Written by: Zhou Xiangyue, author of "Financial World" Weekly, Zhou Xiangyue, Li Dan,
Editor/ Chen Fang,
, donated 100 million yuan to , and sent , Hongxing Erke to a hot search. In the past year, this third-tier brand has dominated the hot search list many times because of playing charity cards, and has become the research object of the industry's top brands. However, in the context of weak marketing and low competitiveness of its own products, Hongxing Erke's sales conversion is not optimistic. The sales of this hot search is not as good as last year's. Some hard-core dealers even chose to give up. The road ahead of Hongxing Erke is long and difficult.
has been hot searches for more than 30 times a year
hot search list, and recently he has dominated the list on Weibo , Douyin and other platforms with donations.
htmlOn the evening of July 30, at a live broadcast party on the Internet, Hongxing Erke once again announced that he would donate 100 million yuan of materials and donations to the Fujian Provincial Disabled Welfare Foundation to help disabled people and families in need improve their quality of life. The large donation quickly pushed Hongxing Erke to the top of the hot search list of major platforms, which attracted many netizens to say, "Hongxing Erke has stepped on a sewing machine for a year, and donated it again." "Stop talking, go buy another pair." The popularity brought by the donation of
once again benefited Hongxingerke live broadcast room. According to the new Douyin data, the two live broadcasts of Hongxingerke’s main account “Hongxingerke Brand Official Flagship Store” on the evening of July 31 and the morning of August 1 attracted 476,900 and 749,000 views respectively, setting a new record. While leaving messages, netizens said, "I donated another 100 million yuan" and "I have joined a major project of over 100 million yuan this time", they placed an order to support it, and the cumulative sales of the two live broadcasts were 1.95 million yuan.
htmlOn August 1, "Financial World" Weekly interviewed Hongxing Erke about this incident. As of press time, the other party only sent one sentence: "The donation matter is subject to the official information released by the Provincial Disabled Welfare Foundation. Subsequent donations related information will be audited and publicized through the platform as required." In addition, Hongxing Erke did not reply more.
According to the Red Star Capital Bureau, the 100 million yuan donated by Hongxing Erke is still under negotiation. "More than 80% of it are supplies, all of which are Hongxing Erke's own brand of clothing, and then some cash is provided. The funds are now in place."
"Hongxing Erke donated 100 million materials and funds is worthy of recognition." Cheng Weixiong, an independent analyst in the shoe and clothing industry, said that while enterprises create economic benefits, they also have to assume social responsibilities and need to consider how to give back to society. In addition to taxation and employment, giving back to society is also an effective way to donate money and materials within your ability.
Cheng Weixiong analyzed that donations are generally dominated by goods, and most of them are stock products . It not only practices social responsibility, but also enhances the brand reputation and solves inventory problems to a certain extent. In his opinion, donations during the Henan flood last year were a milestone event for Hongxing Erke, which made this "lost" brand appear and brought "wild consumption".
Before July last year, Hongxing Erke lost his voice in the public opinion field for a long time. Many netizens think that the company is already "on the verge of bankruptcy" and are even accused of not being able to afford a Weibo member. In huge contrast, 17 topics including "Hongxingerke's members were recharged for 2140", "Hongxingerke's sales increased by more than 52 times on July 23", "Hongxingerke's chairman denied that he was on the verge of bankruptcy" took turns to the hot search list on Weibo.
Since then, Hongxing Erke has become a frequent visitor to the hot search list. According to incomplete statistics from the weekly magazine "Financial World" that from July 23 last year to the present, Hongxing Erke has been on the hot searches on Weibo alone at least 30 times. Among them, about half of the hot searches broke out in a few days after the news of Hongxing Erke's 50 million yuan in materials to aid Henan floods, and nearly half of the hot searches were evenly distributed in the remaining time, allowing Hongxing Erke to maintain a long-term and stable attention in the public opinion field.
