Written by Chen Jiying
Edited by Wan Tiannan
In the past two years, Chinese concept stocks have been in mourning.
The market value of large factories has been cut in half compared with the peak; Kuaishou's stock price fell by eighty percent from its high; Meituan's market capitalization has also shrunk by more than half from its peak; Other listed unicorns are also devastated by their vitality.
However, among the Chinese concept stocks, there are two exceptions - one is Pinduoduo, whose market value once surpassed that of Alibaba, the first e-commerce brother, and its stock price has more than doubled from the low point in June this year; The second is MINISO, whose U.S. stock price soared from less than $6 in September last year to nearly $30.
Unlike most companies that have reduced their hands and feet, reduced costs and increased efficiency, Pinduoduo and MINISO are making a big splash and attacking globalization.
As early as the beginning of the establishment of Pinduoduo, Huang Zheng expressed his ambition of globalization in his first place, wanting to "turn capitalism upside down". In April this year, Chen Lei, the first person appointed by Huang Zheng and chairman of Pinduoduo, was transferred to focus on globalization.
In 2023, Ye Guofu, the founder of MINISO, will also have a dense overseas itinerary, from Fifth Avenue in New York, to Oxford Street in London, England, and then to Jakarta, Indonesia. The globalization that Ye Guofu personally grasped has become the "No. 1 project" of MINISO.
Under the onslaught, the performance is gratifying - Pinduoduo and MINISO, and the two growth curves of domestic and foreign businesses are soaring.
According to "LatePost", Temu's GMV in 2023 is expected to soar to $14 billion, and the GMV target for 2024 is $30 billion.
MINISO's overseas report card is also good - in the Q1 fiscal quarter of fiscal year 2024 ending at the end of September 2023, MINISO's revenue was 37900 million yuan, a year-on-year increase of 37%. Among them, the domestic revenue exceeded 24900 million yuan, a year-on-year increase of 35%, and overseas revenue was 1.3 billion yuan, a year-on-year increase of 41%.
It was the best quarter so far in the company's history", Yip revealed.
Under the collective malaise of Chinese concept stocks, what are the underlying commonalities of the counterattack stories of Pinduoduo and MINISO, and what enlightenment can they bring to the industry?
China's cost-effective, global cargo
Whether it is Pinduoduo or MINISO, the soaring market value of its market value depends on its performance at home and abroad.
In the quarter, Pinduoduo's revenue was 688400 million yuan, a year-on-year increase of 939%, nearly doubled, far exceeding analysts' expectations, "not as good as Temu".
In the Q1 quarter of fiscal year 2024, MINISO's GMV in overseas markets increased by 48% year-on-year, of which the direct market increased by 80% year-on-year, the * market increased by 39% year-on-year, and overseas revenue increased by 41% year-on-year.
Unlike Chinese companies that focus more on underdeveloped markets when going overseas, the globalization of TEMU and MINISO has simultaneously attacked the markets of developed countries.
Temu has been launched in 47 countries around the world, and half of its users are from the United States.
MINISO, which started earlier than TEMU, has entered 107 countries and regions around the world since its overseas launch in 2015, and is also gaining momentum in developed markets, with revenue growth of 160% in North America, 60% in Latin America, and 85% in Europe in this fiscal quarter.
In addition, the growth quality of MINISO's overseas segment is also improving, with the GMV of a single store increasing by more than 27% year-on-year, and the average number of stores increasing by about 13%.
From the appearance, TEMU and MINISO do not seem to be comparable - in the overseas market, the former is entrenched online, the latter focuses on stores, the former covers the whole category, and MINISO focuses on "good-looking, fun, and easy-to-use" lifestyle products.
However, the underlying logic of the two is actually the same - both rely on the advantages of China's ** chain, which has the highest cost performance in the world.
At the earnings conference, Pinduoduo executives interpreted Temu's competitive logic, "We try to create a platform model that is different from Amazon's new generation of flexible ** chain system, where consumers from countries with different cultural backgrounds can buy goods directly from high-quality factories through our services. ”
Under the extreme cost performance, Temu's ** in some categories can be half or even more cheaper than SHEIN and Amazon.
The same is true for MINISO, "As our volume (becomes) larger and larger, our bargaining power (with) the ** chain is also increasing", Ye Guofu revealed.
