China Consumer

Change of style

Can pop star revive HLA’s flagging fortunes


Chou: getting a new wardrobe?

Are the young people who drank U-loveit milk tea, donned Metersbonwe casual wear and rode around on Evermaster motorcycles – all habits associated with Taiwanese pop legend Jay Chou – now going to start wearing clothing under the HLA brand?

China Heilan Group – better known by its retail brand name HLA – certainly hopes so. In October it posted three weibo messages introducing Jay Chou as the new spokesperson for the brand. The announcement soon made a splash: ‘Jay Chou Endorses HLA’ became a hot topic on Weibo with more than 540 million reads.

In 2019, a market research firm reported that the majority of Jay Chou’s fans were born between the years of 1988 and 1997. This aligns with HLA’s target consumer group of 20 to 45 year- olds. In the last few years, the brand has also tried to revamp its image, appealing more to younger consumers. Apart from making Chou its spokesperson, it has been sponsoring popular shows such as U Can U Bibi, Keep Running and The Next Top Bang. But the Taiwanese star’s fans bring a different level of dedication and they were soon rallying on the Heilan Group Weibo account. “In the future my entire closet will only have clothes from HLA,” professed one netizen. “I want the sweater that Jay Chou wears,” swooned another.

HLA needs a sales surge, with iFeng reporting that it had more than Rmb8 billion in unsold inventory on its books last month. And Chou’s star power is yet to put a rocket under Heilan’s share price. In the six days after the announcement of the endorsement deal, Helian’s shares actually fell more than 3.5%, according to Wind Information, a financial data provider.

The Heilan Group was founded in 2002 in Jiangsu’s Jiangyin primarily as a clothing brand for men. Its advertising slogan – “Every year, a man only needs to shop twice at HLA” – was popular (discerning a fundamental truth about many mens’ dislike of shopping for clothes, especially with their wives, perhaps).

In 2014 the clothing and textiles firm went through a corporate reorganisation before listing on the A-share market. Operating income was robust at more than Rmb12.3 billion and growing rapidly. At its peak, the company’s founder Zhou Jianping was worth Rmb43 billion, making him the richest man in Jiangsu.

Heilan Group’s revenues and profits increased steadily for a couple of years, with sales reaching Rmb15.8 billion by 2015. But the company has struggled to maintain the previous pace of growth and 2020 saw sales hit by the pandemic, dropping to Rmb8.1 billion in the first half.

The slowdown has been accompanied by a growing backlog of unsold stock, which has been a source of concern for investors. The anxiety seems to have irritated Heilan’s management team, however. “No one is allowed to question HLA’s inventory issues!” bellowed Zhou, the founder and chairman, at a shareholder meeting last year. “There is no point questioning the company. If you were sufficiently skilled, then you would be the chairman!” he added.

Where inventories remain unsold, HLA has cut the brand labels from its clothing and sold it off to third parties. In August, it was reported to be selling its apparel at discounts of as much as 90% to other sellers.

HLA comes up with the main design ideas for its clothes and then places the orders for the finished goods with suppliers. Consumers have often complained that HLA fails to stay in step with new trends. Additionally, it does not design clothes for women, excluding itself from a higher-yielding segment of the fashion market. Its focus has been on high volume, cheaper clothing. Critics wonder if these weaknesses have been addressed at senior management level.

“It seems that HLA’s marketing activity is only garnering momentary traction. In reality, the overall operations have not fundamentally changed and the product iterations are still weak,” Cheng Weixiong, the founder of Shanghai Liangqi Brand Management, told Times Weekly.

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