Bosideng's HK$256 million inventory depreciation last year sparked worries that the firm was not responding fast enough to climate change.
But chairman and chief executive Gao Dekang believes new design concepts, with an emphasis on leisure and sports, will ensure a bright future for Bosideng.
Gao, who first established an apparel business with a sewing team of 11 villagers in Changshu back in 1975, has guided Bosideng to pole position among the mainland's down apparel producers.
Bosideng's clothing is distributed through 6,844 retail outlets, including speciality stores, concessionary retail outlets in department stores and branded down clothing halls.
Sales of apparel amounted to 60 million units last year, a year-on-year increase of 20 percent. In the same period Bosideng's turnover surged 53 percent, dismissing market fear that global warming would drag its sales down.
"As reflected from the sales figures over the last two years, sales of non- functional down apparel are still satisfactory in not-so-cold winters," Gao says. "In the future, we will develop more down apparel that incorporates the elements of fashion, leisure and sports. We are confident that these new products will become the driving force of the company's earnings."
A shift from highly functional down clothing, which is usually bulky, to
China experienced a warmer winter last year, Gao admits.
Based on past experiences when down garments were sold well in advance of the winter months, retailers made a large number of orders long before winter last year, he says.
As a result, the accumulation of products led to the big inventory depreciation figures.
To avoid a stacking of inventories, Bosideng plans to strengthen the Enterprise Resource Planning system. ERP is a computer system that integrates all data and processes of an organization into a unified system.
"In the past, our ERP system covered only the trade company," Gao says. "We could not get hold of selling information of different products immediately. Seeing this, our company plans to use 3 to 5 percent of the funds raised from our listing to expand the scope of the ERP system to all retailers.
"In doing so, we aim to shorten the inventory turnover rate of retail shops from a week to one or two days."
On October 10 this year Bosideng was listed on the Hong Kong stock exchange.
Despite having attracted Cheung Kong (0001) chairman Li Ka-shing, New World (0017) chairman Cheng Yu-tung and China Life (2628) as cornerstone strategic investors, Bosideng's stock price has dropped below its offer price of HK$3.28, hitting a low of HK$2.95.
The stock is down 4.57 percent since its listing versus a 0.66 percent gain in the benchmark Hang Seng Index.
From 1995 to 2006, Bosideng was the leading down apparel brand in the mainland in terms of sales for 12 consecutive years.
Three brands under Bosideng, "Bosideng," "Snow Flying" and "Kangbo," captured 36.1 percent of total market share among the 30 largest down apparel brands in the mainland, according to China International ICT Innovation Cluster.
Bosideng has designed a sZeries of fashionable down apparel for the coming winter.
Gao says he is confident the company will be able to present a satisfactory annual report.
Bosideng is also eyeing markets overseas for future growth.
Through acquisitions, joint ventures, partnerships and an expansion in its retail distribution network, the company aims for a bigger market of down apparel products.
"Russia will be Bosideng's stepping stone to expand our business to overseas markets. We will gradually expand to Canada and the US. As for the local market, [we] will look for opportunities to acquire distribution rights of international high-end down apparel. It would help to fill the blank areas of our business.
"Apart from down clothing, we will also diversify our product line to include products such as bedding, home linen and non-down clothing. Our aim is for Bosideng to attract consumers year- round."
Gao says products such as down feather blankets may also attract consumers.
more fashionable clothing, may be a magnet for trendy customers, including teenagers.
