From "fake foreign brand" to "fake high-end", Mousse successfully "played to death".

Double 11 in 2023 seems to rely on dramatic events to detonate traffic. After Jingdong tore Li Jiaqi, Simba tore up with the "fake foreign goods" Mousse, which made headlines in the media again.

On October 31, the head e-commerce anchor Simba launched the high-end product "Light Luxury Big Black Cow Leather Soft Bed" (including mattress and bed) in the live broadcast room, and the original price of more than 20,000 products was sold at 4,980 yuan in Simba's live broadcast room, triggering a large-scale rush by netizens, and the sales exceeded 1 billion in 2 hours.

In contrast, the annual sales of Mousse mattresses are only 5.8 billion, and it is not an exaggeration to call it a "sales miracle" this time.

Simba's live broadcast room sold mousse products, with sales exceeding 1 billion

The best is yet to come.

The online sales of the "fracture price" caused dissatisfaction among the offline dealers of Mousse, and it was said that consumers who had previously purchased at the original price asked for a collective return or make up the difference. Dealers have complained to Mousse.

Under the pressure of the dealer, Mousse finally had to "step on the brakes" on the cooperation with Simba, and took the initiative to suspend the follow-up delivery of another Mousse mattress. On November 1, Mousse announced that Mr. Yang Xin, deputy general manager of the company, applied for resignation from the position of deputy general manager of the company due to personal reasons. It is rumored that Yang Xin, the deputy general manager who resigned, was an important figure in promoting the cooperation of live streaming.

After Simba learned that the cooperation might be suspended, he expressed great dissatisfaction, and started a "war of words" with Mousse dealers, shouting at dealers in the live broadcast room, and also named Mousse that he must perform the contract or see him in court. Simba even opened an account on Douyin, specifically going to Douyin to "scold".

Simba ran to Douyin to lash out at Mousse

Things are still fermenting.

On November 2, Simba's Douyin account was suddenly banned, causing an uproar among netizens. Mousse said that it is still cooperating with the Simba team, and will reasonably arrange consultation, scheduling and delivery according to existing orders, but there will be no new cooperation with the head anchor in the short term.

Just when the whole network was discussing how the two sides would end, some media began to speculate about the script planned in advance for this "mutual tearing", and also speculated that the vast majority of the exaggerated sales of 1 billion yuan were reached by Mousse channels and dealers working together to place orders, just to hype and lure consumers to buy.

However, after careful analysis, it is less likely to be self-directed and self-acting. Because of the bad history of Mousse mattress, CCTV has left a bad impression on consumers after exposure, and if it is really self-directed and self-acting, it is tantamount to smashing the "high-end" signboard.

Mousse's financial report shows that in the first three quarters of this year, its revenue from e-commerce, direct supply and direct sales channels was 640 million yuan, 142 million yuan and 103 million yuan respectively, an increase of 23.35%, -76.57% and -54.37% year-on-year respectively.

"Capricorn Business Review" judged that this may not be a story of "stealing chickens and rice", but a story of a pseudo-high-end brand "going to the doctor when it is sick", and as a result, the decision-making mistake was messed up, and in the end it would rather breach the contract than keep the façade.

However, Simba's begging like this, the damage has been caused - the high-end bedding that sells 20,000 yuan offline is still profitable for 4,000 yuan online, allowing consumers to completely see the true face of this "pseudo-high-end".

In June 2022, Mousse shares were successfully listed on the Shenzhen Stock Exchange.

Mousse's rash attack on live broadcast e-commerce has a lot to do with the poor performance in the past two years.

According to the financial report, the average annual growth rate of Mousse's revenue in the first three years (2019-2021) of listing can reach 27.34%, while the revenue in the first year after listing (2022) decreased by 10.31% year-on-year. In the first three quarters of this year, revenue continued to grow negatively, down 8.38% year-on-year.

The change of face before and after the listing is so obvious, which has caused investors to question the financial data of the Mousse prospectus.

Mousse's operating income and its growth rate from 2018 to the first three quarters of 2023

Data source: Mousse share financial report

The same is true for profit changes. Mousse's net profit attributable to the parent company in 2022 will only increase by 3.28% year-on-year, although the profit growth rate in the first three quarters of this year has rebounded, reaching 21.44%, but compared with the average profit growth rate of 47.65% in the first three years before listing, the regression is very large.

