The encyclopedia · Strategy & Leadership · Financial decision · 2002–2026
Heilan shifted unsold-clothing risk to suppliers and franchisees — and hit 6,957 stores
Heilan Home's 'brand + platform' model: suppliers take back unsold goods, franchisees fund stores, Heilan operates them — near-zero inventory risk.
Heilan Home (海澜之家)
The solution
Chinese menswear retail is brutally seasonal. Heilan Home, founded 2002, built a 'brand + platform' structure: franchisees fund stores, Heilan manages them, and suppliers carry unsold inventory.
The purchasing model is credit plus return rights — 'returnable first, non-returnable second'. In 2019, 46bn yuan of its 84bn yuan finished-goods inventory could be returned to suppliers, who resell clipped-label goods on secondary markets; a sub-brand, Haiyijia, absorbs the rest.
Franchisees (90% of stores) invest in rent and fit-out but don't manage or own stock; Heilan controls selection, pricing and allocation. Stores grew from 3,990 in 2015 to 6,957 by mid-2024, and cash conversion hit near 150% in 2020–2023.
The model made Heilan China's top menswear chain by share for six straight years — 2019 revenue ¥21.97bn — while inventory days improved from 299 (2018) to 216 (2023).
Why it worked
- Returnable purchase contracts transfer markdown risk upstream.
- Franchisee capital pays for expansion, so growth needs no new equity.
- Heilan keeps the operating margin by owning the goods and decisions.
- Suppliers tolerate it because scale and a stable ~13% margin beat the industry's 10%.
What can be applied
If you can allocate each risk to the party that can carry it best — inventory to the maker, fixed assets to the investor, operations to you — growth stops needing your capital.
Aftermath
2023 revenue reached ¥21.53bn (+16%) with net profit ¥2.95bn; Tencent took a ¥2.5bn stake in 2018, and the group now stretches into OVV, kids' brand YeeHoO and home brand Heilan Youxuan, while JD.com partnered on outlet retail.
Sources
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