(BZUN) 2023 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by for Baozun's Second Quarter 2023 Earnings Conference Call. (Operator Instructions). As a reminder, today's conference call is being recorded. I will now turn the meeting over to your host for today's call, Ms. Wendy Sun, Senior Director of Corporate Development and Investor Relations of Baozun. Please proceed, Wendy.

各位女士、先生們早上好，感謝大家出席寶尊2023年第二季度財報電話會議。 （操作員說明）。提醒一下，今天的電話會議正在錄音。現在我將會議交給今天的主持人，寶尊企業發展和投資者關係高級總監孫雯女士。請繼續，溫迪。

Thank you, operator. Hello, everyone, and thank you for joining us today. Our second quarter 2023 earnings release was distributed earlier before the call and is available on our IR website at ir.baozun.com as well as on global newswire services.

謝謝你，接線員。大家好，感謝您今天加入我們。我們在電話會議之前發布了 2023 年第二季度收益報告，可在我們的 IR 網站 ir.baozun.com 以及全球新聞專線服務上獲取。

They have also posted a PowerPoint presentation that accompanies our comments to the same IR website where they are available for download. On the call today from Baozun, we have Mr. Vincent Qiu, Chairman and Chief Executive Officer; Mr. Arthur Yu, Chief Financial Officer and President of Baozun e-commerce and Ms. Sandrine Zerbib, President of Baozun Brand Management.

他們還在同一個 IR 網站上發布了一個 PowerPoint 演示文稿，其中包含我們的評論，可供下載。今天，寶尊董事長兼首席執行官邱文森先生接聽了我們的電話；寶尊電商首席財務官兼總裁Arthur Yu先生和寶尊品牌管理總裁Sandrine Zerbib女士。

Ms. Qiu will review the business strategy and company highlights followed by Mr. Yu, who will discuss the business development of Baozun e-commerce and above our financial outlook, and then by Ms. Zerbib to share more about Baozun brand management.

邱女士將回顧業務戰略和公司亮點，隨後余先生將討論寶尊電子商務的業務發展和我們的財務前景，然後Zerbib女士將分享更多有關寶尊品牌管理的信息。

They will all be available to answer your questions during the Q&A session that follows.

他們都將在接下來的問答環節回答您的問題。

Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of the U.S. Securities Act of 1933 as amended -- the U.S. Securities Exchange Act of 1934 as amended and the U.S. Private Securities Litigation Reform Act of 1995.

在我們開始之前，我想提醒您，本次電話會議包含美國 1933 年證券法修訂案、美國 1934 年證券交易法修訂案和美國私人證券訴訟改革法所界定的前瞻性陳述。 1995 年。

These forward-looking statements are based upon management's current expectations and current market and operating conditions and relates to events that involve known or unknown risk, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results to differ materially from those in the forward-looking statements.

這些前瞻性陳述基於管理層當前的預期以及當前的市場和運營狀況，並涉及涉及已知或未知風險、不確定性和其他因素的事件，所有這些因素都難以預測，其中許多因素超出了公司的控制範圍，這可能導致公司的實際結果與前瞻性陳述中的結果存在重大差異。

Further information regarding these and other risks, uncertainties or factors is included in the company's filings with the U.S. Exchange Commission and its announcement notice in the company's filings published on the website of the Stock Exchange of Hong Kong Limited. All information provided in this call is as of the date here and is based on assumptions that the company believes to be reasonable as of today, and the company does not undertake any obligation to update any forward-looking statements, except as required in the applicable law.

有關這些及其他風險、不確定性或因素的更多信息，請參閱該公司向美國交易委員會提交的文件以及在香港聯合交易所有限公司網站上發布的該公司文件中的公告通知。本次電話會議中提供的所有信息均截至此處日期，並基於公司認為截至今日合理的假設，公司不承擔更新任何前瞻性陳述的義務，除非適用的要求法律。

Finally, please note that unless otherwise stated, all figures mentioned during this call are in RMB. In addition, we may elect to use adjusted in place of nongeneral account accepted accounting principle or non-GAAP in order to reduce overall confusion that may arise from our discussion about financials related to the GAP brand.

最後請注意，除非另有說明，本次電話會議中提到的所有數字均以人民幣為單位。此外，我們可能會選擇使用調整後的會計原則或非公認會計原則來代替非公認會計原則，以減少我們對與 GAP 品牌相關的財務問題的討論中可能出現的整體混亂。

It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Vincent Qiu. Vincent, please go ahead.

現在我很高興向大家介紹我們的董事長兼首席執行官邱文森先生。文森特，請繼續。

Thank you, Wendy. Hello, everyone, and thank you all for your time. Last quarter, we detailed our exciting transformation road map, where we are expanding Baozun Group into 3 business lines; Baozun E-commerce, Baozun Brand Management and Baozun International.

謝謝你，溫迪。大家好，感謝大家抽出寶貴的時間。上個季度，我們詳細介紹了令人興奮的轉型路線圖，其中我們將寶尊集團擴展到 3 個業務線；寶尊電商、寶尊品牌管理和寶尊國際。

As demonstrated on Slide #2, these 3 business lines create an ecosystem in which each complements the other two, and all 3 concurrently promote each other. This strengthened Baozun Group into a one-stop ecosystem with the most comprehensive services. Today, I'm happy to share our strategic partnership with Authentic Brands Group, or ABG, which exemplifies the advantages and the benefits of Baozun Group's one-stop ecosystem.

正如幻燈片 #2 所示，這 3 個業務線創建了一個生態系統，其中每個業務線都與其他兩個業務線相輔相成，並且所有 3 個業務線同時相互促進。這使得寶尊集團成為服務最全面的一站式生態系統。今天，我很高興與大家分享我們與Authentic Brands Group（簡稱ABG）的戰略合作夥伴關係，這體現了寶尊集團一站式生態系統的優勢和好處。

Slide #4 is a snapshot of ABG. ABG is the global leader in brand development, boosting a large portfolio of more than 50 iconic and world renowned sportswear and lifestyle brands. Earlier this year, ABG's executives visited us to discuss Baozun brand management and our potential collaboration with Hunter, a British premium outdoor brand under its portfolio.

幻燈片 #4 是 ABG 的快照。 ABG 是品牌開發領域的全球領導者，擁有超過 50 個標誌性的世界知名運動服裝和生活方式品牌的龐大產品組合。今年早些時候，ABG 的高管來訪，討論寶尊品牌管理以及我​​們與其旗下英國高端戶外品牌 Hunter 的潛在合作。

They quickly recognized that Baozun's vision and ecosystem can elevate Hunter's business in Greater China. Especially, specifically Baozun's advancements in marketing technology and digitalization as well as our game-changing new retail philosophy and a broad international reach makes us the ideal strategic partner.

他們很快認識到寶尊的願景和生態系統可以提升亨特在大中華區的業務。尤其是寶尊在營銷技術和數字化方面的進步以及我們改變遊戲規則的新零售理念和廣泛的國際影響力使我們成為理想的戰略合作夥伴。

Accordingly, ABG has chosen Baozun group to become a strategic partner in Greater China. We have signed a license agreement for Hunter. Beyond the typical license partnership, we are moving further and are in the process of forming up a joint venture with ABG to call Hunter's intellectual property in Greater China and Southeast Asia.

