Hongxing Erke waits for the wind to come

Keep up with consumer demand or flop.

The low-key Hongxing Erke once again returned to the public eye.

Perhaps in the memory of those born in the 80s and 90s, Hongxing Erke was once one of the famous brands like Anta and Xtep .

Today, Anta’s market value once exceeded HK$500 billion, surpassing Adidas and becoming the world’s second sports brand; Xtep’s share price has doubled to a record high, and it has won the favor of Hillhouse Capital. With the help of the national tide, the two crossed the age barrier , radiated from the 80s and 90s to the Z generation, and became one of the “lights of domestic products” loved by young people.

Unlike the smashing highlights, Hongxing Erke disappeared from the public’s field of vision and was gradually forgotten. Just like the well-known slogan “To Be Number One” has long been reduced to “tears of the times”, Hongxing Erke’s sense of existence is so weak that it “feels about to close down”.

July 22, Erke because low-key relaxation aid flood-affected 50 million yuan in Henan lead hairnet Friends of concern, “Erke microblogging comments good sad” was boarded hot microblogging search. The contrast between large donations and Hongxing Erke’s “difficult to protect itself” status is the key reason for the “distress” of the outside world. Regarding his behavior, many netizens said, “Hongxing Erke donated 50 million yuan, which is not particularly popular, is really a lot.” “Members” Not willing to open, but donated 50 million.” Out of support, netizens not only filled Weibo members for 120 years, but also rushed into the live broadcast room to make gifts and place orders.

It has to be said that this wave of operations helped Hongxing Erke, who had been silent for a long time, a wave of goodwill in the hearts of the public. Even so, Erke want to rise again, and Anta, special steps to the same station with the run line, is still difficult.

From glory to decline

Looking back at the development of many domestic shoe companies, Jinjiang is a small fishing village located on the southeast coast. Since the birth of the first pair of sports shoes, Jinjiang has gradually accumulated advantages in shoemaking by relying on OEM shoe factories. In the mid-1990s, foundry shoe factories transformed and established their own brands. 361 Degrees, Peak, Xtep, and Anta emerged one after another in Jinjiang.

When Hongxing Erke was established in 2000, it was several years behind other brands. According to the founder Wu Rongzhao’s description, the entrepreneurship started with a rough factory building and was also burdened with bank liabilities of more than 10 million yuan. Faced with a shortage of funds, Wu Rongzhao boldly introduced foreign strategic investment, established an exclusive agency model in deep binding with customers, and finally resolved the company’s negative equity crisis.

At that time, the pioneers Anta and Xtep have established their own brand recognition, and the later Hongxing Erke is rarely known. To make the Street Fighter sound reputation, money is no longer fear of the popular Hong Kong star Erke Jordan Chan signed as a brand spokesperson, shaped the young fashion brand. Then, Hongxing Erke invited South Korean actress Jang Nara to endorse, further strengthening its trend positioning. Over the past few years, Hongxing Erke has continued to introduce new products, expanding its product categories from sports shoes to other sportswear, and has gradually developed into a comprehensive sports brand with a complete system.

By 2005, Hongxing Erke’s turnover had grown from over 10 million to 600 million. This year, Hongxing Erke was listed in Singapore, becoming the industry’s first apparel brand to be listed overseas. “To Be Number One” is as deeply rooted as the “sweetness” of Michelle Ice City .

In terms of brand marketing, Hongxing Erke began sponsoring domestic and international tennis tournaments, and successively cooperated with well-known events such as the China Tennis Open and the WTA Istanbul Year-end Finals. In the tennis sneaker competition, he shared the limelight with Nike and Adidas.

Perhaps in order to realize the ambition of “To Be Number One”, in 2007, Hongxing Erke opened many stores across the country. Due to reasons such as location selection and unscientific management, many stores suffered losses. At the critical moment, Wu Rongzhao shut down the loss-making stores to “survive with broken arms”, introduced the ERP system to strengthen terminal management and guidance, and reorganized the channel structure so that Hongxing Erke survived.

New crises are still coming.

Affected by the 2008 Olympic Games, almost all sports brand companies have given too high expectations for the sales of sports goods, so that the inventory of many companies remains high. Beginning in 2011, affected by the inventory backlog, domestic sports brands have collectively entered a downward cycle. Hongxing Erke is no exception. The inventory crisis that has lasted for three years has left Hongxing Erke almost no respite.

