Hailan home business model is bright!

Haishu Home Apparel Co., Ltd., which is in the “queuing” stage, recently announced the submission of the IPO prospectus for initial public offerings. The company plans to issue 49 million shares and plans to list on the Shenzhen Stock Exchange.

There is no suspense, and the raised funds are still directed to the construction of core retail business centers in first- and second-tier cities in key developed provinces. Compared with the regular fund-raising projects, there are suppliers who can accept returns in Haishu's home, only The operating model of franchisees that do not operate with money does make a real difference in the industry.

The Magical Risk Dismantling Law “The Man's Wardrobe” Haishu Home Prospectus is not sufficient for the necessity demonstration of its fund-raising project, but its unique business model is described quite clearly.

In the industry chain of Hailan House, the upstream supplier produces according to the plan of the company's design center, adopts the retail-oriented purchasing model, and only pays no more than 30% of the purchase price at the time of warehousing, combined with actual sales, monthly Vendor settlement. The company and the supplier enter into a procurement contract with the returnable terms for goods with unsalable goods. In addition to the products with unqualified quality, goods that have been unsalable after two seasons of the market can be returned to the supplier.

In the downstream areas, the requirements of franchisees and the cooperation method of consignment sales are also quite novel. Franchisees do not need to have professional experience in the apparel industry. They only need to own or rent shops in the company's approved location and pay a million yuan deposit (refundable upon closing). Franchisors do not need to be involved in store management. The company carries out standardized management in a unified manner. All the inventory is counted in the company. The franchisee does not take any risks, so long as they take the money and wait for the dividends. Hailan Home has repeatedly emphasized in the prospectus that this model is designed to attract more “social investors” and idle funds from the society.

Throughout the entire operating model, Hailan Home perfectly decomposes the top two major issues of apparel companies—inventories and funds—up and down. They only need to provide brand management, supply chain management, and marketing network management. It is a consistent concept that forms a benefit community between suppliers, franchisees, and companies. “One wins and one wins, and both ends lose.” Relying on this model, Haishu House has quickly and nationwide made nearly 2,000 stores (only two directly-operated stores) in three short years. The annual operating income also increased from 1.383 billion yuan in 2009 to 3.594 billion yuan in 2011, with an average annual compound growth rate of 61.17%. The net profit attributable to the parent company increased from 301 million yuan in 2009 to 701 million yuan in 2011. The compound growth rate is 52.66%, and the profitability is obviously higher than the pre-listing level of textile and garment enterprises in the same industry.

“Although the pattern is familiar, it is still an eye-opener. The entire industry chain has money and money, housing out of the house, shipments of goods, risk of suffering from bitterness, and enjoy the benefits, resulting in a rapid growth. And high-margin companies to be listed.” Li Jiaqing, managing director of Junlian Capital, eloquently commented.

The unique business model of Hailan's home has caused a lot of skepticism both inside and outside the industry, and it is feared that its biggest selling point will be doubtful in the capital market.

Class ** tactics to do clothing?

Recalling its root causes, Hailan's family is part of the Haishu Group. The Haishu Group started with the production of fabrics, and provided Haishu's home with a wealth of supplier resources as support. Although the return mechanism makes the pressure on suppliers not small, but because of the men's category Slower style updates and the full range of products such as suits, pants, shirts, T-shirts, jackets and other products of Haishu House diversified the risks to some extent.

As to why the downstream franchisees will give up their right to operate, they are only satisfied with the confusion. A consultant from a financial institution explained that the requirements for the franchisees at Haitang Home are already very clear. The target group is locked in possession of stores and financial resources. The social franchisees are recruiting social investors rather than professional operators in the apparel industry. More investors with social idle funds do not possess the industry's operational capabilities and experience. They only care if the profitability of the investment is within the acceptable range and the investment risk is low enough.

Haicang House is subtly integrating the clothing production design resources, high-quality store resources and social capital resources in the upstream and downstream industry chains to achieve a better profit model, but this approach makes the Haicang House look more like a family. Class ** company, not a traditional clothing company. It collects social idle funds, and then uses this part of funds to carry out project expansion. The company produces manpower and management, franchisees sell stores and funds, and cooperate to realize the sharing of investment interests. What puzzles some experts in the textile and clothing industry is that the domestic apparel industry is in an important period of brand formation. Does this type of company's tactical operation of garment companies really make a brand that can handle domestic and foreign competition?

Some experts in the investment community believe that the future competition in business models is the focus. He Ruiqi, a senior consultant of Hejun Consulting, said that the hosting of Hailan's home is still very innovative. The success of this model represents a trend of the future franchise chain. Local partners provide space and funds, and the headquarters is responsible for personnel. Comprehensive management of goods and goods, but at the same time the requirements for joining the headquarters will be higher and higher. Hailan Home currently manages approximately 2,000 franchised stores across the country. It is in line with Haifei's business expansion plan that the number of stores in the short term will increase to 2,500, and the medium-term plan will increase to 3,500. In terms of model and expansion speed, whether the company's management capabilities can be followed up, whether quality store resources can be successfully obtained, and whether profit levels can be maintained are the key to judging sustainable development.