Text | Chinese merchant Tao Strategy Coco
Do you believe that a piece of cloth can actually sell for a Rolls-Royce!
A company in Shandong pulled 1g of wool to 500 meters to make a cloth comparable to "soft gold", which cost 68,000 yuan per meter.
Even if the price is better than gold, this fabric is still in short supply, and the world's top clothing brands such as LV, Gucci, Hermes and other top clothing brands have a lot of affection for it.
This fabric is called "Ruyi Spinning", and it is produced by the Shandong Ruyi Group, known as "China LV".
However, the company that can "weave" out ten thousand taels of gold is saddled with 40 billion yuan of debt, and even 16 million cannot be taken out.
"A piece of cloth can buy a Rolls-Royce" Shandong Ruyi, why is the balance insufficient?
Don't look at it as "Chinese LV", but it is a very "soil" - 20 years ago it was a "broken" textile chief in the sorghum field, perhaps it was the obsession of the transition from "soil" to "foreign" that caused the later trouble.
One meter of "Ruyi Spinning" can sell for tens of thousands of yuan, but foreign brands can sell hundreds of thousands of clothes made of this rice cloth. The profit gap is so big, why not do it yourself?!
In 2010, Shandong Ruyi set a development strategy of "technology, high-end, branding and internationalization", and frantically acquired overseas fashion and luxury goods companies in the past ten years.
A large number of acquisitions have sounded the international popularity of "Shandong Ruyi", and even known as "China LVHM".
Eating so many big brands in one go, Shandong Ruyi has some indigestion.
Shandong Ruyi "buys, buys and buys" all the way, and one shot is hundreds of millions of investment. On the road to acquisition, investment cash alone is about 40 billion yuan. In a few years, Swiss luxury brand Bally, British century-old brand YAG Shidan, French light luxury group SMCP and other brands have also become its pockets.
As of the end of the third quarter of 2021, Shandong Ruyi's total assets reached 38.134 billion yuan and net profit was 1.276 billion yuan.
It looks like money, but it actually runs out of money.
In terms of mergers and acquisitions, Shandong Ruyi is eager to make quick gains, most of the funds used in mergers and acquisitions are short-term financing funds, and the one-year repayment period brings huge debt pressure to the company.
In addition, for mergers and acquisitions, Shandong Ruyi has also issued corporate bonds, mortgages and guaranteed loans. The consequence of this is that you did not wait to acquire the brand profit, and you first carried the debt.
After acquiring these brands, Shandong Ruyi did not integrate resources and operations well.
Overseas brand Gieves & Hawkes is regarded by the British as a representative of the British aristocratic style. After the acquisition of Ruyi Group, Gieves & Hawkes, which is positioned as a "high-end menswear", was directly put into the department store. What's more, many of them have been acquired and put into various "outlet stores" - discount shopping malls that sell brand-name seasonal, off-the-shelf, and broken-code goods.
This is equivalent to acquiring a Dior and then putting it on the "moving batch" to sell, which is tantamount to the brand "suicide"
In this way, ruyi debts are piled up more and more, but the profits are very small. By the fourth quarter of 2021, Ruyi could not even get 16 million.
In addition, the company is on the verge of losing control of SMCP as its indirect holding company, European Topsoho Sàrl, fails to redeem 250 million euros of bonds convertible into SMCP Group shares at maturity.
A bought fashion empire gradually collapsed.
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