Vancl shifts strategy with $100m financing
Chinese online clothing retailer Vancl announced on Tuesday that the company has completed a new round of financing worth over $100 million, according to a report by news portal qq.com.
The financing success shows the confidence of the industry toward the Vancl brand and online clothing retailer business, the report said, citing Chen Nian, the company's founder and CEO.
According to Chen, his company will focus on mid- and high-end products with an emphasis on quality but a much smaller number of categories in 2014.
The completion of the new financing will beef up Vancl's product design, choosing of raw materials, supply chain efficiency and quality control.
This round of financing, the seventh since the company's founding in 2007, was led by Lei Jun, chairman and CEO of budget smartphone maker Xiaomi. Other investors including Vancl's old shareholders such as IDG, Ceyuan Ventures, SAIF, Temasek, and CITIC.
Market observers see the new investment as an attempt by investors to save Vancl, apparently hampered by a cash shortage.
Insiders see this shift in Vancl's development model as an increased level of influence from its shareholders and Vancl's new focus bears the trademark of the sales model of budget smartphone maker Xiaomi, according to media reports.
In the previous six rounds of financing, Vancl garnered a total of $422 million. However, these investments proved unable to sustain Vancl's business model.
In September 2013, Vancl relocated its headquarters from central Beijing to its suburban Yizhuang area, and downsized its payroll by 20 percent.
This was followed by Vancl being unable to honor payments to its suppliers, which further weakened the company.
Attempts to contact Vancl and Xiaomi for comments by the Global Times went unanswered by press time.
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