New Manufacturing Stage Of Shoe Industry

Brand promotion combined with all kinds of value elements has made Chinese shoe enterprises have the chance to go global.

"May 23rd is a watershed. It has changed the history of China's footwear industry."

Wang Zhentao, President of AOKANG group, said to everyone.

This day, BELLE International's listing on HKEx has stimulated almost all the domestic shoe enterprises' nerves.

Wenzhou's shoe industry has never been on the market and has become stubborn. Wang Zhentao will soon contact 5 of his more than 20 investment banks.

Qian Jinbo, chairman of the Red Dragonfly Group Limited company in Wenzhou, said BELLE is the learning object of red dragonfly.

In September of this year, the Limited by Share Ltd of the dragonfly started listing.

In BELLE's home town of Guangdong, Foshan footwear Limited by Share Ltd on Saturday won Lenovo's venture capital investment in March this year, and is also ready to go public next year.

As the largest footwear producer and exporter in the world, there are more than 20 thousand shoe making enterprises in China. Shoes account for more than 60% of the world's total output. Last year, we produced about 10000000000 pairs of shoes and 7 billion 800 million pairs of export shoes.

Behind such a large capacity is the lower product grade and lower unit price.

Footwear companies represented by brands such as AOKANG, red dragonfly and Foshan Saturday started building brand as early as the 90s of last century. Now they are facing a climbing period.

"In the 90s of the last century, as long as shoes were produced, they could be sold.

Now the shoe making enterprises have entered a brand era, including brand development, packaging and management.

Wu Changjiang, general manager of Foshan footwear industry Limited by Share Ltd, said Saturday.

Wang Zhentao also believes that the footwear industry has entered a new "manufacturing" stage, that is, the brand added value of shoes.

BELLE international obviously walks ahead of its peers. It is worth noting that compared with Daphne, which ranks second in the market, BELLE shoes have fewer sales and higher sales.

Dumbbell structure

On September 4th, at the 2007 China International Leather Exhibition held at Shanghai New International Exhibition Center, 5 exhibition halls were packed with booths and bustling crowds.

In some footwear accessories, raw materials counters, queuing for information long dragon up to 10 meters.

"Since last year, raw materials such as leather shoes have increased in price, but our finished shoes must be kept at almost the same price level, otherwise it will be very difficult to compete."

Wu Changjiang, general manager of Foshan footwear industry Limited by Share Ltd, said Saturday.

AOKANG and Kangnai, rich birds and other famous brand leather shoes companies were also present at the leather exhibition in Foshan on Saturday. They are also anxious about the price rise of raw materials.

"The net profit of the whole leather industry is almost 8%."

Wu Changjiang thinks.

Because Foshan has a higher brand value on Saturday, it has surpassed the industry average in the case of rising cost of raw materials and labor.

An important factor that constitutes the unique competitiveness of Foshan's Saturday brand is independent design.

Zhang Zemin, the chairman of Foshan's Saturday, is still a design director and has a similar experience with BELLE founder Deng Yao. Zhang Zemin was a shoe designer in the early years, so after the company was founded, he personally took charge of the design.

At present, Foshan has 3 brands including ST&SAT (Saturday), FONDBERYL (Febe Lear) and SAFIYA (Sophia) on Saturday, of which ST&SAT ranked third in last year's women's shoes market, second only to BELLE and Daphne.

You know, in the past, especially in the women's shoes industry, buyer's mode is very popular, that is, purchasing ODM suppliers' products and labeling their own brand sales.

"This mode can be used as a supplement to supply chain. If there is no design at all, buyer's mode will become more and more easily replicated in shoe industry."

Wu Changjiang said.

In fact, many brand shoe enterprises realize the importance of independent design and strengthen the investment in design and research.

At present, AOKANG has established an international R & D center of 3000 square meters in Dongguan, Guangdong, employing designers from Italy and Germany to reserve new products.