據此，ABG選擇寶尊集團作為大中華區戰略合作夥伴。我們已經簽署了 Hunter 的許可協議。除了典型的許可合作夥伴關係之外，我們正在更進一步，正在與 ABG 組建一家合資企業，以調用 Hunter 在大中華區和東南亞的知識產權。

This marks another milestone in our transformation where all three business lines will cooperate together to deliver an extraordinary suite of services to a leading global brand partners. Looking forward, we anticipate the challenging macro environment in China to continue. However, we have set key objectives for each of our business lines for the rest of 2023 with a priority in higher business quality of the e-commerce delivered solid growth in profits and cash flows in the first half of the year. BEC is also prepared to transition into a second growth curve to adapt to the rapidly changing dynamics of China's e-commerce market.

這標誌著我們轉型的另一個里程碑，所有三個業務線將共同合作，為全球領先的品牌合作夥伴提供非凡的服務。展望未來，我們預計中國充滿挑戰的宏觀環境將持續下去。然而，我們為2023年剩餘時間的每個業務線設定了關鍵目標，其中優先考慮的是提高電子商務的業務質量，從而在上半年實現了利潤和現金流的穩健增長。 BEC還準備過渡到第二條增長曲線，以適應中國電子商務市場快速變化的動態。

Baozun Brand Management or BBM went through a smooth transition period as we have put in place the right infrastructure, supply chain partners and excellent team. BBM is now accelerating its China-for-China product offerings featuring GAP's new local designs and marketing. For Baozun International, we continue to establish infrastructure throughout Asia, focusing on technology-enabled distribution to deliver the maximum omnichannel reach for our brand partners. Currently, Baozun Asia employs around 150 employees across Singapore, Malaysia, Thailand, South Korea, Philippines, Hong Kong and Taiwan.

寶尊品牌管理（BBM）經歷了一個平穩的過渡期，因為我們擁有合適的基礎設施、供應鏈合作夥伴和優秀的團隊。 BBM 目前正在加速推出以 GAP 全新本地設計和營銷為特色的“中國為中國”的產品。對於寶尊國際來說，我們繼續在整個亞洲建立基礎設施，專注於技術支持的分銷，為我們的品牌合作夥伴提供最大的全渠道覆蓋。目前，寶尊亞洲在新加坡、馬來西亞、泰國、韓國、菲律賓、香港和台灣擁有約150名員工。

Over the past 15 years in our history, I'm thankful that Baozun has been successfully cruising in industry. We quickly expanded the business, built the best team, accumulated the best knowledge and became the industry leader. Now as the e-commerce industry matures, we have updated our aspiration to focus on refinement towards extraordinary, whereas in a booming environment, where success was built on catching the whiff, we now are building future success on making a difference to create the trend.

15年來，我很慶幸寶尊在行業中的成功航行。我們迅速擴展了業務，建立了最好的團隊，積累了最好的知識，成為了行業的領導者。如今，隨著電商行業的成熟，我們的志向也更新了，從精緻走向非凡，而在蓬勃發展的環境下，我們的成功是靠嗅覺而成功，現在我們正在以改變、創造潮流來建立未來的成功。

I'm pleased that in the such a short term since our acquisition of GAP, the team has already delivered notable achievements in its first 5 months of operations. With a solid new foundation in place, the team is accelerating its localization initiatives to drive further enhancements. Furthermore, by adding Hunter to its portfolio, BBM continues to scale, and I am confident that its success will greatly contribute to the next wave of Baozun's success. Let me now pass the call over to Arthur for a review of our financials and updates on e-commerce business. Arthur, please proceed.

我很高興在收購 GAP 後的短時間內，團隊在運營的前 5 個月內就取得了顯著的成績。有了堅實的新基礎，該團隊正在加快本地化計劃，以推動進一步增強。此外，通過將Hunter納入其產品組合，BBM繼續擴大規模，我相信它的成功將為寶尊下一波的成功做出巨大貢獻。現在讓我將電話轉給 Arthur，以審查我們的財務狀況和電子商務業務的最新情況。亞瑟，請繼續。

Okay. Thank you, Vincent, and hello, everyone. Let me do a quick review of the financials of the second quarter of 2023, after which, I will discuss our BEC business in more detail.

好的。謝謝你，文森特，大家好。讓我快速回顧一下 2023 年第二季度的財務狀況，然後我將更詳細地討論我們的 BEC 業務。

Please note that we have prepared segment reporting to provide higher transparency as shown on Slide #5. At this time, we are reporting 2 segments: e-commerce, which includes BEC, BZI and group headquarters, and brand management, which includes GAP Greater China.

請注意，我們準備了分部報告，以提供更高的透明度，如幻燈片 #5 所示。目前，我們報告兩個部分：電子商務（包括BEC、BZI和集團總部）和品牌管理（包括GAP大中華區）。

Please turn to Slide #6. We are pleased to report that our e-commerce segment achieved better year-over-year profitability and operating cash flows. This positive outcome can be attributed to our ongoing efforts in business optimization and cost reduction. Additionally, our brand management segment contributed incremental top line growth after the inclusion of GAP Greater China. This resulted in a 9% increase in net revenues for Baozun Group, reaching a total of RMB 2.3 billion during the quarter.

請翻到幻燈片#6。我們很高興地報告，我們的電子商務部門實現了同比更好的盈利能力和經營現金流。這一積極成果歸功於我們在業務優化和降低成本方面的持續努力。此外，GAP 大中華區納入後，我們的品牌管理部門貢獻了營收的增量增長。這使得寶尊集團本季度淨收入增長9%，達到人民幣23億元。

Notably, product sales experienced a significant increase of 34%, while service revenue declined by 3% compared to the same period last year. Within the e-commerce segment, we witnessed improved top line momentum as consumer sentiment has gradually recovered particularly during the 618 promotion campaign.

值得注意的是，產品銷售額同比大幅增長34%，而服務收入同比下降3%。在電子商務領域，隨著消費者情緒逐漸恢復，特別是在618促銷活動期間，我們看到收入勢頭有所改善。

To further enhance our offering, we prioritized value added services in digital marketing and IT services while tactically reducing low-margin product sales in the appliance and electronics categories. Notably, the apparel sector displayed a robust recovery in the second quarter with double-digit year-over-year growth in sportswear.

為了進一步增強我們的產品和服務，我們優先考慮數字營銷和 IT 服務中的增值服務，同時有策略地減少家電和電子產品類別中的低利潤產品銷售。值得注意的是，服裝行業第二季度呈現強勁復甦，運動服裝同比實現兩位數增長。

Please turn to Slide #7. In this quarter, at the group level, our total gross profit increased by 8% to RMB 1.6 billion. Our total cost of the products increased by 12% to RMB 675 million, mainly due to the incremental cost of products for GAP China.

請翻到幻燈片 #7。本季度，集團層面的毛利潤總額增長8%，達到人民幣16億元。產品總成本增加12%至人民幣6.75億元，主要是由於GAP中國的產品成本增加。

For the quarter, product sales gross margin of e-commerce expanded by 110 basis points to 14.3%, and product sales gross margin of BBM was 52%, which is ahead of our own plan for market improvement. Our adjusted income from operations was RMB 0.7 million during the quarter of which e-commerce adjusted operating income grew by 29% to RMB 61 million, reflecting our high-quality strategy and effective cost optimization.

本季度，電商產品銷售毛利率擴大110個基點至14.3%，BBM產品銷售毛利率為52%，領先於我們自己的市場改善計劃。本季度調整後運營收入為人民幣 70 萬元，其中電子商務調整後運營收入增長 29% 至人民幣 6100 萬元，體現了我們的高質量戰略和有效的成本優化。

These optimization efforts included ramping up regional service centers, reforming compensation initiatives, process reengineering and improving working capital efficiency. On BBM, GAP China showed a good momentum, both operationally and financially, reducing its operating loss by nearly half on a year-over-year comparable basis. Our new season product launch in the recent month was quite successful and should provide a foundation for a better-than-expected financial results for GAP China in the full year.

