Doctor Frog: Metamorphosis Of Children'S Wear Foundry Enterprise

There are not many brands of children's clothing in China, but they can only be listed in Hongkong until now.

The frog from the children's clothing OEM has undergone two pformations in the past 20 years and has gradually stripped its production business from a successful foreign trade enterprise, and has successfully pformed itself into a focus on design, brand and channel.

"Integration of international resources, multi brand, multi-channel development."

Chairman and President of the company's board of directors

The two pformation

In 1988, the business of Zhong Zheng was only an enterprise that simply did the processing of children's clothing.

In the Yangtze River Delta, there are still a lot of similar enterprises. They are stuffy and rich. They don't care about the reputation of the enterprises. But every day, they need to worry about the rise in the cost of human or raw materials, the change of the export situation, and even a little fluctuation of the exchange rate.

Under the careful management of Zhong Zheng Yu, the enterprise is doing well.

By the mid 90s of last century, the company's annual export volume had reached US $30 million, ranking the top in the industry.

But when the profits from the foundry industry are booming, Zhong Zheng uses more and more pressure.

He realized that under the trend of increasing raw material prices and labor costs, the road to foreign trade alone will be narrower and narrower.

In 1996, Zhong Zheng decided to carry out the first pformation and open up the domestic market, and walked on two legs.

Obviously, this pformation is not easy.

In order to take this step, he spent at least 10 years to compete with his competitors and explore sales channels for his company.

In the process of doing foreign trade, Zhong Zheng used to visit Japan several times to observe how Japanese companies could sell their products.

He found that some children's products, which were processed by Japanese small and medium sized businesses, were sold several times to the Chinese market terminals after the distributors and agents.

So in 2008, Zhong Zheng made second bold attempts. He first registered a children's brand "Baby2" in Japan, entrusted to the Japanese manufacturing plant, and then entered the Chinese market.

"This is equivalent to outsourcing production to Japanese OEM companies, and concentrating on building brands and channels."

Zhong Zheng used to be proud to say that compared with Japan's competitors, the quality of their products is not bad, and because of the compression of intermediate links, they have made obvious advantages in price. This pformation has made their products initially out of the red sea of market competition.

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Learning from Disney

But Zhong Zheng quickly realized that if he merely labled the product with "foreign labels" was not enough to ensure success, he began to consider how to create greater "added value".

This time, he looked at Disney.

In 2004, Zhong Zheng noticed a figure that the value of derivative products of the global animation industry was more than 500 billion dollars at that time. Among them, Disney's derivatives involved many fields such as children's toys, clothing, books, food and so on, and all of them had achieved great success.

But the pformation from Dr. frog to cartoon is not smooth sailing.

At first, Dr. frog tried to sell the little frog newspaper, and published the story of doctor frog every month. As a result, the appeal power of cartoon image could not appear in the market.

The turning point appeared in 2005.

At that time, Harry Porter's fourth global synchronized release.

Through the negotiation, Dr. frog obtained the brand authorization of Harry Porter series cartoon from Warner Brothers, and designed the children's clothing style and sold it at the terminal.

With the upsurge of Harry Porter, Dr frog earned a "first pot of gold" in brand licensing.

Since then, it has been unmanageable. The doctor frog has successively acquired 7 authorized brands such as tennis prince, NBA, Manchester United and Juventus.

Because compared with the animation brand, the sports brand will be more lasting whether it is influence or vitality.

Today, the product line of PhD includes the self owned brands such as PhD, Baby2 and Dr. Frog, authorized brands such as tennis prince, Harry Porter and NBA, as well as some overseas brands of agents.

When Zhong Zheng concentrated on his Disney Dream, he also launched an ambitious "network Disney plan" with another company in Shanghai.

Zhong Zheng said that compared with Chen Tianqiao's enterprises, Dr. frog did not set foot in the cultural industry, but only used the international brand resources for his use, focusing on product design, brand and channel, and pformed into a "light asset" company.

In 2008, Zhong Zheng Yi decided to sell all his production business.

After pformation, the "revenue" is also quite gratifying.

From 2007 to 2009, the sales revenue of doctor frog was 211 million yuan, 325 million yuan and 630 million yuan respectively, of which gross profit amounted to 266 million yuan in 2009.

"Interchange" channel

But the doctor frog can complete the listing in a short time. The most capital market is still its "three-dimensional cross" channel mode.

According to its prospectus, by the end of June 2010, the company had 1126 sales outlets, including 5 different types of department store counters and street shops.

Among them, there are 1062 department store brand counters, 24 street shops, 33 PhD 365 living rooms and 7 main stores.

The main shop covers an area of 2000~3000 square meters.

Unlike previous sales platforms, the store has integrated all its own brands, licensed brands and its agents or distribution products to provide products for 0~14 year olds.

365 the size of the living hall is smaller than that of the main store.

And its department store counters and street shops have been selling a single brand model for many years.

"The department store counters are equivalent to the BELLE shoe industry's mode and the street shop is similar to the Mts. Bang Wei," Dr. frog 365 living hall is like Watsons, while the main store is similar to Gome and Suning. "

Zhong Zheng explains.

In addition, the proportion of self operated stores and third party businesses will remain at 46 in the future.

However, this multi channel mode was not designed by PhD frogs early, but gradually explored in the process of channel construction.

Lv Yihao, vice president of doctor frog, said that this is mainly due to the different consumption habits of different cities, for example, most of the children's stores in Shanghai are in department stores, while consumers in Hangzhou are more accustomed to shopping in the street stores.

In the view of Zhong Zheng Yi, the business model, which includes R & D, brand and channel, is favored by the capital market largely because it can be copied to the whole country very quickly.

According to the doctoral frog prospectus, 40% of the funds raised will be used to open new retail stores during the 5 years from 2010 to 2014. In the second half of this year, there will be plans to increase 488 new stores.

However, after all, children's clothing industry has not entered the threshold and competition is fierce.

For the PhD frog, the most urgent task at present is to spread the channel as soon as possible and open up the distance from the competitors.

On the basis of this core advantage, consider the efficiency of single store operation.