Analysis Of The First Objection Of The Board Of Directors Of Pathfinder

< p > December 20, 2012, Pathfinder issued the "second session of the eighteenth meeting of the board of directors resolution announcement", said the "investment in the establishment of Discovery new brand joint venture" motion was voted in by 4 votes, 1 votes against, 0 abstentions, and vote against the vote is the Pathfinder Chairman Sheng Faqiang's wife Wang Jing.

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The joint intention of "P > < a href=" http://sjfzxm.com/news/index_c.asp "> Pathfinder < /a > and Jiangsu Jia Mao commerce Co., Ltd. was formed as early as 2012.

In March 1, 2012, Sheng Fa Qiang disclosed in his Sina micro-blog the news of signing the joint venture letter with Yang Jianhui, chairman of Jiangsu Jia Mao, and 1 hours after the release of micro-blog by Sheng Qiang, Wang Jing forwarded the micro-blog to support it.

Only 9 months later, Wang Jing's attitude took a 180 turn, from the initial force to the "husband singing women do not follow" the drama, it is worth pondering.

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< p > < < a href= > http://sjfzxm.com/news/index_cj.as > > the first objection of the board of directors since the listing of "http://sjfzxm.com/news/index_cj.as" > /a > Wang Jing gave two reasons: "1, at this stage, the company should concentrate its resources on the construction and operation of the brand business of the Pathfinder, constantly enhance the reputation of the Pathfinder brand and the professionalism of the product; and, because of the new establishment of the new company, the higher level of the Explorer company will be dispersed.

Personal opinions are not suitable for large-scale investment in developing new brand businesses at present.

This reporter has traced back to the source and sought more detailed explanations in the relevant announcements of Pathfinder.

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< p > < strong > diversification prospect doubt < /strong > < /p >

Less than P, the Pathfinder set up a joint venture to develop a new brand after further testing the ACANU brand in March 2012.

However, the Pathfinder plans to use the total investment of 50 million yuan to replace the project valuation of the net present value of more than 700 million yuan. Can Discovery Expedition brand bring such a huge investment income? < /p >

< p > according to the sales revenue and sales channels disclosed by the Pathfinder 2010 and 2011 Annual Reports, the average annual operating income of each franchised store is about 1 million 192 thousand yuan.

Similarly, according to the Pathfinder's estimated operating income and sales channels for the joint venture company, 4 years after the establishment of the joint venture, the annual average operating income of Discovery Expedition brand stores is about 2 million 216 thousand and 500 yuan, 86% higher than the original brand of Pathfinder.

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< p > management and operation of the same management team. However, the channel operation efficiency of the newly developed brand is far beyond the development of more than ten years old brand after the promotion of just 4 years.

If this is the case, the impact of new brand products on the brand of the Pathfinder will be great, so the opportunity cost for the pathfinder for the joint venture will be immeasurable.

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< p > < < a target= "_blank" href= "//www.sjfzxm.com/ > > clothing > /a >" industry "is generally facing" high inventory, low growth and low profit ". Today, the uncertainty of brand diversification and the possible impact of new brands on the original brand are the fundamental reasons why Wang Jing put forward that" the company should focus more on resources and concentrate on the construction and operation of the brand business of the Pathfinder "at this stage.

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< p > < strong > the hidden trouble behind the equity arrangement is < /strong > /p >

The reasons why Wang Jing voted against the above second points in P reflects the potential problems in the equity arrangement of the joint venture.

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The joint venture letter signed by the Pathfinder and Jiangsu Jia Mao in early March 2012 only provided that the Pathfinder invested in cash and possessed not less than 35% of the shares, but did not involve the arrangement of the shares of the Explorer executives (see Annex).

However, according to the joint venture contract signed by both sides in December 2012, 3 executives of the Pathfinder jointly hold 4.5% stake in the joint venture company while the joint venture company is responsible for the operation and management of the joint venture.

Such equity and business arrangements highlight the hidden dangers of joint ventures.

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< p > according to the rational economic man hypothesis, whether the resource allocation of the Pathfinder or the arrangement of the 3 heavy-duty executive shareholders' energy, the result of maximizing their own interests tends to favor the high-quality resources and their own energy to the joint venture rather than the decision making of the largest shareholder of the Pathfinder.

This is one of the reasons why Wang Jing proposed decentralization of executive energy in the board of directors.

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< p > although the Pathfinder tries to explain the impact of the joint venture on the main brand of the Pathfinder with the difference of raw material selection, production process and target consumer group, in fact, the joint venture takes the Discovery Expedition brand as the carrier and focuses on the R & D and promotion of outdoor leisure functional products, which is basically the same as the Pathfinder's own business, the overlapping of consumer groups and the uncertainty of pricing, and inevitably pushes the new brand to the "opposite side" of the Pathfinder brand.

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< p > because the Pathfinder is not the controlling shareholder of the joint venture company, it is perhaps Wang Jing's concern that the Pathfinder is spending money on raising wolves.

Similar problems have appeared in HUAWEI, HUAWEI has introduced relevant policies to encourage internal entrepreneurship, but in the end, it ended up ending with Ren Zhengfei's "pain killer" in the company's positive competition with HUAWEI.

Therefore, Wang Jing's objection is not absurd.

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< p > Wang Jing's opposition has aroused all kinds of "gossip" in the market.

As mentioned above, this negative vote reflects the great uncertainty of the Pathfinder's investment prospects and deserves the attention of investors.

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