How Did The High Growth Of Leather Products Come True?

In the United States and Europe, the mature market has been in crisis, and many industries are shrouded in mist. Only the luxury industry is booming because they have strong support from the needs of the Asia Pacific region, especially the contribution of the Chinese market to P.

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< p > however, when the Savior market itself is in the economic weakness, coupled with the government's attack on corruption and the advocacy of thrift, many luxury brands immediately lose their past scenery.

As the upper end of the luxury industry chain, the past foundry factories that rely on luxury brands and shine brilliantly are also affected.

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Leather products are one of them in the age of P.

As the first luxury foundry enterprise, it went on sale in Hongkong and became famous overnight.

Italy luxury brand Prada (Prada), USA < a target= "_blank" href= "http://www.91se91.com/" > designer /a > brand Michael Kors, American high-end brand, Coach and Fossil are all names on their long-term customers list.

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"P" has benefited from the surge in sales of luxury brands. As one of China's thousands of foundry factories for other people, the leather products of the era have portrayed a high growth track in the past few years.

However, its latest announced performance in the manufacturing sector reflects the challenges facing the entire luxury sector.

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The European sovereign debt crisis will continue to bring uncertainty to the global economy in the next few months. However, the US economy has not recovered sharply, and it is expected to face more challenges in the next six months. P

"In the half year earnings report up to December 31, 2012, the leather products of this era look forward to the future.

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< p > < strong > "an average business of making 47 yuan for a package" < /strong > < /p >

< p > a set of data can clearly reflect the high growth of leather goods in the past few years: the company's revenue increased from HK $1 billion 349 million in 2009 to HK $1 billion 726 million in 2010, and then increased to HK $2 billion 493 million in 2011, with a compound annual growth rate of 35.9%.

In the year ended June 30, 2012, the income of leather goods increased to HK $3 billion 338 million, up 33.9% over the same period last year.

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How is the high growth of leather products achieved in the age of < p > strong > /strong < < /p >

< p > earnings show that almost all of the company's revenue comes from its high-end and luxury brand foundry manufacturing handbags, small leather goods and travel products.

For a luxury brand that sells tens of thousands of bags and has a gross profit margin of at least 30%, it is easy to make money.

But as a foundry factory on the upstream end, how much they can get from it is always a sensitive topic.

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< p > the company's annual results as of June 30, 2012 show that during the period, the manufacturing business sold about 15 million 480 thousand products, with a total sales volume of HK $3 billion 324 million, including total sales cost of raw materials, direct labour costs and manufacturing daily expenses, amounting to HK $2 billion 597 million.

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< p > through the above data, we can roughly estimate the average cost of OEM for the top and luxury brands. The average price is $167.7 per piece, and the price to be sold to the brand is 214.7 yuan per piece. For the leather products of the era, the profits for the high-end and luxury brands can be 47 yuan for each package.

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< p > compared with the profit of 3000 yuan per unit price calculated by the luxury brand at ten thousand and gross profit margin 30%, the manufacturer is known as a sweatshop.

The boss of a small bag manufacturer in Guangzhou told our reporter: "big factories such as leather goods can still rely on the volume of walking, and the survival of many small unknown factories is very difficult. A bag can only earn twenty or thirty yuan, and the quantity is not so large.

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< p > strong > high growth abruptly stopped, < /strong > /p >

"P >" however, the high growth did not continue.

According to the latest semi annual report, the production orders of brand leather customers from July 2012 to December were flat compared with the same period last year, with a slight increase of 4.5% in sales revenue, a total of HK $1 billion 690 million.

Compared to the 34.3% growth of manufacturing business in the same period last year, the high growth of leather products suddenly stopped.

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Yang Huaqiang, chairman of leather products in the era of P, also predicted that the slowdown of China's economic growth would cause some pressure on the consumer industry in the June 30, 2012 earnings report.

After that, the government launched a high-profile fight against corruption and frugality, giving the once enthusiastic retail outlets a wait-and-see attitude towards luxury brands.

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< p > luxury brands have issued profit warning and double-digit high growth sudden stops. These market realities emerged in the second half of 2012, causing the luxury industry to suddenly become chaotic.

Today, there seems to be no obvious recovery in the market.

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< p > the rising cost of labor and raw materials in recent years is a common challenge faced by Chinese manufacturing enterprises.

The profits of leather goods in the era also depend on whether it can purchase high-quality raw materials at low cost.

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In 2011, the raw material cost of leather goods accounted for 60.7% of the company's revenue. Due to the rising pressure of raw materials and labor costs, the gross profit margin of leather goods in the second half of 2012 was also slightly lower than that of the same period last year.

Yang Huaqiang thinks that the cost plus profit quotation mode of leather goods in the era will largely alleviate the pressure of cost increase.

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However, it is also true that the problem of excessive reliance on leather goods on the main customers is caused by the P era.

From 2010 to 2012, five major customers accounted for 84.1%, 82.4% and 83.2% of the profits of leather products respectively.

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Perhaps P is aware of such worries, and leather goods plans to accelerate the development of their own brands.

Between July 2012 and December, the company's own brand TUSCAN "S" realized HK $22 million 600 thousand, an increase of nearly 5 times compared with the same period last year, but the performance in Southwest China was better. Leather goods in the era decided to regard East China as another key market for its retail business in the future.

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At the same time, leather goods also said it would introduce more international luxury and luxury brand new customers, and continue to expand the manufacturing business of men's travel products and luxury handbags and small leather goods and other branches. P

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