The Red Dragonfly invested more than 200 million yuan and established a sports shoes R & D and production base in Wenzhou.

Not long ago, the red dragonfly and Belgian sports shoes R & D company Ace RSscan signed an agreement to introduce its technology into the development of sports shoes products.

The latter is the research and development enterprise of famous European sports shoes ergonomic design analysis and sports shoes testing system, and has been providing technical services for famous sports brands including Nike and Adidas.

"Some technologies can raise a pair of shoes to raise 5 yuan, some technology actually can raise a pair of shoes several hundred yuan!"

Qian Jinbo, chairman of red dragonfly.

He obviously hopes to cooperate with Ace Kang to bring more interest to the Red Dragonfly brand sports shoes.

"The brand building of advertising products is different from fashion products such as clothing and jewelry. The brand of footwear products is promoted through channels."

Wu Changjiang said that when the brand with distinctive characteristics, large-scale expansion channels can make the brand penetrate into the consumer's mind as soon as possible.

The dilated dumbbell structure of design and channel in the industrial chain is already very obvious.

Before founding Foshan, Zhang Zemin was a distributor of BELLE in China before Saturday.

The cooperation with BELLE made Foshan absorb many of BELLE's essence on Saturday.

Wu Changjiang is very glad that the channel construction in Foshan on Saturday mimics BELLE, and has gone through a high-end route, first from the department stores in the first tier cities, then slowly infiltrating into the two and three tier cities.

"Because only high-end brands can enter a first-class city department store."

Before 2000, Foshan's main channel on Saturday was to develop the exclusive store mode. From the end of last century to the beginning of this century, department stores gradually became the main sales channels for footwear. Foshan adjusted its channel strategy in 2000 on 90s, and concentrated on building department stores channels.

Wu Changjiang said that high-end shopping malls are very picky about brands. Even if they enter, if sales are not up to expectations, they may be kicked out of the mall and replaced by other brands.

Therefore, like BELLE, "the maintenance of the department store channel is a terminal brand management, through the product to contact consumers, to convey the connotation and value of the brand."

At present, Foshan has more than 1000 sales outlets on Saturday, including 70% of its own stores and 30% of its franchisees.

Compared with Wenzhou's leather shoes enterprises in the early light asset expansion channels, the mode of franchise chain is compared. Wu Changjiang believes that the footwear industry adopts the self operated mode to maintain the brand image more effectively.

This view has been recognized by the footwear industry in Wenzhou. Wang Zhentao, chairman of AOKANG, said that at present, AOKANG's own stores and franchisees make up 50% of the total, while the self-employed stores will reach 80% in the future, and 100% of the self operated stores in three years.

He told reporters that after a large channel, the cost of communication with franchisees in recent years is very high. "Every year we have agent meetings, and we invite meals and prizes. If we do not encourage them, if we fail to do well, we will destroy AOKANG's brand."

And he thought that if it was a channel for its own operation, a command at headquarters would be carried out smoothly.

When the outlets are enough, many brands become the development strategy of well-known shoe enterprises headed by BELLE.

"Daphne has more single brand outlets than BELLE, but its overall sales are not as good as BELLE's. The investment market is looking at BELLE because its brand is doing well, and there is much room for further development."

Zhou Jien, director of Credit Suisse Equity capital market, pointed out.

After owning Daphne, Yung international has launched the "shoe cabinet" brand in recent years. Last year, besides the sales point of Daphne increased by 500, the shoe cabinet increased 164 sales outlets, bringing strong growth to Yong en international.

As a result, Morgan, Stanley and other institutions have raised the target price for wing en international and the 2008 financial year.

At present, AOKANG owns 5 brands, AOKANG gentleman shoes, Kanglong casual shoes, beautiful ladies fashion shoes, GEOX breathing shoes and red, while Red Dragonfly owns many brands such as red dragonfly, Czech Road, and hot.

