The picture is from the official microblog of famous creative products
Welcome to the wechat subscription number of chuangshiji
By Wei Jie
“Ten yuan store” is a step closer to listing.
On September 23, mingchuangyu submitted a prospectus to the US Securities and Exchange Commission, planning to list on the New York Stock Exchange, raising $100 million.
According to the prospectus, in fiscal year 2019 (from July 2018 to June 2019), the revenue of mingchuang Youpin was RMB 9.39 billion, with a loss of RMB 290 million; in fiscal year 2020 (from July 2019 to June 2020), the revenue was RMB 8.98 billion, a year-on-year decrease of 4.4%, and a loss of RMB 260 million. Affected by the epidemic, the same store sales of mingchuangyu products in China fell by 32.6% this year, and its stores in overseas markets were closed by more than 20%.
Before the IPO, ye Guofu, founder, chairman and CEO of mingchuangyupin, held 80.8% of the shares, while Hillard capital and Tencent held 5.4% respectively. In September 2018, mingchuang Youpin obtained a total investment of 1 billion yuan from Tencent and Hillhead capital, which was its first external financing since its establishment in 2013.
Relying on its own famous brand, the company has opened 4222 stores in the world, of which direct stores account for only 3.1%, and third-party stores account for 96.9%. The third-party stores include franchise stores and dealer stores. Mingchuang high-quality products do not build their own factories, warehouses, or even open their own stores. Through the integration of upstream and downstream through a brand, the annual sales volume reaches 19 billion yuan.
“Fast store opening, cheap things, and often accused of plagiarism” is the general perception of the public for famous and innovative products, and product quality problem is also a time bomb of famous and innovative products. On the same day when the prospectus was released, the Shanghai drug administration announced the quality inspection announcement that the 2B class carcinogen trichloromethane was detected by the famous nail product (Guangzhou) limited liability agency, which exceeded the national standard limit 1472 times.
Through the prospectus, we can deeply ignite finance and economics to dismantle the logic and hidden worries of famous and innovative products running.
Ten billion business of “ten yuan store”
According to the prospectus, mingchuangyu is “a fast-growing global value retailer offering a variety of design led lifestyle products”. The product range covers 11 categories, including household daily necessities, small electronic products, beauty and skin care products, and more than 8000 core SKUs.
In the minds of most consumers, the image of mingchuang superior products is the upgraded version of “ten yuan store” at the entrance of shopping mall and subway, a low-cost grocery store with Japanese style.
It is such a daily use department store that “more than 95% of its products are priced below 50 yuan”, which has become the “world’s largest retailer of lifestyle products” in the frost Sullivan report. In 2013, mingchuangyoupin opened its first store in Guangzhou and established its brand “miniso”. As of June 30, 2020, there are 4222 stores in more than 80 countries and regions, including 2533 in China.
According to the prospectus, Gmv will reach 19 billion yuan in 2019, with revenue of 8.98 billion yuan in fiscal year 2020.
Mapping / Shenzhen finance and Economics
The two largest sources of operating revenue are sales of goods and fees charged to franchisees. As of June 30, 2020, the sales revenue of commodities is 8.1 billion yuan, accounting for 89.7%. The “license fee, royalty based on sales and management and consulting service fee” charged to franchisees is 590 million yuan, accounting for 6.6%.
Ye Guofu summed up the method of playing famous and innovative products as “three high and three low”, namely “high appearance value, high quality and high efficiency; low cost, low gross profit and low price”. Through design, we can grasp the sense of “series, simplicity and fashion” to create high appearance value. We can refer to IKEA.
The core of high quality is to find a good supplier, “the first person should come out in person, place one million or ten million orders at a time, and settle accounts through cash.” Ye Guofu identified the pain point of the long accounting period of the factory, and attracted large OEM factories and famous brand suppliers. High efficiency and low cost correspond to each other. The products of famous creative products are only from the warehouse to the store, and there is no intermediate channel.
Guotai Junan Securities research paper summarized the cooperation mode between famous innovative products and suppliers as “price based on quantity + buyout customization + non pressure payment”: jointly developed commodities with suppliers, deeply involved in product design, bought out copyright, formed exclusive source of goods, reduced costs through large-scale procurement, and attracted more than 800 suppliers with the fastest 15 day payment collection.
