Dec. 27 (NBD) -- China's leading footwear brand ST&SAT announced Tuesday to give up its plan of setting up a small loan company, explaining that the move is to respond to policy changes and to control risks.

It's noteworthy that it's been less than three month since ST&SAT planned to organize a micro-lending company.

Data shows that the micro-lending company is designed to have a registered capital of 300 million yuan (45.86 million U.S. dollars), 51 percent of which is to come from ST&SAT. The remaining 49 percent will be contributed by other two companies.

Those investors planned to increase the registered capital to 500 million yuan (76.44 million U.S. dollars) in one year after the company is put into operation. 

ST&SAT explained in an announcement in October that micro-lending businesses will increase customer loyalty and promote revenue growth.

However, one month after ST&SAT announced the small loaner plan, government issued a notice to regulate micro-lending platforms so as to prevent financial risks.

Against such background, ST&SAT decided to give up the plan.

A staff member at ST&SAT told NBD that the termination of the small loaner project won't affect the overall strategy of the company, and the company has managed to offset the impact brought by e-commerce expansion with its strategy of fashion IP ecosystem.

NBD noticed that in 2009 when the company was listed, net profit of ST&SAT totaled 114 million yuan (17.43 million U.S. dollars), the highest during the past eight years.

However, the net profit in 2016 has decreased by 80 percent in contrast with the year of 2009. The annual report for 2016 pointed out that ST&SAT's traditional sales channel has been greatly challenged by ecommerce. Rising channel and labor costs put it under great pressure. 

In 2016, ST&SAT decided to build a fashion IP ecosystem by expanding online-businesses and acquiring two fashion media. Besides, to better conduct businesses, it renamed itself by removing footwear from its Chinese name. 

In the first half of 2017, ST&SAT reported 790 million yuan (120.76 million U.S. dollars) in revenue and 31.15 million yuan (4.76 million U.S. dollars) in profit, a year-on-year increase of 11.42 percent and 9.69 percent, respectively. Net profit attributable to shareholders was 22.31 million yuan (3.41 million U.S. dollars), up 10.7 percent compared with the same period last year.

Email: tanyuhan@nbd.com.cn