At the same time, Ye Guofu is also deliberately restraining MINISO's desire for short-term high profits, "All excellent retail companies in the world do not make quick money, and the model of sustainable operation." Only with high cost performance can we maintain a high threshold, and competitors will not be able to enter. ”
In fact, even Amazon attaches great importance to the Chinese ** chain - in 2022, the products of Chinese ** merchants will account for 70%-80% of Amazon's goods, and the contribution of GMV will be as high as 26%.
The aggressive offensive of MINISO and Temu has even caused local players in overseas markets to lose their troops.
According to GWS data, Amazon's daily mobile app lost more than 1 million U.K. users from January to June, while U.S. users plummeted to 46 million from 54 million daily active users at the end of March, driven by Chinese players such as Temu.
In the European and American markets, MINISO has put a sharp increase in pressure on dollar general (Dale), a $1 store in the United States.
In the latest fiscal quarter just released, Dahl's revenue fell into stagflation, with a year-on-year increase of only 396%, and the net profit attributable to the parent company fell by more than 30% year-on-year - after the epidemic, with the opening of logistics, the cost-effective advantage that Dale was proud of in the past was gradually broken down by players from China.
Of course, in developed and underdeveloped markets, the comparative advantages of China's ** chain are actually different.
In non-developed countries, such as Latin America and Southeast Asia, the efficiency of the local ** chain is low, and MINISO has a significant competitive advantage by virtue of its integrated circulation model and China's lower-cost goods.
In the developed country markets represented by the United States and Europe, although its retail system is more efficient, its cost advantage is far inferior to that of China's first chain.
As for how to envelop the upstream ** chain and completely release the advantages of China's ** chain, the measures of TEMU and MINISO have commonalities and differences.
When attracting investment, Temu threw out the first dividend of high GMV growth in China's industrial belt, and second, its full custody model, which greatly lowered the threshold for going overseas. Merchants in China's industrial belt who do not speak foreign languages and do not understand cross-border e-commerce can leave their operations and logistics to temu and easily enter the globalization.
In addition to relying on the stable orders brought by high growth to achieve price reduction by volume, MINISO also superimposes the sense of security brought by the buyout system, as well as the short account period of rapid payment, etc., and is willing to do product development and flexible chain with a lower ** to ensure the speed of new products, so as to reduce inventory pressure, improve circulation speed, and ensure the high cost performance of the terminal price.
Therefore, even though the tracks of TEMU and MINISO do not seem to coincide, in terms of the underlying development logic, the two have a high degree of interconnectedness - fully releasing the comparative advantages of China's ** chain.
Looking at the world, there is no other country or region that can match the advantages of China's ** chain. Taking Vietnam as an example, although it has advantages in a single variable of labor costs, it is not the same as China in terms of the completeness and richness of the first chain.
This also means that this underlying advantage of temu and MINISO has long-term sustainability.
temu rolls are low, and MINISO has "three good".
Although they both rely on the advantages of China's first-class chain, temu and MINISO are very different in terms of the depth of involvement in the first-class chain and the control of core competitive advantages.
Temu, which has just launched globalization in 2022, has a core competitiveness of "extremely low price", and as a platform, it controls the products it sells, controlling more prices and less goods.
To this end, temu continues to upgrade its price comparison system.
According to a later report, the temu platform holds a product auction once a week, and the one with the lowest middle price of the same model wins and gets more traffic support, while the products that fail in the bidding will be restricted by the platform from stocking and launching new products. Once the merchant continues to bid unsuccessfully, even the goods that have been put into the warehouse will be returned by Temu.
In the period of testing the waters of globalization, it is easy to understand that TEMU only controls prices and does not control goods - whether it is manpower or system, it is difficult to support the massive full category of goods, scientifically and accurately control both price, product and goods.
As a three-in-one self-owned brand of "product + brand + channel", MINISO not only controls price, but also controls goods and products, and in this regard, the path of MINISO and SHEIN is similar.
Ye Guofu didn't want to just roll up the low price, "There are two kinds of business in this world that anyone can do, one is to make things very well, and it is very expensive to sell; The second is to make things very poorly, and sell them very low. But the hardest thing to do in this world is to do the quality very well, and ** to do it very low. ”
Therefore, he delineated the yardstick for MINISO to be cost-effective, but also to meet the "three good" indicators - "good-looking, fun, and easy to use".