Like BELLE, these well-known footwear enterprises use channels as a means of brand extension, and develop different positioning brands to enhance their profit margins.

Manufacturing regression

This summer, AOKANG's beautiful beauty brand sold 60 thousand pairs of sandals, far from what Wang Zhentao expected.

What annoyed him was that he had said that he had been in the ark on April 20th, but he didn't come up until about May 20th, and the shoes were late for a whole month.

The reason for Wang Zhentao's helplessness is that the production of the factory can not keep up.

AOKANG currently has 3 manufacturing centers, with an annual output of 9 million pairs of shoes, and sales driven by channels are increasing. AOKANG outsourced 40% of its production.

But this year's late sandals forced him to consider building a new production base.

He admitted to reporters that the money made from leather shoes is becoming more and more difficult to make. At present, the net profit of AOKANG in leather shoes is still maintained at 10%, but the profits of manufacturing will drop sharply due to the rise of various costs.

It is not surprising that AOKANG, which started with leather shoes and started building new production bases, is also expanding its production base with BELLE, which is being sold, and is building a new BELLE Industrial Park.

And wing en international set up a new processing plant in Jiangxi in 2006, and plans to build another new factory in Taizhou.

Since the manufacturing sector does not make money, why do we need to invest heavily in famous footwear enterprises pursuing high profits?

"Not only is the shoe industry, but now the whole fast moving product industry is building production bases. The whole industry has grasped the design, research and development and channel construction, and now the dumbbell structure is gradually becoming more balanced."

AOKANG CFO Yu Xiongping thinks.

Unlike previous large-scale production bases and production as a profit point, this round of manufacturing regression is, in the final analysis, the ability of shoe enterprises to control the entire industry's supply chain.

In leather shoes industry, making money depends on the replenishment speed of the supply chain.

Every shoe brand is afraid to sell all the goods to the market during the new product launches of each season. Instead, it will first put it in small quantities and replenish it according to the market reaction.

The internal strength of every brand is the speed of the supply chain. If the production fails to keep up, AOKANG will be troubled this year: the channel has been rolled out, but the new products will not keep up.

The way BELLE uses is to lay out 50% of the goods to the market to test the reaction, and then replenish the goods quickly. On Saturday, Foshan controlled the supply of the whole seasonal environment through the selling and storing ratio, and even refined the cycle to cycle of single brand and single category.

Wu Changjiang believes that the ideal state of selling inventory ratio is that sales account for 80% of the purchase.

No matter which kind of supply chain management mode is adopted, production is a very important link.

Especially when enterprises already have strong design capabilities and channels, the disconnection of production will make the entire supply chain unbalanced. Therefore, although manufacturing has become more and more profitable, the limitation of its jump out of a single link can be seen in the whole industrial chain. The significance of manufacturing still lies in bringing more value space to enterprises.

"In the new round of manufacturing regression, and not only a narrow expansion of the production base, such as the seven wolves, Metersbonwe to establish a close production alliance, the key point is to master production in their own hands."

Yu Xiongping believes that the future competition of FMCG brands is the competition of supply chain, rather than a single competition between enterprises.

Capital market debut

"In the past, the gap between us and BELLE was not large, but now it has been left behind."

CEO, a well-known leather shoe manufacturer in China, said he believed BELLE's listing not only had more cash flow, but also managed a standardized platform through pre market restructuring and other processes.

What's more, BELLE is standing on the international stage by going public.

Wu Changjiang believes that since 2003, the footwear industry in China has begun to move towards the capital era.

What impressed him deeply is that hung Guo international, which owns the brand of 100 billion, is listed in Singapore. Through the pformation of the stock system before listing, a group of internationally renowned investment funds and investors have been introduced.

Wang Zhentao's memory of BELLE's top advice is new. They told Wang Zhentao that the listing was directed towards strengthening the operation of the company instead of rushing to the money.

This allows the capital market.