Miniso, the Biggest Chinese ‘Copycat’ Dollar Store


Will the boom in online shopping through popular Chinese e-commerce companies lead to the death of the high street shopping?

Miniso Group Holding Ltd (NYSE: $MNSO) begs to differ by raising $608 million from its IPO at the NYSE on Oct 15th.

Chinese e-commerce has exploded in the last decade. We’ve seen the impacts Chinese e-commerce boom all over the western world, in terms of IP infringement and fake goods, while truthfully most of us consumers have enjoyed it.

Many may have heard about Taobao, JD, or Alibaba, the most popular e-commerce companies in China. Yet few have have heard about Pinduoduo or Miniso.

Miniso happens to be the one physical store in China growing vastly.

If you searched Miniso on Google, you would find that “Miniso is criticized of being a ‘copycat’ for copying the aesthetics of other stores.”

The company logo design resembles that of UNIQLO. Every decoration of Miniso’s stores have copied those of MUJI. And even their product lines use packaging similar to those of other global brands.

However, the price of their products is extremely affordable.

Miniso owns 129 retail stores, accounting for only 3% of its total stores, the rest is franchised. The benefit of this strategy is that it reduces expansion and overhead costs, it leverages the multiplied advertising and promotion, it lowers the liability and allows to generate funds more efficiently.

According to the official investment policy, each franchise store opening generates about $100,000 and royalties of up to 62% annually (compared to 67% from fast food sales). Working with this business model the Chinese copycat is able to get improved cash flow to support its operations and expansion.

For entrepreneurs seeking to jump start their entrepreneurship journey with Miniso, they can borrow funds from a P2P platform like Fenlibao. The chain of Miniso+Fenlibao is a crafty internal circulation of funds, technically called a “Blood Transfusion“.

In the case of insufficient funds of the franchisee, the previously franchised stores can be used for mortgage loans, and the store can be opened through Fenlibao financing, and the funds raised can be used to pay brand usage fees, deposits, etc.

In this way, Miniso and Fenlibao have achieved a win-win situation, while most of the risks fall on the franchisees.

According to the MNSO F-1 Registration file, in the 2020 fiscal year (as of June 30, 2020) Miniso has over 4200 stores in over 80 countries with $1.3 billion revenue. Revenue has declined 4.43% on a year-on-year basis but gross profits are up by 8.8 %.

In terms of cash flow, Miniso’s net cash flow from operating activities is about $123 million in the fiscal year 2020. This indicates that the company has a stable financial support for continuous expansion. There is no doubt that Miniso is a successful company, relying on the notion of low-price high-value products.

When $MNSO IPO’ed, they chose Goldman Sachs and BoA as the underwriters. Syndicated by these big names and backed by Tencent and Hillhouse Capital, investor subscription was not an issue.

The “copycat” tag seems to currently be a cat in the sack for Miniso. Although the company has started a series of cooperation projects with IP owners, such as the Miniso x Marvel IP store, the Miniso has ”over 100 legal cases, of which about 60 are lawsuits”, according to a Chinese data research company.

Time will tell if these are concerns that investors at some point can’t ignore.


Shiying Yang

Shiying Yang, a junior equity research analyst who thrives to be a quantitative analyst. She graduated from Drexel University with a dual degree in Finance and Business Analytic. Shiying has found a passion for seeking algorithms and rules behind the various transactions in the capital market. She believes that innovation is the key to economic growth. Shiying is a patient investor who manages a personal portfolio of common stocks, with a heavy weight on technology companies.