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Shoe Industry, Huajian, Crisis, Destruction, Opportunity

2009/2/7 0:00:00 63

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Early industrial pfer and complete industrial chain layout have become a magic weapon for Huajian to increase profits and resist risks.

Amid the panic of many shoe companies, the crisis has not only destroyed the "shoe king" enterprises, but has brought another great opportunity for development.

　　制造業不倒翁

After the Spring Festival, it was time for workers to return to work.

In Dongguan, where industrial workers gather, south of the Five Ridges, more than 20 degrees Celsius, keeps them away from the chill in winter.

Zhang Huarong, also known as the "godfather of Chinese women's shoes", is the boss of Dongguan shoe making enterprises.

　　危機的另一面

A few months ago, when Zhang Huarong's business was busy celebrating the 12th anniversary celebration, Dongguan's foreign oriented industries were in a state of "collapse".

"Collapse tide" is not groundless.

Guangdong customs statistics show that in the first half of 2008, the footwear enterprises with export performance in the PRD decreased by 2426 compared with the same period in 2007, and nearly half of them collapsed.

According to the data of the Asian Footwear Association, after the financial crisis escalated in September last year, the purchase scale of Asian shoe making industry reduced by 15% from October 2008 to January 2009. The number of footwear industry employees is expected to be reduced by 25% and the output of shoe factories will account for 30% of the total industry output.

However, after these pessimistic data, Zhang Huarong was pleasantly surprised to find that unlike his peers, his company had received more orders.

Due to the collapse of shoe factories faster than orders, many foreign customers have just finished their orders, but shoe factories suddenly disappeared.

As a result, many customers began to pfer the remaining orders to suppliers who meet the requirements of "large and reputable" conditions.

Zhang Huarong's Huajian group is such a supplier.

The shoe company, which is headquartered in thick street, is not only the boss of more than 1200 shoe factories in Dongguan, but also the largest female shoe manufacturer in China. It produces 16 million pairs of shoes annually and is the foundry of more than 30 of the world's top 50 shoe makers.

For tight overseas clients, the Huajian group is obviously more reliable.

Ten years ago, orders for a single 300 thousand pairs had brought Huajian back to life. Now, the largest single order in new orders has reached this figure.

In October and November, with the collapse of their peers and layoffs, Huajian had more than 2000 workers in the market, and even had to work overtime on Sunday.

　　先行者的眼光

Zhang Huarong's good life is not only a matter of luck, but also from his early precautions.

As early as 6 years ago, Zhang Huarong of Jiangxi moved ahead of his peers for industrial pfer. He invested 600 million yuan in his hometown in Ganzhou to establish a new factory and employs more than 10000 workers.

The local production cost is more than 10% lower than that of the Pearl River Delta, which offset the pressure brought by RMB appreciation and cost increase in recent two years.

"If it weren't for the Ganzhou base, this Huajian would be very difficult."

Zhang Huarong said.

Since the plant was set up in Ganzhou in 2002, the Huajian group's bulk of low shoe orders have been pferred to Ganzhou production. Dongguan headquarters specializes in the production and purchase, research and development, trade and other aspects of high value-added shoes with small orders.

Although the shoe industry's supporting facilities in Ganzhou are still not perfect, raw materials are mainly purchased in Dongguan, but relying on Guangdong Jiangxi expressway, cargo pportation can be completed within a day.

The average monthly wage of Ganzhou workers is 300 yuan lower than that of Dongguan, and the cost of hydropower is also much lower.

Industrial pfer reduces costs, but Huajian's actions are not limited to this.

In Zhang Huarong's way of thinking, the first step is to shift the low value-added part of the project. The high added value means that the high-tech part is clinging tightly to the new layout of "Dongguan design and inland production". The second step is to extend the links from manufacturing to high profit R & D, logistics and sales in the industrial chain, and achieve sustained growth through controlling the industrial chain.

When Huajian grew up at a low price in 1999 and grew into a medium-sized shoe enterprise, it began to spend heavily on mining talents, but this led to a boycott, which made the upper shoe materials completely broken off.

This crisis made Zhang Huarong decide to build shoe material factories by himself.

So in just a few years, Huajian gradually opened up or bought upstream supporting enterprises such as PU big end factory, shoe material factory, leather factory, printing plant and machinery factory.

The integration of the industrial chain makes Huajian save a lot of costs in packaging, freight, business expenses, communication and other links. Even if the overall production and marketing environment is not good, Huajian's profit is still 2 to 3 percentage points higher than that of its peers.

The complete industrial chain has become a magic weapon for Huajian to increase profits and resist risks.

　　暖冬里的夢想

Next, Zhang Huarong, who had tasted the sweetness, further deepened this integration and took this opportunity to upgrade and pform the company.

In 2005, Huajian began to adjust its market strategy and gradually expand its direction from a single international brand subcontract to a brand's OEM and its own brand management.

Zhang Huarong has invested more than 4000 yuan, introduced the "Jackie Chan" brand, bought the "Carver" brand and created the "COLCO" brand, and opened more than 200 stores in Beijing, Shanghai, Guangzhou and other cities.

In August 2006, Huajian and Taiwan Baocheng group co founded the Huabao R & D center, the largest shoe research and development center in China, and spent 3% of its annual turnover on R & D funds, employing more than 30 designers from Italy, Spain, Brazil and other countries in the annual salary of 100 thousand -15 million euros, and set up 2800 R & D teams. The technology research and development is meticulous to the human foot type, and even cooperate with foreign institutions to reset the "100 code standard" of women's shoes, and set up the industry standard maker.

In 2007, Huajian carried out a new upgrading of its industrial structure.

Invest 600 million yuan to build the world shoe industry (Asia) headquarters base, from materials, product development to brand incubation, logistics distribution and business services.

Huajian, a sole manufacturer of finished shoes, has been pformed into an integrated enterprise, which controls a complete industrial chain integrating R & D, trade, manufacturing, logistics and distribution, and headquarters base.

This complete industrial chain can save 4%-5% expenditure for Huajian every year.

Today, although OEM is still the foundation of its establishment, Huajian has begun the new step of "OEM + OBM" walking on two legs.

Zhang Huarong, who thinks about "how to diversify risk" every day, even begins to pick orders, limiting the purchase quantity of orders from a single customer to less than 30% of Huajian's total capacity.

According to the association of Asian footwear industry, the number of orders will greatly exceed the number of enterprises in the 3 and April of 2009.

"Look again, as long as we find out the situation in 3, 4 and May, we will not let this rare opportunity to expand."

Zhang Huarong said.

Now, prudent Zhang Huarong is waiting for this warm winter to bring him the best opportunity.

Editor: vivi