A layout that started in 2020 was finally settled.
Li Ning's largest shareholder, Viva China (HK8032), will make another move to win the British shoe brand Clarks.This is the third international brand in Weifang China controlled by the Li Ning family to be recorded in 2020.
Compared with the "Li Ning" brand, Li Ning (HK2331)'s largest shareholder, Vivian China, is much more low-key.However, with Viva China as a platform, the Li Ning family's overseas mergers and acquisitions process is accelerating. In 2020, Viva China won the controlling stake in the local brand Bao Shilong in Hong Kong, China; in early 2022, it completed the acquisition of the Italian century-old luxury brand Amedeo Testoni (iron Lion Tony).
In recent years, with the rise of "national tide", the competition of local sports brands in the domestic market has become increasingly fierce, and it has become an inevitable choice to expand overseas markets.Behind the extraordinary expansion of China is the pressure of competition from the local sports brand Red Sea.
Is successive outbound mergers and acquisitions a panacea for maintaining a competitive advantage?On June 7, Li Yingtao, a senior analyst in the brand retail industry of Analysys, replied in writing to the reporter of "Daily Economic News" that overseas mergers and acquisitions is a necessary step, but after that, the problem of (how to realize) the localization of overseas markets must be considered.
Acquisition of Clarks to be finalized
The Li Ning family has another son in overseas mergers and acquisitions
If all goes well, Viva China, controlled by the Li Ning family, will be the third international brand in 2020.According to the announcement, after the resolution was passed at the extraordinary general meeting of shareholders held on June 15, its acquisition of the British footwear brand Clarks (Qile) will be finalized.
According to public information, the Clarks brand was founded by brothers Cyrus Clark and James Clark in 1825. Its products are sold to more than 100 countries and regions around the world. At its peak, 54 million pairs of shoes were sold every year, which is equivalent to 103 pairs of shoes sold every minute. out.
Clarks are not cheap.In the Clarks Tmall flagship store, the reporter found that many of its products cost more than 1,000 yuan.
In recent years, Clarks' performance has been significantly dragged down by the epidemic, and its revenue has been nearly halved.The announcement shows that in the past two years, Clarks' revenue was 779 million pounds and 926 million pounds respectively; the net profit was -151 million pounds and 53 million pounds respectively.Compared with 2019 before the epidemic, Clarks' global revenue reached nearly 1.4 billion pounds.In addition, so far, Clarks' main market is still the European and American markets. In the past three years, its revenue in the main market has accounted for more than 80% of Clarks' total revenue.
Viva China said in the announcement that after the epidemic, the board of directors believes that Clarks has growth potential by entering the Asian market (especially the Chinese market) and increasing the utilization rate of the online platform.In addition, the Board believes that the transaction will create synergies between Clarks and the multi-brand footwear and apparel business (in marketing, supply chain solutions and distribution channels) and further expand the Group's global market presence.
Image source: Screenshot of Clarks official website
Pursuant to the agreement, upon completion of the acquisition, Clarks will become an indirect non-wholly owned subsidiary of Viva China.According to the announcement, Viva China will continue to develop Clarks business through measures such as improving operational efficiency, redefining customer classification and strengthening brand building.
Viva China said in the announcement that it believes that the management team of the multi-brand footwear and apparel business and Viva China can turn around Clarks' financial performance, thereby expanding the group's source of income.At the same time, the board also believes that the global retail market will recover after the epidemic, and Clarks' business performance will also improve.
Clothing retail expert Ma Gang told the reporter of "Daily Economic News" through WeChat on June 6 that conventionally, mergers and acquisitions mainly focus on three aspects, the tangible assets of the other party, such as production capacity, etc.; intangible assets, such as brands Value, intellectual property, etc.; value-added parts, such as market complementarity and R&D complementarity between the two parties.Therefore, overseas expansion, on the one hand, the acquisition of the target is cost-effective, and the acquirer has a strategic plan for expansion, so it is easy to form an acquisition.Through multiple brands, Viva China integrates the large clothing industry, and multiple brands can form resource integration and complementarity.
Acquired Bao Shilong, Amedeo Testoni successively
The Li Ning family is accelerating mergers and acquisitions and has acquired at least two brands in the past two years.
In July 2020, Viva China completed the acquisition of a controlling stake in Bao Shilong, a local apparel brand in Hong Kong, China.Bao Shilong is mainly engaged in the retail and distribution of casual clothing. In the announcement at the time, Feifei China said that Baoshilong has the potential to further promote the brand in China; in early 2022, Feifei China completed the acquisition of the Italian century-old luxury brand Amedeo Testoni.
