China’s CCTV News Channel recently reported the situation of the Jiangsu Quality Supervision Bureau’s random inspection of the quality of winter products in 2020, and exposed 8 batches of adult down jacket samples such as Rumere and Xuezhongfei. This exposure quickly sparked heated discussions among Chinese netizens, and was once on the list of hot topics on Weibo.
It was reported that today, Rumere Corp. is about to usher in the big test of the meeting, which is short of a successful listing. In fact, the reporter found out that Rumere Corp. had been questioned by the Shenzhen Stock Exchange as to whether there was click farming in its transactions, and that its products were repeatedly involved in infringements.
Disturbance arose at a critical juncture, Rumere faces a bumpy IPO
On April 2, the China Growth Enterprise Market Listing Committee will hold its 20th review meeting in 2021. At that time, Rumere Co., Ltd. (hereinafter referred to as “Rumere Corp.”) will be reviewed and its IPO sponsor will be CICC. It is reported that as early as July 31, 2020, Rumere Corp. disclosed the prospectus declaration draft on the official website of the Shenzhen Stock Exchange, and plans to be listed on the ChiNext.
According to the prospectus of Rumere Corp., Rumere was established on March 13, 2012. It is an online apparel brand retail company. Based on the Internet platform and relying on the “RUMERE” brand, the company manages clothing planning, design, supply chain management and sales. The main products include professional and casual styles of women’s clothing, men’s clothing and accessories, etc. It has multiple sales platforms such as Taobao Golden Crown Store and Tmall Store. Among them, more than 99% of the sales of Rumere Corp. come from Taobao shop “Rumere high-end women’s clothing”.
Rumere’s prospectus shows that its online income accounts for more than 90% of the company’s main business income in each period. If an “online apparel brand retail company” that is highly dependent on “Taobao stores” wants to hit the ChiNext, does Rumere Corp. fit the positioning of the ChiNext?
The “three innovations and four new” requirements of the ChiNext, enterprises should comply with the general trend of “innovation, creation, and creativity”, or the deep integration of traditional industries and “new technologies, new industries, new formats, and new models.” In the second round of the inquiry letter, the Shenzhen Stock Exchange asked Rumere Corp. to analyze the “three innovations and four innovations” in combination with the business model, technological advantages, growth, and comparison with comparable companies in the same industry, and to explain whether the company meets the requirements the basis and rationality of the positioning of the ChiNext.
Rumere Corp. said that the company’s development is a deep integration of the digital economy and the real economy. The company focuses on clothing planning and design, supply chain management and online sales. It has broad market prospects and growth space, so the company is in line with the ChiNext positioning. Data shows that as of now, Taobao has tens of millions of Taobao stores. Industry insiders say it is still controversial whether Rumere, whose sales are highly dependent on Taobao stores, is “rubbing off on the ChiNext concept”.
In addition, the Shenzhen Stock Exchange has also questioned whether Rumere Corp. has click farming behavior.
The prospectus shows that in 2017, 2018, 2019 and 2020, multiple buyer IDs repeatedly placed orders and contributed a large proportion of revenue. Among them, the number of buyer IDs with 21-50 orders were 7232, 10385, 10475 and 11413, and the total order amount was 95.8831 million yuan, 148 million yuan, 145 million yuan and 181 million yuan respectively; The number of buyer IDs with a single number of more than 50 times were 839, 1938, 2004 and 2739, and the total order amount was 30.022 million yuan, 77.3142 million yuan, 77.308 million yuan and 130 million yuan respectively.
In the inquiry letter of the Shenzhen Stock Exchange, Rumere Corp. was required to state whether the issuer and its related parties have used methods such as sending empty parcels to the issuer’s online sales platform through itself or entrusting a third party, fictitious courier number, and using real courier number. Conduct click farming, fictitious transactions, and enhance reputation. In this regard, Rumere denied it.
Product quality problems were exposed, and there were also copyright disputes
A few days ago, the unqualified quality of Rumere brand adult down jacket samples was exposed. Industry insiders analyzed that the quality problem may be related to Rumere’s stock production model relying on outsourcing processing.
According to the prospectus, Rumere’s production model mainly includes independent production and outsourcing production, among which outsourcing production is divided into partial entrusted processing and full entrusted processing. Outsourcing production is its main production model. In 2018, 2019 and 2020, the proportion of outsourcing production to operating costs is 83.71%, 87.54% and 92.61%, respectively. Regarding the down jackets of Rumere Corp. that were exposed to unqualified quality, the prospectus shows that in the jackets purchased by Rumere Corp. in 2018, down jackets accounted for 40%, and among the jackets purchased in 2019 and 2020, down jackets accounted for up to 95%. % And 70%.
Rumere Corp. stated in its prospectus that if there are major fluctuations in the market for surface materials and the labor market for garment manufacturing in the future, and the company cannot effectively control product costs or adjust product prices in a timely manner, it will have a greater impact on the company’s operating results.
Since outsourcing production is Rumere’s main production model, how about Rumere’s independent design and R&D strength as an online apparel brand retail company?
The prospectus shows that Rumere’s R&D investment in 2020 will only account for 1.42% of its operating income. From the perspective of the number of R&D personnel, in 2020, Rumere Corp. will have 48 design and R&D personnel, accounting for 12.97% of its employees. It is worth noting that these 48 people also include IT departments, technical departments, and vision Department staff.
It is worth noting that Rumere Corp. stated in the prospectus that “the core technical personnel of the company are Mr. Guo Jian, Ms. Wendy and Mr. Yu Qingtao.” However, public information shows that Guo Jian and Wendy were in 2008 and 2009 respectively. Acquired an MBA degree from Tsinghua University successively each year. According to the resumes of the three persons in the prospectus, before the establishment of Rumere Corp., their work resumes were not directly related to online apparel brand retailing, nor to apparel design and technology research and development.
n addition, in recent years, Rumere Corp. products have been plagiarized. According to the data from Tianyancha.com, Rumere Corp. are involved in a number of legal proceedings concerning copyright ownership and infringement disputes.
In August 2016, Shanghai Zhihe Fashion Industry Group Commercial Development Co., Ltd. (hereinafter referred to as “Shanghai Zhihe”) believed that the styles, colors, patterns, etc. of Rumere sold through the “Rumere Flagship Store” were similar to those of Shanghai Zhihe. The copyrighted works involved in the case were the same, and Rumere and other related companies were sued to the People’s Court of Putuo District, Shanghai. Rumere Corp. lost the case. In May 2018, Shanghai Putuo District People’s Court ruled that Rumere Co., Ltd. and its subsidiaries immediately stopped infringing on the copyright of Shanghai Zhihe’s art works and compensated a total of 150,000 yuan.
Product design has been repeatedly involved in infringements, and the production model relies on outsourcing production. What will be the results of Rumere, which claims to be “in line with the positioning of the ChiNext” on April 2nd? CNR Finance will continue to pay attention.
Source: CNR