Ye Guofu’s understanding of retail is often “surprising”, such as “high price + high gross profit = bankruptcy, low price + low gross profit = richest man”. He has also publicly expressed his disdain for online channels, “don’t listen to Ma Yun’s bluff, as if there is no way out without e-commerce or Internet.” Online + offline is not the essence of new retail. If the product is good enough, it will sell well both online and offline. Online sales are very small for us. ”
However, an epidemic has severely damaged the famous and innovative products that rely on offline channels.
Affected by the epidemic situation, as of June 30, 2020, the revenue of famous creative products in China has decreased from 6.4 billion yuan to 6 billion yuan, a decrease of 5%, and more than 20% of its stores in overseas markets have been closed. Compared with the first half of 2019, the same store sales of mingchuang products in China in the first half of 2020 decreased by 32.6%.
In the prospectus, mingchuangyu products made a risk warning: due to the delayed payment to the suppliers, the financial viability of the suppliers, franchisees and other business partners, the supply chain was interrupted, and the collection was difficult, which adversely affected the business and business performance of mingchuangyu products.
Mingchuang superior products no longer think that e-commerce channels are dispensable.
According to the prospectus, consumers are increasingly accepting e-commerce, and the amount of consumption generated through e-commerce platforms is increasing. The e-commerce plan of mingchuangyu products includes expanding products and sales channels through cooperation with e-commerce platforms. “We cannot guarantee that we will be able to establish an attractive, user-friendly and secure online sales channel, and we may not be able to meet the changing expectations of online shoppers on a sustained basis, which may put us at a competitive disadvantage, damage our reputation and have a significant adverse impact on the growth of our e-commerce business and operating performance.”.
Open a shop, can’t stop at all
Opening stores constantly is an important way for the growth of famous and innovative products.
As of June 30, 2020, there are 4222 stores in more than 80 countries in the world, including 2533 in China.
“If you want to do a large-scale business, you must continue to open stores,” Wang Guoping, a senior consultant at lianshang.com, said to shenran finance and economics. The single store revenue of mingchuangyu products has been very difficult to go up, and the bright spot will be the growth of overall scale. This strategy is to promote strengths and avoid weaknesses. “The profit-making characteristics of famous and innovative high-quality products is to achieve revenue growth through light mode and large-scale operation. In short, the more stores are, the more money they make. They do not pursue high gross profit of single product or single store profit. Sales base to a certain extent, even if only a few cents, the total is very large. At the same time, the more stores, the less the backstage cost is allocated to a single store, and the profit can run out on the contrary. ”
But it’s not easy to open a shop quickly. In the case of fierce competition in the domestic market and the saturation of some regional markets, the expansion of overseas stores has become a way to maintain the growth of famous and innovative products.
As of June 30, 2020, there are 1689 stores in overseas, accounting for 32.7% of overseas revenue. However, affected by the epidemic situation, the store opening plan of mingchuang high-quality products has almost stopped this year. In the first quarter and the second quarter of this year, the total number of stores of famous and innovative products increased by 12 and decreased by 1 respectively.
Mapping / Shenzhen finance and Economics
In the prospectus, mingchuang Youpin reminds that the expansion speed of overseas stores will slow down in the first half of 2020, and there is no guarantee that the expansion of overseas stores will continue to slow down or even fail in the future.
In the prospectus the first mock exam is called franchisee, which is similar to franchising of chain stores. It is a secret for the rapid expansion of the brand name products. However, there are also risks in this model.
“You contribute, and the company contributes. Mingchuangyoupin is an investment project, and you are an investor. ” A person in charge of the Investment Promotion Department of North China region of mingchuangyu told shenran finance and economics that after joining, all the goods in the stores were owned by the company, and they were sold in the stores free of charge. 38% of the turnover (33% for food products) was the profits of the franchisees. Store management and goods scheduling are all under the unified responsibility of famous and creative products, and the expenses of store construction and period are borne by franchisees themselves.
