Starting From The Clothing Industry, Is The "Village Enterprise Pairing" Assistance Agreement A Misnomer

Recently, Zhejiang Senma Modern Agricultural Development Co., Ltd. announced the latest layout of Senhuojia Community Complex, including three main businesses: new agricultural markets, community commercial facilities and children's life experience.

Zhejiang Sima Modern Agricultural Development Co., Ltd. was established by Sima Group in 2007, and its predecessor was to respond to the call of Wenzhou Municipal Party Committee and Government for industry to feed back agriculture.

As a well-known clothing company in Wenzhou, Senma signed a "village enterprise pairing" assistance agreement with Longtou Village, Zeya Town, Ouhai District, to develop and build a Senma Ou citrus planting base.

Sima Group established Zhejiang Sima Ecological Agriculture Development Co., Ltd. in March 2008, and has now announced its formal entry into agricultural ecology.

As a specialty in Wenzhou, Ou orange has also jumped into the fashion industry from agriculture. In 2008, it was originally thought that Senma would boldly cross the border and make big moves, but it was only 11 years later that it really started.

It is reported that the three store forms launched by Senma, namely, Senhuo Family Life Complex, Morita Zhiwei Market Center and Morita Zhiwei Community Fresh Food Store, will be expanded. Focus on the customer groups within 1 km of the community to facilitate consumers to buy vegetables, buy goods and educate children.

Whether Sima sells clothes or vegetables, the children's industry as the growth pillar of Sima Group will also be introduced. According to the layout of Sima's children's experiential play and education growth complex, children's education, sports, technology and other entertainment sectors such as early care, early education, training will be integrated into it.

To sum up the recent trends of Sima, they are all related to investment. This time, it is to lay out a new agricultural market, focus on consumers' jobs, and invest in new retail services for mothers and infants some time ago, so as to deeply enter the field of mothers and infants.

Is the clothing business difficult to do?

According to the 2019 interim report of Sima Garments, as of June 30, 2019, Sima had realized a revenue of 8.219 billion yuan and a net profit of 722 million yuan respectively, with a stable overall development.

Sema's performance soared in the first half of the year mainly benefited from children's clothing brand Barabala. According to the semi annual report, Sima Children's Clothing achieved a revenue of 5.212 billion yuan, accounting for 63.41% of the total revenue.

In addition, Sima acquired KIDILIZ Group, a European children's wear brand, in October 2018. From January to June 2019, KIDILIZ's business revenue reached 1.483 billion yuan, accounting for 18.18%.

However, as of the middle of 2019, the leisure clothing brand "Sima Brand", which is positioned in the mass consumer market, only accounted for 35.81% of the total revenue.

The net profit of Sima was basically flat in 2016-2017, increased by 1.26 percentage points to 619 million yuan in 2018, and then slowed down again in the first half of 2019. The net profit deducted was 669 million yuan, an increase of only 8.08% year on year, but slightly higher than the same period.

However, the biggest problem is the doubling of expenses. In the first half of the year, the selling expenses and administrative expenses of Sima were 1.964 billion yuan and 374 million yuan respectively, with an increase of 107.41% and 151.72% respectively.

Sima explained that due to business growth, the increase of employee salary, rental fees, advertising fees, freight and miscellaneous fees, service fees, etc., as well as the merger of KIDILIZ Group in France in the current period led to the rise of three expenses.

Compared with the former industry leader Metersbonwe, the net profit in the first half of this year plummeted by 359.61%, and the company has voluntarily closed more than 1300 stores.

By the first half of 2019, the number of offline stores of Sima had reached 9404, a net increase of 281 compared with the beginning of the year. Among them, the number of franchise stores can account for 70% of the total, almost saturated.

Sima's Balabala children's clothing revenue was 3.73 billion yuan, up 29.89% year on year, and KIDILIZ's children's clothing revenue was 1.483 billion yuan. The sum of the two accounts for 63.43% of Suma's operating revenue.

It can also be clearly seen that in recent years, Sima has shifted its business focus from fashion to children's wear, and is developing in a diversified way. The main business of Sima brand clothing has been unable to influence the transformation of Sima.