“Investor Network” Wang Jianfan
In 2013, Ye Guofu and Miyake Junya also co-founded Mingchuang Premium. At the time, it was regarded as a low-end alternative to Muji, and relied on its price advantage to rapidly expand the market. This strategy has effectively attracted a large number of consumers and established their place in the retail industry.
Ten years have witnessed the rapid growth of Mingchuang Premium. By 2023, the company's annual revenue reached 13.8 billion yuan, up nearly 40% year on year; gross margin increased to 41.2%, an increase of 6.3 percentage points over the previous year; net profit after consolidation was about 2.36 billion yuan, an increase of 110% year on year.
However, since September 15, 2023, Mingchuang Premium's stock price has experienced obvious fluctuations. After the release of the report for the first quarter of fiscal year 2024, the company's stock price fell for three consecutive days, with a cumulative decline of more than 25%. By the close of trading on March 27, 2024, the company closed at HK$39.1/share, down nearly 34% from a high of HK$59.28 per share.
The “godfather of finance” under the self-financing dispute
Ye Guofu's entrepreneurial journey began by exploring the blue ocean of the jewelry market. In 2004, they registered their own brand, the predecessor of Mingchuang Premium — “Oops”. With the 10 yuan store model, they quickly gained prominence in the market. However, with the advent of Taobao, consumers began to prefer to buy more affordable jewelry online, and “oops” rapidly declined.
What is less well known, however, is that Ye Guofu was once hailed by the industry as the “godfather of internet finance.” According to the “Qilu Evening News” report, Ye Guofu has previously invested in more than 30 projects in Internet finance, with a total investment of more than 5 billion US dollars. These include the P2P online lending platform “Fenlibao”, the internet collection platform “Everyone Receives”, and the cash loan platform “Is there a shortage of money?”
What is worth mentioning is that according to media reports, Ye Guofu used Mingchuang Premium to build an intricate capital operation model. This model involves P2P platforms, high-interest cash loans, and deposit fund pools, forming a closed loop of capital. In this series of operations, “Fenlibao” played a critical role, not only supporting the operation of Mingchuang Premium, but also a key link in its capital chain.
According to public information, Fenlibao was founded by Mingchuang Premium's United Nations risk control and financial management team in 2014 and officially operated in 2015. Ye Guofu himself made a public appearance as the chairman of Fenlibao. Fenlibao has also publicly stated that it distributes wages and reimbursements for more than 12,000 people, settlement payments for more than 3,000 suppliers, and settlement payments for more than 1,000 offline stores for chain organizations such as Mingchuang Premium.
A Tencent Finance report pointed out that Ye Guofu's Mingchuang Premium acted as a guarantor, so that franchisees raised funds to open stores in the form of loans on the Fenlibao platform. In this process, loan funds mainly flowed back to Mingchuang Premium through security deposits and franchise fees, which raised widespread questions about self-financing behavior. In this way, Mingchuang Premium and Fenribao will achieve a win-win situation. However, the vast majority of operating risks are passed on to franchisees. Once the franchisee does not operate well, the franchisee will face a huge risk of financial loss.
In 2018, the tightening of the regulatory environment marked the beginning of an era of major cleaning in the P2P industry. Fenlibao announced its withdrawal and complete closure in August 2020, and other P2P businesses related to Ye Guofu and Mingchuang Premium also came to an end. Currently, there are very few records of Mingchuang Premium's past, as if trying to play down this controversial past.
Mingchuang Premium, the potential crisis behind growth
In 2017, Ye Guofu announced his ambition to create premium products: the plan is to cover 100 countries and regions, open 10,000 stores, and reach 100 billion yuan in annual revenue by 2019. However, in the face of the complex and changing nature of the market, this goal has yet to be achieved. By the end of 2023, the number of Mingchuang Premium stores worldwide reached 6,413, including 3,926 in China and 2,487 overseas, which is far from the target.
