It takes time for the garment industry to "warm up"

Every year in July and August is the time for listed companies to record their results for half a year. As Soyuz first announced the first half of 2015 results at the end of July, listed companies in the A-share apparel industry also began to disclose semiannual reports.

From the published results or performance forecast, over 70% of the company's net profit has increased compared to the same period last year, and in 2014, this proportion was less than 30%. Among them, Shanshan, Youngor, Jin Feida and other companies have increased their net profits by more than 50% year-on-year.

The change in the data seems to indicate that the domestic apparel industry has improved after nearly four years of downturn. However, after careful analysis of the semi-annual report, the reporter found: On the one hand, the profit growth of several companies mainly comes from the cross-border unrelated to the apparel industry. Investment; On the other hand, the apparel industry itself has not achieved significant results in the offline and online reforms and attempts in recent years. From the current performance, it cannot be concluded that the domestic apparel industry has begun to pick up.

Diversified investment prop up profit growth and it is too early for the market to pick up

Jinfei Da, the first-half year-on-year increase in net profit of 1530%, mainly due to the completion of the acquisition of 100% of Nanjing Autotech New Energy Technology Co., Ltd. in May; Shanshan shares, investment income from the sale of shares of Ningbo Bank In the first half of the year, net profit increased by 413.79% year-on-year; Caesars shares are expected to increase their net profit in the first half of the year by 60% to 110%. The games business they acquired is the main growth point of the company's profits.

After sorting out and analyzing semi-annual reports of some listed apparel companies, it was discovered that most of the profits of many companies come from cross-border investments that are unrelated to the apparel industry. Excluding the income from cross-border investment, Shanshan Co., Ltd. only achieved revenue of 302 million yuan in the main clothing industry in the first half of this year, a year-on-year decrease of 55.36%; Jinfeida achieved net profit increase due to acquisitions in the first half of the year, and its net profit in 2014 The year-on-year decline was 81.9%. Among the semi-annual performance forecast announcements, only a few companies such as Soult, Hailan and Aokang International attributed the increase in profit to the optimization of terminal sales and the expansion of e-commerce channels. Even so, financial investments with high added value are also found to be particularly important for profit increase.

In addition, although the general situation is upwards, there are still seven wolves, langzi shares, Kanudi road and other corporate performance continued to decline, and for the decline in performance, the companies mentioned the "order reduction", "retail no recovery" and other reasons.

In the face of the semiannual report card of listed apparel companies, Yu Xiangpin, secretary-general of the China Textile Planning and Research Institute and director of the industry research department of the China Textile Construction Planning Institute, bluntly stated that this is a natural stabilization of the domestic apparel industry after a few consecutive years of decline.

Wang Wei, vice president of the China Garment Association, also said: "This can only show that the internal adjustment of the company has achieved initial results and cannot explain the improvement of the market situation. It is still too early to say that the garment industry is picking up."

The outdated competition in the model has intensified and the industry continues to decline for four consecutive years. The downturn in the domestic apparel industry began in 2011, and sportswear that has grown in sales for many years has experienced a decline for the first time in the year. Taking Li Ning as an example, the data shows that in 2010, the company’s sales were 9.479 billion yuan, and in 2011 it dropped to 8.165 billion yuan.

In the following four years, the downward trend gradually spread to casual wear, men's wear, women's wear and other fields. The apparel industry in China has entered an overall low point. Talking about the reasons for the decline in the apparel industry, Yu Xiangfeng believes that the most fundamental is that the franchise model no longer meets the needs of the market. When the market was undersupplied, the franchise model increased the number of brand stores. Although this increased sales, it also created many stores with poor operating conditions. With the increase of garment companies and the saturation of the market and oversupply, due to the affiliated stores, companies are always out of touch with the market and cannot be adjusted quickly based on product sales, resulting in many products on the market but unable to meet consumer demand. .

At the same time, due to the accumulation of a large number of stockpiles in poorly-operated stores, corporate accounts increased, and it was difficult for liquidity funds to be used for the development of new products, leading to a vicious circle. While the franchise model restricts the development of enterprises, online brands and foreign brands have also begun to compete for the domestic apparel market. Infineon and Handu clothing houses and other online brands have attracted a group of consumers who like online shopping because of their higher price/performance ratio. After these brands have achieved success online, they have also extended their reach to offline stores. In addition, foreign fashion brands such as ZARA and Uniqlo have entered China in recent years. The direct mode they adopt can quickly adjust stores and products according to the market, and they also firmly occupy some markets while meeting consumer demand.

Yu Xiangpin told reporters that the healthy growth of foreign apparel brands is a strong testimony. "It proves that the downturn in the domestic garment industry is an internal cause and has nothing to do with the slowdown in the world economy."

Xiao Xiao, a teacher of the Department of Textile Design and Industrial Economics at Donghua University’s School of Textiles, also pointed out the fourth reason for the downturn in the apparel industry: In previous years, China’s garment export boomed and absorbed some surplus products, but with the export of clothing in recent years Processing has gradually shifted from China to lower-cost Southeast Asian countries. This narrowing of the digestive channels has made the issue of domestic apparel market saturation even more prominent.

Optimize the terminal to develop e-commerce, clothing companies seeking to break through the difficulties faced by internal and external factors, the Chinese clothing company in recent years began to seek breakthroughs, so that the performance of many listed companies' cross-border investment is a common attempt. In Wang Xi’s opinion, capital is the basis of market competition no matter what the line is. Apparel companies seize real estate, financial and other investment opportunities, help increase their economic strength, and provide funds for the innovation and transformation of apparel industry. . After relying on diversified investments to stabilize benefits, more and more companies are aware of the drawbacks of the franchise model.

In the first half of the industry report, Sou Yute, Hailan Home, Aokang International, etc. all listed "channel terminal optimization" as one of the reasons for the increase in business performance. Currently, there are two main ways to optimize terminals: First, shutting down poor stores and supporting high-quality stores. Wang Xi explained to the reporter that through adjustments, the goods stayed in high-quality stores with shorter time, faster turnover, and the output of the store’s unit area was improved. “The faster the goods rotation in the store, the higher the sales naturally. ".

Another method to optimize the terminal is more thorough, that is, change the franchise store to a direct-operated store. According to Yu Xiang-Feng, some companies have already acquired the franchise stores with good locations and operations as directly-operated stores, but franchise stores still account for a large proportion. Moreover, after being transformed into a direct-operated store, it is necessary to respond quickly to changes in the market. It also involves reforms from design to production to transportation.

It is understood that the fastest reaction cycle in the domestic garment industry is one month, and many foreign brands only need one week. Seeking a segmented industry in a saturated market is also a choice for apparel companies. With a cost-effective Haicang home focused on low-end menswear markets, Semir has attributed the rapid development of the children's wear business to an important reason for growth.

In addition, some companies also extended their business to the online search firm in the special investment Yinman, early language and other well-known Amoy brand of Guangzhou Huimei Garment Co., Ltd., to achieve a joint line of apparel industry and online. Meibang Apparel launched a fashion brand APP "Fan", while Aokang International increased sales through online group purchase. It is worth noting that although companies have made e-commerce channel development a new growth point for their performance, the listed company's industry report does not explicitly state that the profits derived from e-commerce platforms account for their share of total profits.

Yu Xiangpin bluntly stated that for many apparel companies, the biggest role of online channels is to sell inventory. In order to get out of the predicament, the domestic garment industry must fundamentally change the franchise model and truly connect with the market.

Xiao Xiao also said that compared with the previous various inputs and publicity, reasonable and effective control of costs, increase consumer branding and consumer bond, is the key to the successful transformation of garment enterprises.