Anta Shoes: Cross The Business Cycle Through Life Cycle

December 17th, "when I was out playing with my friends, I wasn't too embarrassed to wear local clothes." brand Of Athletic Wear " Xiao Xi said that the sales elite of the media company is a typical brand control, and he is willing to pay a premium for the brand he is pursuing. In his eyes, sports clothing, Nike and Adidas represent taste. This made the brand manager of Li Ning Co who ate with him uncomfortable. As the most famous sports brand in China, Lining has just launched a massive brand redevelopment campaign this summer. Lining's brand builders hope that this campaign will make their brand younger, more attractive and more distinctive. Obviously, this change did not stimulate little Xi people.

How to capture the hearts of young people and younger Chinese consumers is testing the minds of Chinese local sports brands. If in the past 5 years, with the magnifying effect of China's manufacturing capability and capital market, China's local sports brands can achieve the first stage of rapid growth. Then, in the next 5 years, there are two main paths for them to achieve: brand upgrading, spiral growth or mediocrity, such as meteor fall.

　　 Ding Shizhong Never allow companies created by themselves to be squeezed into second roads, so he spends a lot of money.

In an internal meeting in 2009, Ding Shizhong, the founder of Anta (2020.HK) and chairman of the board and CEO, tried to win the 2009-2012 year sponsorship of the Chinese Olympic Committee (COC) for "the price of the TOP sponsor of the Olympic Games". This means that whether it is the 2010 Winter Olympics, the Asian Games in Guangzhou or the London Olympics in 2012, the Chinese delegation will appear in Anta's logo dress instead of Lining.

After winning the sponsorship of COC, Ding Shizhong realized that he didn't have much time to enjoy the feeling of victory. Because in addition to the rights, Anta must give the Winter Olympic award dress within the specified time, the design scheme of the Guangzhou Asian Games award dress; and the news from factories is: this year, it is easier to recruit workers than in previous years, and the price of cotton is soaring like crazy.

For Anta, how can the life cycle of an enterprise cross the external business cycle?

Crossing cycle

2010 is a challenging year for the garment industry, because this is the highest cotton price in history, rising from 18 thousand yuan per ton to 30 thousand yuan / ton, which makes the vice president of the industry responsible for raw material purchase fluctuate like a roller coaster.

Anta is no exception. For this kind of traditional enterprise, which is based on the "futures system" mode, the order making will make the production plan. Whether we can grasp the rising of the fabric and find the best time to buy the raw material will directly affect the production cost of the enterprise.

These problems are not only a barrier that needs to be overcome in front of an enterprise.

Xu Zhida, 29, executive director and chief executive officer of PEAK sports (1968.HK), has been in the field of sportswear for more than 8 years. He said, "I have never experienced any volatility like 2010." a notable example is that "cotton yarn prices have risen by more than 50% in 2 months, and orders have not been adjusted."

Xu Zhida was lucky to have made his veiled order, but the ups and downs of the price still made PEAK feel confused. Under the futures system, dealers in the spring and autumn season will have to place an order. What kind of price should PEAK quote? "Next year, there will be more than 10% increase in the goods in the spring and autumn season, but the fluctuation of raw materials is so great. In order to avoid the pressure of rising prices of raw materials, Xu Zhi Da even plans to further expand its production business to cotton manufacturing, printing and dyeing, and expand the industrial chain to increase resilience against risks.

Unlike the cyclical economic fluctuations, the shortage of labor is like a rope set in the neck of the Jinjiang sports brand. The more compact it is, the less attractive the Jinjiang is for the migrant workers in the development of the inland economy. Xu Zhi Da estimates that the number of migrant workers in Jinjiang has decreased by more than 20% compared with the peak period. PEAK itself has also put into operation a new production base in Nanchang.

Although entering the December, the soaring cotton has gradually recovered rationality, these enterprises have only experienced a short period of raw material price rise test, but the above mentioned problems, together with the pressure of inflation and monetary tightening, will still impact the fragile nerves of Chinese enterprises. {page_break}

Will the economy gradually enter a stable period or continue to be complex and changeable? For 18 years in a row, Joseph Ellis, the first retail analyst of Wall Street, was quoted by institutional investor magazine as the first retail analyst in his book "walking in front of the curve". "We can compare the economic cycle to the four seasons of a year and repeat it in the same order. Influenced by external factors, summer in some years will be warmer than in other years, and sometimes it will be colder in winter. But when summer comes, the weather gets hotter and the weather gets cold when winter comes. In the same way, the economic cycle is in essence an alternation of rise and fall. For enterprises, how to grasp the alternating point of rise and fall is still an unfamiliar knowledge.

