It Is Difficult For Local Fashion Brands To Find Consumers To Pay For Them

Those who are oriented to high-end local latest fashion brand Nowadays, it is difficult to find the consumers who pay for it. Even though, they were once popular in the early years.

For example, fashion company Baoguo International (00589. HK). The company recently announced its annual results for 2015, which showed that by the end of December last year, its turnover had dropped 15.2% from 1.879 billion yuan in 2014 to 1.594 billion yuan in 2015, and its profit turned into loss of 72 million yuan.

Another name may be more familiar to the public. Before the name was officially changed in July last year, Baoguo International was called Baozi Fashion Co., Ltd. Its core brand was Women's wear Ports1961。

Failed to sell the company

If we go back more than ten years ago, consumers who are keen on shopping in high-end stores will know about Booty. Booth was once considered a foreign brand. Although this understanding is not wrong, it is not comprehensive.

According to the introduction of the company's official website, this brand was founded in Canada in 1961 by Luke Tanabe. In 1989, Luke Tanabe plans to retire. The Chen Qitai family, a Hong Kong businessman, finally decided to buy the brand.

In 1993, Borz "from outside to inside", based in Xiamen, began to promote the brand in the Chinese market. According to the pronunciation of PORTS, this brand is directly named "Booty".

There is no doubt that Posture has achieved great success since then. In many high-end shopping malls, people can often see this brand, which was once regarded as the leader of high-end women's wear in China.

At the same time, the performance of Boots in the capital market is also good. The company was listed at the end of 2003, and its profit rose by nearly 390% in the past seven years. During this period, its dividend continued to be high. The company's share price soared from 3 Hong Kong dollars in 2003 to 31.5 Hong Kong dollars in 2008. However, this price has also become the highest in the history of Booty. Since 2010, the share price of Boots has been falling all the way. As of March 29, its share price was only HK $2.71.

"It's really a very difficult time at present." In the 2014 financial report, Chen Qitai, CEO of the company, said frankly that due to the economic environment, the promotion of simple lifestyle and the rise of online shopping, the luxury market will continue to be weak, and it will look for more promising opportunities.

This new opportunity is "selling". In May 2015, Baoguo International signed an offer agreement with Dongfang Fuhai to sell 20% of its equity at a price of 420 million yuan, including 6% of its equity in the early transaction. At the same time, it was stated in the transaction statement that the remaining 80% of the equity may also be sold to Dongfang Fuhai at a price of 2.4 billion yuan later. The move was widely discussed in the industry at that time, and was interpreted as that the company might fall into operational difficulties and be forced to withdraw from the fashion and clothing business.

Chen Qitai stressed that he would not quit the fashion industry when he was interviewed by the media soon afterwards. He said that the purpose of selling his equity was to switch to A-share. In his opinion, his company is seriously underestimated in the Hong Kong stock market. At that time, A-shares were in a good bull market. Chen Qitai said that many overseas listed companies have launched their return plans, and Booty is one of them. After moving to A-share market, referring to the industry's average P/E ratio, Chen Qitaiguan estimated that the market value of Booty could exceed 20 billion yuan.

However, this statement did not follow after the sharp fall of A-shares. The dramatic change occurred in October 2015, when Baoguo International announced that the purchase and sale contract of Ports Baozi Women's Wear brand was dissolved, and the 6% equity transaction that had already been transacted was also called back. Baoguo International will return 180 million yuan of transaction funds to Dongfang Fuhai within 7 working days.

Consumers don't pay?

"(Domestic) women's clothing retail is increasingly tight under the competition of international brands." Yang Dayun, president of UTA Fashion Management Group, concluded that the reason for the decline of local high-end women's wear brands such as Booty is that the large-scale entry of foreign brands and the replacement of China's new generation of consumer groups have made this brand increasingly aging.

