May 11, 2021 - Latest Open Letter

YMYX - To Our Partner Designers - Please Read

Dear All,

This email I have sent to you is very long, but it is very important.

Please ensure that you carefully read through.

On May 6, I sent an open letter to all of our partner designers, and I also posted it as the most recent update on our website, to publicly swear my promise.

In reply to my letter and post, I received a lot of responses from partner designers, each expressing their respective point of views, of which I was very thankful.

Amongst these replies, was one reply from a partner designer that quite frankly, we found to be really unacceptable. I share the content of this reply below:

May 7, 2021

[Redacted] to Kate

The point of view he expressed in his reply totally flips right and wrong, ignores the truth and actually instead turns around and accuses YMYX of being hateful and angry. As a result, I responded to express our point of view:

May 7, 2021

Kate to [Redacted]

After this, we have exchanged several emails back and forth; and I share below the content of these emails, for your consideration (names redacted).

May 7, 2021

[Redacted] to Kate

May 7, 2021

Kate to [Redacted]

May 7, 2021

[Redacted] to Kate

May 7, 2021

Kate to [Redacted]

May 8, 2021

[Redacted] to Kate

May 8, 2021

Kate to [Redacted]

May 11, 2021

Kate to [Redacted]

May 11, 2021

[Redacted] to Kate

May 11, 2021

Kate to [Redacted]

While writing this open letter, I have finally received this designer’s acceptance to our suggestion to cancel the contract. I also promise here that we will not request any penalties for the cancellation.

After COVID-19 restrictions are fully lifted and we are able to travel back to Milan, we will sign a consent of cancellation form to cancel the contract in person.

Toward this end result, in my heart I feel regret and even sadness, because between May 2 and May 5, in fact, we conducted a second round of market research for his brand among 16 cities, as the first market research we had conducted prior to this for his brand was received very poorly by consumers. Yet on May 7, he sent me the email I shared above. The content of this email, to speak frankly, caused our team to feel incredibly humiliated, and it deeply damaged the enthusiasm of the team working on his brand. All of them felt dismayed, and frustrated.

But in fact, this round of market research results was actually very positive; even as I started writing this email earlier today, I just started receiving the initial feedback from the 16 cities research, and the new collection garnered a very positive response from the consumers surveyed.

This not only proves the importance of market research, but also proves that this designer does in fact have the capability to design collections that the consumers will welcome.

But even if this is the case, while we understand that if we cancel the contract with this designer today it may bring us losses and a feeling of regret, we also know clearly that if this were much later down the line, and we had already invested more financial and other resources to operate and launch the brand in the market, our losses would be even greater.

As a result, to invest in this designer’s brand, there is an unpredictable risk, because we do not know when he will have yet another emotional outburst, and will once more cause our team’s confidence and enthusiasm to be damaged further.

So this result, even though it’s not perfect, is in both parties’ best interests.

After I sent my previous open letter, a large number of designers wrote to me and strongly recommended that we ought to cancel our cooperations with these kinds of designers.

Actually, prior to this, when there was another designer who used sexually harassing language towards me, there were also many designers who raised a similar suggestion to me, but I always felt that as long as we used honest and open communication, these designers would come to see that we're actually on the same boat, that we need mutual trust, and that having this trust in place, has as much to do with YMYX’s interests as well as the interests of the designer themselves. But it is very unfortunate that my hope and my patience have failed.

As a result, in order to let the entire YMYX platform become healthier, more constructive, and in order to avoid spending our limited resources and capital on those designers who lack maturity, or are emotional and unreasonable, we have decided that in this moment, for any partner designer who wants to cancel our contract, no matter what the reason, we will agree to do so, without any penalty.

Even though, in the case of this particular designer, we have already done a large amount of work on behalf of his brand--we have arranged a factory that does work for brands like Dior, Dolce and Gabbana, and Balenciaga to test with his brand, we have invested in market research, not once, but twice, and further invested human capital and physical resources--yet because our mutual trust has been harmed, the result is that all of our preliminary investment, has essentially gone to waste.

However, in order to avoid similar situations from occuring in the future, we must cut the cooperation with these designers who lack professionalism and maturity, in order to avoid even more losses.

In addition, many designers also told me that there are some designers who frequently complain behind the scenes. They have put all of their frustration from their life and work, and even the unfortunate situations they have suffered because of COVID-19 on us, blaming YMYX for it all.