(Photo/Weibo platform screenshot)
For example, on August 21, 2021, Hongxing Erke once again made it to the top Weibo hot search list for donating one million yuan to Henan Museum . On October 11, 2021 and March 18, 2022, Hongxing Erke rushed to Weibo for "silently donating materials to Shanxi" and rushing to , Quanzhou to help ; plus this donation of 100 million yuan, Hongxing Erke has experienced at least four more times in the past year when donating.
In addition to donating, Hongxing Erke has also been on the hot search because of some business actions. In November 2021, Hongxing Erke was on the hot search for the establishment of an industrial company; in January 2022, it successively became the hot search for the construction of factories in Xinjiang and the joint brand with King of Glory ; in July 2022, "Hongxing Erke Wu Rongzhao People's Daily" and "Hongxing Erke Sends Little Red Riding Hoods All Network" were on the hot search for the first time.
Why has Hongxing Erke frequently been on the hot search list in the past year? Zhang Qing, chief brand management expert of China Sports Economic Research Center, told Caijing Tianxia Weekly that on the one hand, Hongxing Erke is good at summarizing methods from experience, thoroughly understands the public welfare tags and social media gameplay, and takes measures to continuously strengthen it, which is more cost-effective than advertising; on the other hand, in the context of domestic products, consumers have some development mentality, that is, the brand can resurrect its life because of its own contribution and support. "To a certain extent, Hongxing Erke was pushed to the hot search, which is similar to a star being pushed to by fans." What did Hongxing Erke do after a year of becoming popular?
Zhang Qing told the "Financial World" weekly that since July last year, Hongxing Erke has not only come out of the trough, but also created an effect that is enviable to the industry.
"As far as I know, friendly businessmen have already put forward requirements for their communication departments, marketing departments, etc., reflecting on why they spent so much money. There was no such effect. Instead, Hongxing Erke achieved such effect." Zhang Qing revealed that in the past, most brands in the industry, especially some leading brands, generally did not regard Hongxing Erke as a research object, but now they have begun to regard it as a "not to be ignored" force to pay attention, research, and even learn from it. What exactly has Hongxing Erke done in the past year that he became popular and led to such a result?
"On the one hand, Hongxing Erke maintained continuity and stability in the manufacturing and dissemination of social topics, making its popularity not a "flash-of-the-pan"; on the other hand, after a short-term busyness, it also consciously responded and acted in line with market demand, and at the same time made a lot of efforts in optimizing and layout of the supply chain." Zhang Qing said.
Indeed, in the past year, Hongxing Erke has strengthened his image as a "conscientious enterprise" more than once. In addition to donating money and materials, a fire broke out in Hongxingerke's cooperative factory in May 2022. Not only did it not hold the order breach of contract, it actively extended a hand to help, and received a lot of praise.
At the same time, Hongxing Erke also has many actions in creating the live broadcast matrix. As early as October last year, Hongxing Erke established a live broadcast center at the headquarters of Xiamen and began to promote live broadcast business in the form of a matrix account. It is expected that the live broadcast channel will account for 10% of the group's business in 2022. As of now, in the Douyin live broadcast accounts related to Hongxing Erke, there are at least 5 accounts with more than one million fans, including sports shoes and clothing flagship stores, children's clothing flagship stores and other accounts for sub-track tracks. The number of fans of the main account "Hongxing Erke Brand Official Flagship Store" is as high as 13.195 million.
Hongxing Erke Chairman Wu Rongzhao gave the outside world the impression that he was introverted and "when he saw the camera, he was nervous." But he not only appeared in the live broadcast room and interacted with netizens as soon as possible after Hongxing Erke became popular, but also operated a Douyin account on a regular basis, with 10.155 million fans. On Weibo, Wu Rongzhao's number of fans has reached 718,000, and even has an independent personal super talk. She is a veritable "Internet celebrity" and "spokesperson" of Hongxing Erke.