這些優化工作包括擴大區域服務中心、改革薪酬舉措、流程重組和提高營運資金效率。 BBM方面，GAP中國在運營和財務方面都表現出良好的勢頭，運營虧損同比減少了近一半。近一個月我們新季產品的推出非常成功，應該為GAP中國全年好於預期的財務業績奠定基礎。

Sandrine will cover the details later in her part.

桑德琳稍後將在她的部分中介紹細節。

Turning to Slide #8 about our cash and cash flow status. As of June 30, 2023, our cash, cash equivalents, restricted cash and short-term investments grew to RMB 3.2 billion from RMB 2.9 billion last quarter. During the quarter, our total operating cash flow was RMB 453 million. This is an improvement of RMB 49 million from the same period last year, mainly due to our efforts in improved working capital efficiency through back-end process reengineering our inventory, billing and cash flagship management.

轉向幻燈片#8，了解我們的現金和現金流狀況。截至2023年6月30日，我們的現金、現金等價物、限制性現金和短期投資從上季度的人民幣29億元增至人民幣32億元。本季度，我們的經營現金流總額為人民幣4.53億元。較去年同期增加人民幣4,900萬元，主要是由於我們通過後端流程再造庫存、計費和現金旗艦管理，努力提高營運資金效率。

Now let's focus on our e-commerce business. Overall, we achieved a solid set of business results in this quarter with year-over-year growth in both gross margin and operating profit. With an end to the COVID pandemic, we are delighted to witness that many brand partners are continuing to focus and invest on interactive engagements with consumers and omnichannel strategy on e-commerce. During this year's 618 promotion, Baozun achieved an overall GMV year-over-year growth for the brands we managed. We helped many of our brand partners achieve #1 rankings in their own categories, including sportswear outdoors and electronics. Our new business development, we continue to see a healthy trend with a stronger pipeline in the second half of this year compared with last year. In this quarter, we added 41 new brands to our client portfolio, mainly from fresh apparel, luxury, health care and fast-moving consumer goods.

現在讓我們重點關注我們的電子商務業務。總體而言，我們在本季度取得了紮實的業務成果，毛利率和營業利潤均同比增長。隨著新冠疫情的結束，我們很高興看到許多品牌合作夥伴繼續關注和投資與消費者的互動以及電子商務的全渠道戰略。在今年的618大促中，寶尊所管理的品牌整體GMV同比增長。我們幫助許多品牌合作夥伴在各自的類別（包括戶外運動服和電子產品）中取得了第一名的排名。我們的新業務發展，我們繼續看到健康的趨勢，與去年相比，今年下半年的管道更加強勁。本季度，我們的客戶組合中新增了 41 個品牌，主要來自新鮮服裝、奢侈品、醫療保健和快速消費品。

We continued to make progress in our omnichannel initiatives. As demonstrated on Slide #9. 46% of our brands engaged with us on at least 2 channels, reaching a record high. All of those new channels expansions, JD, WeChat and Douyin delivered double-digit growth in revenue.

我們的全渠道計劃繼續取得進展。正如幻燈片 #9 所示。 46% 的品牌通過至少 2 個渠道與我們進行互動，達到歷史新高。所有這些新渠道的擴張，京東、微信和抖音都帶來了兩位數的收入增長。

Please turn to Slide #10. Value-added service remains crucial in creating value for our brand partners. In this quarter, we established the creative content to commerce business unit or called CCC business unit to better capture the emerging needs of content creation and live streaming. We aim to integrate creative content, intellectual property and brand building strategies with the rising trend of live streaming and short videos.

請翻到幻燈片 #10。增值服務對於為我們的品牌合作夥伴創造價值仍然至關重要。本季度，我們成立了創意內容商業事業部或稱為CCC事業部，以更好地捕捉內容創作和直播的新興需求。我們的目標是將創意內容、知識產權和品牌建設策略與直播和短視頻的上升趨勢相結合。

To date, we have launched 5 live streaming studios located in Shanghai, Hangzhou, Wuhan, Hefei and Nantong totaling over 10,000 square meters in facilities equipped with state-of-art technology and run by an experienced team.

迄今為止，我們已在上海、杭州、武漢、合肥和南通開設了5個直播工作室，總面積超過10,000平方米，設施配備最先進的技術，並由經驗豐富的團隊運營。

Given the shift of China's e-commerce market dynamics, we view the next 12 to 18 months as a transition period for our e-commerce business into a sustainable and quality-focused approach.

鑑於中國電子商務市場動態的轉變，我們認為未來 12 至 18 個月是我們電子商務業務向可持續和注重質量的過渡期。

Now let me share our key initiatives during this transition period. Please turn to Page 11. Firstly, we will put our brand partners' needs at the center of everything we do. By staying ahead of curve and adopting our experience to the dynamic e-commerce landscape in China, we ensure that our brand partners receive the best possible support and solutions to be successful in this market. We will continue to strengthen our structured client management framework and to improve our service quality through the [NPS] program, which we co-developed with NielsenIQ.

現在讓我分享一下我們在這一過渡時期的主要舉措。請翻至第11頁。首先，我們將把品牌合作夥伴的需求置於一切工作的中心。通過保持領先地位並將我們的經驗應用於中國動態的電子商務環境，我們確保我們的品牌合作夥伴獲得最好的支持和解決方案，以在這個市場取得成功。我們將繼續加強我們的結構化客戶管理框架，並通過我們與 NielsenIQ 共同開發的 [NPS] 計劃來提高我們的服務質量。

This program enables us to gather valuable feedback from our brand partners and make necessary improvements to enhance their overall experience. We also actively collaborate with our brand partners to codevelop industry best practice on e-commerce. For example, we worked with a leading luxury brand to implement a one-on-one live customer services. We helped a leading outdoor sports brand to implement an omnichannel CRM solutions and we implemented an online-merge-offline solution with single inventory for a leading electronics brand.

該計劃使我們能夠從品牌合作夥伴那裡收集寶貴的反饋，並做出必要的改進以增強他們的整體體驗。我們還積極與品牌合作夥伴合作，共同開發電子商務行業最佳實踐。例如，我們與一家領先的奢侈品牌合作實施一對一的實時客戶服務。我們幫助一家領先的戶外運動品牌實施全渠道 CRM 解決方案，並為一家領先的電子品牌實施了單一庫存的線上合併線下解決方案。

By combining our expertise of e-commerce with our brand partners industry insight, we aim to stay at the forefront of the e-commerce innovation while delivering exceptional value to our brand partners.

通過將我們的電子商務專業知識與品牌合作夥伴的行業洞察力相結合，我們的目標是保持電子商務創新的前沿，同時為我們的品牌合作夥伴提供卓越的價值。

Secondly, we will focus on the quality of the business. Given the current challenging macro environment, we will continue our efforts in portfolio optimization. By evaluating our low-margin accounts and implementing measures to minimize risk and improve working capital efficiencies, we aim to strengthen the overall quality of our client portfolio. At the same time, we will enhance our internal control and risk management which will help us to be better equipped to navigate challenges and maintain the long-term sustainability of our business.

二是注重業務質量。鑑於當前充滿挑戰的宏觀環境，我們將繼續努力優化投資組合。通過評估我們的低利潤賬戶並採取措施最大限度地降低風險並提高營運資金效率，我們的目標是加強客戶投資組合的整體質量。同時，我們將加強內部控制和風險管理，這將有助於我們更好地應對挑戰，保持業務的長期可持續發展。

Thirdly, we will continue to invest in building our capability to provide end-to-end services across different categories and different business models. We will strategically invest in -- and strengthen the categories where we have already built a competitive edge, such as apparel, sports, luxury and electronics. At the same time, we will expand into those categories that show improving demand with low online penetration, such as health, beauty, beverage and (inaudible). We will continue to strengthen our value-added services, including digital marketing, IT, logistics and warehouse to provide a one-stop shop to brands seeking a strategic partner in e-commerce in China. We have also engaged in some early discussions to become the sole distributor for some international brands in China.

