Youngor Group recently announced its intention to change its Chinese name from “Youngor Group Co., Ltd.” to “Youngor Fashion Co., Ltd.,” as a further manifestation of its focus on the fashion business. The Youngor brand is also demonstrating its initiative to the market and investors by opening large experiential stores in cities like Nanning and Ganzhou.
However, apart from its flagship brand, Youngor Group’s expansion into the fashion industry is also evident in other aspects. Brands such as the American designer brand Alexander Wang, American streetwear brand UNDEFEATED, and Norwegian outdoor sports brand Helly Hansen, all invested in by the group, are accelerating their expansion in the Chinese market by opening stores frequently.
Interface Fashion previously reported that in just the first half of 2023, Alexander Wang opened new stores in multiple cities including Hangzhou, Ningbo, Wuhan, and Zhengzhou, and held a retrospective flash event in Sanlitun, Beijing’s Taikoo Li in September of the same year. According to the official website, Alexander Wang currently has 20 stores in China.
The cooperation began in September 2022 when Chinese challenger venture capital and Youngor Group announced the joint acquisition of a minority stake in Alexander Wang. According to “Waves,” an investment channel under 36Kr, Challenger Venture Capital’s stake after the investment reached over 20%, while Youngor Group’s role in the division of labor was not disclosed. However, this marked its first investment in a high-end designer brand.
The investment in UNDEFEATED was completed in 2021, with Youngor Group acquiring 40% of its equity and establishing a Greater China regional company. Helping Helly Hansen return to the Chinese market and establishing a joint venture company also took place in the same year. Youngor Group exclusively manages its operations and production in the Greater China region.
Despite their different natures, Youngor Group is also striving to align UNDEFEATED and Helly Hansen towards the high-end direction. After Helly Hansen’s return to the Chinese market, it predominantly chose to open stores in high-end shopping malls such as Beijing SKP, Nanjing Deji Plaza, and Shenzhen Bay MixC. While UNDEFEATED, positioned slightly lower, also established a presence in Sanlitun, Beijing’s Taikoo Li, and Wangfujing.
This brings to mind Anta Group’s model, which similarly, through external acquisitions, has built a brand matrix covering mass, mid-range, and high-end markets while maintaining the continuous growth of the Anta brand. This strategy has not only boosted sales and stock prices but also transformed the image of Anta Group towards internationalization and high-end.
Whether through full acquisitions or only handling Chinese operations, Anta Group has been deeply involved in the operations of these “foreign” brands, including product design and development, production and transportation, store location and decoration, and marketing and promotion, to some extent, reshaping the image and operating model of these brands.
Youngor Group is also doing similar things. It utilizes Youngor’s industrial chain to build a supply chain platform for UNDEFEATED, creating cross-border collaborations, and promoting its presence in more mainstream shopping malls and e-commerce platforms. As for Helly Hansen, its initiatives include signing Han Dongjun as the first spokesperson for the Greater China region and conducting a nationwide skiing-themed roadshow. These are a series of highly localized approaches.
From 2020 to 2022, Youngor Group’s fashion segment revenues were 6.334 billion yuan, 6.821 billion yuan, and 6.317 billion yuan, respectively, with revenue for the first nine months of 2023 at 5.102 billion yuan. Apart from the special period affected by the pandemic, the fashion segment revenues of Youngor Group have shown overall growth, although the growth rate is not impressive, especially compared to the real estate segment.
One obvious reason is that the Youngor brand still accounts for the largest portion of sales. The fashion segment’s apparel business revenue for the first nine months of 2023 was 4.217 billion yuan, with the Youngor brand alone contributing 3.944 billion yuan, accounting for 93.53%. In contrast, in Anta Group’s revenue of 29.545 billion yuan in the first half of 2023, the Anta brand and Fila accounted for 47.8% and 41.3%, respectively.
To date, no new force has been created apart from the Youngor brand, which is why, even with a multi-brand layout, Youngor Group finds it difficult to achieve rapid growth in the fashion business. The aging image of the Youngor brand is not a new topic; it is not only difficult to move towards the high end but also lacks the strong appeal in the baseline market like the Anta brand.
Youngor Group finds itself in a tough spot in the fashion apparel industry.
The success of Anta Group’s multi-brand strategy relies on brands such as Salomon, Kappa, Descente, Salomon, and Amer Sports targeting specific markets such as running, skiing, and tennis. These markets have rapidly developed in China in recent years, avoiding competition with Nike and Adidas and being accepted and recognized first by middle-class and above, naturally shaping the brand’s image towards the mid-to-high end.
The fashion apparel industry, on the other hand, is highly saturated.
The Youngor brand competes with overseas brands, emerging domestic brands, and online brands in the low-end market. UNDEFEATED faces other rapidly expanding international and domestic streetwear brands. As for Alexander Wang, such brands are greatly influenced by designer inspiration and trends, and Youngor Group has not included the income it brings into its financial reports, making it a relatively autonomous and independent project.
Helly Hansen’s skiing and sailing belong to emerging niche markets, which is an advantage, but its current contribution to revenue is not enough to drive overall performance improvement.
However, this does not mean that Youngor Group has no opportunity.
Interface Fashion previously reported that unlike the model of previous-generation clothing companies like Shandong Ruyi, which directly acquired overseas brands and then operated them with existing experience, today’s companies tend to promote cooperation through equity investment or the establishment of joint ventures. The advantage of this model is that the risk is smaller, and if operated properly, investors can also benefit.
For Youngor Group, a good investor and brand incubator image may be what it needs most now, rather than directly bringing sales. In a situation where it heavily relies on the Youngor brand, Youngor Group must start with the flagship brand to promote transformation, and reshaping a new image and regaining market trust is crucial.
In November 2022, Li Rucheng, chairman of Youngor Group, revealed that the group had invested a total of 8 billion yuan in the fashion industry over the past five years, covering the upstream and downstream of the industry chain. In addition, Li Qionghan, the daughter of Li Chengcheng, took over the Shanghai Fashion Center of Youngor Group after resigning as the group’s general manager, with the aim of building a fashion brand matrix. She was previously responsible for investment business at Youngor Group.