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Tiexue Records RMB 50 Mln in Online, Offline Military Goods Sales

Netease Tech, 7/20/11

Jiang Lei, CEO of Beijing Tiexue Technology, operator of military affairs online community site Tiexue.net, revealed recently that the company sold approximately RMB 50 mln in military goods last year. Jiang said that the company has already seen a greater amount of sales over the first half of 2011, split evenly between online and offline channels. Online, Beijing Tiexue's Junpin (junph.com) B2C e-commerce platform plans to release its own line of Tiexue brand goods next month. Goods will be designed by the parent company, but manufacturing will be outsourced. With the release of its own brand line, wholesale costs of military apparel and equipment items featured on the Junpin platform will see a reduction from the current cost of RMB 1,000 per item to between RMB 200-300, allowing reductions in the retail prices on the website. Offline, two direct sales shops opened by Tiexue last year were followed by the opening of another three stores in the first half of 2011. The company plans to open yet another three shops this year, bringing offline presence to Beijing, Shanghai, Guangzhou and other tier-1 cities.

Nearly all Junpin consumers are also users of the Tiexue.net community. As much as 1% of Tiexue.net visitors move directly from the site to Junpin.com, where nearly 30% of users go on to make more than a single initial purchase.

Tiexue's B2C apparel business is currently limited to military-style outwear and leisure clothing. Weapons available for purchase on the site are limited to basic tools such as multifunction pocket knives.

In order to further expand operations, Tiexue recently began talks with several RMB-denominated investment funds, and completed term sheets for deals the details of which will soon be announced. Tiexue previously fielded a personal investment in 2004, the current extent of the company's financing history, internally-obtained cash flow support notwithstanding. Jiang said that the company has begun preparation work in hopes of seeing an IPO on a growth enterprise market (GEM) exchange sometime within the next 2-3 years.

Keywords: Jiang Lei sales volume e-commerce Internet IPO retail users B2C online community GEM Tiexue branding funding

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