In particular, it embodies its "three good" concept of IP trend products.
MINISO has successively cooperated with more than 80 well-known IPs around the world, such as Disney, Sanrio, Pokémon, Jurassic, Barbie, etc., and has broken the ceiling of product innovation and market expansion through IP co-branding and incubation of its own IP hits. It has incubated a number of original IPs including Dundun Chicken, Penpen, China Panda, etc., and the first original IP park Dundun Chicken theme store has also landed in Wuhan in September, creating an immersive trendy IP park through rich IP products and scene design.
The advantages of IP products are obvious, one is that they can quickly "get acquainted" when they are globalized.
When it first arrived in markets such as the United States, Europe, and Southeast Asia, MINISO was an unfamiliar brand, but it could take advantage of the world-famous super IPs such as Disney and Sanrio to quickly establish familiarity and intimacy with local target users through co-branded products.
The second is to improve gross profit margin.
The low-price strategy has worked, but it may drag down gross margins. With a lot of money like Pinduoduo, Temu is not in a hurry to make quick money, and plans to lose money for three years first.
Because of the superposition of IP, MINISO's products have a premium space while ensuring cost performance, and can continue to improve gross profit margins, "many new IP products are more than 30% higher than non-IP similar products, and they are still sought after."
In the latest fiscal quarter, MINISO once again set a new single-quarter record, with a gross profit margin exceeding 40% for the first time, reaching 418%, up 61 percentage point; Adjusted net income was 6400 million yuan, a year-on-year increase of 54%.
Temu, which only rolls low prices, and MINISO, which seeks "three good", also have a difference in core competitiveness.
Low price is the core competitiveness of temu, therefore, its strategy is the idea of explosive products, a plate of low-priced goods, access to globalization.
Of course, we believe that this is only a phased measure of Temu - just as Pinduoduo started from outside the Fifth Ring Road, and now it is attacking the Fifth Ring Road, and also uses the iPhone and other first-value goods as a low-price benchmark.
Ye Guofu believes that the essence of consumption is happiness.
Based on this idea, the core competitiveness of MINISO not only meets the basic functional value with cost performance, but also caters to interest consumption and provides "emotional value".
This strategic positioning is also suitable for its core categories - big beauty, big toys, big IP, etc.
The above-mentioned categories are largely self-pleasing consumption, and at present, the happy consumption philosophy of arousing interest, satisfying emotions, anchoring hobbies, and leading aesthetics has become the common divisor of mass consumption.
Of course, in more than 100 countries around the world, MINISO has very different cultural environments, interest consumption, and aesthetic preferences, so in terms of localization, MINISO must also be deeply involved.
In order to achieve glocalization, in Southeast Asia, where there is a lot of rain and high temperature, MINISO has strengthened the waterproof and sweatproof function of beauty products; The big house in Europe and the United States is suitable for large and tall dolls; In the Middle East, women's black robes generally have no pockets, and small packages of wet wipes are more popular; Dundun chickens, which came to the Western world, were disguised as Christmas chickens, Easter chickens and other festive dolls; In India, heavy fragrances that last for a long time are more sought after.
In fact, there is no difference between temu and miniso in terms of key categories, brand positioning, and core competitiveness, but it is the optimal solution to adapt to their current development stage.
The strategy is different: super brand vs super platform
Although both are soaring in globalization, there are significant differences in the growth paths of TEMU and MINISO.
Relatively speaking, Temu, which focuses on the line, has a flexible body and a lighter growth model.
In order to quickly open the U.S. market, in February this year, Temu spent $14 million, setting a record for the event's advertising in history, and also became the youngest brand ever to advertise in the "Super Bowl", in order to convey its low-price mentality.
According to the latest news, temu plans to run another 30-second ad during the U.S. Super Bowl game on February 11, 2024, which will be the second consecutive year that Temu will appear at the U.S. Super Bowl.
However, MINISO took the initiative to do heavy work and relied on seemingly cumbersome offline stores to expand its business.
As of September 30, 2023, MINISO has spread to 107 countries and regions around the world, with 6,115 stores worldwide, including 3,802 domestic stores and 2,313 overseas stores.
However, in the location of the ** store, MINISO has taken a lot of effort to plant flags in the world's famous landmarks and top business districts.