第三，我們將繼續投資建設跨品類、不同商業模式的端到端服務能力。我們將戰略性地投資並加強我們已經建立競爭優勢的類別，例如服裝、運動、奢侈品和電子產品。與此同時，我們將擴展到那些需求增長但在線滲透率較低的類別，例如健康、美容、飲料和（聽不清）。我們將繼續加強我們的增值服務，包括數字營銷、IT、物流和倉儲，為在中國尋求電子商務戰略合作夥伴的品牌提供一站式服務。我們還進行了一些早期討論，以成為一些國際品牌在中國的獨家經銷商。

On the other hand, we will continue to incubate our own brands domestically. We witnessed an early breakthrough during the quarter with our self-incubated brand (inaudible) generating sales of RMB 22 million.

另一方面，我們將繼續在國內孵化自主品牌。我們在本季度見證了早期突破，我們的自主孵化品牌（聽不清）銷售額達到 2200 萬元人民幣。

Finally, we aim to enhance our cost effectiveness and efficiency through the implementation of technology and business process reengineering. This will involve expanding our regional service centers and integrating internal efficiency and quality control technologies such as Service Anywhere, S-ANY and Design Anywhere, D-ANY. We are also actively collaborating with leading academic institutions to enhance our talent pool and provide training opportunities, at the same time, decreasing our labor expenses for entry level employees.

最後，我們的目標是通過實施技術和業務流程重組來提高成本效益和效率。這將涉及擴大我們的區域服務中心並整合內部效率和質量控制技術，例如 Service Anywhere、S-ANY 和 Design Anywhere、D-ANY。我們還積極與領先的學術機構合作，以增強我們的人才庫並提供培訓機會，同時減少初級員工的勞動力費用。

Furthermore, we will continue to promote the Lean 6 Sigma process to enhance both quality and efficiency. We are in the process to integrate AI technologies, including our self-developed automation platform growth (inaudible) into our daily operations. We are confident that this initiative will result in improved operating efficiency and reduce the costs. We are embarking on a transition journey in the e-commerce business to adapt to the changing market dynamics. This transition program will require some time and effort to realign our people, resources and business processes.

此外，我們將繼續推廣精益6西格碼流程，以提高質量和效率。我們正在將人工智能技術（包括我們自主開發的自動化平台增長（聽不清））融入到我們的日常運營中。我們相信，這一舉措將提高運營效率並降低成本。我們正在踏上電子商務業務的轉型之旅，以適應不斷變化的市場動態。此過渡計劃需要一些時間和精力來重新調整我們的人員、資源和業務流程。

However, we have full confidence that once this transition is successfully executed, our e-commerce business will be better positioned to drive sustainable growth and achieve even greater success in the market.

然而，我們完全相信，一旦這一轉型成功執行，我們的電子商務業務將能夠更好地推動可持續增長，並在市場上取得更大的成功。

Now let me turn the call over to Sandrine to elaborate more on BBM. Here we go Sandrine.

現在讓我將電話轉給 Sandrine，詳細說明 BBM。我們來了，桑德琳。

Thank you, Vincent and Arthur, and thank you all for joining us today. It is my great pleasure to speak with you. Please follow us to Slide #12. Let me first reemphasize that BBM is the holistic omnichannel partner for global brands. We focus on growing a portfolio of premium consumer lifestyle brands that we manage with a data and technology-driven China-for-China approach.

謝謝文森特和阿瑟，也感謝大家今天加入我們。我很高興與您交談。請跟隨我們觀看幻燈片#12。首先我要再次強調，BBM 是全球品牌的整體全渠道合作夥伴。我們專注於發展優質消費生活方式品牌組合，並通過數據和技術驅動的中國為中國的方式進行管理。

We began our journey earlier in 2023 with GAP, and we are currently under way of transforming GAP China from a discount-driven approach to one that focuses on building consumer love for our brand and products. In the second quarter of 2023, although the macro recovery was not as strong as everyone had hoped, we implemented our transition plan and successfully improved AUR, average unit retail, and gross margin.

我們於 2023 年早些時候開始了與 GAP 的旅程，目前我們正在將 GAP 中國從折扣驅動的方式轉變為專注於培養消費者對我們品牌和產品的喜愛的方式。 2023年第二季度，儘管宏觀復甦沒有大家希望的那麼強勁，但我們實施了轉型計劃，成功提高了AUR、平均單位零售量和毛利率。

Our store level operating profit after royalty fees turned positive and we exceeded our initial forecast on the bottom line.

扣除特許權使用費後，我們的商店水平營業利潤轉為正值，並且超出了我們最初的預測。

Please turn to Slide #13. As you may recall, we took a series of quick actions to improve store efficiency, including strictly controlling discounts, updating existing store visuals with a focus on mix and match storytelling, and enhancing sales adviser training. Thanks to these actions, our blended gross margin reached 22 -- sorry, 52%, a healthy level even post royalty fee.

請轉到幻燈片 #13。您可能還記得，我們採取了一系列快速行動來提高商店效率，包括嚴格控制折扣、更新現有商店視覺效果（重點是混搭故事講述）以及加強銷售顧問培訓。由於這些行動，我們的綜合毛利率達到了 22——抱歉，是 52%，即使扣除特許權使用費，也是一個健康的水平。

I want to highlight that this gross margin achievement is key to GAP China's success. Overall, we generated a total revenue of RMB 324 million, a decrease of 26% year-over-year, largely explained by the closure of 86 stores before we took over, which is equivalent to a decline of 40% year-over-year on store count.

我想強調的是，毛利率的提高是GAP中國成功的關鍵。總體而言，我們的總收入為人民幣3.24億元，同比下降26%，主要是因為我們接手之前關閉了86家門店，相當於同比下降40%按商店計數。

Our same-store growth reached 11% in the second quarter of 2023. As you can see, despite the disappointing micro recovery, we still managed to implement our transition plan, improve gross margin and reduce loss. We believe the new foundation for GAP China is in place as we have successfully upgraded the supply chain and significantly increased store efficiency as well as recruited talent for all key positions.

2023 年第二季度，我們的同店增長達到 11%。正如您所看到的，儘管微復甦令人失望，但我們仍然成功實施了轉型計劃，提高了毛利率並減少了損失。我們相信，GAP 中國的新基礎已經就位，我們已經成功升級了供應鏈，顯著提高了門店效率，並為所有關鍵崗位招聘了人才。

This third quarter, we will start selling our new locally designed China-for-China product and we will expand to a larger product portfolio in the fourth quarter. Now that the foundation is in place, we are ready to accelerate new store openings and marketing investments and I'm very excited about our plans for the second half of 2023.

今年第三季度，我們將開始銷售本地設計、專為中國設計的新產品，並將在第四季度擴大產品組合。現在基礎已經到位，我們已準備好加速新店開業和營銷投資，我對我們 2023 年下半年的計劃感到非常興奮。

Building on the new foundation, we aim to open up to 10 stores beginning with the flagship destination store in Guangzhou, designed with new narratives that is younger and more interactive with prioritized product layout, the new stores will be infused with our local design language. Walking into our stores, you will resonate with our modern preppy urban workwear, and premium [blue] aesthetics around which we have organized the product range. Walk deeper, and you will discover co-branded designs as well as upgraded segmentation for men, women and kids.