(Photo/Wu Rongzhao’s screenshot of Douyin)
Of course, Wu Rongzhao himself does not think he is the spokesperson of Hongxing Erke, and he also denies being an internet celebrity. But it is undeniable that this once extremely low-key business boss has begun to frequently be active on social media such as Weibo and Douyin, actively interacting with users with an approachable and down-to-earth entrepreneur image, and the content posted is centered around his daily life related to Hongxing Erke as a "worker Xiao Wu".
In addition, in the past year, Hongxing Erke has made frequent moves in supply chain construction, brand upgrade, and joint branding to get rid of the "rustic flavor".
In November 2021, Hongxing Erke announced the construction of a factory in Shangqiu, Henan, and the opening of 3,000 recruitment positions. Just two months later, Hongxingerke Xinjiang Yutian Garment Production Base was officially completed, claiming to be able to fully put into production 120 production lines and implement 4,000 jobs.
At the same time, Hongxing Erke also launched an attack on first- and second-tier cities, upgrading its brand image to cater to Generation Z consumers by launching the Star Chuang concept store. On October 1, 2021, Hongxing Erke's first batch of Star Creation concept stores were first launched in Changsha, Shenzhen and Fuzhou, and then gradually expanded to other cities. By July 30, 2022, Hongxingerke's first Star Chuang concept store in Beijing was officially opened on , Fengtai District. Currently, Hongxingerke has opened 16 Star Chuang stores in 14 cities across the country, including Beijing, Guangzhou, Hefei, Changsha.
In terms of product , Hongxing Erke is also working hard to move closer to young people. Not only has he cooperated with " Fox Demon Little Matchmaker ", Honor of Kings, Sanxingdui Museum and other companies to launch co-branded products, but he also launched the Youth Design Co-creation Competition in March 2022, saying that through this event, it will "select more excellent young designers... encourage fans and young people to participate in brand co-creation." In the same month, Hongxing Erke also released a future strategic plan, saying that he would adhere to the "new domestic product in science and technology", empower products with technology, continue to realize product innovation, and allow technology to meet the needs of the Chinese people's scientific movement.
These measures are not without effect. In June 2022, Wu Rongzhao reposted the "Sweetheart Leader" Wang Xinling on Weibo posting a photo of wearing Hongxing Erke's shoes, which once attracted many netizens' comments such as "this pair of shoes is really good" and "feel good".
In Zhang Qing's view, although Hongxing Erke seized the opportunity brought by an occasional event and allowed himself to continue to have popularity, in the long run, the brand ultimately depends on the product to speak, and this is not a one-day effort. The company still needs to continue to work hard on its core competitiveness and practice its internal skills in order to have the opportunity to turn its advantages into victory.
marketing is weak, and its performance is dull
Around the Hongxing Erke donation incident itself, an undeniable fact is that the "donation" behavior has surpassed the conventional operations such as cross-border joint branding and celebrity endorsement, and has become the main means for Hongxing Erke to attract the attention of the outside world and even increase revenue.
The most obvious comparison occurred on July 21, 2021. Not long ago, the Tmall platform just released the 618 sports outdoor category transaction data list that year. Among them, Anta , Lining , Peak , Extended and 361° ranked among the top five in the national trend sports brand transaction volume , and Hongxing Erke was not on the list. The donation incident on July 21 became a turning point, and Hongxing Erke ignited "wild consumption". Data shows that from July 22 to July 26, Hongxing Erke's cumulative sales exceeded 140 million yuan on Taobao platform alone. What is this concept? You should know that in 2020, Hongxing Erke's annual revenue was only 2.843 billion yuan.
Of course, the sales dividends donated to Hongxing Erke are not only reflected in Taobao, the platform. According to Grey Dolphin data, from July 23 to July 25, 2021, the Douyin platform verified four Hongxing Erke official accounts. In 3 days, these four live broadcast accounts sold a total of more than 190 million yuan of goods.At the same time, a report released by JD.com also showed that on July 23, Hongxingerke's sales increased by 52 times year-on-year.
As the popularity continues to ferment, this emotional consumption boom spreads offline, and even an extreme case of "a male customer buying shoes worth more than 30,000 yuan in one go" and "a man who buys 500 yuan and pays 1,000 yuan and runs away".
