China'S Luxury Foundry Revenues Hit Waterloo

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The downturn in the industry and the rise in manufacturing costs have led to China's luxury manufacturers' profits in Waterloo.

September 18th, with luxury handbags and small

Time group holdings, which started manufacturing, released the 2017 fiscal year results announcement as at June 30th.

The announcement shows that the company's revenue fell 32.4% year-on-year, and annual net profit fell 43%.

Since 2014, the group has declined for four consecutive years, and the rate of decline has increased year by year.

Foundry business is sluggish

As China's first batch of high-end and luxury products for the US and Europe.

One of the manufacturers of handbags and small leather products for large-scale outsourcing, time holding is not a simple OEM factory in China. At the end of 2011, when the group issued shares, PRADA joint venture IDG invested 300 million yuan to subscribe for 41.6% shares. In the prospectus issued in the same period, the time group disclosed that many luxury brands including COACH, LACOSTE and MICHAEL KORS were all produced by the company's assembly line.

Today, the top luxury brands are moving away from the times group.

In the 2017 fiscal year, the retail business receipts increased by 33.3% in the three main businesses of time group holdings, including self brand retail, luxury brand manufacturing and property leasing, but the cost of retail business increased and the retail business profits decreased by HK $3 million 700 thousand, compared with the retail income of HK $159 million 200 thousand.

It is worth noting that the proportion of over 90% of the luxury foundry manufacturing business has a cliff style decline, compared with the same period in 2016, the loss of purchase orders 34.4%.

According to the 2016 annual report released in October 11, 2016, as of June 30, 2016, time group holdings orders decreased by 15.4% over the same period last year.

High end demand shrank

Earlier, the times group also issued a profit warning in August 4, 2017 to blame "global customers' demand for high-end and luxury brands in manufacturing industry".

The reporters found that the semi annual report issued by PRADA in September 8th this year provided a basis for the times group's statement.

The report shows that during the period, the sales volume of the group decreased by 5.5% compared with the same period last year, and the net sales decreased by 5.7%. In addition to the sales growth in the Asia Pacific region, including the Greater China region, the Middle East market, the Japanese market, the European market and the Americas market all declined to varying degrees.

This coincided with time group's regional performance data. In the 2017 fiscal year of the Era Group, the income of North America decreased by 54%, while the European region decreased by 19.3%, while China increased by 13.8%.

In the 2016 fiscal year of the company, North America and Europe are the two largest markets of the times group, with a profit of over 70%.

Despite the rebound in the Chinese market, it is still difficult to restore the declining trend in Europe and the United States.

Subcontracting to self rescue

Despite the luxury brand's "new sweethearts", the times group expresses its optimism and will continue to stick to the Chinese market. "Although the minimum wage level in mainland China has been rising in recent years, the group still relies on China's core competitiveness."

As a countermeasure, time group says it will promote cost optimization in the future, including finding competitive raw materials with high quality, and constantly optimizing and streamlining production processes.

At the same time, the gradual increase of self owned brand is also one of the times group's self rescue strategy. In 2016, it won the exclusive license of international brand Kenneth Cole and Bruno Magli, and released the self styled luggage brand Fashion&Joy in 2014, and launched the Italy handbag brand TUSCAN 'S in the Chinese market.

However, this view also has doubts.

Zhou Ting, President of the Institute of wealth research, pointed out that the luxury goods industry is getting warmer, and that the upgrading of consumption is heating up luxury consumption. There is no decline in demand. One of the times is the loss of orders from the times group, or from the brand adjustment producers, and more orders to the Southeast Asia sub generation factory with lower cost.

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