Zhang Bin, an analyst with the textile and apparel industry of the state securities company, said, "the golden age of textile and clothing industry has passed. In the future, the textile and garment industry will not be able to match the development just as it used to rely on expansion capacity. " He believes that "enterprises should carefully expand their production capacity, and secondly, they should work hard to improve their internal strength. This is not only about strengthening management, but also strengthening the understanding of the market and the anticipation of the economy. Thirdly, enterprises should strengthen their relevance with customers and study their needs.

As the analyst said, "this is a long road". Indeed, not just Anta, but many problems this year have plagued all Jinjiang's sports brands. Labor intensive enterprises are at a crossroads, and Anta will face another cost test, which is brought about by wage adjustment and rising production resources.

The Merrill Lynch Investment clock (see chart two) divides the business cycle into four stages: recession, recovery, overheating and stagflation. There will be corresponding investment products in different economic cycles. For enterprises, it is no doubt difficult for enterprises to synchronize their production cycles with different economic cycles and make the right judgments. To Anta and other enterprises, has it grasped the rhythm and alternation point of the current economic cycle?

"Towel"

"Economic cycle or industrial cycle will really affect the operation of enterprises". For this reason, Anta vice president Zhang Tao is not shy about it. But to his optimism, the biggest challenge does not depend on the cost of production or the price of production, but rather on the management mode of the enterprise itself. In fact, Anta has made considerable internal adjustments this year.

Zhang Tao's "adjustment" refers to Anta's inspection and transformation of production and supply chain this year. Admittedly, product innovation, technological innovation and brand innovation are positive breakthroughs, but these changes need long-term accumulation. Under such circumstances, pushing the meticulous management of the company from the daily operation of "towel" has become the best choice at present.

For example, in the management of its own factories, Anta has further strengthened staff management and staff motivation, and has begun to improve the management's own level. In the face of external foundries, Anta on the one hand more stringent selection of suppliers, on the other hand, efforts to make each other see "hope and vision of cooperation with Anta".

An obvious example is that Anta has made the sales forecast in 2015, so that the generation plant can form a more long-term production plan. In Zhang Tao's words, the construction of a new shoe factory, from construction to recruitment, will take at least a year and a half. For this reason, "we give partners some expectations, and they are more likely to move forward with Anta."

In terms of raw material procurement, in order to avoid price fluctuations, Anta's approach is to help OEM and ODM factories purchase raw materials in advance, and enable them to enjoy large volume purchase discount through scale effect. On this basis, Anta is trying to further deepen its synergy with the foundry. "We will give them more support no matter whether they are funds, site selection or cooperation with the local government." Zhang Tao said.

Unlike Nike and Lining, Anta has not completely abandoned manufacturing in recent years. Ding Shizhong believes that the manufacturing sector is still of great significance to Anta today: a brand with manufacturing capability can make more accurate estimation and measurement of the quotation of the agent, and can quickly adjust the product strategy according to the market changes. For some products with "high difficulty" and "high technology content", Anta can also complete directly in its own "direct army". And the competitive advantage of Jinjiang brand is also related to Anta.

After all, from the perspective of brand influence, foreign brands such as Adidas and Nike still occupy a high position: "how do we compete? Competition is cost-effective, and every international brand is more expensive than 30% of our products, so we must strive to do the best." Ding Shizhong said. In other words, local brands, including Anta, must be able to fill the negative value of brand appeal with the positive value of manufacturing advantage.

Zheng Jie, executive director and executive vice president of Anta, directly attributed the core elements of Anta model to "comprehensive competitive cost control". It is inseparable from the mature supply chain system that has been formed behind Anta: from shoelaces to soles, from fabrics to zippers. Local mature industrial clusters provide corresponding support for the supply chain of these sports brands.

