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Text/Wang Xun; Source/Mantis Finance (ID: TanglangFin)

From the peak of “contracting” one-third of the world’s down jacket “Feather King”, to no borders, vigorously enter the men’s wear, women’s wear, children’s brand market, after being once pressed by inventory to the border of death, and then have to reduce the product line, back to the old down jacket industry, Bosideng still can not get rid of the fate of down jackets.

In 2007, Bosideng landed on the Hong Kong Stock Exchange, and the founder Gao Dekang turned from a small tailor to a billionaire, and the scenery was unlimited for a while. At that time, Bosideng had dominated the down jacket industry for 11 years, and at its peak, it contracted one-third of the world’s down jackets, and its inherent image of “the king of cold clothing” has been deeply rooted in the hearts of the people. However, Bosideng also has troubles in addition to happiness, and the warm winter in the first year of listing has made founder Gao Dekang realize that its products are seasonally single, and the obvious drawbacks of market profitability affected by climate are undoubtedly obvious. Bosideng seeks four-season development, and transformation and upgrading are imminent.

Multi-branding, four-season production

In May 2009, Bosideng International Investment wholly acquired Jiangsu Bosideng Garment Development Co., Ltd. and entered the men’s wear business, and its diversification strategy quietly took the first step. In the same month, Bosideng established a joint venture to participate in the sales of American street fashion brand Rocawear in Greater China. In 2010, Bosideng launched the “Ruiqi” women’s wear project to position high-end women’s clothing, but within a year, Bosideng spent nearly 900 million yuan to acquire the equity of Jesse Qicheng, a high-end women’s wear brand in Shenzhen, which is almost the same as the former’s positioning.

In 2012, the Group officially adjusted its strategic direction to “multi-branding, four-season and internationalization”, and planned to successfully extend from the existing single down jacket category to selective and focused series categories in about 3 years, so as to strengthen men’s wear and excellent women’s wear. In 2012, the number of Bosideng stores reached more than 14,000, and the number of stores increased by nearly 5,000 in one year. But frequent new brand launches and big acquisitions didn’t help Bosideng expand the market, and the surge in stores paved the way for high inventories.

At the same time, fast fashion brands represented by Uniqlo and ZARA, you catch up and accelerate the layout of the Chinese market, consumers have more choices. In 2013, Aldo Liguori, director of the Broadcasting Department of Fast Retailing, pointed out that “the change of seasons in Japan is very similar to China, and we know better than our competitors what clothes Chinese need to help them keep warm and wick off perspiration.” Not only that, in terms of “Chineseization”, one out of every 6 employees of Fast Retailing Group will say Chinese, higher than Toyota and Sony, in terms of personnel layout, Uniqlo has about 60,000 employees worldwide, except for 40,000 concentrated in Japan, and Chinese mainland ranks second with 6,700 employees.

In terms of business strategy, Uniqlo, ZARA, H&M, GAP and other fast fashion brands choose shopping malls to large stores, multi-products, fast turnover as the business direction, stores are more than 500 square meters, Bosideng still chooses large supermarkets of containers and urban street stores, in the new aspect, especially in Bosideng focus on the women’s clothing market, H&M 12 days to complete the process from design to cabinet new products, ZARA maintains updates twice a week, the shortest 7 days, And it can launch about 120,000 fashions a year, but even Bosideng, which is in a period of expansion, can only launch 200 products a year, which is far from its competitors.

As of 2013, Bosideng’s non-down business revenue fell by 5.3% year-on-year, and the inventory reached 2.703 billion. In terms of stores, the number of stores decreased by 5,053 to 6,599 as of March 31, 2014. In addition, Bosideng Menswear, Jesse and Moco decreased by 25, 15 and 13 stores respectively, bringing the total number of stores to a total decrease of 5,106 stores for the full year.

As of the annual report data released in March 2020, the revenue of diversified clothing business was 83 million, accounting for 0.7% of the group’s total revenue.

