Image source @ Visual China
At three o'clock in the afternoon, in the Hongxing Erke store on the fourth floor of a shopping mall in Tongzhou, a few people were selecting goods, and the clerks interspersed with it, not looking rushed.
This shopping mall is adjacent to the subway station, and the fourth floor is located with sportswear stores such as ANTA, Adidas, Nike, etc. During the Tanabata Festival, the crowds are weaving, and some of the goods in the Hongxing Erke store have also launched a "buy one get one free" promotion.
"At the end of July, there were a lot of consumers shopping, and every day was very busy, and in August, the flow of people began to fall. Overall, the daily traffic is indeed a little more than before. A clerk of Hongxing Erke told titanium media App that consumers have come to find summer clothes in recent days, but they have all been sold out at the end of July, and now there are only new autumn clothes.
Several people in the store are shopping
In addition to Hongxing Erke, other stores on this floor are still selling summer clothes, and there is still a lot of inventory.
A random interview with a consumer said: "It is autumn now, I want to change into a few autumn clothes, see here is a Hongxing Erke, come to see, the quality of their products are very good, there are many friends in the recommendation." When it comes to wild consumption, individuals are still not very recommended, and it is very good to pick what you can use. ”
Titanium media App noted that within half an hour, people entered the store from time to time to inquire and shop, but it was no longer the scene of the previous rush and empty, out of stock, after the "wild consumption", the current stage of Hongxing Erke's passenger flow fell back to normal levels.
<h2>Behind the "wild consumption", how is Hongxing Erke living? </h2>
The "darling" in late July undoubtedly belongs to Hongxing Erke.
When a domestic brand that does not make much money in the hearts of consumers "donated a year's profits" to the Disaster Area of Henan, netizens broke through their defenses and rushed into the live broadcast room to "wild consumption".
In the Douyin live broadcast room, the sales volume from July 21 to 23 alone has exceeded the total sales volume in the first half of this year. Jingdong data also shows that Hongxing Erke's sales on the 23rd increased by more than 52 times year-on-year, and the overall sales of the National Tide Sports brand from July 22 to 23 increased by more than 280% year-on-year.
Wu Rongzhao, the boss who has been doing business for many years, probably does not think this is a good phenomenon, he pedaled a shared bicycle to the live broadcast room in the early morning to persuade consumers to consume rationally, but the public screen is still full of words such as "persuade you not to be nosy", "you are so wild, why should we be rational", etc., without giving Boss Wu face.
The "miracle" of Hongxing Erke is still being staged.
At that time, the Tokyo Olympic Games had just started, and Hongxing Erke did not invest too much advertising, but netizens still bound this domestic brand with the Olympic Games, making its popularity high. According to the data released by Douyin E-commerce, the sales of platform sporting goods during the Tokyo Olympic Games increased by 365% year-on-year, of which Hongxing Erke ranked first.
Behind the explosion of Hongxing Erke, the sinking and floating of the shanghai over the years, compared with Li Ning and Anta who came out of jinjiang together, all the way is also stumbling.
In November 2005, Hongxing Erke was listed on the main board of Singapore, becoming the first domestic sports brand to be listed overseas in China. According to public information, the listing raised about 200 million yuan, Hongxing Erke used this fund to expand production capacity, and invited Chen Xiaochun as a spokesperson, angrily brushing a wave of existence.
In 2008, Chen Xiexia, a member of the Chinese women's weightlifting team sponsored by Hongxing Erke, won the first gold medal in the 2008 Olympic Games, and the brand reputation was greatly enhanced, and the slogan "TO BE NO.1" also spread throughout the country, and Hongxing Erke opened an expansion with more than 7,000 stores at its peak.
With the rapid cooling of the "sports fever" brought by the Olympic Games, after 2010, the inventory crisis suddenly spread to the entire industry, and brands such as Li Ning and Anta ushered in a wave of store closures.
In order to avoid dealer closures, Hongxing Erke not only spent 335 million yuan on dealers in Beijing, Shanghai and Tianjin, but also provided interest-free short-term loans of up to 467 million yuan to dealers in some provinces and cities. This also led to the operating expenses of Hongxing Erke reaching 2.243 billion yuan in 2010, and the net profit loss of the year was 1.635 billion yuan, down 1000% from the same period of the previous year.
In 2011, Hongxing Erke broke a financial fraud scandal, and then confirmed by the independent agency nTan that the amount of inflated in the financial report was 1.154 billion yuan, and Hongxing Erke's reputation fell to the bottom, and it was also suspended for nearly a decade, and the stock market value stayed at 290 million US dollars, about 1.88 billion yuan.
