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Interface News reporter | Chen Qirui
Jiemian News Editor | Lou Qiqin

Recently, a netizen posted content on social media, pointing out that the outdoor advertisements of AIVEI, a brand under Xinhe Co., Ltd., in Chongqing Longhu Beicheng Tianjie and were starred by Xu Shaoen, the daughter of Taiwanese artist Xu Xidi. Xu Shaoen had previously been embroiled in controversy for calling English her native language on her personal Instagram account.

Now, netizens' dissatisfaction has extended to AIVEI's advertisements, and they are demanding that the shopping mall remove the relevant advertisements.

At present, the AIVEI outdoor advertisement in Longhu North City Paradise Walk has been replaced. The relevant person in charge of Xinhe Co., Ltd. responded to Phoenix.com, saying that the cooperation between AIVEI and Xu Shaoen expired on July 21st - she is not an official spokesperson, but just a partner. However, Xinhe Co., Ltd. also stated that if there are promotion plans in the future, it may re-launch the advertisement.

Xinhe shares frequently cooperates with Xu Xidi's family. Xu Xidi has appeared in Jorya's advertisements with her three daughters in the past, and the eldest daughter Xu Xiwen even had the opportunity to appear alone. According to Tianyancha App and the prospectus, one of the shareholders of Purple Forest Limited, the sixth largest shareholder of Xinhe shares, is Xu Xidi and her husband Xu Yajun.

With the replacement of the advertisement in Longhu Paradise Walk in North City, all the controversies have come to a temporary end. But from another perspective, the traffic and exposure brought to AIVEI by this controversy may be much more than what it planned to gain through outdoor advertising. For many consumers, "Jorya sister brand" is still the most well-known label of AIVEI.

Jorya is the most important brand of Xinhe Co., Ltd. and the source of the entire group. As the business scale gradually expanded, Xinhe Co., Ltd. began to operate multiple brands and launched five sub-brands: Jorya Weekend, ΛNMΛNI, GIVH SHYH, CAROLINE and AIVEI.

In the financial report, the highest-positioned brand in Xinhe Group is Jorya, with main product price range between RMB 2,000 and RMB 60,000, targeting first- and second-tier cities and some third-tier cities with consumption capacity. CAROLINE and AIVEI are the lowest-positioned brands, with the highest price range between RMB 3,000 and RMB 4,000, but the lowest price of the former is RMB 2,000, while the lowest price of the latter is RMB 680.

The target customer age groups are also different. CAROLINE targets women between 25 and 35 years old, while AIVEI targets women between 22 and 28 years old, which leads to their different styles of urban modern and cute romantic. However, judging from the 2023 financial report, Xinhe Holdings has chosen to invest more resources in AIVEI. In this group that mainly operates directly, almost all new franchise stores are from AIVEI.

Xinhe Co., Ltd. did not disclose the individual performance of each of its brands in its financial report, but now it has reached a time when it needs to find new growth points.

From 2015 to 2023, Xinhe's operating income changed from 1.813 billion yuan to 1.759 billion yuan, with almost no growth in these eight years. In the first quarter of 2024, its revenue fell by 19.06% to 365 million yuan, and its net profit attributable to the parent company fell by 88.49% to 5.6369 million yuan. In the latest 2024 semi-annual report forecast, Xinhe said that its net profit attributable to the parent company would fall by 96.14% to 95.04%.

The reason given was that a large number of stores with poor performance were closed under the transformation strategy, resulting in a rapid decline in performance in the short term.

In comparison, the revenues of the local women's clothing groups Ellis, Jinhong Group and Yingjia Fashion, which also follow the mid-to-high-end route, were 835 million yuan, 824 million yuan and 1.285 billion yuan in 2015, and they will become 2.915 billion yuan, 4.545 billion yuan and 6.912 billion yuan in 2023. The gap between Xinhe Co., Ltd. and its peers is getting bigger and bigger.

One reason is that Xinhe's peers have completed relatively successful acquisitions or achieved success in their own sub-brands in the past few years, finding new growth points for the company. For example, Self-Portrait of Ellis has become the representative of fairy dresses in the market, and Jinhong Group has found a large number of young consumers with TEENIE WEENIE.

Although Xinhe also adopts a multi-brand strategy, the voice of its sub-brands has not been high in the market. However, among all the sub-brands, Xinhe decided to invest more resources in AIVEI. It is obvious that Xinhe Co., Ltd. saw that its style and price are quite different from Jorya.

As the social retail environment changes, consumers' enthusiasm for mid- to high-end non-luxury brands of women's clothing is fading. The main reason is that they are expensive and do not retain their value. AIVEI will not divide Jorya's market due to similar styles. Its relatively lower prices and cuter styles can also make up for the group's shortcomings in the mass young market.

A younger image can sometimes make the market more tolerant of brands trying different fields, which is something that Jorya, with its higher price and target audience, does not have. If AIVEI can succeed, Jorya's image will also benefit. This is another purpose of many apparel groups operating sub-brands.

According to Xinhe Co., Ltd., AIVEI and Jorya Weekend belong to the leisure track. The main brand Jorya is classified as exquisite life, and ΛNMΛNI and CAROLINE belong to workplace commuting. For this reason, Xinhe Co., Ltd. has also set up three corresponding business clusters.

Xinhe Co., Ltd. is not the only company that has thought of developing young and affordable sub-brands.

Winner Fashion also launched a younger, cheaper sub-brand, Elsewhere, which became the group's fourth-largest brand in 2023 with annual revenue of 532 million yuan. D'Zit Fashion is doing something similar, with the sales growth of the younger brand d'zzit in 2023 being higher than that of the main brand Dazzle.

These companies are in better operating condition than Xinhe Co., Ltd., and have more resources and funds to invest in marketing and expansion of sub-brands. With the decline of the driving force of the main brand Jorya and the increase of profit pressure, it is not easy to expand the scale of AIVEI.