"Two Legs" Pformation Huajian Group Perfect Turn

The words "Dongguan traffic jam and global shortage" vividly highlight the importance of the PRD cities in the global manufacturing industry.

However, in today's crisis of manufacturing and life, Dongguan, which rises with the OEM mode, has become one of the most severely affected areas.

From 2007 to the present, the shoe making capital of the world's 1/10 accounted for more than 1000 of the shoe companies that were killed in the war, which only saw casualties and no smoke.

The Huajian group, headquartered in Houjie Town, Dongguan, despite being China's largest export manufacturer of women's shoes, exported to US $280 million in 2007, but the export tax rebate adjustment, labor costs rising, raw material prices rising, RMB appreciation, and international market consumption were suppressed. This makes the 100% export enterprises feel a sharp knife hanging overhead.

"Shoemaking Export enterprises used to have an average profit of 7% to 10% in the past, but now only 4% to 7%, and the original 2% to 5% profit enterprises can only close now."

Zhang Huarong, chairman of Huajian group, made an account with emotion. "Under the present severe situation, our traditional OEM road is not pformed, and the next one may be us."

    OEM開道，OBM升級

The cost explosion has made Huajian group bear tremendous pressure like other shoe making enterprises. For a long time, the OEM road has been dominated by the people at the end of the industrial value chain, and it has inspired Huajian to make the decision of pformation.

Gradually developing the independent brand and re decomposing the industrial chain, this new strategic plan has gradually formed in Zhang Huarong's mind.

But for some companies trying to abandon OEM and try to build their own brand, Zhang Huarong did not agree.

"In the case of changes in the external environment, it is undoubtedly a dead end to continue to stick to OEM, but completely abandoning OEM, relying solely on brand development is not necessarily the best choice for Chinese enterprises."

Huajian group combined with the reality, established the "OEM + OBM" two legs parallel strategic road.

On the basis of continuing to cooperate with international famous brands and stabilizing the scale of OEM production, Huajian group began to vigorously build its own brand.

In October 2005, Huajian signed a brand contract with famous artist Jackie Chan, launched its own brand "Jackie Chan". After that, he bought "Alan Delon" and "Carver", and the three brands covered high, medium and low grade different markets.

At the same time, Huajian group also set up the sales center of the group, Dongguan, the industry company limited, specialized in the brand operation and sales integration.

In order to enhance the value of the brand, Huajian group develops a lean production mode that saves energy and improves labor efficiency, so as to cope with the cost problem.

For example, in the past, the surplus materials made by enterprises to make insoles were thrown away, and now they are brought back and used to make small broken flowers on shoes. Only such a small detail can save 300 thousand yuan a month.

    東莞設計，內地生產

How to decompose the shoemaking process and the industrial chain?

Zhang Huarong's train of thought is that the first step is to shift the low value-added part to the high value-added part, namely, the high-tech sector, and to build a new layout of "Dongguan design and inland production". The second step is to extend the links from manufacturing to R & D, design, logistics and sales of the high profit in the industrial chain, and achieve sustained growth by controlling the industrial chain.

As early as the beginning of operational cost growth in 2002, Zhang Huarong began a major adjustment of production layout.

Huajian Group invested and developed Huajian international shoe city in Ganzhou. After the shoe city was completed, the bulk of the group's low shoe orders were pferred to Ganzhou production. Dongguan headquarters specializes in the production of high value-added shoes with small orders, and procurement, trade and other links.

Although the shoe industry in Ganzhou is not perfect in supporting the whole production, raw materials are mainly purchased in Dongguan, but because Ganzhou is next to Guangdong, the Guangdong Jiangxi expressway is closer to the distance between the two places. Freight pport can be completed within a day; the average monthly wage of Ganzhou workers is about 300 yuan cheaper than Dongguan, and is relatively stable; the cost of hydropower is also much lower, and the photoelectric cost can offset the increase of logistics cost.

However, in the process of layout adjustment, Huajian group also had a hesitant time.

In 2004, Huajian group set up a production base with two production lines in Vietnam, but this relocation did not bring substantial effect to the pformation of enterprises.

The reason is that the average labor cost of Vietnamese workers is only 3/5 of that in China, but almost all raw materials and accessories have to be shipped from Dongguan. Workers are not as proficient as China, and their production efficiency is relatively low. Management is basically sent from China, and in the process of familiarity with local laws and regulations, they also need to spend a certain amount of manpower and material resources.

Overall, the overall cost has not been reduced.

Therefore, the base has not been expanded since then.

Cling to the high added value of innovation research and industrial design is reflected in Huabao research and development center, the largest shoe research and development center in China, which was founded in August 2006 by Taiwan Baocheng group.

The R & D center has a team of over 2800 people, including nearly 30 professional designers from Italy, Brazil, Spain and other countries.

    服務產業，引領升級

In 2008, Huajian group started the second step pformation attempt to control the industrial chain, and launched a high-profile entry into the industrial service sector, and invested about 40000000 yuan to build "world shoe industry (Asia) headquarters base" in Houjie, Dongguan. It is located in the Asian headquarters of R & D, trade, brand incubation and logistics, and develops new materials, new products and new markets.

At the same time, it also held the "world footwear development forum", intended to become a leader in the footwear industry upgrading, and provide a platform for industrial upgrading.

Under the impact of various unfavorable factors, the effective pformation made the Huajian group's situation improved rapidly in the two quarter.

"In the next ten years, Huajian's output value will reach 15 billion yuan, of which the independent brand will account for 70%."

With the gradual deepening of pformation, Zhang Huarong firmly believed that Huajian group would use two legs to walk steadily.