The Garment Industry Will Set Off A Wave Of Mergers And Acquisitions

　　 Unlike in the past, overseas brands began to look for Chinese buyers. merger It is becoming a shortcut for Chinese enterprises to enter the international market.

Many insiders said that the relatively intensive enterprise acquisitions in the first four months of this year attracted their attention. Whether this is sending a signal that the garment industry will set off a wave of mergers and acquisitions.

Capital assistance

With the rapid growth of China's retail industry and the deepening of the policy of expanding domestic demand, funds, venture capital and other institutions have begun to take an interest in the clothing industry. The important reason is that the clothing industry is an industry with brand development potential, especially high-end brands, which are profitable. Since last year, the number of mergers and acquisitions of listed companies has increased. Wang Xiangsheng, president of the International Garment Brand Development Management Center, told our reporter that this year, the phenomenon of enterprises' bundling listing through acquisitions has also emerged. "If an enterprise has limited strength, it will have more confidence to refinance and go public through mergers and acquisitions." These phenomena reflect that, In the current situation of capital demand and resource scarcity, capital needs to pursue high-quality resources to achieve a stronger desire for value-added, so this has become one of the driving forces of mergers and acquisitions in the clothing industry.

In an interview with this newspaper, Li Kailuo, president of Blue International Investment Consulting Co., Ltd., talked about the main reasons why listed clothing companies or large enterprises are keen on mergers and acquisitions today. He said that the seven wolves' acquisition of Kenna and Hunan's unforgettable acquisition of Chaoshi western-style clothes are all hoping to use this to complete their multi brand strategy and form brand tribes, To enhance the overall risk resistance and profitability of the enterprise group, when the market sales growth of one brand reaches the limit, the way to expand the territory is to own another brand. For example, when Metersbonwe launched the mid tier brand ME&CITY, it was partly out of this consideration. On the other hand, enterprises need to merge with other similar enterprises or direct competitors to build giant enterprises and form industry leadership. For example, Seven Wolves once bought Aidu to strengthen the influence of the enterprise in the field of men's wear.

Li Kailuo believes that the impact of these two factors on the industry will be more obvious in the future.

Acquisitions in the industry are rising one after another, and enterprises outside the industry are also crossing the border and entering the clothing industry. Wang Xiangsheng said that some real estate enterprises and liquor enterprises are already consulting him about entering the clothing industry. Wang Xiangsheng believes that it is difficult for a brand to start from scratch, so generally speaking, he suggests that if you are not familiar with the clothing industry, you can consider acquiring a brand with a certain foundation, which may be the best choice.

Towards internationalization

In addition to the involvement of capital factors, another major feature of apparel M&A today is the increase in mergers and acquisitions between brands, especially the pursuit of high-end brands.

M&A between brands is to pass merger Bring new value after brand superposition. The acquisition of high-end brands by medium-sized brands is a new phenomenon in the industry recently. Never forget to purchase Chaoshi western-style clothes. It is by virtue of the power of high-end brands that we can improve ourselves. Similarly, the acquisition of Kenna by Seven Wolves is not an acquisition between brands, but an acquisition of the agent resources of foreign top brands in China, but its essence is that Seven Wolves is high-end.

It is reported that the 2011 Sino US textile and clothing brand merger and acquisition promotion conference will be held on May 18. The important purpose of this promotion conference is to provide a platform for Chinese brands to understand and acquire American clothing brands. In fact, since Ruyi Group acquired Japan Rina last year, Chinese enterprises' actions or intentions to acquire overseas brands have become more frequent. In other words, among the new characteristics of high-end M&A, the phenomenon of locking in overseas brands is very prominent. At this year's International Service Expo, Zhou Mingjiang, Chairman of Red Bean Group, disclosed that Red Bean will make some moves in internationalization, which is speculated by the industry Red bean Or complete the acquisition of foreign brands within the year.

Due to the impact of the international financial crisis and the world economic recession, the market value of many European and American enterprises has shrunk, liquidity has weakened, and the assets of some big brand companies have continued to shrink. It is an important choice for them to lower the threshold of M&A and find buyers with abundant capital at this stage. At the same time, foreign brands are optimistic about the Chinese market, and Chinese garment enterprises have ushered in an opportunity period of international mergers and acquisitions.

Wang Xiangsheng said that the root of the brand is very important when domestic enterprises go abroad, that is, where the brand originates and what kind of cultural temperament it carries. International consumers identify with their brands with cultural roots. Therefore, instead of building a brand through developing their own strength, domestic enterprises should choose to purchase a foreign brand that is native to China, which will greatly shorten the process of internationalization. Li Kailuo also believes that in the future, through mergers and acquisitions, there is a greater possibility of the emergence of fashion brand groups with international influence in China, while it is difficult for local clothing brands to move towards international fashion centers.

The danger of post merger

M&A will indeed play a rocket like role in promoting the development of enterprises, especially in the share prices of listed companies. On March 25, Sina completed the transaction of acquiring Macaulin shares. The next day, the stock price of Macaulin rose 25.56%.

Of course, whether it is the growth of share price or the expansion of enterprise scale or the improvement of influence, although M&A has obvious advantages for enterprise development, enterprises should also have a high sense of risk.

During M&A, it is far from enough for garment enterprises to find professional consulting companies to make adequate preparations for the evaluation stage. In the post M&A stage, various problems in operation and management are likely to be ignored in advance, and if there is no forward-looking risk prediction, problems will easily occur.

Li Kailuo reminded enterprises that at least three aspects should be seriously considered before mergers and acquisitions. {page_break}

First, different enterprises have different corporate cultures. After mergers and acquisitions, the conflict between cultures must be emphasized, especially reflected in the acquisition between domestic brands and international brands, and between mid tier brands and high-end brands. In this case, imposing their own culture on enterprises with large differences will become a very unfavorable factor in the post merger development process of enterprises. For example, seven wolves follow the "wolf culture", while most foreign big brands advocate the "elephant culture", that is, stable development. Therefore, enterprises like Seven Wolves should avoid cultural conflicts between enterprises in the process of internationalization, and the acquirer can introduce a suitable benign culture on the basis of respecting the original corporate culture of the acquired enterprise.

Second, attention should also be paid to the issue of management costs. For example, in terms of human resources costs, channel costs, etc., the unit investment of high-end brands is much higher than that of low-end brands. Therefore, enterprises must fully consider their own strength before acquisition to avoid blindness in investment.

Third, acquiring a new enterprise means entering a new market. Especially in mixed M&A, the possible problem is to force two different industries together. For example, a communication company in Guangdong once created a casual wear brand, but it failed to deal with this problem, resulting in no improvement of the brand today.

Li Kailuo said that production enterprises, in particular, should avoid factory thinking and brand management. Productive enterprises mainly manage product quality, while brands create consumers' external feelings. The two are completely different. This is why a large proportion of acquisition cases fail. Therefore, for hybrid acquisitions, investors should play their own roles and choose professionals to operate the brand.