Internationalization is blocked

In 2012, Bosideng began its internationalization strategy, taking advantage of the remaining warmth of the London Olympics, and the first stop was set in London, England. To this end, Bosideng founder Gao Dekang was also invited to visit Trinity College of Oxford University and delivered a speech on the theme of “Investing in the UK: Bosideng’s Road to International Expansion”, at 18 South Moulton Street in London, Bosideng spent more than 300 million yuan to buy a 7-storey building and open its first overseas high-end brand flagship store.

South Moulton Street is home to world-renowned designer concept stores, where designers such as Dior creative director John Galliano and McQueen have opened concept stores. Therefore, in order to match the taste of high-end people, this flagship store has also changed the image of Bosideng’s domestic civilian “down jacket”, focusing on high-end men’s clothing. In the planning, the store strives to de-localize, not only using local British designers Ash Gangotra and Amelia Pretious as creative directors, but also choosing to complete 80% of the manufacturing in the UK rather than China; In terms of product marketing positioning, the company’s external publicity caliber is to benchmark Hugo Boss, which is directly reflected in the price: a T-shirt costs $85, a down jacket costs $398, and a suit ranges from $795 to $995.

However, Bosideng’s first stop of internationalization was not smooth, and the high fight did not exchange Bosideng’s breakthrough in the international high-end market, and the flagship store’s revenue was dismal.

More than a year later, during the National People’s Congress in March 2014, founder Gao Dekang mentioned the flagship store in a special interview with Xinhuanet’s 2014 National Two Sessions. In the interview, “time” and “persistence” are repeatedly mentioned, “You must persevere, you must be ready to plan when you enter the country of others, this plan is not a matter of one or two years, it will last for several years… It takes time, and it certainly won’t work without time,” he said, but a month later, Bosideng parted ways with local British designers and manufacturers, opting to work with Chinese suppliers.

Many insiders speculated that Bosideng’s British flagship store “military heart shake” may be related to revenue, in March 2014, just before Xinhuanet interview, Bosideng released the 2013 fiscal year financial report, operating income fell for the first time in five years, and the decline was as high as 11.66%. In June 2016, Bosideng’s share price fell from HK$1.2 per share at the end of May 2015 to HK$0.62, and 1,328 stores in China were closed. At this time, Bosideng can be described as internal and external troubles.

On February 13, 2017, the day before Valentine’s Day, Bosideng’s British flagship store was also the only flagship store overseas to close its store in a low-key manner. However, it is interesting that although this is a failed attempt to internationalize the brand, the experience of overseas expansion has indeed provided a topic for it to establish an “international standard” brand image among young domestic consumers, such as the slogan “best-selling in 72 countries” in 2018. But how international is Bosideng? “Mantis Finance” found that in the data disclosed in fiscal year 2019 (announced on March 31, 2020), the revenue of Bosideng brand down jacket was 9.51 billion yuan, and the revenue of down jacket was divided into self-operated (retail) and wholesale, of which self-operated (retail) was 5.6283 billion, and the total revenue of domestic self-operated retail network was 4.866 billion, which shows that

Bosideng’s 86.4% of revenue still comes from Chinese mainland.

Source: 2019-2020 annual report data

The data of best-selling overseas did not mention, but highlighted that in the export business, OEM processing revenue was 1.61 billion yuan, an increase of 17.8% year-on-year.

Looking forward to the data disclosed in fiscal year 2018, Bosideng brand down jacket revenue accounted for 73.7% of the total revenue, about 7.7 billion yuan, self-operated (retail) was 4.959 billion, at the same time, the annual report also disclosed that the total revenue of domestic self-operated retail network was 4.628 billion, which shows that up to 90% of Bosideng’s revenue comes from Chinese mainland.

Source: Bosideng 2018-2019 Annual Report

In the middle of 2018, the propaganda slogan of 72 countries was put forward, and it did not provide enough information support until the 2019 financial report was issued. Bosideng’s internationalization has a long way to go.

