Did not explain the identity of the buyer. This is not the first time that Shandong Ruyi Group has launched a merger with overseas brands.
In April this year, Shandong Ruyi Group spent 1.3 billion euros to collect Sandro, Maje and Claudie Pietro. Before the frequent acquisition of well-known foreign brands, Shandong Ruyi's more business focused on the development and production of fabrics.
It is understood that although it has a certain position in fabric manufacturers, Shandong Ruyi has not done anything in the end product clothing. In the clothing business, Shandong Ruyi is more about OEM business. The acquisition of foreign brands can not only improve the influence of Shandong Ruyi in the field of clothing, but also bring more benefits to Shandong Ruyi.
Unlike the previously acquired luxury brands that are favored by consumers and favored by consumers, Aquascutum, a British brand that has been in the history of more than 160 years, is famous in the UK for making waterproof jackets for the military in World War I, but now the brand The development in the Chinese market as well as in the European and American markets is not satisfactory.
New brand profitability to be tested
The US financial crisis has caused the sales of Aquascutum in Europe and the United States to plummet, and the brand has not grasped the luxury consumer market in China. The Beijing Business Daily reporter learned that the brand closed 29 stores worldwide in the past year, while mainland China was the hardest hit area in the closed store. In 2015, it closed 25 stores.
In addition, Beijing Business Daily reporters saw in the brand's Tmall flagship store that Aquascutum's sales are only single digits.
Aquascutum parent company YGM trade revenue also fell below the 1 billion Hong Kong dollar mark. According to the YGM trade report, last year, the group's net loss was HK$87.871 million and its turnover was HK$894 million, down 18.7% from the same period of the previous year. Among them, the sales turnover of ready-to-wear sales fell 19.8% to HK$775.39 million, with a loss of HK$927.98 million.
YGM Trade said that the retail market, which was the main business of the Group, shrank last year, especially in the Mainland China and Hong Kong markets, resulting in a significant decline in the retail and wholesale prices of branded ready-to-wear, leather goods and apparel. YGM Group believes that this year, the above two major markets are still challenging, and the Group will face a difficult environment in the next few years. In addition, store rents and other occupational expenses are still high and are suppressing profitability. In order to increase the cash flow to make up for the loss, YGM trade sold a property in August this year to cash out 66.8 million Hong Kong dollars.
It is understood that the YGM trade, which had control of the Asia-Pacific region in 2012, acquired the Aquascutum that declared bankruptcy. YGM Trade hopes to “revival†its brand by expanding its product range and actively expanding its sales network in the Asia Pacific region. However, the results are not satisfactory from the current performance and business conditions.
Enterprise management becomes a development problem
In recent years, the Chinese market has not lacked investors in foreign high-end clothing brands, but only managers who can operate foreign brands and local corporate cultures are lacking. In the context of the sluggish environment of the apparel industry, whether the future development of Aquascutum can be integrated with the local corporate culture has become a difficult problem to be solved.
Cheng Weixiong, general manager of Shanghai Liangqi Brand Management Co., Ltd., said in an interview with Beijing Business Daily that Shandong Ruyi Group's overseas mergers and acquisitions, in addition to realizing complementary resources, the deeper reason is the hope of continuing to encounter cold in the clothing market. Next, merge brand resources at a more favorable price. As a fabric manufacturer, Shandong Ruyi Group needs to expand its business, and it is necessary to further fabricate the fabric to obtain more profits.
"But as Chinese companies are in the process of docking with the international fashion industry, there is also concern about it." Cheng Weixiong bluntly said that on the one hand, Shandong Ruyi Group itself is a productive enterprise, and brand thinking is different in the process of mergers and acquisitions. And the trend in this process is bound to weaken. In the process of connecting enterprises and enterprises, the collision of customs and culture is inevitable, and the integration of national culture in the management team is also very important. In addition, the diversification of the brand also needs a certain positioning. It must be clearly positioned before the active layout. In the process of acquiring the brand, the complementarity between these brands and enterprises should be considered. In the process of merger and acquisition, how should the enterprise control? Certainly, problems encountered during the transformation and mergers and acquisitions may lead to poor performance affecting the main business.
Beijing Business Daily reporter Sun Yixiang Lin Shan
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