在新的基礎上，我們計劃以廣州旗艦店為起點，開設多達10家門店，以更年輕、更具互動性的新敘事設計，優先考慮產品佈局，新店將融入我們本土的設計語言。走進我們的商店，您將會對我們的現代學院派都市工作服以及我們圍繞其組織產品系列的優質[藍色]美學產生共鳴。再往深處走，你會發現聯名設計以及男、女、童的升級細分。

Our improved quick response agile supply chain has enabled us to reduce our design to shelf lead time from previously 3 to 6 months to a matter of weeks. We are also rebuilding our online brand image and upgrading our consumer base. We will further leverage our omnichannel capabilities to amplify our channel differentiation plans.

我們改進的快速響應敏捷供應鏈使我們能夠將設計到上架的交貨時間從以前的 3 到 6 個月縮短到幾週。我們還在重建我們的在線品牌形象併升級我們的消費者基礎。我們將進一步利用我們的全渠道能力來擴大我們的渠道差異化計劃。

Our IT transition is on track and we are ready to transition to Baozun enabled systems by the end of September. In addition, our CRM will also be upgraded with effective membership system. In marketing, we will focus on the I am GAP, a new GAP tagline to elevate brand marketing in the full season and raise brand influence. We have actually included the I am GAP brand theme our presentation, and I encourage you to read it to understand our upgraded DNA. We feel very good about where GAP is heading and we look forward to sharing with you more and more on our next call together.

我們的 IT 轉型已步入正軌，我們已準備好在 9 月底之前過渡到支持 Baozun 的系統。此外，我們的CRM也將升級，推出有效的會員體系。營銷方面，我們將圍繞GAP新口號“我是GAP”，提升全季品牌營銷，提升品牌影響力。實際上，我們的演示文稿中包含了“我是 GAP”品牌主題，我鼓勵您閱讀它以了解我們升級後的 DNA。我們對 GAP 的發展方向感到非常滿意，並期待在下次電話會議上與您分享更多信息。

Now let me introduce an exciting addition to the BBM portfolio. We have been very selective in narrowing down to a possible few lifestyle brands. We and our strategic partner, ABG, see Hunter as an excellent fit for BBM.

現在讓我介紹一下 BBM 產品組合中令人興奮的新成員。我們非常有選擇性地縮小了可能的幾個生活方式品牌的範圍。我們和我們的戰略合作夥伴 ABG 認為 Hunter 非常適合 BBM。

Please turn to Slide #14. Hunter is a British heritage brand of original footwear and outerwear that currently sells exclusively online in China. Over the past 2 years, Hunter has seen rapid growth in China and has been profitable. We see Hunter as an iconic premium lifestyle brand with excellent growth potential in Greater China, aligning perfectly with BBM's mission.

請轉到幻燈片#14。 Hunter 是英國原創鞋類和外套傳統品牌，目前僅在中國網上銷售。過去兩年，Hunter在中國實現了快速增長，並實現了盈利。我們認為 Hunter 是一個標誌性的高端生活方式品牌，在大中華區具有卓越的增長潛力，與 BBM 的使命完美契合。

We believe the combination of BBM China-for-China strategy, combined with our technology and data-driven approach in product and consumer operations will empower Hunter for sustainable future growth. Post COVID, the outdoor lifestyle has become a trend, and Hunter has strong brand reputation in this dynamic segment. Like GAP, Hunter was a BEC brand partner. So we have experience with Hunter's business, and we are comfortable with our ability and resources to grow its top line and bottom line in China. Unlike GAP, which is a long-term license, we will co-own Hunter's intellectual property in Greater China as well as Southeast Asia.

我們相信，BBM China for China 戰略與我們在產品和消費者運營方面的技術和數據驅動方法相結合，將為 Hunter 帶來可持續的未來增長。新冠疫情過後，戶外生活方式已成為一種趨勢，Hunter 在這個充滿活力的細分市場中擁有強大的品牌聲譽。與 GAP 一樣，Hunter 也是 BEC 品牌合作夥伴。因此，我們對亨特的業務有豐富的經驗，並且對我們在中國發展其營收和利潤的能力和資源感到滿意。與GAP的長期許可不同，我們將共同擁有Hunter在大中華區以及東南亞的知識產權。

Naturally, our BZI division can help to grow Hunter's business in that region. We anticipate needing to add only seven additional members to full-run Hunter's current business and we have already identified the personnel. As such, we don't anticipate the addition of Hunter to our BBM portfolio will cause any disruption to our GAP business.

當然，我們的 BZI 部門可以幫助 Hunter 在該地區發展業務。我們預計只需要在亨特目前的業務中增加七名成員，並且我們已經確定了人員。因此，我們預計 Hunter 加入我們的 BBM 產品組合不會對我們的 GAP 業務造成任何干擾。

In conclusion, Hunter is a good addition to BBM that not only offers excellent growth potential, but also establishes our strategic partnership with ABG towards greater and deeper future collaboration. Hunter kicks off our partnership with ABG, and we aim to form a strategic alliance that broadly covers business development and planning, brand management, marketing and public relations for ABG's brand portfolio. With all this being said, I shall now hand the call back to Arthur. Thank you.

總而言之，Hunter 是 BBM 的一個很好的補充，不僅提供了出色的增長潛力，而且還為我們與 ABG 建立了戰略合作夥伴關係，以實現未來更廣泛、更深入的合作。 Hunter 啟動了與 ABG 的合作夥伴關係，我們的目標是建立一個戰略聯盟，廣泛涵蓋 ABG 品牌組合的業務開發和規劃、品牌管理、營銷和公共關係。話雖如此，我現在要把電話交還給亞瑟。謝謝。

Okay. Thank you, Sandrine. In summary, we have achieved another milestone in our transformation where all 3 business lines will cooperate together to deliver an extraordinary suite of services to our brand partners. BEC continues to benefit from business and cost optimization and is transitioning itself into a second wave of growth. BBM has put in place a new foundation for GAP China and accelerating its China-for-China strategy. Baozun International is on track to build infrastructure and expand its mission. That concludes our prepared remarks. Thank you.

好的。謝謝你，桑德琳。總之，我們在轉型中實現了另一個里程碑，所有 3 個業務線將共同合作，為我們的品牌合作夥伴提供非凡的服務。 BEC 繼續受益於業務和成本優化，並正在轉型為第二波增長。 BBM為GAP中國奠定了新的基礎，並加速了中國為中國的戰略。寶尊國際正在建設基礎設施並拓展其使命。我們準備好的發言到此結束。謝謝。

Operator, we are now ready to begin the Q&A session.

接線員，我們現在準備開始問答環節。

(Operator Instructions) And the first question today comes from Alicia Yap with Citi.

（操作員說明）今天的第一個問題來自花旗銀行的 Alicia Yap。

I have 2 questions. First, can management share with us on the latest consumption sentiment you have seen for July and August so far. What are the spending sentiment by brand, if you can give some color? And any major difference in terms of the international brands versus the domestic brands in terms of the (inaudible) spend willingness?

我有 2 個問題。首先，管理層能否與我們分享一下您所看到的 7 月和 8 月迄今為止的最新消費情緒？如果你能給出一些顏色的話，不同品牌的消費情緒是怎樣的？國際品牌與國內品牌在（聽不清）消費意願方面有何重大差異？

And then second question is can management help us to update on the store traffic for GAP China with more off-line activity post reopening, have you seen meaningful traffic improvement since taking over the business.