Second entrepreneurship, nirvana rebirth

In 2017, Bosideng announced that it would “cut” non-down businesses such as men’s wear, home and children’s clothing, and refocus resources on the main business of down jackets. In the past four years, high inventory has been a mountain in Bosideng’s heart, which has also led to its lag in the research and development of new models, “old style”, “brand aging”, “middle-aged and elderly down jacket” and other names that weigh Bosideng breathlessly. At the same time, Bosideng also had to watch its own GAP and BOSS down jackets processed by itself win its own market share.

Bosideng decided to return to square one, and 2018 was also a turning point for its performance. “The existing designs and channels have been relatively marginalized and drifted away from the mainstream population and major channels.” Rui Jinsong, executive director and vice president of Bosideng, said, “In the next three years, Bosideng will reshuffle 70% to 80% of the more than 3,000 stores in the existing channel, and the newly opened stores will be positioned as flagship stores in shopping malls, fashion department stores and core business districts, focusing on floor efficiency and brand effect.”

For the mainstream consumers of the younger generation, Bosideng also joined hands with Focus Media to hold a strategic cooperation conference of “Activate the Brand, Detonate the Mainstream” in the Shanghai Center, and the two sides reached a cooperation of 100 million yuan, with the slogan of “focusing on down jackets for 42 years”, strengthening the label of down jacket experts, and detonating 200 million mainstream people through precise delivery, during the “Double 12” period in 2018, it exceeded 500 million in a single day, a year-on-year increase of 150%.

Bosideng returned to the main business of down jackets, in order to cater to the preferences of young people, it also launched “Star Wars series”, “Marvel series” and “Disney series” with well-known IPs; In order to shape the image of a high-end fashion brand, Bosideng even hired former Herm├Ęs creative director top design master Jean-Paul Gaultier to cooperate, “Bosideng realized all my crazy ideas” Gaultier praised Bosideng, and the cooperation between the two sides was a hit, causing heated discussions in the fashion circle.

In February this year, Bosideng bucked the epidemic and appeared at the International Fashion Week, when most Chinese brands and fashion media canceled the original event, some media reported that “International Fashion Week, Chinese faces are collectively absent”, Bosideng at London Fashion Week’s wonderful down jacket show, brought the strength and confidence of Chinese brands to the international show, especially in the closing show, 54 models wearing red down jackets and designers appeared together with the curtain call, the atmosphere reached a climax, and the audience cheered for China. Guests from all over the world chanted “Come on China” with Chinese to send blessings to China and Chinese brands.

Whether it is signing a trend designer or stunning international fashion week, under the overall strategy of “focusing on the main channel and focusing on the main brand”, Bosideng Nirvana has been reborn and achieved word-of-mouth and performance growth against the trend. The label of “Bosideng = Down Jacket” is more deeply rooted in the hearts of young consumers. In the first half of 2020 report, Bosideng’s non-down jacket revenue decreased from 1.1% to 0.7%, while the revenue of its main business down jacket was 2.989 billion yuan, accounting for 64.1% of total revenue, an increase of 18% year-on-year.

After going around in circles, Bosideng still followed the familiar path back to the starting point.

With the moat built on down jackets for 44 years, Bosideng temporarily buys more capital and time for the next development. But risks that cannot be ignored remain. The warmth attribute of down jackets is decreasing, the fashion attribute is strengthening, Bosideng, which has a single product and a single revenue, how to resist in the face of fast fashion and cross-border competition from fashion brands? The peak sales season of down jackets is concentrated between October and the following month and February, and how to share the risk of the drag on sales in the warm winter is a problem that Bosideng needs to face head-on no matter what. Before answering these questions, Bosideng could only tell the story of down jackets.

*The pictures in this article are from the Internet

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Source: Bosideng 2018-2019 Annual Report

Source: Bosideng 2018-2019 Annual Report

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