Chairman Statement

In the first half of 2023, as China fully lifted its travel restrictions, its economic activities gradually recovered. However, weak consumer confidence and inadequate demand posed significant challenges to the economic recovery. Nevertheless, Symphony Group responded to these challenges with a proactive and flexible approach, enhancing its business resilience.

Despite the challenging business environment, the Group’s revenue for the first half of the year recorded a double-digit growth compared to the same period last year, mainly benefiting from the increase in the revenue of domestic retail business. The Group strategically operated “Park Outlets”, its retail business, on the model of “Outlets + Community Malls” across China at its early stage. Located in Xiamen, Shenyang and Anyang, the retail outlets offer both international and local brand mixes, integrating shopping, entertainment and leisure activities into one. In the first half of this year, the overall brand mixes were fully upgraded and optimised, with some of the brands opting to open their first outlets in China at Park Outlets. In January, sales at Xiamen’s Park Outlets hit a record high for a single month, showing an impressive performance. The results of online promotion and traffic attraction were significant, with a more than 50% year-on-year substantial increase in WeChat fan count and over 30% growth in membership compared to the same period of the previous year. During the period, the outlets made good use of resources to improve their infrastructure and carried out various equipment upgrade projects to create a more pleasant shopping environment. In terms of promotion, the outlets hosted various large-scale events, including stage plays, bazaars and brand collaborations, successfully attracting new visitors. The community malls, which are located in Tianjin and Chongqing municipalities with excellent geographical advantages, have catered to the day-to-day consumption needs and services for residents. In the first half of the year, the community malls introduced more educational merchants such as bookstores and sports centres to diversify the merchant mix.“Park Outlets” have been developed in the domestic retail market for over a decade with an unwavering commitment to optimising the shopping experience for merchants and visitors and consolidating its strengths to strive for business growth.

The Group acquired SKINS, the world’s first compression sportswear brand, at its early stage, and formed a joint venture with ITOCHU Corporation (“ITOCHU”), one of the largest general trading companies in Japan, to jointly operate SKINS. Due to the intense competition in the compression wear market, combined with high operating costs, the brand’s business environment has been challenging. In spite of the above, the Group has remained committed to optimising the business model, adapting to the market environment, and boosting business development.

The Group has operated the global footwear brand PONY for years, consistently striving for the maximum value for the brand. Last year, the Group successfully sold the trademark of PONY outside Asia Pacific to Iconix International Inc. (“Iconix”), a US-based brand operator, and set up a joint venture with Iconix to run PONY in the Asia Pacific region (except Mainland China and Taiwan). Over the past few years, the Group has brought satisfactory revenue to the business by selling trademarks in different regions, reflecting its operational effectiveness. This year, with the consent of both parties, the joint venture for PONY in Asia Pacific will be fully managed by Iconix in advance. The Group firmly believes that this move will further benefit the brand in accelerating its global development while allowing the Group to focus on the development of other businesses.

The Group’s financial business remained stable in the first half of the year. In the face of factors such as weak market transactions, interest rate hikes and a slowdown in the launch of IPOs, the capital market environment has grown increasingly intricate compared to the past. In response to these challenges, the Group has always been prepared for risk management and continuous operation enhancement in an effort to sustain healthy and positive business development.

Looking ahead, as the macro-economic environment is still subject to several uncertainties, such as the debt and financing issues of China’s Real Estate industry, as well as the weakening Renminbi, consumers will remain conservative in their attitude. The Group firmly believes that the positive fundamentals of the market remain unchanged in the long run under the government’s support. In the future, the Group will focus on improving operational efficiency while strengthening the core competitiveness of its retail and brand businesses. In terms of retail business, the Group will strengthen its collaborations with external partners to attract more young, emerging brands to join. In terms of branding, it will focus on key market development to deepen the market’s understanding of compression wear. In the face of favourable conditions of the economic recovery, the Group will constantly consolidate its strengths, capture opportunities and pursue sustainable business growth.

On behalf of the Board, I hereby express my sincere gratitude to the shareholders, our staff, the banks, our clients and our business partners for their trust and support. The Group will strive to boost business development and keep excelling in order to create greater value for our stakeholders.