第二個問題是，管理層能否幫助我們更新GAP中國的門店客流量情況，並在重新開業後進行更多的線下活動，自接管業務以來，您是否看到了客流量的顯著改善。

Okay. Alicia, it's Arthur here. So I will take the first question, and then I will hand over to Sandrine for the second one. So for the first one, as we all know, in the quarter 2, with the 618 promotion, the overall consumption is in a pretty positive recovery trend, but unfortunately, in July, what we witnessed is the trend has stopped with both Tmall and JD into a negatory -- into a negative territory in terms of the growth. But the good thing is, in August, we have seen some recovery, even though it's still slightly below our expectation, but it's on the trend to recover, so hopefully, with summer holiday ending, we will see that continue. People will start to spend.

好的。艾麗西亞，我是亞瑟。所以我會回答第一個問題，然後我將把第二個問題交給桑德琳。所以第一個，眾所周知，在第二季度，隨著618促銷，整體消費處於一個相當積極的複蘇趨勢，但不幸的是，在7月份，我們看到的是，天貓和天貓的趨勢都停止了。京東陷入負增長——進入負增長領域。但好消息是，8月份，我們看到了一些復甦，儘管仍略低於我們的預期，但有復甦的趨勢，所以希望隨著暑假的結束，我們會看到這種情況繼續下去。人們將開始消費。

In terms of the category, so far, we have seen some good momentum in the third quarter to date on luxury, on jewelry and also travel-related products. So for example, the outdoor and also the suitcase, so those we have seen experiencing a double-digit growth.

就品類而言，到目前為止，我們在第三季度看到了奢侈品、珠寶和旅遊相關產品的一些良好勢頭。例如，戶外用品和手提箱，我們看到它們經歷了兩位數的增長。

In your final question about the domestic and the international brands. We actually see both the international brands and domestic brands, have the willingness to spend if the ROI is good, so -- which leads to the quality of operations for both Tmall and JD, so that's where we see the customer either international or domestic are looking for the good quality and stable team. They're looking for data analytics. They're looking for technology to help them, which gave Baozun a strength to stand out from our peers. So that's why I mentioned in the second half of the year, we have a stronger pipeline than the past year.

在你最後一個關於國內和國際品牌的問題中。我們實際上看到國際品牌和國內品牌，如果投資回報率良好，他們就會願意花錢，所以——這會導致天貓和京東的運營質量，所以這就是我們看到國際或國內客戶的地方尋找品質優良、穩定的團隊。他們正在尋找數據分析。他們正在尋找技術來幫助他們，這給了寶尊從同行中脫穎而出的優勢。所以這就是為什麼我在下半年提到，我們的管道比去年更強大。

So after the COVID, the brand, both international and domestic, are starting to spend their money wisely. Therefore, the capability of Baozun can play a big part in this area. So I will hand over to Sandrine for the second question on GAP.

因此，在新冠疫情之後，無論是國際品牌還是國內品牌，都開始明智地花錢。所以，寶尊的能力在這方面可以發揮很大的作用。那麼關於 GAP 的第二個問題我將交給 Sandrine 回答。

Okay. So Alicia, to answer your second question, let me stress the fact that our same-store growth for the Q2 is 11% and now if I look at August, it has picked up to more than 30%. And if I look at year-to-date as of today, we are close to 30%. So all in all, this is very positive, and it's actually the combination of increased traffic to answer more directly your question and increased conversion in spite of stopping or at least drastically reducing the discounts in store and therefore, actually increasing our margin quite significantly.

好的。艾麗西亞，為了回答你的第二個問題，讓我強調一個事實，我們第二季度的同店增長率是 11%，現在如果我看看 8 月份，它已經上升到 30% 以上。如果我看看今年迄今為止的情況，我們已經接近 30%。總而言之，這是非常積極的，它實際上是增加流量以更直接地回答您的問題和增加轉化率的組合，儘管停止或至少大幅減少了商店的折扣，因此，實際上相當顯著地增加了我們的利潤。

So all in all, yes, we see traffic increase and conversion picking up very significantly and momentum continuing to go up until today in August. And we expect that the last 4 months will be continuing on this trend and potentially even accelerating because this is when we're going to really start accelerating not only store opening, but also marketing investments with the I am GAP and new GAP campaigns as well as launching the new products that are designed China-for-China.

總而言之，是的，我們看到流量和轉化率顯著增加，並且勢頭持續上升，直到八月份的今天。我們預計過去 4 個月將繼續保持這一趨勢，甚至可能會加速，因為此時我們不僅會真正開始加速開店，還會開始加速 I am GAP 和新 GAP 活動的營銷投資推出專為中國設計的新產品。

The next question comes from Thomas Chong with Jefferies.

下一個問題來自 Jefferies 的 Thomas Chong。

My first question is regarding the growth outlook for non-Tmall channels. Can management comment about how it is trending and its contribution to GMV in the future?

我的第一個問題是關於非天貓渠道的增長前景。管理層能否評論一下它的趨勢及其對未來 GMV 的貢獻？

And my second question is about our international strategy. Can management comment about any strategic update and our thoughts in second half and next year? Thank you.

我的第二個問題是關於我們的國際戰略。管理層能否評論一下我們下半年和明年的戰略更新和想法？謝謝。

Okay. Thank you, Thomas. I will take the first one, then I will hand over to Vincent for the international expansion. Yes. In terms of the non-Tmall channels, as I mentioned in the earlier prepared remarks, we actually have seen an increased trend that the clients are looking for omnichannel Therefore, our Tmall contributes has actually come down in terms of the total GMV. And non-Tmall is representing 34% of the overall GMV for quarter 2 and that trend has continued with the clients looking for the omnichannel strategy.

好的。謝謝你，托馬斯。我會拿第一個，然後我會把國際擴張交給文森特。是的。在非天貓渠道方面，正如我在之前準備的發言中提到的，我們實際上看到客戶尋求全渠道的趨勢有所增加，因此我們天貓的總 GMV 貢獻實際上有所下降。非天貓佔第二季度整體 GMV 的 34%，隨著客戶尋求全渠道策略，這一趨勢仍在持續。

And in terms of -- in Baozun, we have 47% of our entire portfolio. The clients are using more than one channel, so that number has increased by about 5% over the last few quarters. So we are seeing that trend to continue. Okay. Let me hand over to Vincent for the second question, yes.

就寶尊而言，我們佔整個投資組合的 47%。客戶使用多個渠道，因此這一數字在過去幾個季度增加了約 5%。所以我們看到這種趨勢將會持續下去。好的。讓我把第二個問題交給文森特，是的。

Okay. Thank you Thomas for the questions. I'm with you for the second question about the Baozun international overseas strategies. Of course, Baozun international is, of course, a key element of our strategy. And I think in the past 1.5 years, we have finished constructioning the infrastructure, including the team building, capability and also territory coverage.

好的。謝謝托馬斯提出的問題。第二個問題是關於寶尊國際的海外戰略。當然，寶尊國際是我們戰略的關鍵要素。我認為在過去的1.5年裡，我們已經完成了基礎設施的建設，包括團隊建設、能力建設以及地域覆蓋。

So we have several offices in different countries with the ground team to help us to come back not only in brand e-commerce business, but also brand management business. So with that addition, just now, as Sandrine mentioned, we have a new member, a very capable guy joined us for the BBM expansion in the region.

所以我們在不同的國家設立了多個辦事處，並有地麵團隊，幫助我們不僅回歸品牌電商業務，還回歸品牌管理業務。因此，隨著這一補充，正如桑德琳剛才提到的，我們有一位新成員，一位非常有能力的人加入我們，以促進 BBM 在該地區的擴張。

So for the strategies, I think one thing about the localization, we want the local team can do the BD service provisioning and also all the other elements of the e-commerce business themselves in the region. So that is localization. And we also have another keyword called landing means that the both the international team will help our global e-commerce clients or brand management clients to land in that area. So there's 2 key elements.

