(Yicai Global) May 26 -- Sandriver is struggling to make ends meet as the latest waves of Covid-19 bring much of its business to a halt. The Chinese luxury fashion label’s only hope now is to sell its inventory as quickly as possible to boost liquidity, the company’s founder told Yicai Global.

Sandriver has had almost no revenue for three months, Guo Xiuling said. The Shanghai-based firm had to close its sales outlets in early March and the plants were shuttered later that month. And even if production continued there is no way to sell the goods either at home or abroad due to the disrupted transport routes. The outbreaks have hit much harder this year than in 2020, she added.

The world-famous brand, which has been invited to Paris Fashion Week for eight consecutive years and is the only Chinese brand in LVMH’s department store Le Bon Marche Rive Gauche in Paris, has been unable to keep its factories open during lockdown as they cannot provide a large number of employees with accommodation, which is required under the so-called closed-loop system where staff stay at the plant, Guo said.

The fashion house makes consumer goods that are not considered essential products and therefore it is not eligible to receive preferential support to reopen, she added. Some of its overseas orders are in danger of being transferred to rival firms.

But Sandriver still has fixed expenditure of around CNY2 million (USD297,044) a month.

“All outgoings including wages, social insurance premiums and rents have barely changed,” Guo said. The firm continues to pay its workers, even those who are locked down at home, as it doesn’t want to lose its highly-skilled team.

The only way out is to quickly sell stock to local stores to replenish the rapidly diminishing cash reserves, Guo said. She will be trying out group buying soon too. Guo said she is not willing to take out low-interest loans as no matter how low the interest rate is, the debt must be repaid on time. Borrowing more money will only speed up the demise of companies as profits fall.

Sandriver’s dazzling success overseas will come to nothing if it is forced to close, Guo said. She hopes that Chinese consumers who can afford luxury goods will choose to buy and support local brands. Both high-end companies like Sandriver and run-of-the-mill corner stores must reassess their strategy of surviving an uncertain market in order to last the long run.

Editors: Tang Shihua, Kim Taylor