"At least before 2010, Borz was the darling of shopping malls and Chanel in the minds of some consumers. ”Yang Dayun recalled that with the convenience of going abroad and the arrival of "flattening" of global information, consumers were no longer dominated by superficial information. They needed real international brands to consume. The spring of international luxury goods grew savagely in China after 2005. At least, the Chinese people know what a first-line brand is.

Yang Dayun's statement really reflects some people's consumption view. For example, Gu Yingying, the founder of the dressing assistant.

"If a domestic brand of down jacket sells for more than 10000 yuan, who will buy it?" This young entrepreneurial woman is definitely not without financial strength to buy it. In fact, she sold a company before the age of 25, cashed out tens of millions, and earned the first bucket of gold in her life. She told the reporter that she just couldn't figure out the pricing strategy of some high-end women's wear in China and the audience. Gu Yingying mentioned that she went to the market several times to learn about the market for the company's business. After knowing several domestic high-end women's wear brands and their prices, she exclaimed, "This price is better than buying XX brand in Hong Kong!" This XX brand naturally refers to the names of several well-known international brands.

As Yang Dayun said, the new generation of young people like Gu Yingying, who are born after 80 or even 90, do not quite agree with domestic high-end clothing brands. These people's consumption concept is about two extremes, either to buy affordable fast fashion brands or to buy well-known international brands. In their view, some domestic high priced brands are actually the price at which Alto sells Audi, and the local soil seems to lack the genes to cultivate first-line brands.

The new generation of consumer groups has caused many domestic high-end brands that have risen in the past 20 years to encounter embarrassment and bottlenecks.

Yang Dayun even "pessimistically" believes that the strategic implementation of the luxury positioning of domestic brands has proved to be a failed effort. Booty is the epitome of the past glory of Chinese women's wear brands. With the fading of Booty, other similar brands will gradually enter the "retirement" stage in the next five years. At most, they will "retire".

Seeking self breakthrough

Of course, there are also optimists in the industry.

"The brands whose average customer price is more than 3000-4000 yuan are considered as high-end brands in our industry." Xia Guoxin, chairman of Shenzhen Golith Garments Co., Ltd. (603808), admitted that due to the impact of the short-term economic environment, the market in this industry has been poor in the past two years. Previously, Golith's average annual growth was more than 20%, but now it is about 10%. "Not only high-end women's clothing, but also other affordable clothing are not in good market," he added.

Xia Guoxin believes that, like food, clothing is also a necessity. In his opinion, the clothing industry is a "sun never sets" industry. "There is a low tide in the short term, but it is still good in the long term." In addition, he does not agree with the statement of brand aging, "like those hundred year old brands abroad, there is no aging. In fact, the key is to see whether the products can fit the targeted audience."

Golith's strategy is to target senior career women. The reporter learned in the interview that the audience of the brand in the South China market is mostly enterprise executives, lawyers, civil servants, etc., and the targeted age is 30-45 years old. "In this group, we are highly recognized." Xia Guoxin said that Golith must have a diversified group to be a high-end or even luxury brand. This company acquired two overseas high-end brands last year, and there will be other acquisition plans in the future. "But the target of the acquisition must be high-quality and high-end, consistent with the positioning of the whole group." Xia Guoxin stressed that his company will only specialize in the fashion industry now or in the future.

Another company with the same positioning, Lucie (002612), found other ways to break through after its performance declined in the past two years. Since last year, this company has continuously acquired or acquired shares in some Internet companies, and announced that it will expand its business in many fashion categories such as mother and baby, beauty, cosmetic surgery, cultural and sports education in the future, and create a "pan fashion ecosystem" covering the lifestyle of "clothing, food, housing, entertainment, beauty and medicine".

These traditional local high-end brands constantly adjust their development strategies and directions after being hit. It is difficult to determine the outcome.

After observing the successful fashion industry abroad for a period of time, Gu Yingying came to the conclusion that if a company wants to become a century old brand, gain people's respect and market recognition, it must know "restraint" in opening stores and expanding scale. "Massive market expansion is not a good thing for high-end brands," she said.