Reasons for Yaohan's Bankruptcy

Causes and enlightenment of Yaohan's bankruptcy.

2001110 In October, amid the voices of debt recovery, Yaohan Department Store (Hong Kong) Co., Ltd. finally declared liquidation, and its ten branches in Hong Kong and Macau closed down immediately. This is the largest group company that went bankrupt in Japanese department stores in Hong Kong in recent years. This news is like a bombshell, shaking the Hong Kong market, which has been continuously affected by the Asian currency turmoil. 2/KLOC-The placement of 0/00 employees, the impact of Yaohan's closure on the Hong Kong department store industry and other issues have suddenly become the focus of attention from all walks of life. In the mid-1980s, Wada Kazuo came to Hong Kong with more than one billion Hong Kong dollars to start a business, introduced the business philosophy of large Japanese department stores into Hong Kong, and quickly established a department store kingdom, which set off a whirlwind in the department stores and retail markets in Hong Kong. However, the changes in the market have dramatically thrown it into the bottom of the waves. Yaohan's evolution from prosperity to decline may reveal some lessons! Let the department store retail industry take a warning.

First, the grocery store began to build a department store kingdom. Wada Kazuo, the founder of Yaohan Department Store, has experienced many vicissitudes and prospered. Thirty years ago, Hotan was only the owner of Yaohan grocery store, which mainly sold vegetables in Shizuoka Prefecture. "Eight hundred" means food stall. Wada Kazuo started his world dream with the philosophy of "starting from scratch and returning to the starting line of zero at most". In the 1960s, a nationwide large supermarket chain appeared in Japan. At that time, only six or seven grocery stores in Yaohan were threatened. In order to avoid competition from his peers in Shanghai, Wada Kazuo went overseas to gradually realize his talents. 1972 opened its first overseas branch in Brazil, and then successively entered the Singapore and American markets. 1983 Yaohan finally became a Japanese listed company. 1984, Japanese Yaohan entered Hongkong and opened the first Yaohan department store in Shatian Satellite City in the form of pavement, with a pavement area of about 16084 square meters. Later, in1987 65438+February, a second branch with a freight yard area of about 22 197 square meters was opened in Tuen Mun Square. 1989 raised 67.3 million yuan in Hong Kong in September for the opening of the third branch of Huangpu Garden; Later, Yaohan and Hongkong expanded rapidly. 19 1 and 1992, * * Four new branches were established, located in Tsuen Wan, Yuen Long, Lantian and Macau, with a freight yard area of over 45-870 square meters. 1994 and 1995, the opening of Tseung Kwan O Store, Tin Shui Wai Store and Ma On Shan Store increased the total number of branches to 10. This business strategy, which seems to choose a new town as the business base, is aimed at the newly rising middle class in Hong Kong, and takes new management and all commodities as the leading ideology, which makes Yaohan become the upstart department store in Hong Kong in a short time and the main force of large shopping malls in new towns. At that time, Yaohan was very proud of being in Hong Kong and looking at the world. 1990, Wada Kazuo moved Yaohan's headquarters to Hongkong with HK$11500,000, and he cheerfully reprimanded Fang Qiu. When he was most proud, he bought the villa "Tianbi Gao" at the top of the HSBC Taipan Mountain at the highest market price at that time, which made the Hong Kong business community stunned. In Yaohan's huge world strategy, it is natural to develop Chinese mainland business. Yaohan opened a department store in Beijing in 1995, and then expanded its business to Shanghai, including Shanghai No.1 Department Store and Shanghai New Century Commercial Building, with a total investment of 228 million US dollars. Subsequently, the "Wuxi New Century" shopping center was established in Wuxi with an investment of 77 million US dollars. When Hotan entered Hong Kong, he vowed that when "1997" returned to China, Yaohan's headquarters would also be moved to China. By then, Yaohan's global sales will reach HK$ 55 billion. In 2005, Yaohan's sales network in China will be expanded to 65,438+0,000. The rapid commercial expansion has made Yaohan the number one Japanese overseas enterprise in Asia in recent ten years. The supermarkets of Yaohan department stores are all over Japan, Brazil, the United States, Singapore, Hong Kong, Malaysia, Brunei and Chinese mainland. Beijing pop singer Ai Jing once sang "1997 Shopping in Yaohan" in a song in the early 1990s, and Yaohan Department Store has become a part of local culture. According to a survey, among the 65,438+0,000 respondents, 76% have shopped in Yaohan, ranking first among other department stores, including Jusco, Yong 'an and sogou. However, when operators are intoxicated with the dream of "department store kingdom", they ignore the curse of excessive expansion on the future development of Yaohan.

