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Niche firms devise supple makeovers to stay in season

By Liu Jie (China Daily)
Updated: 2009-04-28 08:19

A change in season is always welcome, especially if it is summer following a particularly harsh winter. But to hotpot specialist Little Sheep, the onset of summer is a challenge to its survival.

Many small neighborhood hotpot eateries in Beijing and other cities around the country can just shut shop during the off-season. But that obviously is not an option for Hong Kong-listed Little Sheep, which owns and operates the nation's largest chain of hotpot restaurants.

It cannot afford to send thousands of cooks, waiters and helpers packing for the summer and expect them to troop back to work at the first sign of autumn. Neither can it simply switch off the vast supply chain that extends to the sheep farms in Inner Mongolia and turn it back on at will.

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What's more, its shareholders, including quite a few foreign institutional investors, expect the company to keep its cash registers ringing all through the year.

The problem, of course, is not unique to Little Sheep. Publicly-listed vendors of winter clothing, notably down jacket maker and retailer Bosideng and Inner Mongolia's cashmere specialist Erdos, are under increasing pressure from shareholders to reduce their over-dependence on the harsh weather for their earnings.

So, what is the solution?

Little Sheep is offering, for the first time this summer, hotpot for the hot season. The stove at the table is there. Instead of the spicy thick soup favored by patrons seeking temporary relief from the bitter chill during the winter, the summer version is a light clear soup flavored by jasmine or dried chrysanthemums that are valued by Chinese herbalists for their "cold" or "yin" quality.

For the traditionalists, there is a tea-based soup that is supposed to neutralize the fat of the meat that keeps the body warm. "The new menu (at Little Sheep) has definite appeal for the increasingly health-conscious diners," said Bian Jiang, general secretary of China Cuisine Association, a trade organization for Chinese chefs.

Restaurants of the hotpot chain are offering patrons a much wider choice of cold side dish and an extended dessert menu to sweeten the patron's palate. Some Little Sheep restaurants have even extended their business hours to take advantage of the longer daylight hours during summer.

Lu Wenbing, Little Sheep's president, emphasized that his company can leverage on its meat processing base in Inner Mongolia to develop more lamb dishes, such as western-styled roast lamb chops or Chinese-flavored braised lamb and cold lamb tripe mix.

Zhao Zheng, a loyal patron of a Little Sheep restaurant near his home, said that he would still enjoy hotpot in summer. "Hotpot in summer is another kind of enjoyment," he said.

Little Sheep owns 130 directly controlled restaurants and 246 franchised outlets on the mainland and another 20 overseas, mainly in Hong Kong. The company's sales touched 1.01 billion yuan in 2008, up 34.6 percent from the previous year. Average per customer expenditure at the company's restaurants rose 5.4 percent. The company attributed this growth to brand building, more restaurants and improved menu.

In the garments business, China's largest down clothes producer Bosideng has diversified into other lines of clothing products through mergers and acquisitions to improve sales during the warm season. The company said it would continue the strategy in the coming years.

Bosideng International Holdings Ltd, the Hong Kong-listed arm of Ningbo-based Bosideng Group, bought a menswear manufacturer and retailer from its parent company for 560 million yuan last year. The first Bosideng Menswear Store opened last September. The company said it expects to open a total of 2,000 outlets in second- and third-tier cities by 2010

Bosideng said it had earmarked 2-2.5 billion yuan to acquire some well-known women's and children's clothing brands at home and abroad this year. The company said that the new acquisitions would greatly lessen its dependence on a single line of products - down garments.

Bosideng held its first fashion show of its diversified clothing products at this year's CHIC, the largest annual international fashion fair in China. "It's really fantastic," said Jiang Hengjie, deputy chairman of China Garment Association. "But it (Bosideng) still has a long way to go before it can establish an all-season brand."

Different from Bosideng's merger and acquisition tactic, cashmere giant Erdos is further deploying its innovation strength to develop the all-season business. "Cashmere does not only belong to cold seasons, cashmere underwear is natural and healthy and cashmere T-shirts are cool and comfortable in summer," said Wang Linxiang, chairman of Erdos.

The company is now trying to penetrate into the southern China and overseas markets, he said.