Regarding the reasons for the acceleration of Li Ning's overseas mergers and acquisitions in recent years, Li Yingtao, a senior analyst in the brand retail industry of Analysys Analysis, told the "Daily Economic News" reporter in writing on June 7 that on the one hand, there are resources, funds and capabilities. The basic factors for overseas mergers and acquisitions; on the other hand, facing the future development, for the Li Ning brand, the Chinese market will gradually become saturated in the future, and to maintain sustainable growth, mainly rely on the overseas market.
Image source: Screenshot of Li Ning's 2021 annual report
With the intensified competition of local sports brands, mergers and acquisitions are becoming a "sharp weapon" for each brand to expand the market.
Thanks to the popularity of "national tide", the financial performance of local sports brands in 2021 will be dazzling.In terms of revenue scale, Anta still ranks first among local sports brands, with revenue approaching 50 billion yuan, and net profit increased by 49.55% year-on-year, reaching the highest growth rate in ten years; while Li Ning has exceeded 20 billion yuan in revenue. , the net profit growth rate reached 136.14%; Xtep, which ranked third, also achieved a breakthrough in revenue and entered the tens of billions camp.
Behind the rising revenue, the "hand-to-hand battle" of local sports brands is becoming more and more intense. After telling the story of "national tide", overseas mergers and acquisitions have become the key to expanding the market of local sports brands.
Outbound M&A is a necessary step in internationalization
But challenges lie ahead
Everyone wants to discover the next "FILA".
In 2009, Anta bought the right to use and operate the trademark of FILA, a century-old Italian sports brand, in China from Belle International at a price of 332 million yuan.The 2021 annual report shows that in Anta Group's 49.328 billion yuan revenue, Anta and Fila account for the same (48.68%, 44.24%).In addition to Fila, the outdoor sports brand Arc'teryx, the ball manufacturer Wilson and other brands have all been taken over by Anta in recent years.
In 2019, Xtep launched a multi-brand and international development strategy, and successively acquired brands such as Saucony, Merrell, and Palladium.
Regarding the acceleration of the pace of mergers and acquisitions of local sports brands in recent years, Li Yingtao said that in 2021, Li Ning's revenue will exceed 20 billion, Anta's revenue will approach 50 billion, and the revenue scale and profitability are not bad compared with international brands.In this case, for sports shoes and apparel brands, more consideration is given to the multi-brand matrix and further regional expansion.Through the acquisition of overseas brands, the regional expansion of overseas markets is achieved, which is also in line with the current development stage of the brand.
Competition is becoming increasingly fierce, and it seems that mergers and acquisitions of overseas brands are becoming a "good medicine" for local sports brands to expand their domestic and overseas market shares.
Li Yingtao believes that overseas mergers and acquisitions is a method with a relatively high success rate and efficiency. Although the initial capital cost of mergers and acquisitions is relatively high, it can be exchanged for time and efficiency advantages.
He also said that in the international market, compared with Anta and Li Ning, brands such as Nike and Adidas will have stronger competitiveness.If you rely on local brands to attack, it is actually more difficult, and at the same time, you must take into account the localization problems in overseas markets.Through overseas mergers and acquisitions, the problem of localization and the recognition of brands by local consumers have been solved to some extent.
But after successful overseas mergers and acquisitions, are local sports brands taking a step towards internationalization?In Ma Gang's view, the answer is no.He believes that the introduction of foreign brands to develop the domestic market is not about going overseas. Going overseas means selling domestic products to foreigners.Internationalization refers to "income internationalization", not just "internationalization" if a foreign brand is attached.
Li Yingtao believes that overseas mergers and acquisitions of local sports brands are also one of the paths for brands to go overseas, and it is also one of the steps for local brands to go overseas.After the completion of overseas mergers and acquisitions, the brand can gradually understand the operation system of the overseas market, accumulate local resources and talents, understand the characteristics of local localization, and then copy these experiences to the brand.Otherwise, local brands rushing abroad may encounter Waterloo, so before that, overseas mergers and acquisitions is a necessary step.
On June 7, Viva China replied that for the acquisition of Clarks, there is currently no other information to disclose except the official announcement.
Reporter |Ke Yang
Editor |Liang Xiao Lu Xiangyong Du Hengfeng
Proofreading |Sun Zhicheng
Source of cover image: Screenshot of Clarks official website
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