So I want to say today, to all of these designers complaining, let us cancel the contract.

After discussion with our board of directors, YMYX has formally made the decision that from today, May 11, 2021 until May 18, 2021, if any designer, no matter if you are in the stage of market research, or in the factory sample test stage, or at any other stage in cooperation with YMYX, requests to cancel the contract, we will agree.

As mentioned above, we will not make any request of you to give a specific reason, and even though we have already in this preliminary phase of our work, invested a lot and even for those who have completed sample tests with factories, there will be no financial penalties.

Then once COVID-19 restrictions have fully been eased, we will schedule to meet in Milan and sign a consent form of cancellation, face to face, so that we can officially and legally end our cooperation relationship.

In fact, during the process of undergoing the factory sample test and China market research for some designers, we have also felt that no matter if it is their creativity, or their emotional stability, and their reaction to facing difficulties and change, they were not up to standards. They lack the ability to nimbly adjust and adapt. They also lack the experience to work as part of a team. They are narrow minded and always complaining; in their eyes, everything is YMYX’s fault, Kate’s fault, or the factory’s fault. Some designers’ attitude is also extremely arrogant, and it truly is quite hard to accept and work with.

In the course of my more than a decade of experience in the venture capital industry, my experience has been that those who have the capability, in the face of obstacles, focus on solutions, while those who don’t have the capability, they focus on excuses. A person’s success depends not just on the talent they have in their field of expertise, but also depends on whether or not they have the ability to work smoothly in a team.

There is one designer who reads my emails and basically doesn’t respond; and only when we follow up with them many times for an answer, do they give a reply. I trust that any investor facing this kind of investee would gradually lose their enthusiasm toward the investment. And as a result I want to tell this designer, let’s cancel the contract. Since you are not willing to even answer our emails, then we also are not willing to invest in you.

There are also a few designers who are only willing to hear positive feedback, and when the market research results are not positive, or if we have different points of view toward their designs, their emotions can’t stay in check and start to explode. Maintaining these kinds of designers’ emotional balance is also very exhausting; therefore if you are this kind of designer as well, I also hope that we can cancel the contract.

The reason is because if you do not change this attitude, we will never have full confidence in working with you and it would be impossible to invest in you with full force. Keeping this kind of contract would also not have any meaning for you either.

When I have written at great length to convey my points of view, there are some designers who have complained that my letters are far too long and complicated, and are not willing to read them. But then when I have written with brevity, these designers complain that I have not been transparent or shared enough information.

I sincerely apologize, we are not suitable to cooperate; let us cancel the contract and go our separate ways. No investor in the world would feel enthusiasm and be full of hope at the prospect of investing in these kinds of designers.

Yet there are still other designers who have had the tendency to release their emotional stress on me, whether it be the result of pressures of daily lives or difficulties they are experiencing in their own business in Europe; and vent that stress to me, as if everything is YMYX’s fault.

These kinds of unpredictable, and sudden outbursts cause my heart and spirit to be truly fatigued. Since you feel that it is all YMYX’s fault, that has caused your unhappiness, then similarly, let us move to cancel the contract. We will return your happiness to you, and the cancellation of the contract will also release your stress.

And other designers, when we suggest that they reach for a more luxurious look, they ask us if we think their fashion is not good, or similar to fast fashion, then why do we want to work with them, or select them in the first place?

But they forget, that when we met with them in Milan, they told us that in fact they could do so much more, and it was simply that they lacked resources to support them, and often they had explained that it was because of European consumers’ need for fast fashion, that they didn’t do more and elevate their brand, but that if YMYX were to invest in them, they would fully have the capability to create really magnificent and higher level fashion.

I do not want to chase blame, whether YMYX is right or the designer is wrong; since we have signed this contract out of a misunderstanding, and now you have fully understood that we are not suitable for each other, then let us cancel the contract.

Still other designers have been complaining, why haven’t we started yet, after such a long time?

I tend to always explain that after signing the contract, the majority of our time was spent waiting for the registration of trademarks to be approved, and then we have been faced with COVID-19. It was not just YMYX who was impacted; all brands, and even all industries, have been impacted. At present, we simply cannot give a confirmed and concrete timeline.