因此，對於策略，我認為關於本地化的一件事是，我們希望本地團隊能夠提供 BD 服務以及該地區電子商務業務的所有其他要素。這就是本地化。我們還有一個關鍵詞叫落地，就是國際團隊會幫助我們的全球電商客戶或者品牌管理客戶落地到這個地區。所以有兩個關鍵要素。

Right now, I think we are doing a quite good job. And also this year, we will start to conduct the Hunter business in the region after the joint venture and license agreement and also next year, we have some other brands, strong brands in our pipeline. So early next year, we will roll out more on management business in the region. So I think it's quite promising. Thank you, Thomas.

現在，我認為我們做得很好。今年，在簽訂合資企業和許可協議後，我們將開始在該地區開展 Hunter 業務，明年，我們還有一些其他品牌，我們的管道中的強大品牌。所以明年初，我們將在該地區推出更多管理業務。所以我認為它很有前途。謝謝你，托馬斯。

And the next question comes from Sophie Wang with CMB Bank International.

下一個問題來自招商銀行國際的 Sophie Wang。

I have 2 questions here. The first one is regarding live stream e-commerce update. Last time you stated the plan to enhance live stream e-commerce capacity. So would you mind to share some more color on live streamings update? And what is the feedback and the performance of brands and gains?

我這裡有兩個問題。第一個是關於直播電商的更新。上次您提到了提升直播電商能力的計劃。那麼您介意分享一些關於直播更新的更多內容嗎？而品牌的反饋和表現及收穫又如何呢？

The second question is about the Hunter acquisition. What is the rationale behind this here? And how do you look at its synergy and financial impact from Hunter acquisition going forward?

第二個問題是關於亨特收購的。這背後的理由是什麼？您如何看待收購 Hunter 帶來的協同效應和財務影響？

Yes. Sophie, I will take the first one on the live streaming, and then I will pass to Sandrine for the second one.

是的。蘇菲，我將在直播中拍攝第一個，然後我將傳給桑德琳拍攝第二個。

In terms of the live streaming, I think our idea is to combine the best of Baozun capability, which is -- for a long time, we have been strong in terms of the content creation and also operations. With the world-class facility and operations, which we are starting to build, those 2 things can combine together to achieve a very good kind of model for our brand partners to find the new growth area in terms of the e-commerce. So this is a new area that Baozun can get into, but our strength in terms of the connection with the brand and also the content creation will help us to stand out.

在直播方面，我認為我們的想法是結合寶尊最好的能力，就是說，長期以來，我們在內容創作和運營方面都很強。憑藉我們正在開始建設的世界一流的設施和運營，這兩件事可以結合在一起，為我們的品牌合作夥伴實現一種非常好的模式，以找到電子商務方面的新增長領域。所以這是一個寶尊可以涉足的新領域，但我們在品牌關聯度和內容創作方面的優勢將幫助我們脫穎而出。

So far this year in the first half of the year, we have seen some good progress in terms of some luxury brands, we start to perform the Douyin ,which has achieved very good results. And also, very recently, only this month, we launched a new Douyin GQ show on Douyin which has achieved a very good result. So if you look at Douyin, you can find in terms of the details on that one. I'm not going through the detail. But what that proves is the Baozun's capability plus our investment into the live streaming can create a good result for our clients.

今年上半年到目前為止，我們看到一些奢侈品牌方面有一些很好的進展，我們開始做抖音，取得了很好的效果。還有最近，就在這個月，我們在抖音上推出了新的抖音GQ秀，取得了非常好的效果。所以你看一下抖音就可以找到那個的詳細信息。我不會詳細說明。但這證明了寶尊的能力加上我們對直播的投入可以為我們的客戶創造一個好的結果。

Okay. Now I will hand over to Sandrine. Yes.

好的。現在我將把任務交給桑德琳。是的。

Okay. So Hunter, what's the rationale to add Hunter to the portfolio? So second brand in the portfolio. The first reason is that it really fits the philosophy of how we want to build this portfolio because Hunter is a premium lifestyle brand by essence, I would say, or in essence. It has a strong DNA. It has very iconic product, that's a second reason.

好的。那麼亨特，將亨特加入投資組合的理由是什麼？所以是產品組合中的第二個品牌。第一個原因是它確實符合我們構建這個產品組合的理念，因為我想說，亨特本質上是一個優質生活方式品牌。它擁有強大的DNA。它擁有非常標誌性的產品，這是第二個原因。

On top of this, it's in a category which is like urban outdoor which has a lot of momentum and especially after COVID, we have seen a lot of growth. Then to add to this, we know the brand. We know the brand because we've been its e-commerce partner for a couple of years. We therefore saw it growing very fast in the last 2 years, and also being in China, at least a profitable brand. And all these are actually positive reasons to go this direction.

最重要的是，它屬於像城市戶外這樣的類別，有很大的動力，特別是在新冠疫情之後，我們看到了很大的增長。除此之外，我們還了解這個品牌。我們了解這個品牌，因為我們多年來一直是其電子商務合作夥伴。因此，我們看到它在過去兩年增長非常快，而且在中國，至少是一個盈利的品牌。所有這些實際上都是朝這個方向發展的積極理由。

On top of this, also among the criteria which are important for us, it's a brand that sells strongly online, actually, for the time being in China, it's only online. So online potential is very strong. And it's a brand that we believe that we can do China-for-China to expand the product portfolio in an efficient way. So all this combined together made us think that it's actually a good brand for our portfolio. And in addition to this, this time, we can have some ownership over the brand, which makes a big difference versus a pure license.

除此之外，對我們來說重要的標準之一是，它是一個在線銷售強勁的品牌，實際上，目前在中國，它只是在線銷售。所以線上的潛力是非常強大的。我們相信這個品牌能夠以中國為中國，以有效的方式擴大產品組合。因此，所有這些結合在一起讓我們認為這對於我們的產品組合來說實際上是一個很好的品牌。除此之外，這一次，我們可以擁有該品牌的一些所有權，這與純粹的許可有很大不同。

And then in terms of financial impact, at the beginning, it's relatively marginal. We plan to grow this brand significantly in Greater China, but also in Southeast Asia because we have the IP in Southeast Asia as well. And the good thing is that, as we said, it's a brand which is operationally positive from the very beginning. So of course, at the beginning, we will have to add some royalties. But overall, it's the brand which is operationally positive from day 1, which is not a turnaround like we have experienced previously.

然後就財務影響而言，一開始它相對較小。我們計劃在大中華區以及東南亞大力發展這個品牌，因為我們在東南亞也擁有知識產權。好的一點是，正如我們所說，這是一個從一開始就積極運作的品牌。所以當然，一開始我們就得增加一些版稅。但總體而言，該品牌從第一天起就在運營上表現積極，這並不像我們之前經歷過的那樣出現轉變。

(Operator Instructions) And the next question comes from Janet Young with Bank of America.

（操作員說明）下一個問題來自美國銀行的 Janet Young。

My question is regarding the product sales. Since you have mentioned that the optimizing -- optimization of product distribution model and time portfolio has put some pressure -- downward pressure on our product sales. It has been going on for a while. Can you give us an update on the progress? And looking into the future, do you -- how long do you think you will last? And what product categories still have much room to improve? And can you give a sense of how much further impact it could potentially have on the product sales and margins?