Second, the main reason for the collapse of Yaohan The six department stores in Hong Kong, whether Japanese-funded or Hong Kong-Hong Kong exchange joint venture, have similar business practices and generally follow the local Japanese business methods. However, there are differences in administrative management and business strategies due to the different personalities, styles and views on the local market and the overall economic development prospects of the operators. Yaohan went bankrupt when Asian countries and regions were hit by the financial turmoil and their economies were adjusted downwards. Although there are various external unfavorable factors leading to the failure of Yaohan's operation, the main reason is that the management's unrealistic expansion ambition has pushed Yaohan to the point of no return. The reasons leading to the collapse of Yaohan are: 65,438+0, rapid expansion, tight monetary base and lack of bank backing. The reason for the collapse of Eight Companions and Baifa is that Yaohan made a mistake in investment strategy and expanded too fast. Before the old store went on the track, it vigorously expanded the new store, resulting in heavy debts. The recent reason is that after Yaohan went bankrupt, suppliers came to collect debts one after another, but the money was not available. As a result, Hong Kong and Yaohan, which are already short of money, are even more stretched and insolvent, resulting in an avalanche effect. Yaohan Annual Report shows that in 1988, Yaohan's trade debt payable was only over 3 million yuan, equivalent to less than 65,438+0% of its turnover. However, by the end of March this year, the outstanding trade accounts in Yaohan had increased to nearly HK$ 550 million, equivalent to 6,543.8+03.5% of the turnover, and the total liabilities reached HK$ 6,543.8+024 billion, which was close to the total assets of ten branches. The consequences of the rapid expansion of Yaohan department stores are very obvious. People in the accounting field estimate that to open a large department store like Yaohan, it will cost 40 to 50 million yuan to decorate it alone, and it will take at least five years to repay the current period. In 9 1 year, Yaohan's profit was at its peak, with a net profit of nearly 57 million yuan. In the next four years, Yaohan opened seven branches, and its profits dropped rapidly. Since 1995, Yaohan has suffered huge losses, with a cumulative loss of HK$ 3,654,380,600. Yaohan has been throwing money at opening new stores, and the front line has been stretched too long, resulting in an increase in overall expenditure and inventory. In the case that the capital inflow can't meet the expenses, Yaohan has to keep borrowing from banks and delay repayment to suppliers, and the interest expenses are increasing day by day. In addition, in the process of business development, Yaohan lacked close cooperation with banks and did not listen to the opinions of the banking sector, which led to the company's financial difficulties, without the backing of banks, and finally forced Yaohan Department Store to declare liquidation when the funds could not be turned over.

2. The inability to own a property, soaring rents, the heavy burden of not being able to afford a property, and the sharp increase in rents year by year are another cause of death in Yaohan. Since Yaohan entered the Hong Kong market, it has been operating in the form of lease, and has not purchased paved property. In the case of rising prices and rents, Yaohan's burden is getting heavier and heavier. When Yaohan/KLOC-0 entered Hong Kong in 1984, it was at the time of Sino-British negotiations and the market was at a low ebb. After Sun Hung Kai Properties built a new city plaza in Sha Tin, in order to bring prosperity to the real estate market, Sun Hung Kai signed a low-cost lease with Yaohan for a period of 10 year, and leased the shops on the fourth floor of the new city plaza to Yaohan at a rent of less than 65,438+00 yuan per foot. However, when the lease of 10 expires, the developer will increase the price by more than 6 times, forcing Yaohan to reduce the four floors to two floors, which will affect the profits of shops that have been selling well. 1997, Yaohan's rental expenditure alone reached HK$ 460 million, equivalent to 1 1% of the total turnover.

3. The business strategy failed to adapt to the changes in the market. The rapid expansion of Yaohan is fatal, and the mistakes in business strategy have accelerated its liquidation. Yaohan's investment strategy is aimed at big houses and villages. Like other department stores in Japan, it pursues large shopping malls and attracts customers with a wide range of middle and high-grade goods. This strategy was very successful more than ten years ago. At that time, China had just started reform and opening up. Due to the rapid economic growth in the Mainland, the income of Hong Kong people has increased substantially. In the early days, 80% of Yaohan Baifa's goods came from Japan, and 20% were purchased locally, which was quite successful. However, times have changed. In the 1990s, property prices and rents soared in Hong Kong. Great changes have taken place in the business environment of department stores. The bigger the shopping mall, the bigger the rental cost and the more employees it employs. Moreover, not all the displayed goods sell well, and many of them are goods with extremely slow circulation speed, which not only occupies funds, but also lacks efficiency. At the same time, the department store industry has its own rules, unlike other industries, investment will soon pay off. It is understood that it will take at least six years for the department store industry to gain a foothold from opening a store. Yaohan operators ignored this market rule, mechanically pursued the original development model, blindly expanded the number of stores and opened one after another. Because many newly opened shops have no customers, they can't make a profit for several years, and the mud is getting deeper and deeper.