In terms of expenses, the overall investment budget is about 1.8-2 million yuan due to the operating area of the store of more than 200 square meters, plus the decoration and rent of the store. It includes brand use fee of 80000 yuan / year and goods deposit of 750000 yuan (full refund if the contract is not renewed at the expiration of the contract). The company arranges the decoration uniformly, and the decoration fee is charged in advance at 2800 yuan / m2 (including basic decoration, shelves, accessories and cash register equipment), and the more is returned and the less is paid after installation.
The main features of the first mock exam are: franchisees undertake the capital expenditure and store operation expenses of the stores; the stores are sold to the consumers before they sell the products, and the title of the products is retained; the name and premium products are paid to provide franchisees with the management and consulting services; and the sale proceeds are distributed to the first part of the products, and the franchisee retains the rest.
Among the 4222 stores in the world, 96.9% of them are non self owned third-party stores. In this mode, the famous and innovative high-quality products do not have to bear the risk of store operation. As long as there are enough shops, the scale effect can be produced.
In the prospectus the first mock exam of quality products has been able to frankly tell the risk of this model. “The revenue of each MINISO store is a better indicator of the performance of each store, but the name of the best product is not intended to further disclose the same store sales”.
The reason why this data is kept confidential is inseparable from the development mode of famous innovative products. According to the prospectus, the expansion of stores is the main driving force for the growth of revenue of famous and innovative products. And one of the purposes of the listing funds is still to open more stores.
Although mingchuangyoupin does not want to disclose the specific income of each store, mingchuangyupin admits that there has been a big fluctuation in the revenue of each store. In fiscal year 2020, the revenue of single store of mingchuang superior products decreased by 19.8%, mainly due to the outbreak of the epidemic, the continuous expansion in China and the world, the increase in the number of stores in low-end cities and low market share, and the increasingly fierce market competition.
Compared with the second half of 2018, the same store sales of mingchuang products in China in the second half of 2019 decreased by 3.8%, mainly due to the intensification of domestic competition. Compared with the first half of 2019, the same store sales of top quality products in China decreased by 32.6% in the first half of 2020, mainly due to the impact of Xinguan epidemic.
According to the prospectus, franchisees usually recover costs within 12 to 15 months after the store opens. Mingchuangyu said: in the near future, the same store sales of mingchuangyu products may continue to fluctuate significantly, and are not expected to increase significantly, but will further decline.
A number of franchisees said in an interview with the media that, due to the low unit price of goods, the number of customers largely determines whether or not to make money, while the location of stores largely determines the flow of people. Not every famous and innovative product can make money. Some franchisees said that with the intensification of competition, business is not as good as before.
Nevertheless, it can be predicted that mingchuang Yipin will still open large-scale stores in the future. In January 2019, the slogan of “hundreds of billions of stores in one hundred countries” was called out by famous innovative products, that is, by 2022, the number of stores in 100 countries and regions around the world will reach 10000, and the revenue will exceed 100 billion yuan. During the epidemic period, ye Guofu adjusted the original plan of opening stores in 2020, raising the goal of opening 600 new stores in the world to 1200.
At that time, will more and more dealers find that: the stores of famous brand products are more and more open, but they are less and less profitable?
To be listed on the market of famous and innovative products, dimension reduction version of the spelling more?
Like pinduoduo, which also focuses on low price, mingchuang superior products are also facing disputes such as infringement and product quality.
Although mingchuangyu said in the prospectus that it has a network of 49 designers and 25 design partners, and has established authorization with 17 popular brand IP, even so, the infringement of mingchuangyu products is still like a time bomb, which disturbs the confidence of consumers.
In January, the Shenzhen designer brand finerworld released the official account of the famous article, “do you dare to respond?” 》, accusing mingchuang of plagiarizing the brand products, and claiming that several Brooch products sold in mingchuang stores are highly similar to finerworld IP in design. Prior to this, manshuraton and LEGO had sued famous products for infringement of design patent rights.
