The Chinese businessman, who has set up a chain of shops selling sleek household items at bargain prices in the basement, has just become a billionaire, taking advantage of the global trend of consumers to turn to cheap goods when a coronavirus pandemic engulfs budget spending.
Guangdong based in China Miniso Group Holding Ltd. raised $ 608 million through an initial public offering in New York on Thursday, with founder and CEO Ye Guofu̵7;s share of about 65 percent – held with his wife – worth more than $ 4 billion, according to the Bloomberg Billionaires Index.
Miniso, which sells everything from fixtures to bathroom slippers in colorful, clean designs, says more than 95% of its products in China cost less than 50 yuan ($ 7.44), turning to the same hunters for bargains. goods that drive chains like the British “Primark”, the Japanese “Don Quixote” and the “Dollar General” in the United States
Retailers are inexpensive prosperous as the global recession caused by the pandemic has led to an increase in online shopping. It has also accelerated the transition of generations to thrift and loss, which began during the financial crisis more than a decade ago. According to research firm Euromonitor International, thanks to brightly lit stores and modern but cheap goods, Miniso has secured almost 60% of the market share in China’s general outlets, excluding grocery stores.
Intermediate networks pay the price. Retailers from Brooks Brothers and J. Crew to the Japanese cult brand Muji, an American division, have filed for bankruptcy protection.
“Because the pandemic is causing a drop in cost worldwide, consumers are more focused on high-value brands,” Zoe told Bloomberg in an interview on Thursday. “This is a great opportunity for Miniso. The more we are in an economic downturn, the greater the opportunities and the better the development for budget brands. “
On the first day of trading, Miniso shares rose 25% in New York before gaining 4.4% and closed at $ 20.88.
Chinese technical giant Tencent Holdings Ltd. and a hedge fund Hillhouse Capital co-invested RMB 1 billion in the company in 2018, and each of them now owns 4.8% stake, according to the company’s prospectus. This share is worth 614 million dollars together, which pays off four times in two years.
A Miniso spokesman declined to comment on E.’s wealth.
Although the last symbol in the name Ye means “rich” in mandarin, the native of Hubei Province had a humble beginning, like many other entrepreneurs of his generation. He started working at a steel pipe factory, and when the demand for consumer goods from the newly discovered China increased, Ye went into the trading business, trying to sell ceramic cosmetics and fashion accessories.
During a business trip to Japan in 2013, he was inspired by budget stores and brought the concept to China, enlisting the help of Japanese designer Miyake Junyu. Miniso now has more than 4,200 stores, 60% in China and the rest in 80 countries.
Miniso has often been accused of relying on the minimalist aesthetics popularized by Muji, a retailer owned by Ryohin Keikaku Co. that offers a brand-free, logo-free lifestyle and household goods. The success of the Chinese company, in turn, has given rise to the cottage industry of lifestyle brands that sell Scandinavian or Japanese designs at cheap prices, such as OCE and Nome.
In 2016, according to a court document, Miniso and the affiliated company received an order to compensate LVMH for its economic losses in a lawsuit for design violations in Shenzhen. The Chinese company is also involved in several copyright disputes in which it has accused other domestic retailers of copying its brand and committing fraud during marketing campaigns.
There are, 42 years old, denied charges of copying. “People may have some misunderstandings about us,” he said. “Miniso is a very original design. The basis of our products is good design. “
Still make a profit
The rapid expansion of Miniso has been made possible by a franchise model that cuts its own profit margin – only 3% of its stores operate directly. Over the next decade, the company plans to open hundreds of stores a year both in China and abroad, Ye said.
The company has not yet made a profit. Losses for the year ended June fell 12 percent to $ 37 million from a year ago. And Covid-19 did not completely regret it – annual revenue by June fell by 4.4% to $ 1.3 billion.
Miniso also faces growing competition in budget pricing from Chinese e-commerce giants such as Pinduoduo Inc. and Alibaba Group Holding Ltd. Taobao Deals, Alibaba’s trading platform, launched a campaign this month to sell goods for just one yuan.
“When Pinduoduo and Alibaba double in profitable retail and direct-to-manufacturer models, it will displace brands like Miniso whose core offering is based on low prices,” said Mark Tanner, founder of the Shanghai Marketing and Research Agency China. Skinny.
Miniso said he was trying to maintain his price advantage overseas by diversifying his core base of Chinese suppliers.
When asked to become a billionaire, Ye paused for seven seconds.
“I didn’t think about it at all,” he said. “I’m too busy with my usual job.”