4. The investment strategy is divorced from reality and lacks scientificity. In terms of investment strategy, many shops are unscientific, divorced from the local environment and blindly developing. The population of new towns is generally smaller than that of old towns, lacking floating population and relatively low purchasing power, which makes it difficult to support large-scale stores. Yaohan has opened in Maanshan New Town with a population of less than100000! 160000-foot mall sales can't go on, and it has been losing money from opening to closing. According to China Resources Department Store, the choice of department stores should follow objective laws. The population is between 300,000 and 400,000. New towns with development prospects can open up to 20,000 to 30,000 feet of small and medium-sized shopping malls. If it is an old city with no development prospect, it does not have the conditions to open a large department store. In addition, the rising rents, high land prices and high wages in Hong Kong since the 1990s have objectively restricted the possibility of operating large shopping malls in new towns with low incomes, but Yaohan failed to respond in time.

5. The market positioning is vague and unattractive. In terms of commodity management, Yaohan's market positioning is vague. In terms of business model, department stores are not like department stores, supermarkets are not like supermarkets, and the market positioning is not as clear as other Japanese department stores such as Jusco and sogou. In the past, most Japanese-funded department stores took the middle and high-end route, while Yaohan's later products were positioned as low-end products, and 80% of the products were purchased in Hongkong or Chinese mainland. Due to operating expenses, many commodities are expensive and lack competitiveness. As a Japanese-funded department store, the goods have no own characteristics and ignore the international taste, so they lack certain attraction.

6. Lack of managerial talents, maladjustment in operation and management, lack of middle-level managerial talents, confusion in internal management and disconnection from external expansion strategy are also fatal internal injuries of Yaohan's bankruptcy. Yaohan operators only pay attention to the speed of external expansion, seize sales outlets, and lack the follow-up management of middle-level talents. Internal management confusion, resulting in many drawbacks. It is reported that one third of the office buildings rented by Yaohan Shatian Headquarters have been vacant for five or six years, from renting to closing. In Hong Kong, where the rent is very expensive, this is impossible and should not happen to other companies. In addition, due to the lack of management talents, many internal links are out of control, resulting in high prices of purchased goods and lack of competitiveness. The whole Yaohan Group has a huge structure and belongs to the family military operation, and its management decisions are often highly concentrated on one person. This old management method, which lacks scientific vitality, is extremely incompatible with the requirements of modernization and the development of large department stores. Japanese media once pointed out that Yaohan's bankruptcy is an arbitrary management mode of monopoly operators that is too romantic.

Third, the enlightenment of Yaohan's bankruptcy The rise and fall of Yaohan's operation has provided many useful inspirations for the Hong Kong department store industry:

1. There should be some self-owned properties in the department store retail business. In Hong Kong, retail business should have its own property, especially large-scale department stores, which can ensure the long-term stable development of business, establish the overall image and create long-term benefits. According to some people who run retail business, unless you have your own shop, you can't continue to do business. Otherwise, nine times out of ten, let go after the first lease, and few people can survive the second lease. At the beginning of its establishment, Hang Seng Bank proposed that all properties must be owned by themselves, so as to ensure stable income and expand development. At present, more than half of Hang Seng's annual profit of 600-800 million comes from property income. Similarly, Guo Yuhua Street, which has its own property management, is unmoved and poised when the retail market is depressed at present.

2. Asset management and zero-level management should be closely integrated and develop together. In recent years, many large real estate developers in Hong Kong have set foot in the retail industry, and they have also seen the profits of this piece. The real estate they operate is generally combined with store management, hoping that the retail industry will bring prosperity to the real estate. For example, when Changshi developed many properties, it had already reserved a place for its Baijia Supermarket. When some properties rent low-rise shops, the rent is very low, but it is required that non-brand shops are not thick, so as to upgrade the property grade and raise the rent level of office buildings. At the same time, because the property and retail businesses complement each other, the growth of the two major operating profits can be guaranteed.

3. Maintain the existing market positioning and adjust the business strategy in time according to market changes. The retail industry should be based on the existing market positioning level, operate flexibly, take it slowly, steadily and proactively. Adjust business strategy, reduce operating costs, control inventory, increase marketable varieties, and pay attention to the speed of capital withdrawal. If this can be done, enterprises will be in an invincible position in the fierce market competition.