What we can do now, is simply prepare. We can only wait until the market truly has recovered, and the market environment has normalized, then that is when we will enter.

At present, China is indeed one of the countries that has controlled COVID-19 better; but the market hasn't fully recovered yet.

Customs and clearance, and shipping times are still very long; as a result, to enter the market now, is not realistic. Consumers’ normal life still hasn’t fully recovered either. Sometimes, products being shipped from Europe to China, from what we understand, can still take up to 1-2 months to receive.

To enter the market under these circumstances would cause the consumers to be deeply unsatisfied, and they would complain.

But if you cannot wait, then I apologize; and in that case, let us cancel the contract.

In reality, YMYX takes huge pressure of costs, we have our team and overhead expenses, we are even more in a hurry than you to start.

As the CEO of YMYX, I have never released this stress onto any partner designer; as a result, I am fully not able to accept any designer taking out their stress on me either.

There are also 3 or 4 designers who have used COVID-19 as an excuse, and even now, still haven’t started their registration of trademark. For these designers, since you are now in difficulty, then let us cancel the contract as well. In the future, when you have the ability to register the trademark, we can still discuss whether or not to cooperate again.

Other designers have said that they need to focus on how to make a living now, so they can’t put all of their time on the YMYX project; toward this situation I also understand and sympathize. Similarly, I hope that these kinds of designers will also cancel the contract; because even though I have sympathy, if you cannot fully invest your energy into your brand in China, it will not succeed.

For all the massive amount of business and work I face everyday, my body is physically tired, but my heart and spirit are not; however, in order to constantly quell these designers’ emotional reactions, my inner heart feels extreme and utter exhaustion, my tolerance is also quickly slipping away.

It now seems clear that my previous thinking and goal to resolve these misunderstandings through communication is moot. Now, I feel that these designers' problems have arisen from their character, and character is very hard to change. I have lost the patience to sit and wait for these designers to change.

As a result, we need to put our limited time and energy into those designers who are really worth our effort and investment.

In reality, the YMYX platform is meant for those designers who have ambition, talent, experience and also who have a teamwork mentality.

If you do not have these qualities, then YMYX does not welcome you, because other than losing money, cooperating with you will not produce any other result, let alone success.

I also include those designers who insist on keeping their brands very niche and small, let us cancel the contract, because we do not have the ability to go to such a big market with 10 to 12 models and compete to win. I unders tand your insistences, and your brand principles, but I must apologize, we do not have interest in your principles.

There is another designer who complained that he didn’t know there were so many designers involved in the YMYX project. If he had known, he would not have signed it in the first place. Then let me tell this designer as well, let us cancel the contract.

I want to explain once more, why we have so many brands in the project. If we just brought 10 or 20 brands into the market, these brands would be nothing more than a few drops of water in this huge ocean of a market in China; and consumers would not turn their attention and cast their admiring eye toward your small brand. Just like in a lot of showrooms from Italy or France who set up shop in China, they feature smaller brands with a small number of styles to show. Even now, based on our research, we cannot find any brand that has really succeeded in the market via the showrooms, and sales volumes are sparse. Despite the fact that a lot of these brands being shown in the showrooms are very high in quality, because the showroom’s scale is too small, consumers won’t pay attention.

But YMYX platform has hundreds of brands, every season, we provide tens of thousands of styles to the consumers, and because there are more choices, consumers will be attracted to our platform. As a result, for each brand that we work with, this will bring about the attention of the consumer, because there will be a huge amount of consumers who will come to YMYX everyday to visit and buy.

In reality, this also helps our partner brands gain a very advantageous position against those smaller brands who are independently entering the market or entering with a showroom. Because there may be a small number of consumers who will take note of the small brands that are sitting in a showroom, but I trust that the majority of these hundreds of millions of consumers, will choose to visit and purchase the fashion that they love from YMYX instead.

Just like every day, in every minute and second, huge numbers of people will visit Alibaba’s sites, while only a small portion of consumers will visit small fashion boutiques.

This is a very simple business principle.

For factories as well, because they are working with YMYX, they are more willing to provide a low production cost, prioritize the orders for YMYX partner brands for our platform, de-prioritize those of other brands, and follow their promises on delivery times and quality control because they will not dare to lose out on YMYX as a client, since we are a big player.

The same logic applies for fabric suppliers.