"When companies strengthen collaborative management of supply chain, they can also focus on classifying suppliers, such as general suppliers, partner suppliers, strategic partner suppliers," Qian Jin, a partner in Peking University, pointed out. "Enterprises can share different levels of information to different suppliers and provide them with different degrees of support. These actions often do not require investment, but only require a certain amount of intelligence." In the view of Qian Qian, manufacturing industry needs to improve efficiency and efficiency, and the sorting out of suppliers' resources is an important link. {page_break}

However, it is obvious that Ding Shizhong can not be satisfied if he hurriedly adjusts the pace when the crisis comes. He has stressed more than once that "taking precautions is the way to survive". Surrounded by the idea of change, he realized that the company focused on manufacturing, relying solely on cost and price to win too passive. In order to develop more important source of profits, only to spend more efforts to build "brand added value", the following is the beginning of sponsorship strategy for sports events.

watershed

This sense of hardship can be traced back to Anta's successful history. When the fellow townsman and his colleagues were busy working for OEM, Ding Shizhong began to step by step in the design, procurement, production, logistics, terminal sales and other links in 2001. In 2001, Anta began to consider the concept of integrated sports products, extending the category from sports shoes to sportswear and accessories sales. When all the footwear manufacturers in Jinjiang were worried about the peak sales season of only 3 months in a year, Anta not only promoted the sales volume of single store with the help of category expansion, but also lengthened the cycle of peak season; in 2003, Anta changed the "laissez faire" industry rules, and began to invest resources to help dealers realize operation upgrading.

Through the terminal management reform, Anta upgraded simple batch merchants to sporting goods regional operators, and upgraded the business department to business companies. The Anta sports science laboratory established in 2005 can be regarded as a sign of the completion of the value chain. Through vertically integrated business mode, Anta tries to consolidate its own supply chain management capabilities to better resist external risks.

In Ding Shizhong's eyes, Anta now has the capital to fight against cyclical fluctuations, and Anta has increased the proportion of research and innovation every year. This year, it has reached 3% of sales. This is the benchmark of international leading brands, in pursuit of Ding Shizhong's so-called "innovation value" - which may be a side of comprehensive cost control.

In the increasingly homogeneous Jinjiang, it is difficult to find an exclusive secret methodology, and any method will be replicated quickly. If you want to lead, you always have to think the latest and run fastest.

"In the process of industrial upgrading and market shuffling, only when we become leaders of value chain, can our profit mix and pricing strategy become competitive." Ding Shizhong said, the core question is, if we have the right direction, what genes do we need to push forward?

Perhaps the successful bidding for 2009 is the 2009-2012 year's COC cooperation partner. It will be another big event. You know, this is a very competitive bidding, including Anta, including six companies, including Adidas's transnational giants, such as Lining's past sponsors. However, the bidding can actually see more Anta styles.

Anta did not have the first advantage in this campaign. Compared with competitors, its product design and brand accumulation are slightly inadequate. Anta's thirst for brand upgrading is not difficult to understand. Some people describe Anta's competitive environment: behind it, XTEP and 361, who also came from Jinjiang, were listed in Hongkong in 2008 and 2009 respectively, and del Hui, who is about to be listed, plans to catch up with them, hoping to narrow the gap with Anta. The international brand Adidas and Nike have been trying to "sink" the channel in recent two years, trying to surround the two or three line market in China.

The opportunity provided by the Chinese Olympic Committee, which covers a wide range of interests and years, is unprecedented in the Chinese sports industry. This is precisely the opportunity Anta has been seeking to enhance the brand level and increase brand exposure. However, the objection in Ding Shizhong's management was filled with "sky high price" in the tender, and the genes that came later were not changed.

However, relying solely on sponsorship of a sport can not completely reverse the image of the brand. What Anta has done behind marketing and network expansion is probably ignored by people. Zheng Jie came to Anta two years ago. An important task is to re comb the brand DNA and work out a "relatively clear brand development path and strategy". Even though Anta's name has been heard in many areas, Zheng Jie still forces the company to think: who is Anta? What kind of consumer group are we facing? What way should we use to communicate with our consumers?

He soon discovered the problem of Anta's brand communication. In the past, Anta often emphasized the "how to look good and how to sell" a garment, but ignored the overall planning for the product. Based on this, Zheng Jie began to develop seasonal themes for each stage of sales, and presented merchandise corresponding to the theme in the shop.

As for the newly acquired brand, Ding Shizhong said, "the company has confidence in running the international brand well, but it needs a process." Take Anta's products as an example, from commodity planning to selling to terminals, there is a 16 month cycle, and FILA has only been 11 months since its formal takeover. Next, FILA will merge into Anta's whole business. "We will have a group of professional teams to manage this brand." Zheng Jieru said.

For Anta, every major event, including the Guangzhou Asian Games, may become a new watershed, and whether we can seize the opportunity is a test before us.