Since the 2021 semi-annual report proposed focusing on the development of brand licensing + services, Antarctic E-commerce (002127) has made frequent moves: it first established a joint venture with fast fashion brand C&A, and then spent 510 million yuan to acquire multiple Korean clothing brands.
However, the above-mentioned brands are somewhat poorly managed. After the heroic “buy, buy, buy”, how Antarctic e-commerce transforms and reconstructs its brand has attracted much market attention.
One after another, he spent 510 million yuan to purchase multiple Korean clothing brands.
In the 2021 semi-annual report, Antarctic E-commerce proposed to “strive to achieve a GMV of approximately 300 billion within five years.” To this end, the company will focus on expanding six major business lines including brand licensing + services and fashion industry brand matrix. The former refers to through cooperation and purchasing a variety of model to create about 20 world-class brands; the latter refers to the self-operated model to upgrade and innovate national brands and localize well-known overseas brands to increase market share and obtain more product profits.
Since then, Antarctic e-commerce companies have made frequent moves to acquire many international brands. In July 2021, it announced that it would establish a joint venture with fast fashion brand C&A, with Anji E-commerce holding 60%. The joint venture will enjoy the online trademark use rights of the C&A trademark in China and become the “C&A” brand in China. The only online operation partner in the region.
Then at the end of December, Antarctic E-commerce announced that it would use its own funds of 330 million yuan to acquire some of the trademarks registered in mainland China and the Hong Kong Special Administrative Region (including BASIC HOUSE, There are a total of 78 trademarks such as Mind Bridge and JUCY JUDY, and 100% equity of Baijiahao (Shanghai) Fashion Co., Ltd. (hereinafter referred to as “Bijiahao”) was acquired from Baijiahao Hong Kong Co., Ltd. with 180 million yuan of its own funds.
In fact, the brand matrix construction of Antarctic e-commerce has already been started before. The official website shows that its brand matrix covers Nanjiren, Nanjiren+, Nanjiren home, Cardile Crocodile, Classic Teddy, etc. Under the “small goal” of 300 billion GMV, Antarctic e-commerce has accelerated its pace.
Performance and quality are both worrying, so why buy a loss-making brand at a high price?
It is worth noting that the above-mentioned brands that Antarctic E-commerce has acquired or cooperated with are not ideal in terms of performance and product quality.
C&A is a fast-moving fashion clothing brand from the Netherlands. It opened its first branch in China in Shanghai in 2007 and an online store in 2014. Under the impact of the epidemic, foreign fast fashion brands have faced their “darkest moment”. A large number of stores have been forced to close or directly withdraw from the Chinese market, and C&A has also failed. In September 2020, C&A announced that it would sell its Chinese business to Zhongke Tongrong, a private equity company headquartered in Beijing. It has shown a decline in the number of stores and smaller operating scale in China.
TBH GLOBAL, the parent company of BASIC HOUSE, Mind Bridge, JUCY JUDY and other brands, is a Korean fast fashion giant, but it is facing operating pressure: a loss of 57.7 billion won in 2018, a loss of 1.982 billion won in 2020, and a loss of 3.101 billion in the first half of 2021. South Korean won, the reason behind selling off multiple brands may be to reduce debt pressure.
As for another acquisition target, Baijiahao, it is a wholly-owned subsidiary of TBH GLOBAL in China and was established in Shanghai in 2004. From January to September 2020 and 2021, Baijiahao suffered losses of 183 million yuan and 67 million yuan respectively. In addition, in the more than ten years since entering China, Baijiahao has been punished 13 times in total, involving unqualified products, violations of the use of advertising to deceive and mislead consumers by falsely promoting goods or services, and was fined more than 419,900 yuan.
Why did Anji E-commerce acquire the above-mentioned poorly managed brands at a higher price? Previous announcements showed that due to the rise of content e-commerce, the value of some well-known and unique brands has become prominent. The acquisition of such brands will help build the company’s brand system; at the same time, due to the company’s certain shortcomings in research and development, production, and quality management, Baijiahao has strong advantages in R&D, production, and quality management, which can better complement the company’s shortcomings in these areas, make better preparations for the company’s future integrated management and control of production, marketing, and research, and better provide consumers with Products with good quality, good research and development, unique features and good products are not expensive. According to media reports, some analysts pointed out that according to its business strategy, Antarctic e-commerce may operate trademarks such as Baijiahao in an “OEM” model.
The acquisition may drain cash reserves. Can Antarctic e-commerce be brought out of its predicament?
Obviously, after the acquisition, the more core issue is how Antarctic e-commerce can manage the above-mentioned brands well, and use this to enhance its own strength and gain consumer recognition.
Affected by incidents such as the “Korean Restriction Order” and “THAAD” since 2017, the Korean Wave has put the brakes on China, and Korean cosmetics and Korean outfits are no longer favored by young people. The multiple brand trademarks involved in this transaction – data show that BASIC HOUSE is a well-known Korean women’s fashion brand, founded in 2000; Mind Bridg is a well-known Korean clothing brand with both business casual and fashion styles, founded in 2003; JUCY JUDY It is a well-known clothing brand in South Korea, focusing on girly style. It was founded in 2003.
After the above-mentioned Korean clothing brands have experienced poor management, the fading of the Korean Wave, and frequent quality problems, there are still many variables whether they can once again capture the “hearts” of consumers in the hands of Antarctic e-commerce. As for future brand building plans, Antarctic E-commerce has not given any further reply as of press time.
Returning to Antarctic e-commerce itself, it is still facing the dilemma of declining performance and falling stock prices. The third quarterly report of 2021 shows that Antarctic e-commerce achieved operating income of 2.775 billion yuan in the first three quarters, a year-on-year increase of 0.08%; it achieved a net profit of 403 million yuan, a year-on-year decrease of 44.15%. In terms of the secondary market, Antarctic e-commerce’s stock price has shrunk significantly in 2021, with a cumulative decline of 48.74%, underperforming the market, and the total market value is less than 20 billion yuan.
In addition, some voices in the market pointed out that Antarctic E-commerce’s acquisition of some trademarks and Baijiahao shares held by TBH this time, totaling 510 million yuan, came from “self-owned funds”, which may empty out its cash reserves. As of September 30, 2021, Antarctic E-commerce’s book cash was 373 million yuan. Affected by rumors of “financial fraud” in 2021, in order to stabilize investor confidence, Antarctic E-commerce spent 1 billion yuan to repurchase shares.
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