Mousse's net profit attributable to the parent company and its growth rate in the first three quarters of 2018 to 2023

Data source: Mousse share financial report

There is such a big difference in the operating performance before and after the listing, which inevitably makes investors suspect that Mousse has the possibility of whitewashing and packaging financial data in order to go public.

For example, a suspicious sign is that Opai Home, the largest customer of Mousse products, made a surprise stake in Mousse before listing - in December 2020, Opai Investment, a subsidiary of Opai Home, indirectly held 1.5% of Mousse shares by increasing its capital in Mousse shares. Since then, the transaction between Opai Home Furnishing and Mousse shares has continued to increase, and it has become the company's largest customer.

Large customers concurrently serve as shareholders of the company, which is easy to breed the risk of benefit transmission, and there is a possibility that listed companies may "press" revenue to large customers to recognize revenue in advance or even inflate income.

From 2019 to 2021, the sales of Mousse shares and Oppai achieved rapid growth, during which the sales accounted for 1.63%, 6.47% and 8.15% of operating income, respectively, and the value further expanded to 11.48% in 2022. At the same time, Mousse's accounts receivable to Opai Home Furnishing also increased, and its accounts receivable balance ratio was close to 50%.

Taken together, it is difficult not to suspect that the two parties conspired to beautify Mousse's business, and Mousse exchanged equity for the inflated "income" brought by Oppai.

In addition to the negative growth of revenue, from the perspective of operating data, Mousse also has a hidden danger in development - the product structure is extremely simple.

Mousse has always relied heavily on the sale of bedding products such as mattresses, bed frames and mattresses. According to the financial report data, before 2022, the three types of bedding products accounted for 86%-92% of Mousse's operating income, of which mattress revenue accounted for half. In the 2022 annual report, Mousse listed the revenue of the sofa business separately, but the revenue accounted for only 7.8%.

The revenue structure of Mousse products from 2019 to the first half of 2023

Source: Mousse shares financial report

Compared with peers: the product structure of Gujia Home Furnishing is relatively scattered, with sofas, bedding and integrated products accounting for 52%, 21% and 17% of the revenue respectively; Xilinmen, which also focuses on bedding, has sofa revenue accounting for more than 12% of operating income.

The over-reliance on bedding has seriously affected Mousse's ability to resist risks, which can also explain to a certain extent why home furnishing leaders such as Gujia Home Furnishing and Xilinmen still have positive performance growth in the context of the overall home consumption environment this year, but Mousse's revenue has declined year-on-year.

Interestingly, even if it was only for bedding, Mousse was not ready. The quality of its products has been repeatedly problematic, and it has been complained about many times and exposed by the media.

On the Black Cat complaint platform, Mousse mattresses and bed frames have been complained by consumers many times, mainly involving quality problems such as irritating odors, excessive formaldehyde, and collapse.

Black Cat complains about the complaints about Mousse on the platform

Source: Black Cat Complaint Platform

According to the statistics of black cat complaint data, the number of complaints about the merchant Mousse bedding is 134, and 112 times have been completed. Most of the content involved in the complaints is related to product quality, such as excessive formaldehyde, dented mattresses, inferior plates, high temperatures, large color differences, etc.

Mousse, which deceived Chinese consumers for 12 years, was exposed by the CSRC's cross-examination before it was exposed, which caused continuous doubts including official media at the time.

At the same time, Mousse's packaging approach to the brand's high-end image finally surfaced along with the listing.

The founders of Mousse, Wang Bingkun and Lin Jiyong, are both natives of Dongguan.

Wang Bingkun has been working in the home furnishing industry since 1998 to 2003, engaged in the agency distribution business of furniture and home furnishing brands such as Milo, Noah and Meng Tiantian, while Lin Jiyong has been an executive director and manager of Dongguan Dazhi Furniture Co., Ltd. since 1998.

Wang Bingkun, founder and chairman of Mousse

The two co-founded the Mousse brand in 2004, and initially relied on Dongguan Dazhi Furniture Co., Ltd. to operate. It was not until 2007 that the Mousse brand officially established its own factory.

It is such an authentic furniture OEM local enterprise that has become a famous "foreign high-end brand" through a variety of fancy packaging and marketing.

Mousse made full use of the psychology of Chinese consumers' preference for "foreign goods" at that time, deliberately created the atmosphere of "European high-end brand" at the beginning of Mousse's establishment, and also hyped up the introduction of European sleep concepts and bedding design concepts to "serve Chinese consumers".

