New Way of Growth of Three-tier Business Chain of Youngor Group

In the past 20 years, Youngor has established a three-tiered business chain growth mode in the midst of doubt: Cash flow business is textile and apparel, growth business is real estate, seed business is financial investment, and it is completed from single manufacturing to industrial complex The transformation. Some people commented that if you compare Youngor to an aircraft, then its body is the main business of clothing, and equity investment and real estate are like its two wings.
Outstanding performance:

In 2008, Youngor's textile business revenue was 2.031 billion yuan, net profit was 123 million yuan, property income was 3.459 billion yuan, and gross profit was 47%. In terms of equity investment, Youngor commissioned financial investment business after Kaishi investment management, with 2009 The capital market is booming and equity investment income is expected to increase gradually.

Sample meaning:

In the past 20 years, Youngor has established a three-tiered business chain growth mode in the midst of doubt: Cash flow business is textile and apparel, growth business is real estate, seed business is financial investment, and it is completed from single manufacturing to industrial complex The transformation. Some people commented that if you compare Youngor to an aircraft, then its body is the main business of clothing, and equity investment and real estate are like its two wings.

Classic quotes:

"Don't think Youngor is just a clothing company. It may be possible to build satellites after decades."

“The textile and apparel industry is Youngor's first platform. Real estate is the second platform. The third platform is investment. This is a new industry. It is still being explored and shaped, but this is the highest level.”

——Li Rucheng, Chairman of Youngor Group

Realize:

In early 2008, the United States "Business Week" once asked Youngor: The company holds stocks of nearly 10 companies such as China Life Insurance, Ningbo Bank and CITIC Securities. These stocks have enabled Youngor's investment income from January to September in 2007 to reach 2.236 billion U.S. dollars, accounting for 98.5% of the total profit of the company. "In addition to the stock and real estate investment business, the company's other businesses have become insignificant."

98.5% of the stage data may not be able to explain all of them, but Youngor's real estate business and equity investment income contribution to net profit is indeed very significant, once reached 53%, significantly higher than the traditional main business, covering the main business brilliance. So that people often wonder: Youngor is the clothing company in Ningbo?

The coordination of Youngor's textile and apparel, real estate business and equity investment has always been an easily controversial and curious topic in the eyes of outsiders. However, in the financial crisis, such a decentralized investment strategy has indeed been affirmed.

The related diversity of Youngor began in the late 1990s. Li Rucheng first took a crucial first step toward the extension of the apparel industry's upstream textiles, fabrics, and downstream sales channels.

In November 2007, after the successful acquisition of Smart and XinMa, Li Rucheng insisted that “Younger has never deviated from the main business, and clothing has always been the foundation. We will become one of the strongest apparel companies in the world.” This is a purchase amount. The $120 million deal is the largest overseas acquisition ever made by the Chinese apparel industry.

In fact, many analysts who understand Younger and the textile industry believe that Youngor faces a bottleneck in the domestic sales of garments, that is, the space for further increase of market share has become increasingly limited, and the growing ceiling is already faintly visible.

Established in 1992, Youngor Real Estate has been serving as a key piece for Youngor Estate. In 1999, Youngor relocated his factory building to restart the real estate project in the original factory area and tasted the sweetness of the Nuggets property.

Li Rucheng’s desire is to establish a three-tier business chain growth model: cash flow from textiles and clothing can be used to back-feed the capital-intensive real estate industry, while financial investment provides the entire group with “financial reservoir” protection and development space. A positive interaction between the three can be formed.

After 2000, Youngor became the leading real estate company in Ningbo. From 2002 to 2006, Youngor’s real estate income increased from 500 million yuan to 1.9 billion yuan, an increase of 280%.

In the fall of 2008, with the gradual decline of the real estate market, the stock market has shrunk, and Youngor’s market value has lost over 10 billion yuan. In May 2009, Youngor had high-level sources that “the clothing sales target in 2010 will increase by 20%.”

In the main business of clothing, Youngor did increase R&D and strive to increase the gross profit margin of clothing. More importantly, Youngor's channel integration is close to closing. The previous more than 6,000 stores have been consolidated into more than 1,000 stores.

However, judging from the long-term plan, Youngor must find a way out for the good cash flow of the main industry. In June 2009, with the real estate sector gradually picking up, Younger’s once-repressed takeover enthusiasm was ignited again, bidding for the largest one in Ningbo’s downtown area. Residential land. Youngor currently has a land bank with a floor area of ​​approximately 4.48 million square meters, which is sufficient to support the development of the next three years.

In the third level capital market, Youngor has been deeply versed in the secrets of making money early on. As early as July to August 1999, after a battle with CITIC Securities, Youngor's image of the market has completely changed. It suddenly became a venture capital expert from a clothing king. The total market capitalization of shares held by Youngor held by Bank of Communications, E-Tech, Guangbo, Shanghai Jiubai, Bailian and China COSCO once reached approximately RMB 20 billion.

Later on the Youngor Investment List, it also included Ningbo Hangzhou Bay Bridge Investment Development Co., Ltd., Shanxi Sunshine Coking (Group) Co., Ltd., Shenzhen China-Europe Venture Capital Partnership, Tianyi Securities Co., Ltd., Hangzhou Chuangye Software Technology Co., Ltd., etc. Wait. Li Ruqian was described as the "Year of 100 billion yuan fund, with 20 people team, looking for projects across the country," the Youngor chairman.

The twists and turns also occurred after the fall of 2008. With the increase in capital market risk, Youngor’s equity investment business has been repeatedly shrunk. Youngor reported in the third quarter of 2008 that the market value of the company’s securities investment projects has dropped from 13.5 billion yuan in early 2008 to 10.4 billion yuan, and the company’s net profit has dropped by 43.55% year-on-year.

Based on the consideration of capital market risks, at the end of 2008, Li Rucheng personally led the establishment of the Cascade Investment Company in the group company. The professional team assisted in managing some of the existing financial assets and tried to gradually transfer the investment business from the stock company to the group. The company level operates to reduce the risk.

Despite walking on dangerous capital steel, Youngor's three-tier business chain growth has been relatively safe. Profits and risks are always the two sides of a coin. The core nature of diversity is capacity.

Expert Reviews:

Yao Xianguo (Dean of the School of Public Administration of Zhejiang University): Youngor started and became famous in clothing. However, the flying eagle now consists of three main businesses that seem to be unrelated, and the three main businesses are formed. Uncoordinated three-tier business. Related to nothing, disorderly and orderly, there is inherent logic in "chaos".

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