Guangdong Baoyang Investment Management Co., Ltd., the brand operator of mingchuang Youpin, has been cancelled, but according to the Changjiang business daily, the company has been involved in 68 legal proceedings, of which 6 have become infringement lawsuits. At present, mingchuangyupin (Guangzhou) Co., Ltd., an affiliated company of mingchuangyupin, which is controlled by Ye Guofu, has been involved in a number of legal proceedings, including 4 infringement of design patent rights, 4 copyright ownership and infringement disputes, and 3 infringement of the right of information network dissemination of works.
Source of lawsuit type of famous creative products / tianyancha
In December 2018, when ye Guofu responded to the infringement, he also said, “do you know how Trump’s daughter responds to the Shanzhai? In the field of design, we always learn from each other without imitating such “golden sentences”.
“Marvel, Hello Kitty, our naked bear, pink leopard, Sesame Street…” Taking advantage of big brand IP, although famous and innovative products are gradually getting rid of the original image of “ten yuan store”, the relevant risks of IP licensing are also disclosed in the prospectus. “If we are unable to expand or maintain cooperation with these IP licensors in the future, it may be difficult for us to find qualified alternative IP licensors, which may adversely affect our daily operations and consumer experience.”
At the same time, IP two-year agreement will also bring inventory risk. “Our agreements with intellectual property licensors usually last two years. If we are unable to sell all of the co branded products in our inventory within a reasonable time after the expiration of the relevant agreement, we will not be able to continue to sell these products and may have to destroy our inventory. This will have a negative impact on our business performance and financial condition. ”
In addition, in terms of product quality and safety red line, famous and innovative products have also triggered regulatory red line.
In September 23rd, the Shanghai drug administration announced the first phase of quality supervision notice for cosmetics inspection and supervision in 2020. It was made by named Chuang Gao (Guangzhou) Co., Ltd., and the stripping nail polish produced by weichake (Tianjin) Biotechnology Co., Ltd. detected 2B type carcinogen trichloromethane up to 589.449 g/g, exceeding the national standard limit 1472 times. On June 18, the Shanghai Municipal Administration of Market Supervision announced that a “kakao friends” single ear Apple bowl sold by mingchuang high-quality products was detected to have excessive melamine migration. In January 2018, one plus one pearl plus the Eyeshadow pen (bronze) was detected excessive arsenic in harmful substances.
Source / official website of Shanghai Drug Administration
In July 2019, Wang Guangyong, brand director of mingchuangyu products, publicly admitted that in the past, mingchuangyu products ran too fast and did not keep up with the management of the supply chain.
The same day, the same day, the same day, the 2B released 1472 times the nail polish exceed the standard.
In addition, it’s no secret that famous, creative and excellent products use P2P platform to divide Ribao into franchise mode. Fenribao’s 2015 and 2016 annual reports show that its major shareholder is Guangdong Saiman Investment Co., Ltd., which is 99.8% owned by Ye Guofu. In the case of insufficient funds for franchisees, they can use the previous franchised stores for mortgage loans, and open stores through the financing of Alipay. The funds raised can be used to pay the brand usage fee and deposit, etc., so as to realize the internal circulation of funds. No matter how the actual operation of the stores is, famous and innovative products can achieve “guaranteed income in drought and flood”.
Source / fenlibao official wechat
The latest news is that fenribao shut down the platform server on August 15, 2020, which may be to reduce a dispute for the controversial mingchuang superior products. Without the supply of this gray “cash cow”, it is necessary to draw a question mark whether mingchuangyu can run fast.
Although mingchuangyu products advertise themselves as “retailers of lifestyle products” in the prospectus, how many consumers will regard “mingchuangyoufeng” as a symbol of their unique life taste, just like MUJI products?
In the prospectus, mingchuangyoupin also expressed concerns about consumer loyalty. “Our efforts in consumer engagement may not be as effective as we expected. With the increasing number of competitors, the competition for consumers has also intensified. Our competitors may invest more in product design and development and maintain more competitive prices. We expect this competition to continue to intensify and if we are unable to maintain the loyalty of existing consumers and attract new consumers, our revenue may decrease, which may have a significant adverse impact on our business, financial condition and financial performance. ”
(statement: This article only represents the author’s point of view, not Sina’s position.)