Not satisfied with the current situation. On January 18 of this year, there were media reports that Ye Guofu once again raised the challenge at the 2023 Investor Conference: over the next five years, a net increase of 900 to 1,100 stores per year, and strive to maintain a revenue growth rate of at least 20%. In other words, in the short term, the speed of opening stores will slow down, and the company will still face management challenges and market risks brought about by accelerated expansion.
In fact, in the domestic market, Mingchuang Premium is facing a positive challenge. In the fourth quarter of 2023, its domestic revenue fell 5.95% month-on-month, revealing the problem of a slowdown in growth. This slowdown is not an isolated phenomenon; it is a direct result of a sharp increase in sales and distribution expenses due to the rapid increase in stores. In a retail environment dominated by low price strategies, this increased cost has not been translated into corresponding revenue growth, which is likely to cause Mingchuang Premium to fall into the dilemma of “increasing revenue without increasing profit.”
It's worth mentioning that Mingchuang Premium is not the only retail company facing such challenges. There have been many cases in the domestic market. Rapid expansion, such as La Chapelle, Metz Bonway, and Urban Beauty, has ultimately devoured the companies themselves, leading to losses and even closure of stores. Therefore, for Mingchuang Premium, it is essential to carefully evaluate the sustainability of the expansion strategy. In the current market environment, enterprises need to balance growth and costs to avoid management and financial pressure caused by rapid expansion.
The growing path of controversy
Since its inception, Mingchuang Premium has been mired in a whirlpool of controversy. Not only is its designer name “Miyake Junya” similar to the famous Japanese designer Issei Miyake, but the Chinese name of the company is also similar to Muji Ryohin, but the English name “miniso” seems to combine Muji's “muji” with the famous Japanese 100 yen store “Daiso.” Furthermore, the design language and color scheme of the logo is very similar to Uniqlo, and the store style is highly similar to that of a Japanese brand. This has led some consumers to mistakenly believe that Mingchuang Premium is a Japanese brand.
In addition to its strong Japanese style, Mingchuang Premium is also frequently the center of conversation due to many controversial acts. This includes, but is not limited to, the “cheongsam doll” incident, as well as mislabeling on Panamanian social media accounts that the brand originated in Japan. These incidents have continuously attracted public attention and brought famous products to the forefront of public opinion. Faced with continuing questions from public opinion, Mingchuang Premium publicly apologized several times in a short period of time, apologized for claiming to be a “Japanese designer brand,” and promised to complete the “de-Japanese” rectification by March 2023.
According to company investigation information, Mingchuang Premium is currently involved in up to 100 judicial cases, touching on various legal fields such as infringement, internet communication rights, design patents, and the right to distribute works. In 2016, artist Bai Guan filed a lawsuit against Mingchuang Premium due to unauthorized use of the “Minimalist Zoo” series of works. The court finally ruled that Mingchuang Premium required compensation and publicly apologized. Furthermore, Shen Wenjiao, founder of furniture brand PiY, publicly accused the MiniHome brand under Mingchuang Premium of copying its nude coat rack design, and Nomi Brand also sued Mingchuang Premium for infringement of the NOME Home Furnishing trademark.
The plagiarism controversy also spread to the highly regarded “TOP TOY” brand under Mingchuang Premium. In May 2021, the trendy toy fair poster released by TOP TOY was criticized for being very similar in design to the 2019 Bubble Mart Beijing Toy Show poster. The government then issued an apology statement, apologizing to the affected competitors, designers, and consumers.
Looking at the development trajectory of Mingchuang Premium over the past ten years, we have witnessed a process full of controversy and challenges. The company's rapid expansion has been accompanied by ongoing tests of its sustainability and brand integrity. Faced with pressure from all sides, Mingchuang Premium urgently needs not only a determination to pursue rapid expansion, but also a profound reflection on corporate culture, brand image, and even social responsibility. In the fierce market competition, how to properly balance growth and quality may become a key factor in whether it can achieve long-term development. (Produced by Thinking Finance) ■