How much revenue has this wild wave of consumption brought to Hongxingerke a year ago? "Financial World" weekly magazine tried to verify with Hongxing Erke, but no reply was received as of press time. But it can be seen that this wave of consumption fanaticism brought by emotions and traffic eventually returned to normal as emotions calmed down and traffic weakened.
According to Feigua data, starting from August 2021, the live broadcast data of the Douyin account "Hongxing Erke Brand Official Flagship Store" has experienced a cliff-like decline, and it lost more than 10,000 fans every day. The weakening of traffic is directly reflected in sales data. In August 2021, Hongxing Erke's official account estimated sales to be approximately 39.7 million yuan, only 1/3 of that in July 2021. In the next six months, the account's monthly GMV never exceeded 20 million yuan. After the popularity of
Hongxingerke tried to make up for it. In November of that year, taking advantage of the popularity of the variety show "Hong Kong Brother 1 Overcoming Troubles" , Hongxing Erke announced that he would cooperate with Jordan Chan, who debuted as the C position in the show. It can be imagined that Hongxing Erke wanted to have a bit of nostalgia. After all, in 2001, he spent a lot of money to invite Chen Xiaochun to endorse him and successfully helped the company gain popularity, which is a marketing model for Hongxing Erke.
However, from market feedback, Hongxing Erke, who has divested the "donation" behavior, did not have enough topicality. Not only did the Weibo of the official announcement of the cooperation have not caused much response, but the cooperative videos of the film have not been released for a long time.
(Photo/Photo by "Financial World" Weekly)
In addition to trying to play the nostalgic card, Hongxing Erke has also tried to follow the trend and follow the national style in the past year. For example, it cooperated with the Henan Museum to launch the "Starry River Brilliant" co-branded T-shirt, created a retro national trend series sweatshirt with Chery Automobile, and joined hands with Qingming Shangheyuan IP to sell national trendy shoes, but the response was still mediocre.
The only two popularity rebounds in
are all directly related to donation behavior. On October 11, 2021, Hongxing Erke announced that he would donate 20 million yuan to the affected areas in Shanxi. On the same day, his official Douyin account added 1,192 new fans. After the recent donation of 100 million yuan, another 170,000 netizens rushed into the live broadcast room, threatening to spend passionately. But in two days, sales hovered around 2 million yuan, less than 10% of the peak period a year ago.
From the current point of view, Hongxing Erke seems to be unable to regain the highlight moment when he was " bought out goods" and the chairman came forward to call for "rational consumption". "Financial World" Weekly saw at the Hongxing Erke official flagship store that all the products in the store are in stock. Except for some footwear products with a monthly sales of more than 30,000 yuan, the monthly sales of most products range from hundreds to thousands.
Not only that, during the on-site visit, "Financial World" weekly learned that offline stores were not queued up to buy or in short supply. A store shopping guide in Beijing said that this hot search on July 31 had no impact on offline consumption. Not only is there no rush to buy, but all the products in the store are sold at 59% off, with a complete range of styles and sizes.
. On second-hand trading platforms such as Xianyu, many Hongxing Erke stock products are as low as 20% off, which more or less reflects the brand's current sales dilemma.
Contradictory "upper" path
Some industry insiders have summarized two paths of rising sports shoes and clothing brands: either sell fast or sell expensively. Obviously, the former refers to laying channels, while the latter refers to building brands.
Before 2008, many domestic sports brands, including Hongxing Erke, chose to make channels and occupy the market by opening stores quickly. Unexpectedly, blind expansion has led to a high inventory crisis in the industry, and the performance of a number of domestic sports brands has been dragged down.
At this time, seeing foreign sports brands such as Adidas and Nike investing in sponsorship and promotion, and gaining high gross profits, domestic sports brands represented by Li Ning and Anta began to change upward. The former gained popularity by deeply binding the Olympic champion, while the latter acquired the Italian brand FILA, which has a high average customer price.