On November 10, MINISO UK*** officially opened on Oxford Street, London, covering an area of nearly 3,000 square feet; In May this year, MINISO became the first Chinese brand to enter Times Square in New York, USA, which has a reputation as a world crossroads.
In Manhattan in New York, next to the bustling Galeries Lafayette department store in Paris, Westfield shopping mall in London's top business district, Dubai's Dubai Mall (Dubai Mall) and other overseas places where every inch of land is valuable, MINISO has successively lit up its signs, and next to some of its stores, there are also the world's most well-known brands, such as Hermes, LV, etc.
Why does MINISO spend a lot of money on stores?
First, in the past, there were few or no Chinese brands in these top business districtsTherefore, once MINISO settles in, it has a strong impact, and quickly occupies the minds of users in a way that seems to be contrary to common sense;
Second,Living next to the world's big brands, and at the same time superimposing the ultimate cost performance, can break the traditional prejudice of "low quality and low price" of Chinese goodsLet the three good attributes of MINISO stand out;
Third, this is also related to the positioning of MINISO. Its products not only meet the basic "easy-to-use" functional needs, but also have fun and good-looking attributes, which can only be fully released through the face-to-face scene of the store.
Fourth, the logistics costs in Europe and the United States and other countries are more expensive, while MINISO focuses on the "$10" range in the United StatesRelatively speaking, store sales can ensure cost and pricing advantages.
Fifth, stores can establish exclusive barriers——For example, in a business district like a shopping mall, in order to enhance the richness of the overall business format, only one merchant of the same type will usually be introduced.
Therefore, although the above location seems to be the most expensive, the ROI of MINISO is quite impressive.
According to Liu Xiaobin, CMO of MINISO, although the monthly rent of MINISO's Times Square Global *** is as high as 350,000 US dollars, after the opening, the performance of the New York Times Square store in the first month was close to 10 million yuan, setting a new sales record for a single store in the United States, so it can not only easily cover the high rent, but also bring considerable income.
In the future, MINISO will open a three-story single-family 1,000-square-meter store on Fifth Avenue in Manhattan, New York, and its monthly sales are expected to hit more than twice that of the Times Square store.
Of course, in addition to landmark stores, other overseas stores of MINISO are also interested in controlling costs. For example, the average monthly rent of a single store in the United States is trying to control it below $100,000 per month.
Although MINISO expands its offline stores, it seems that the growth model is more cumbersome, but after its directly operated stores are run through, it can use the first-class person and partner model as leverage to leverage growth in the future.
According to the financial report data, both at home and abroad, the proportion of directly operated stores of MINISO is very small, and partners and first-class stores occupy an absolute majority.
Especially in overseas markets, the partnership and ** model are more necessary - the latter has abundant local resources and can get better locations and lower rents.
For example, MINISO's ** business company in Mexico, one-third of the equity belongs to the largest local supermarket chain Grupo Sanborns, and the owner of this group is Carlos Slim, the richest man in Mexico, with massive user resources and offline formats, and rich retail experience, which can help MINISO quickly open up the situation here.
In the final analysis, the channel layout and growth path of TEMU and MINISO are very different, because TEMU is positioned as a super platform, while MINISO aims to be a super brand.
Under the super platform mode, Temu guides its massive number of merchants to roll up with each other through an efficient and ultimate price control model, so that cost-effective products can stand out in the incentive fight.
In this game, merchants go in and out, products are replaced back and forth, which is a dynamic game process, users only recognize temu, not familiar with merchants, and do not need to be loyal to a single brand.
Under the super brand model, although the product continues to iterate, the value symbols carried by the product and the target groups met by the product have relative consistency and continuity.
For MINISO, whether it is an IP co-branded product, a "three-good" ruler, or a flagship store entrenched in the world's top business districts, it bears the heavy responsibility of building a global brand.
Looking back at the long journey of Chinese enterprises to go overseas, in the past, whether it was a retail brand or a large Internet manufacturer, its business was still mainly domestic, and most of them were limited to small fights in overseas markets. MINISO, TEMU and TikTok have broken through the aforementioned shackles, and in the future, their overseas ** will most likely match or even surpass their domestic performance.
They have both commonality and individuality, and can also bring a lot of inspiration and confidence to the follow-up Chinese enterprises going overseas.