In the promotion of Mousse on various occasions, it also claims to be "the French brand Mousse, founded in 1868, the founder is the French royal designer DeRucci", which is also the origin of the brand's English name "DeRucci".

In order to strengthen consumers' perception of its high-end brand image, Mousse also used the image of a mysterious foreign old man on the official advertisement, façade and billboard of Mousse, giving people the illusion that this white old man with a pipe and a serious face seems to be a foreign designer of Mousse mattress. This image has been used for more than ten years.

The image of a foreign elderly man in a mousse advertisement

There will always be a moment when a lie will be exposed. In order to go public, Mousse had to give truthful answers to the questions raised by the CSRC. There were rumors on the Internet that the foreigner was just hired by Mousse to take a group of photos, which was confirmed in the SFC's inquiry.

Mousse said in the prospectus that it had signed an agreement with a foreigner named Timothy James Kingman in August 2009 to authorize Mousse to permanently use the photographs and negatives bearing his likeness.

In this regard, the CSRC said that it required Mousse to further explain the basic situation of the foreigner, what is the relationship with Mousse's products, whether third parties can also use the person's photo, which leads to consumers' confusion about Mousse's products and causes potential disputes, and whether Mousse's promotion of the foreigner is in line with the actual product and whether there is false publicity.

The Securities Regulatory Commission's inquiry into the relationship between the "foreign old man" and Mousse

Source: Mousse share prospectus

Paper can't keep the fire. Under the pressure of the Securities Regulatory Commission, Mousse told the truth, in fact, this "foreign old man" is not a designer at all, but an unknown person, not a French European, but an American. Born in Oregon in 1943, he died on June 1, 2012, and lived in China for a time.

According to the media's investigation, the old man named Timothy James Kingman was not a designer at all, nor was he a French-European, but an American. He was born in Oregon in 1943 and died on June 1, 2012.

An obituary of this man appeared in the Seattle Times on June 10, 2012. The obituary said he had studied at Stanford University, fought in the Vietnam War and lived abroad for 20 years, including a long time in China.

Regarding such blatant "false propaganda", Wang Bingkun brazenly said:

"The marketing in the early days of the company did have some inappropriate points, but this was 'necessary marketing', otherwise it would be difficult to gain a foothold in the industry."

Born from the grassroots but wanting to be based on high-end positioning, Mousse had to spend a lot of advertising and marketing expenses on overwhelming publicity and promotion, and constantly strengthen its high-end brand image in the hearts of consumers.

According to the financial report data, Mousse's sales expenses accounted for 26.25% of operating income in the first three quarters of this year, and even exceeded 30% in previous years. Compared with the same industry, the proportion of sales expenses/operating income of Gujia Home Furnishing and Xilinmen is 16.23% and 19.07% respectively, and the proportion of other small and medium-sized brands is even lower.

Positioning high-end brands, its products should have obvious differences from popular products, mainly reflected in the sense of technology and high-end of the product. To this end, Mousse has always emphasized the "high-tech" content of its products. Relying on "high technology", the price of Mousse mattress is much higher than that of other home brands, and most of the mattress products in Mousse stores are priced at more than 10,000 yuan, and the price of a mattress can reach up to 100,000 yuan.

In contrast, the price of hot-selling mattress products of domestic brands such as Xilinmen and Gujia Home Furnishing is basically 3,000 yuan to 5,000 yuan.

Mousse's offline stores give people the illusion of a "sense of luxury".

With high pricing, Mousse enjoys a gross profit margin significantly higher than the industry average. According to the financial report data, the gross profit margin of Mousse in the first three quarters of this year and last year was as high as 50.79% and 46.47% respectively, compared with the gross profit margin of Xilinmen in the first three quarters of this year and last year was 34.22% and 32.40% respectively, and the gross profit margin of Gujia Home Soft Bed and Mattress business in the first half of this year and last year was 35%.

In contrast, in the first three quarters of this year, Mousse's R&D expenses were only 135 million yuan, which was very pitiful compared to the sales expenses of 1 billion yuan.

Mousse's "high-tech" is often "faked" by the media and consumers. The Paper has published a special report.

Source: The Paper

Regarding the high pricing, the sales staff of Mousse offline often say that the black technology products developed by Mousse mattress are made of imported materials, which is "worthy of this price". A "sky-high" mattress priced at 108886 yuan, the official introduction says that it uses the 3D material "black technology" imported by the German Miller company, which has the effect of waterproof and mildew-proof. According to the prospectus, the unit price of the new high-tech material "3D cotton" is only 72 yuan/meter, and the main suppliers are domestic factories rather than German companies. Some people in the home furnishing industry said that there is not much technical difference between different brands using this material, and the channels are the same.