In 2015, Hongxing Erke encountered another fire, the warehouse of Building 3 in the factory area caught fire, and ignited the adjacent Building 2 and Building 1, Quanzhou dispatched nearly 300 firefighters and 50 fire trucks, it took 11 hours to extinguish the fire. This fire burned nearly half of hongxing erke's production equipment, and Wu Rongzhao once recalled bitterly that "the cash on the account is only enough to last a week", but fortunately survived.
In the middle of 2019, Hongxing Erke launched a new line of children's brands, adopting the traditional business model of franchise and distribution, still focusing on third- and fourth-tier cities, while extending to second-tier markets. At the same time, Hongxing Erke will make the "county and prefecture level" dealer channels bigger and stronger as a marketing strategy to focus on development in the future.
After a series of operations, Hongxing Erke's financial data has greatly improved. According to the information on the official website of the Singapore Stock Exchange, Hongxing Erke lost 298 million yuan in 2018, lost nearly 3 million yuan in 2019, and in the first half of 2020, the loss shrank to 600,000, not as huge losses as netizens said "more than two hundred million".
Titanium media App noted that after the wild consumption boom, Hongxing Erke's sales also ushered in a sharp decline. According to the data of Jitter Chacha, the average sales of the official live broadcast room of Hongxing Erke Douyin in the past 15 days were 1.7689 million yuan, which was a cliff-like decline compared with the end of July.
Data source @ jitter check
A business observer told Titanium Media App: "Consumer enthusiasm will always retreat, which is normal, but in the footwear industry, the most important thing is to see whether the cash flow is sufficient." Usually, the money to sell a pair of 100 yuan products, deducting the store rent, marketing expenses, employee wages, etc., only 1-10 yuan is really earned in the pocket. He stressed that the surge in sales of Hongxing Erke some time ago has brought a lot of cash flow, which can mobilize more resources, which can be said to have a certain help to the brand.
After wild consumption, how to go in the future of Hongxing Erke is also a difficult problem facing Wu Rongzhao and the management.
<h2>The national tide has swept the sportswear industry, can Hongxing Erke glow the "second spring"? </h2>
Nowadays, the era of domestic brands has arrived.
According to the "Baidu 2021 National Tide Pride Search Big Data" report, in the past five years, the proportion of Chinese brand search popularity in total brand popularity has increased from 45% to 75%, which is 3 times that of overseas brands. China Renaissance Capital also mentioned in the "China Innovation Report 2021" that the new generation of consumers pay more attention to "domestic products", "interesting" and "interest", and have a natural good feeling for domestic products.
Hua Xizi entered Tmall in 2018, with annual sales soaring from 43.19 million to 1.13 billion in 2018, growing into a unicorn in the beauty industry; Yuanqi Forest surpassed international brands for the first time in 2020 Double 11, and won the first place in sales of Tmall and Jingdong water drinks; old brands such as Lao Gan Ma and Great White Rabbit also relied on the "national tide" to set off a screen brush boom.
Lin Xi (pseudonym), who does public relations business in Beijing, told Titanium Media App: "Girls have a great demand for cosmetics, I used to buy foreign big brands, these two years only found that domestic products are really high quality and low price, now buy cosmetics only pick domestic, more suitable for Chinese skin type." ”
The same is true of the sportswear industry, especially after the "Xinjiang Cotton" incident, domestic consumers' support for domestic products reached a new high, and the sales of brands such as Li Ning and ANTA soared, and ANTA even surpassed Adidas to become the world's second largest sporting goods group.
In the past 5 years, it is precisely the time for the rise of Li Ning and Anta.
In 2015, Li Ning readjusted the focus of channel relations, shifted from direct sales to distribution, and also began to vigorously develop e-commerce channels. At the same time, in 2018, a catwalk with the theme of "Enlightenment" was staged at New York Fashion Week, and with its refreshing fashion brand design, it blew up a "national tide wind" in the fashion circle, and continued to launch high-end product series such as "designer joint model", which further promoted the brand value.
Li Ning "Enlightenment" series
Anta Sports adjusted the channel management regional system to the customer system, reduced the management level, controlled the initiative in store operations, and successively acquired italian sports brands FILA, Archaeopteryx parent company Amer Sports, Salomon, Wilson and other high-end outdoor sports brands, adopting a "single focus, multi-brand, omni-channel" development strategy, the brand was able to rise strongly.
Looking back at Hongxing Erke, who is also of the Jinjiang family, why did he fall behind during this period? The core reason is that the investment in scientific and technological research and development is not enough, the product is not "hard core", even if more marketing is done, the brand image cannot be established.
