Li said the company has been engaging in the foundry production for some internationally famous big and luxury brands. Now it plans to take advantage of its production techniques and develop independent brands with the mature techniques and production quality it has gained in the past. That's the direction of the company's industry upgrading.
As a producer of many luxury clothes brands, Jihua is also planning to enter the terminal-end sales channel sector by setting up outlets in the Chinese market.
The role conversion from original equipment manufacturer to terminal retailers combines the production and sales operation together of luxury brands. It is considered a key measure for Jihua to complete this strategy upgrading.
Under cooperation with Italian outlet company Gestioni Arcotecnica S.r.l., Jihua plans to establish several outlet shopping malls in cities including Changchun, Shijiazhuang, Lanzhou, Nanjing and Qinhuangdao within the next 10 years.
The two sides will establish a joint venture to operate the outlet projects. GA with its rich experience in the outlet industry will take charge of brand recruitment, guaranteeing the multiplicity of high-end labels.
Each will have an investment of 1 billion yuan ($163.3 million). All projects will be located within a suburban area 50 to 100 kilometers away from downtown of the city, targeting middle-class buyers in the Chinese market.
Construction of the first project will start by the end of this year. Engaging in commercial real estate and outlets operations with Italian business partners will help the company to gain international influence in the sector within the next 10 years. The outlet business is expected to become the major revenue resource of Jihua over the next 10 years, according to Li.
Commercial real estate is to become the core business of the company as the labor-intensive industry is tending to slow down in China.
The financial statement of the company shows that army products still dominated the revenue generation of Jihua last year. In 2012, Jihua Group generated revenues of 26.49 billion yuan, increasing by 16.99 percent from a year earlier. Total profits grew 26.15 percent to 1.054 billion yuan.
The company will try to expand to the upstream and downstream of the civilian goods industry and step up an internationalization process, the statement said.
The booming domestic market and rising high-end purchasing group have boosted the development outlet industry in China in recent years. European outlet brand McArthurGlen set up an office in China last year and launched a Chinese-version website in a move to seek more business opportunities.
Shanghai-based Bailian Group plans to open no less than seven outlets within the next five years in Wuhan, Tianjin, Jiangsu and Zhejiang provinces.
From 2002 when China's first outlet was established in Beijing, the number of outlets in the country now exceeds more than 400.
"Attracting the premium brands has been a challenge for outlet operators and, at present, few domestic outlets can attract true luxury brands," said Wan Wenying, vice-president of the China General Chamber of Commerce.
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