Under these circumstances, even though you are a small brand, but because you are working with YMYX, you have gained a strong competitive advantage and position, and are more easily able to attract the consumers’ attention than small brands who are standing alone; your cost of production when compared to other small brands, and your material sourcing capability and resource will be stronger when compared to other small brands. In short, you would be able to produce and source at lower cost yet higher levels of quality than those competing small brands.

We trust that as YMYX’s reputation and visibility increases in the market, and the huge amounts of visitor traffic and purchase volume starts to snowball on the YMYX platform, there will be even more European brands, including French, Italian and Spanish, and those from all across Europe, that will start to be clamouring to join the YMYX platform, and those designers who join at the start of our launch will have the first-mover advantage and will have made the first lasting impression on the consumers.

We believe that for any small brand standing alone, if in the future, they were to enter the Chinese market on their own without a huge amount of financial backing to support them, it would be virtually impossible to win the attention of the consumer, because the consumers’ attention will already be fully occupied by YMYX. Just like today, if you go to China to open a platform like Alibaba; maybe your service, or technology is better, but in competition with Alibaba, you will very quickly fail.

This is a very simple business logic.

Of course, if you disagree, and still you don’t want to enter the China market with a big group of designers in full force, then let us then move to cancel the contract as well.

Moving on, I want to particularly bring attention to one of our partner designers, a young man named Gianluca Signorelli; when we met in Milan he had just a few embroidered sweatshirts and T- shirts in his line, but we gave him this opportunity because we believed in him, and believed the promise that he gave to us, which was that he said he had many ideas but he just lacked the resources and support to grow his idea into a bonafide brand.

The results from the first round of market research we did for this brand based on a first group of new designs were completely negative, and we reported those results to him. But this young designer was very flexible, he created a vast collection incorporating feedback and making a very luxurious offering. And in the course of a second 16-city market research from May 2 to May 5, he has won very good responses from the market. There are a large number of younger consumers really interested in his fashion, inquiring when they could buy his pieces.

He also has ideas for perfumed packaging, boxes, and fan downloads of branded smartphone wallpapers and other virtual goods, to go along with the vision for his brand. I do not mean that every brand should have the same approach as this, but his focus, thoughtfulness, and his innovative talent, has left a strong impression on the YMYX team as well as Chinese consumers.

Investing in these kinds of designers is what is meaningful; we should put more of our time, energy and money on these designers who are easy to work with.

Another designer who creates both shoes and handbags, his vast collection of rendered designs has also just finished a market research, and while we are still awaiting the consumer responses to be compiled from each city, we have already received a lot of consumers’ enthusiastic replies, many expressing their desire to buy. Some consumers have even made a lot of recommendations, too.

A week ago, this designer wrote to me an email, in which he expressed how in the face of initial perplexity, or even disagreement with some of our suggestions, he went through his internal thought process, to understand and also accept our point of view, and even gave us his suggestions, as well. I share that email below:

May 4, 2021

[Redacted] to Kate

Although, between designers and YMYX, it is not possible that all of our thinking is completely aligned, but communication in a civilized manner is the only way not to harm the spirit and the energy of the team.

YMYX, we are not designers, we are businesspeople and investors; we don’t understand fashion as well as designers; if we could judge fashion, then we wouldn't need to go undergo these 16-city market research. But our understanding of the market’s changes, and needs, does not necessarily lose out to the designer’s understanding of those changes and needs.

So cooperation is about mutually making up for what we each lack; we make up for our weaknesses with your strengths, and you make up for your weaknesses, with our strengths, and not about emotionally rejecting the position of the other party.

Your talent is why we would invest in you. But if you only have talent, but you lack in other respects, and you do not have that admirable entrepreneurial spirit and very professional working attitude, then this kind of investment will fail.

Toward this, I have full conviction.

I ask each partner designer to write to me after reading my open letter, and express your point of view.

Once more, from the date of this letter, May 11, until May 18, we will await your decision. But once we pass this date, YMYX will no longer agree to cancellation under any circumstances. If you remain in this contract, but yet in the future you are not capable of increasing your own abilities or elevating your professional cooperative attitude, then there will not be any meaning for you to keep the contract in force. I hope that you understand.

Best,

Kate Chang

CEO

English is the official version of this email. A translated text will follow as necessary.