Source: The Paper

Another mattress product with good sales, "Mousse Baby", is a good example of how Mousse uses marketing to create high-tech gimmicks. One of the "Mousse Baby" is the "Special Contribution of the Chinese Women's Volleyball Team", priced at 55,555 yuan, and the activity price of "3.21" World Sleep Day is 29,999 yuan.

In this regard, according to the official website of Mousse, in 2017, Mousse reached a strategic cooperation with Aisin Seiki Group, a subsidiary of Toyota Group of Japan, to introduce the "Fine Revo" material of its bedding brand ASLEEP, that is, "space resin ball".

However, according to the prospectus, Mousse's "Space Resin Ball" materials were all purchased from Dongguan Zhongri Home Furnishing Co., Ltd., and the status of the supplier's "Space Resin Ball" related trademark applications was invalid and awaiting substantive examination.

In fact, Aisin Seiki's bedding business has ceased production on March 31, 2020, and its "Fine Revo" mattresses have been transferred to Dachi Company, which is the actual controller of Chunichi Home. Going around and around, the so-called high-tech materials "imported from Japan" are still produced by Chinese enterprises themselves.

Mousse's space resin ball mattress products were initially unsalable due to high prices and insufficient promotion efforts. It was not until 2019 that Mousse became the official sponsor of the Chinese women's volleyball team, exclusively customized the "Mousse Space Resin Ball, Chinese Women's Volleyball Mattress" for the Chinese women's volleyball team, and spent a lot of money on marketing and publicity, which made the product sell well and alleviated the inventory crisis of space resin balls.

Image source: The Paper

In order to "gild" himself, Mousse did not hesitate to falsify the source of authority.

In 2018, Mousse published an article "A Brief Analysis of the Unique Advantages of High-end Brand Mattress Mousse" on its official website to promote its technology and product advantages, which mentioned that Mousse cooperated with the Research Center of the School of Ergonomics of the University of Leuven in Belgium, the Asia-Pacific Sleep Research Center, and the Industrial Design Research Center in Milan, Italy.

Some netizens questioned this matter, and searched for "ergonomic research center" on the official website of the University of Leuven in Belgium to no avail, and according to the page, the university's main research field does not have ergonomics, and there are no related entries.

Source: Mousse official website

In fact, whether it is a mattress or a bed frame, its technical barriers are not high, and the proportion of R&D expenses in the entire industry is almost 2% of revenue. Therefore, the high-tech advertised on the market is more of a marketing gimmick used to support high prices.

Under the inertia of "marketing first", the stagnation of performance growth made Mousse first consider borrowing new marketing models and channels to drive revenue, and then derived the marketing cooperation of live streaming, which led to a major marketing decision mistake that seriously damaged the brand value.

The live broadcast incident also exposed a major management loophole within Mousse. For high-end brands, maintaining brand value and image is always the first priority, and Wang Bingkun, who has been engaged in marketing for so many years, should understand this truth.

The author speculates that this cooperation may not have gone unnoticed by the executives.

In fact, as a listed company with standardized operation, Mousse is no different from a "small workshop" in terms of management and internal control, and there are constant lawsuits with dealers.

For example, Mousse has been reported by dealers for tax evasion many times.

In August 2021, Zheng Gang, who claimed to be a former dealer of Mousse shares, published an article titled "Mousse Company's Dealers Report the Company's Suspected Tax Evasion with Their Real Names" on his WeChat public account, and also publicly reported Mousse's suspected tax evasion through Weibo. Zheng Gang said that at the beginning of October 2020, Mousse forced Zheng to open a new store of 2,000 square meters due to the need for listing. Unable to meet Mousse's unreasonable demands, he was terminated by Mousse for a spurious reason.

Zheng Gang is the general agent of Mousse in Xiangyang, Hubei Province, and has been acting as an agent for 13 years, with a total of about 30 million yuan purchased from Mousse shares, most of which Mousse has not issued VAT invoices to dealers. In 13 years, Mousse only issued him more than one million VAT invoices.

