Kappa: Light Assets Operation &Nbsp; 42 Dial 1000 Jin

2001 Italy

After taking over the agency business, Chen Yihong's position on Kappa is further clear: first, he needs to differentiate from Lining, and the two is to make Kappa an international brand name. The competitor is the international first-line brand Nike and ADI.

To this end, the first step is to pform the original OEM system and re select the international top brand manufacturers.

As a result, the cost of both processing and raw material purchasing has increased significantly.

For a small company with independent accounting, risks and pressures can be imagined.

But the idea of using Kappa to compete with Nike and Adidas has not been recognized by the market, and it has almost failed.

In 2003, another SARS crisis was encountered, and sales fell sharply.

In 2004, the Kappa global conference was held in Australia. It was a stunning opportunity for Chen Yihong to see the shape and publicity of the Hallyu Kappa.

Subsequently, Chen Yihong heavily invited Kappa Korea design director Steve Hong to join in the hope that it can lead Kappa China to a completely different road from Nike, ADI, Lining, not professional sporting goods, but to pursue the perfect combination of fashion and sports.

After the first batch of fashion styles were made, dealers almost did not approve. In order to improve the enthusiasm of dealers, Chen Yihong decided to adopt consignment mode, that is, dealers can get trial sales without prepayment.

This desperate gamble means that in case of unsalable sales, the cash flow that has already been stretched will turn into inventory.

Luckily, the market is inspiring news. Dealers are asking for replenishment orders like snowflakes. China has gone through a dangerous path and finally made an innovation.

In 2005, the trend continued to grow, with sales revenue of 148 million yuan and profit of 40 million 510 thousand yuan.

Subsequently, due to the financial crisis of Kappa headquarters in Italy, the ownership of the brand in mainland China and Macao was sold to the trend company, and the trend became a real brand owner.

China's trend is a typical light asset operation mode, which outsource production to almost all 100 suppliers in China, and only owns a factory that can add orders directly.

All 3 logistics centers in the country are also outsourced to third party operations.

Sales are totally dependent on about 3000 stores, of which more than 97% are operated by agents, with only a few direct outlets.

The "light" asset mode brings great competitive advantages to the trend. The capital turnover time in the domestic market is only 23 days, and the inventory turnover days are 42 days, far exceeding that of other companies.

In addition, China has a flexible and responsive supply chain system. The orders collected at the order are generally only about 75% of the factory's list, plus 25% of material reserves.

Then, according to the national sales situation feedback by the information system, all commodities are divided into three categories: unsalable, normal and best-selling, which can be corrected to the factory's instructions in time, effectively reducing the backlog and improving the utilization ratio of funds.

3 years later, in 2008, the sales volume of the trend company rapidly climbed to 3 billion 320 million yuan, and its profit reached 1 billion 300 million yuan. Although sales volume was third in the domestic sports brand, its net profit was far ahead.

In October 10, 2007, China's stock market was listed on the Hongkong stock exchange. With its two advantages of high growth and high profits, its stock was warmly sought after, which refreshed the new IPO record of Mainland consumer goods companies overseas.

The advertisement of the trend adopts the skillful dissemination of 42 dial kilograms, the brand has no big spokesperson, and seldom sponsor large events.

But there is a new way to do this. First, maintain good relations with entertainment people and hosts. These public figures appear in Kappa clothing, ingeniously increasing the exposure rate.

Two is the use of product placement, such as the popular city theme film and television drama, to expand the Kappa brand influence, the audience has seen more, moisten things silently, and naturally have a good impression on the brand.

The author commented: Chinese enterprises are longer than manufacturers, but shorter than brand operations. According to the theory of smile curve, they can only keep the low end of the international value chain for a long time.

Trend company has set an example for domestic enterprises. Real light assets can get high profits. Chinese enterprises can also do that after their efforts.