我的問題是關於產品銷售的。既然您提到優化——產品分銷模式和時間組合的優化，給我們的產品銷售帶來了一些壓力——下行壓力。這種情況已經持續了一段時間了。您能給我們介紹一下最新進展嗎？展望未來，你認為你能堅持多久？哪些品類還有很大提升空間？您能否說明它可能對產品銷售和利潤產生多大的進一步影響？

Okay. Thank you, Jenny. And I think, as I mentioned in the earlier call, our focus of the BEC business is on quality and on the operating cash flow. And the rationalization has made a good contribution to our portfolio and the quality of the portfolio has enhanced. Therefore, you see the result in quarter 2, we have a fairly healthy positive cash inflow of RMB 450 million, which is a very good result, and a lot of this come down to rationalization of product sales portfolio.

好的。謝謝你，珍妮。我認為，正如我在之前的電話會議中提到的，我們 BEC 業務的重點是質量和運營現金流。合理化對我們的投資組合做出了很好的貢獻，投資組合的質量得到了提高。因此，你看到第二季度的結果，我們有4.5億元人民幣的相當健康的正現金流入，這是一個非常好的結果，這很大程度上歸功於產品銷售組合的合理化。

As you may remember, we started this journey about a year ago and now is coming to the point that our product sales portfolio has significantly improved, so we will continue our journey in terms of improving the quality, and we will add on new good quality product sales like the sole distributor model I talked about earlier to our product sales portfolio. We think from quarter 4 this year, you will see a positive trend in terms of the growth from this area.

您可能還記得，我們大約一年前開始了這一旅程，現在我們的產品銷售組合已顯著改善，因此我們將繼續我們提高質量的旅程，我們將增加新的優質品質產品銷售就像我之前談到的我們的產品銷售組合的獨家經銷商模式。我們認為從今年第四季度開始，您將看到該領域增長的積極趨勢。

And the next question comes from Andre Chang with JPMorgan.

下一個問題來自摩根大通的 Andre Chang。

I have a follow-up question on Hunter, the deal and the company's strategy on BBM going forward. So it's a relatively short interval from us doing the deal of GAP and now the deal with Hunter. And we also talk about like potential more cooperation with the Authentic Brands Group. So can management help us understand how we consider -- how far we can go based on our current financial resources and how do we think about the opportunity cost, say we are doing several deals in a short period of time. What about the potential going forward? And what's the reason for us to have the confidence to accelerate progress on the BBM front.

我有一個關於 Hunter、這筆交易以及公司未來 BBM 戰略的後續問題。因此，從我們與 GAP 的交易到現在與 Hunter 的交易，間隔時間相對較短。我們還討論了與 Authentic Brands Group 進行更多合作的可能性。因此，管理層能否幫助我們了解我們如何考慮——根據我們當前的財務資源，我們可以走多遠，以及我們如何考慮機會成本，比如我們在短時間內進行幾筆交易。未來的潛力如何？是什麼讓我們有信心加快BBM戰線的進展？

Go ahead, Sandrine.

繼續吧，桑德琳。

Do you want to start off No, no. Okay. Well, I'll go ahead and I'll let you complement if you feel, especially on the resource question. Actually, we started working on BBM even before the GAP deal. So we've been looking and selecting brands very carefully and we continue to be extremely selective. So for one, Hunter, we have looked at dozens and dozens of brands. So we're not rushing in any manner, we're not rushing.

你想開始嗎 不，不。好的。好吧，我會繼續，如果你有感覺，我會讓你補充，特別是在資源問題上。事實上，我們甚至在 GAP 交易之前就開始研究 BBM。因此，我們一直非常仔細地尋找和選擇品牌，並且我們將繼續嚴格挑選。因此，對於亨特來說，我們研究了數十個品牌。所以我們不會以任何方式著急，我們不會著急。

However, going forward, what we want is indeed to build a portfolio that brings significant revenue and profit and value to Baozun Group. So we will continue to be extremely selective, but we will continue to look at the best opportunities, especially when they fit the portfolio philosophy so well. When they are positive operationally from the beginning, have a marginal impact financially and enable us to also create value by acquiring ownership and not only being in the license mode. So that's the way I would summarize, but I'm sure that Arthur wants to complement on this.

然而，展望未來，我們真正想要的是建立一個為寶尊集團帶來可觀收入、利潤和價值的投資組合。因此，我們將繼續嚴格篩選，但我們將繼續尋找最佳機會，尤其是當它們非常符合投資組合理念時。當它們從一開始就在運營上發揮積極作用時，就會在財務上產生邊際影響，並使我們能夠通過獲得所有權而不僅僅是處於許可模式來創造價值。這就是我總結的方式，但我確信亞瑟想對此進行補充。

Yes. I think I totally agree, Sandrine. Just one more point I would like to add, Andre, is we have been operating as the (inaudible) partner for Hunter over the last 2 years. And we know this brand operationally and financially. So the same as GAP, as a result, you can see, we managed to turn the situation around only after 5 months. And we have confidence, given the information we know about Hunter to make a significant improvement in the short term given where we are by utilizing the resource and platform and capability of Baozun Group. So that's why we go ahead to make this deal.

是的。我想我完全同意，桑德琳。安德烈，我還想補充一點，過去兩年我們一直是亨特的（聽不清）合作夥伴。我們在運營和財務方面都了解這個品牌。所以和GAP一樣，結果你可以看到，我們只用了5個月就扭轉了局面。根據我們對亨特的了解，我們有信心利用寶尊集團的資源、平台和能力，在短期內取得顯著的進步。這就是我們繼續達成這筆交易的原因。

And also, this has opened another cooperation model with the ABG group who owns more than 50 different brands in China that owns IP and through that cooperation, we may explore all different venues of cooperation with ABG group. So that will help us to grow both the BBM and BEC business as well.

而且，這也開啟了與ABG集團的另一種合作模式，ABG集團在中國擁有50多個擁有IP的不同品牌，通過這種合作，我們可以探索與ABG集團的所有不同合作領域。因此，這也將幫助我們發展 BBM 和 BEC 業務。

Some more color from my side is here is that for the positioning, we are positioning the premium fashion first category. So no matter GAP for Hunter is totally within this positioning. Secondly, I think it's going more upstream because Hunter represents co-ownership of [IP] of brands. And thirdly, I think, as always, we think financial fundamentals or the strength of our financials is very important. So in the meantime, we will carefully evaluate all capabilities. So Hunter decisions made consider all these kind of aspects. So I think it's quite mature and solid and a careful selection.

我個人認為，對於定位，我們的定位是高端時尚第一品類。所以無論GAP對於Hunter來說完全在這個定位之內。其次，我認為它正在向上游發展，因為亨特代表了品牌[IP]的共同所有權。第三，我認為，一如既往，我們認為財務基本面或我們的財務實力非常重要。所以與此同時，我們會仔細評估所有能力。因此亨特做出的決定考慮了所有這些方面。所以我認為它是相當成熟和紮實的，也是經過精心挑選的。

This does conclude the question-and-answer session. I would like to return the floor to management for any closing comments.

問答環節到此結束。我想請管理層發表任何結束意見。

Okay. Thank you, operator. On behalf of the Baozun management team, we would like to thank you for your participation in today's call. If you require any further information, feel free to reach out to us. Thank you for joining us today. This concludes the call.

好的。謝謝你，接線員。我們謹代表寶尊管理團隊感謝您參加今天的電話會議。如果您需要任何進一步的信息，請隨時與我們聯繫。感謝您今天加入我們。通話就此結束。

Thank you. Now as mentioned, the conference has concluded. Thank you for attending today's presentation. You may now disconnect your lines.

謝謝。如前所述，會議已經結束。感謝您參加今天的演講。您現在可以斷開線路。