Mousse Hubei Xiangyang agent Zheng Gang reported Mousse tax evasion with his real name

Source: Sina Finance

Then, in November 2021, Liu Qiliang, a former distributor who claimed to be Mousse shares, reported Mousse in his real name that he was suspected of evading huge taxes, and also mentioned that it was seriously corrupt internally. Liu believes that Mousse exploits loopholes in the national tax system in order to maximize the interests of enterprises, and the amount of tax evasion is staggering, estimated to be billions. At present, the WeChat public account can also find the reported article.

Source: Xiangyang Muqing WeChat public account

Qiu, a distributor of Hubei Anlu, also issued an article mentioning that Mousse had an illegal act of not issuing invoices. Li Mou, a Mousse dealer in Xinjiang, also said that he had not received a VAT invoice issued by Mousse shares in the eight years he had been a Mousse dealer.

According to the prospectus, there are more than 1,500 dealers of Mousse, and the sales revenue from the dealer side of Mousse is about 5 billion yuan per year, and the average annual value-added tax payable is about 600 million yuan (including the deductible part) calculated at a tax rate of 13%.

If what the above-mentioned dealers (including former dealers) said is true, a large proportion of their income has not been invoiced for value-added tax, then the accumulated tax evasion over the years will reach a staggering billions of yuan.

Regarding the report, Mousse once responded to the media that tax evasion is not true, and the company operates in compliance and pays taxes in accordance with the law; After a dealer's illegal operation, the company terminated its agency rights, and then spread rumors and slandered the company; The company's false performance is not true, and the income and other information disclosed in the prospectus are true.

However, there are more than a dozen real-name reports on the Internet, and it is obviously difficult to explain them all by "rumor-mongering" or "slander". If it is "rumor-mongering" or "slander", why doesn't Mousse use legal weapons to defend himself?

The weak internal control management system has also led to internal corruption problems in Mousse, and even the sentencing of employees for violating the law.

In November 2021, Mousse disclosed that two employees who were previously responsible for domestic production procurement merchandising and domestic production procurement development had been convicted of bribery by non-state employees and embezzlement of duties, respectively, and had been sentenced. According to the China Judgment Network, from January 2015 to October 2019, Yin Yurong, an employee of Mousse, repeatedly took advantage of his position to provide assistance to four suppliers of Mousse in terms of proofing new products and increasing orders in violation of regulations, and accepted bribes of about 1.0523 million yuan from suppliers, and from 2016 to 2019, Fang Houhui, an employee of Mousse, took advantage of his position to provide assistance to two suppliers of Mousse in increasing orders and picking up goods. and accepted bribes from suppliers amounting to about 131,300 yuan.

Criminal verdict on the crime of accepting bribes by former employees of Mousse, Fang Houhui and Yin Yurong

Source: China Judgments Network

Through the search of the judgment document network, it was found that some employees of Mousse were also involved in a number of criminal cases. Since the establishment of the company, many of its employees have been involved in embezzlement cases, involving hundreds of thousands of yuan. It is worth noting that many employees of the company used their positions to facilitate illegal operations, accept bribes, and seek benefits, which Mousse did not mention in its prospectus.

In addition, Mousse missed the payment of employees' social insurance, which was suspected of violating the labor law. Mousse said in its prospectus that the company did not pay social security provident fund for all employees, and found some objective reasons for this. In response to this situation, the China Securities Regulatory Commission requires the company to explain the specific situation and reasons for the payment of social insurance and housing provident fund, and disclose the response plan.

Whether it is tax evasion, employee violations or internal corruption, for Mousse, it is always endless and uncommon.

Mousse does not seem to have learned the lessons of management and internal control, and has re-examined and improved its own management system and internal control system. This also indirectly led to the occurrence of the "live broadcast farce" that completely deviated from the company's brand strategy.

In the consumer industry, whether the brand is high-end or not, whether it can be recognized by consumers, and finally have to return to the product itself to speak.

Relying on marketing methods that cater to the psychology of Chinese consumers and the characteristics of the times, and are enough to be written into the classic cases of Harvard Business School, Mousse's starting point is very high. Should have been concentrating on making products but chose to focus on marketing gimmicks for 12 years, Mousse's major decision-making mistake seems to be accidental, but it is actually the inevitable result of despising product development and ignoring management and internal control construction.

The destruction of Mousse's high-end brand image by this incident is self-evident. After that, I believe that it is difficult for Mousse to call itself a "high-end foreign product", and it is difficult to enjoy the "high premium" of high-end brands. The company is facing not only the "verbal criticism" of the media, but also the collective "abandonment" of consumers, which will ultimately have fatal consequences on the company's business performance and sustainable development.