strategic risk with SBB, page-2

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researchandwin

932 Posts.

22/08/14

10:06

Post #: 13856014
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Originally posted by noomxx ↑

People must understand the underlying nature of the Chinese retail market.
I don't have much time to write so will make it brief.

There are different tiers in China depending on the consumer 'knowledge base'.
(a) The international knowledgeable
(b) Local knowledgeable based on understanding from overseas trends
(c) The unknowledgeable but want to appear knowledgeable.

SBB caters for category (c).

The strategic risk is that over time this group of customers will decline as customers have a better idea of fashion.

Right now SBB is flogging off 'design by itally' clothes at premium prices through its franchise base to consumers that are in '3rd tiered' cities (notice that most of the franchise outlets are predominantly located outside of major provinces, why? because people in the major provinces are more attuned to real international consumer trends).

There is another strategic risk as well that I will briefly point to. The risk that over time the franchisee business concept will not work with this type of brand. Hence the need for the company to increase company owned stored.
But like billabong, once a company owns retail direct outlets, then other risks can come on board. Essentially the requirements to pay for the cost of that retail outlet, rather than the franchisee paying the cost.

I bought in quite heavily at around 7c, acquired an AU$120k position. But have offloaded 70% of the position.
From other topic threads I was in the top 20 shareholder list (but under a nominee company, so it wont be my name appearing there)

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Noomx,

"Know your customer - deliver on their expectations"

To be so sceptical as to think a Company's customers are going to leave them, purely because all of a sudden they realise that different brands exist, follows no logic.

If they maintain quality and good customer service, the rest will look after itself.

IMO DYOR

SBB Price at posting: 10.5¢ Sentiment: Buy Disclosure: Held
7 Upvote

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strategic risk with SBB, page-2

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