Titanium media App noted that Hongxing Erke has also hired many well-known designers with high salaries and spent huge sums of money to set up a footwear research and development technology center, but the effect is always unsatisfactory. In Hongxing Erke's store, from Nike's AJ1 to Adi's off-white, including Li Ning's many shoe styles, you can find "familiar" shoes, which makes Hongxing Erke repeatedly caught up in the plagiarism controversy.
Hongxing Erke's shoes are caught in the plagiarism storm
In June 2020, the video "Why Can I Buy Fake Shoes in a Real Shoe Store" released by the big V of Station B "Half Buddha Immortal" added a touch of "embarrassment" to Hongxing Erke.
In this video, in order to dilute the fact that the influence of the Hongxing Erke brand is weak, the half-Buddha immortal deliberately despises the shoe circle culture, and said: "The cost of making real shoes and making fake shoes is not very large, saying that wearing shoes is only an assembly line industrial product, and the raw material cost of all assembly line industrial products is very low." The official does not care about real shoes or fake shoes, as long as the brand side and dealers can make money. ”
Source @ Half Buddha Immortal B station video screenshot
This "just right meal" video triggered a public boycott by netizens, and in fact weakened the brand value of Hongxing Erke.
Li Ning, Anta, at the beginning also relied on the "wild road", in the early years, whenever Adi, Nike and other international manufacturers develop new products every quarter, there will be some album dealers, holding the latest product design drawings of international brands in this quarter, looking for various sports brands to negotiate cooperation.
Through the "buy sample copy board", Li Ning and Anta were able to launch products that followed the trend and made a lot of money.
But these manufacturers also know that plagiarism cannot last long, so they invested money in research and development. Since 2008, the annual R&D revenue ratio between Li Ning and ANTA has reached about 2%, while Hongxing Erke spent about 10 million yuan on R&D in 2008, accounting for 0.3% of the year's revenue. In 2015, Hongxing Erke's R&D investment once accounted for 4.8% of revenue, and in 2016, it fell back to 2.7%, and around 2017, it did not announce R&D investment.
As of July 30, 2021, Tianyancha data shows that Hongxing Erke's appearance patents are only 53, while Xtep is 756, anta is 904, and even one-tenth of them cannot reach, naturally it is not innovative.
Relying on the product strength accumulated by long-term research and development innovation, as well as the appropriate business strategy, Li Ning and Anta have begun to take off.
So, what enlightenment can Hongxing Erke draw from the rise of these manufacturers?
Anta's high-end strategy of "buying, buying and buying" requires super cash flow as support, and it is not suitable for Hongxing Erke, Li Ning borrowed the rise of the "national tide", but it is worth Doing homework for Hongxing Erke.
Titanium media App noted that since 2005, Hongxing Erke has been sponsoring domestic and foreign tennis events, including many well-known events such as the China Open Tennis Championship and the WTA Istanbul Year-end Finals, which have a certain brand reputation in the tennis market.
In addition, the young people of the Z era are two-dimensional enthusiasts, and Hongxing Erke can unite with the B station UP master, whether it is jointly making tide shoes, or through video business cooperation, avoiding brainless praise, and can also tell a better story of the national tide brand.
Unlike the impression of netizens, Hongxing Erke has always been very good at marketing, from sponsoring athletes in the 2008 Beijing Olympic Games, to becoming a big financier of professional tennis events, and even investing in network movies, boss Wu Rongzhao is definitely a first-class marketing expert.
In fact, Hongxing Erke has already begun to operate in this regard. For example, at the end of March 2020, Hongxing Erke participated in the online "2020 Shanghai Fashion Week", launched four new products, as well as the application of metallic color and 3M reflective materials, which triggered a small discussion; and increased cooperation with the B station UP owners to produce a series of video works to enhance the brand voice among young people.
Hongxing Erke launched a new series of products at Shanghai Fashion Week 2020
However, due to Hongxing Erke's long-term focus on third- and fourth-tier cities, brand recognition still needs to be improved, coupled with the lack of investment in research and development, there is still a long way to go in design.
"From the perspective of product positioning, Hongxing Erke benchmarks clothing brands such as Decathlon in Europe and Uniqlo in Japan, does affordable and trendy products, connects with ordinary consumers at the marketing level, does a good job of word of mouth, and does more explosive products, which is a sustainable development road, and the high-end route is not suitable for Hongxing Erke." The business observer told Titanium Media App.
In general, the popularity of Hongxing Erke is an excellent opportunity, if you want to take advantage of the rise of the national tide East Wind, you must first eradicate the evil disease of plagiarism, and then work products and marketing, whether it is a joint explosive product, or to participate in fashion week activities, you need to invest more energy, Hongxing Erke can complete this counterattack, it remains to be seen. (This article was first published on the Titanium Media App, and the author |.) Liu Muzong)