Lack of the circulation of new and old products, the inventory crisis has made domestic brands become synonymous with “soil” in the eyes of consumers, especially the impact of international brands Nike and Adidas, highlighting the lack of domestic products in trend attributes. Hongxing Erke “To Be Number One” was even ridiculed by the group as “Tube Number One”.

Hongxing Erke not only needs to deal with the common challenges of the industry, but also deal with various internal troubles.

Since February 2011, Hongxing Erke has been suspended from trading due to suspected fraudulent financial data in 2010. In 2015, a fire destroyed nearly half of the company’s production equipment, causing customer orders to be unable to guarantee, production was once stagnant, and the supply of goods was cut off and funds could not be returned. According to Wu Rongzhao’s recollection, “The cash flow on hand was not enough to support a week at the hardest time.”

Internal and external troubles caused Hongxing Erke’s vitality and fell out of the top five positions in the industry, and never recovered.

The Possibility of Hongxing Erke

For a long time, with the exception of Hongxing Erke, domestic sports brands such as Li Ning , Anta, and Xtep were not going well.

Affected by inventory, Li Ning’s performance fell all the way from 2011, and only began to turn losses into profits in 2015. According to a report in Caijing magazine, for Li Ning, the industry consensus is that there is a problem within the company, “my left foot tripped my right foot”, and the inventory crisis was just the fuse. From 2010 to 2011, the brand renewal, product price increase, channel reform and management team replacement in 2012 and 2015 made the once China’s No. 1 sports brand show its decline.

For Anta, 2012 revenue and net profit declined for the first time since listing, and the decline continued in 2013, and its performance did not improve until 2014. After Anta achieved 8.91 billion yuan in revenue in 2011, the company’s goal for the next year is to “impact tens of billions.” Based on past performance, this is a goal that can be easily accomplished, but this goal was only achieved in 2015.

Anta’s recovery is not unrelated to its transformation from a brand wholesaler to a brand retailer. During this period, Hongxing Erke not only did not embark on retail reforms, but made strategic mistakes instead. During the period in 2012, Hongxing Erke and other companies proposed to transform to lifestyle casual wear. The business proportion of this category once reached more than 50%. However, the competition in the fast fashion industry was more brutal, and the image of Hongxing Erke was deeply rooted in the hearts of the people. Buying it will further aggravate the company’s inventory and cash flow crisis.

Anta, which has successfully transformed its retail business, has also launched a multi-brand strategy. At present, in addition to Anta’s main brand, it also has several brands such as FILA and DESCENTE. It is worth mentioning that FILA, the acquired foreign brand, has now become one of Anta’s important money-making machines.

Li Ning, who appeared in New York Fashion Week, captured the demands of Generation Z by transforming into a fashion brand. States play wave method is also special steps to learn to go with the Shaolin Temple launched Guochao IP, Shanghai Fashion Week debut. In addition, Xtep has also carried out a multi-brand layout: the main brand Xtep focuses on the mass market, Saucony and Merrell target the professional sports market, and K-Swiss and Palladium focus on fashion sports. market. In terms of sales channels, Xtep also transitioned to a retail model in 2015.

Since its decline, Hongxing Erke is also making a younger layout, increasing cooperation with popular UP hosts at station B and senior We-media in the sports circle, participating in live events such as “2020 Shanghai Fashion Week”. Hongxing Erke seems to have not found its own direction. Looking at the things it has done recently, launching artificial muscle running shoes and entering the skateboard market… it is difficult to attract the public’s attention.

Young people’s sense of identity with domestic products has provided soil for the rejuvenation of Anta, Xtep, and Li Ning. The corporate social responsibility presented by Hongxing Erke adds a sense of identity to it. Just as a netizen left a message on Wu Rongzhao’s Weibo, “I hope your product style design can be simplified, and the color system can be used without saturated color systems. Concise and generous, improve the quality of the pictures, and learn from the best-selling online stores.” If Erke Next in R & D, design, products to keep up with consumer demand, did not win or possible return Licensing Board.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/hongxing-erke-waits-for-the-wind-to-come/
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