Chinese Streetwear Conglomerate YOHO! Group Is Facing Financial Troubles
Anonymous sources from inside the company say it’s lost 80% of its workforce due to layoffs and unpaid wages.
YOHO! Group, the Chinese streetwear conglomerate that includes everything from a retail operation to a print magazine and the Yo’Hood lifestyle festival may be in financial trouble. According to a report from Business of Fashion via Tencent News, anonymous sources both inside and outside of the company — ranging from the management team to rank-and-file employees and former staff — have stated that the company has lost nearly 80 percent of its workforce due to layoffs and unpaid wages. BoF also reports that YOHO!’s parent company is facing more than 30 civil lawsuits.
This report comes after a period of vast growth for the YOHO! enterprise. After starting as a print magazine, YOHO! expanded its reach with YOHO! Buy (an e-commerce platform), retail outposts, the above-mentioned Yo’Hood lifestyle festival and even a partnership with British print magazine outfit DAZED.
In 2018, YOHO! reported an annual revenue of ¥3 billion CNY (approximately $468 million USD), and in 2019 it received venture capital funding from Hong Kong-based firm C Ventures. The South China Morning Post even referred to YOHO! as the “Chinese HYPEBEAST” in 2018, an odd comparison as HYPEBEAST, a global company, is headquartered in Hong Kong.
BoF’s reporting indicates that YOHO!’s troubles stem from developing multiple businesses to expand its brand, making its business model an asset-heavy one. However, none of these businesses boast strong profit margins, and YOHO! is beginning to face stiff competition from other outlets like Poizon. This faulty business model is reminiscent of the one that lead to once-thriving US e-retailer and media outlet Karmaloop‘s downfall in 2015: a rapid expansion without the strong infrastructure to properly support it. To remedy the situation, YOHO!’s management is said to be considering everything from another round of financing to a takeover from outfits like JD Sports, ByteDance, Bilibili and Tencent, though no official announcement has been made.
Elsewhere in the world of business, Samsung is forecasting a tough period in the near future due to a global chip shortage.
