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Shandong Ruyi, ‘China’s LVMH’, finds itself in a precarious situation as coronavirus aggravates debt woes

  • The private luxury clothing giant last week secured bondholders’ support to extend interest payment on a 1 billion yuan note again by another six months
  • Shandong Ruyi has to look for fresh sources of funding after losing its state-backed saviour

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China’s Shandong Ruyi made US$4 billion worth of overseas acquisitions in three years starting from 2015, including French fashion label Sandro. Photo: AFP
Bloomberg

The word “ruyi” means “according to one’s wishes” in Chinese. That’s probably what Shandong Ruyi Technology Group’s founders had in mind for a firm that once aspired to be China’s answer to LVMH.

Nearly two decades on, the private luxury clothing giant that grew out of a small woollen mill in the 1970s is finding its financial conditions far from satisfactory.

Since last year, Shandong Ruyi has been battling liquidity concerns, the hangover from a US$4 billion global acquisition spree. The pandemic-induced economic slowdown has aggravated its debt woes, forcing it to twice delay a domestic bond repayment since March. The recent decision by a local government firm to backtrack from a deal to become its white knight is making life even less “ruyi” for the apparel manufacturer.

Shandong Ruyi secured support from bondholders last week to extend coupon payment on its three-year 1 billion yuan (US$140 million) bond again by six months to December 15. The company first asked creditors in March to delay the interest payment till June 15.

China’s Shandong Ruyi owns menswear maker Maje. Photo: Shutterstock
China’s Shandong Ruyi owns menswear maker Maje. Photo: Shutterstock

The latest debt reprieve came soon after a withdrawal by Jining City Urban Construction Investment, a local government financing vehicle, from an October pact to become the private firm’s second-largest shareholder.

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