. Hongxing Erke, who is in the period of industry change, missed a good opportunity to transform upward due to crises such as fraud in financial data. In order to avoid head-on competition with foreign brands, Hongxing Erke chose the sub-sector of tennis on the one hand; on the other hand, he continued to sink and announced that "to strengthen the county level and improve the prefecture level."
It is these two choices that laid the obstacles for Hongxing Erke's future transformation.
According to Euromonitor data, in 2019, Hongxingerke's market share fell to 1%, hitting a new low in ten years. In 2020, Hongxing Erke's annual revenue was 2.843 billion yuan, lower than the 361°'s revenue of more than 5 billion yuan, only 1/12 of Anta and 1/5 of Li Ning. At that time, Anta and Li Ning's revenue were 35.5 billion yuan and 14.457 billion yuan respectively.
When it first went public in 2005, Hongxingerke's revenue was even 299 million yuan higher than Anta's revenue, which was 899 million yuan, but it was overtaken by the latter in 2007. For more than ten years since then, Hongxingerke's performance has been hovering between more than 1 billion yuan and more than 2 billion yuan, and its peers have already exceeded tens of billions. In October 2020, Hongxing Erke delisted from the Singapore Stock Exchange after suspended trading for 29 years and suffered consecutive losses for 10 years.
Although he has been making a name for himself in the past year with his kind deeds, many industry insiders told Caijing World Weekly that Hongxing Erke is still at the level of a third-tier brand in the industry. Specifically, international brands such as Nike and Adi and are ranked first-tier, while domestic brands such as Li Ning and Anta are ranked second-tier, and there is a momentum to catch up with the front-tier. Hongxing Erke, who lacks technical barriers, has always been in the third line.
marketing self-media person Lao Yi's first job was in Hongxingerke for marketing promotion, and he was also the first batch of marketing promotion personnel recruited by the company that year. She told the "Financial World" weekly that a large part of the advantages of Hongxing Erke being able to do it back then is the channels and product selection. The company's design ability has always been a shortcoming, "the brand's genes determine that Hongxing Erke can only take the route of low prices and high quality."
Hongxing Erke's design shortcomings can also be seen from the patent application information. Qichacha data shows that Hongxing Erke has a total of 292 patent information, of which 23% of the appearance design, utility model accounts for 48%, and invention authorization accounts for only 12%.
From the current perspective, Hongxing Erke, who has not yet made a breakthrough in R&D and design, seems to be preparing to start from sales channels and rely on the middle and high-end. Wu Rongzhao once publicly stated that Hongxing Erke will increase the layout of first- and second-tier cities and open a large-scale Xingchuang concept store in commercial areas of first- and second-tier cities. But to some extent, this "upgrade" measure comes at the expense of the sinking market base.
(Photo/Hongxing Erke official Weibo)
Dealer Xu Wei told Caijing World Weekly that in April this year, the regional manager asked him to change the joint venture model to join, but he didn't want to, so he quit. According to Xu Wei, in the past, in order to capture the sinking market, Hongxing Erke focused on a low-risk joint venture model, he only needed to pay a deposit of 100,000 yuan, and then spend more than 100,000 yuan to decorate and pay rent, and then he could successfully become a dealer. The company will take away the goods that cannot be sold out directly.
However, as Hongxing Erke frequently became a hot search, the company's business method has changed, "walking towards the city and shopping malls." Considering that Hongxing Erke cannot compete with other brands in the big business district, the newly launched franchise model requires advance payment and the return ratio is also limited, Xu Wei also withdrew.
. After the weekly magazine "Finance World" showed its intention to join, another former franchisee of Hongxing Erke who had five years of distribution experience tried hard to persuade him to withdraw: It is not recommended to do it. The company now supports franchise agents with small support and large tasks.Although
has become popular, the road ahead of Hongxing Erke is long and difficult. Whether the company can do it well still has to return to the essence of business.
(Xu Wei is a pseudonym in the article)
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