The Era Of Cheap Manufacturing Is Ending &Nbsp; &Nbsp; Garment Industry Is Facing Development Turning Point.

The era of cheap manufacturing is coming to an end, and the scale advantage is difficult to sustain. Many local champions have switched to gambling.

brand

Above the premium, but waiting for them is a solid ceiling.

Where is the way out?

Epic China

Economics

Is the process of rapid growth really slowing down?

There are enough bad news.

The cost of raw materials, labor and land continues to rise, squeezing the profits of many manufacturing and retail enterprises, and it is not easy to pass it on to the consumer.

Li, the main supplier of large retail companies like WAL-MART, Hongkong based consumer goods purchasing and logistics company Fung, warns that "a new era of purchase price rise" has come, and this is a sign of the end of China's deflation led by the world economy.

This unusual situation indicates that the era of cheap manufacturing in China is coming to an end.

In the past more than 20 years, there are only two words in Chinese entrepreneurs' dictionaries: scale.

China has bravely invested a lot of money in pportation and other infrastructure, and eventually helped many small businesses originating in the local market to the country.

The traditional marginal cost theory is playing a role: it takes only one kind of crazy commodity to send an enterprise quickly into the cloud.

To this day, such miracles have become strange.

So, when

industry

When the local champions began to slow down and regress, they could not help wondering how these grim phenomena occurred.

The most representative is Li Ning Co Ltd in the sporting goods industry.

Since the founder of the same name, former gymnast Lining, lit the torch at the opening ceremony of the 2008 Beijing Olympic Games without fear, the company, which has been founded for 20 years, has now fallen back to earth.

In December last year, Lining's orders for the second quarter of 2011 (Q2) fell dramatically: the increase was zero, causing investors to sell their stocks in large numbers.

Although Lining has been the biggest sporting goods manufacturer in China for a long time and passed Adidas in 2009 to become the runner up of the Chinese market, many investors and observers believe that Lining is really in trouble this time.

Lining's 2010 annual report, which is not very bright, is also expected: annual income of 9 billion 479 million yuan, an increase of 13% over the same period, an increase of less than 30% over the past 10 years.

Although the market is still digesting the bad news of the decline of Q2 orders in 2011, Li Ning Co CEO Zhang Zhiyong further warned that the Q3 will be the lowest point of the year.

Without Kyushin Pills's first aid, the growth rate of Lining will remain at a low level this year.

Lining, who is accustomed to long-term triumph, looks like he needs to earn a living.

This terrible collapse is also evident in the automotive industry.

Last August 3rd, BYD motor (01211.HK) announced that it would reduce its sales target from the previous 800 thousand to 600 thousand.

Despite this, the automaker, who is the leader of Buffett's stock holdings, has yet to complete the task, selling only 519 thousand and 800 vehicles a year, and net profit fell 33.5% year-on-year.

The position of Chery, the first in the auto brand, is similar: the original target is 700 thousand vehicles a year, but only 682 thousand actually sold.

Chery's efforts to enter the high-end market are also frustrated.

In 2009, Chery launched two brands, including "Rui Qi" and "Wei Lin", which were located in high-end brands, but sales were poor.

Recently, it has announced the cancellation of the half year's business department, which has returned to Chery's sales company.

It is not easy to figure out what is going on.

To put it simply, the rapid growth of the comparative advantage and the control of retail scale in the past has been difficult to sustain. If we want to write a memoir, we can start now.

Chinese enterprises in the local champions have already touched the ceiling of brand upgrading earlier than their peers. Consumers are still looking for better cost products, but I am sorry, but with the increase of purchasing power, they have turned to the embrace of multinational brands.

A research report by Credit Suisse shows the difficulty of Lining's challenge to Nike: when the monthly household income exceeds RMB 7000 yuan, Chinese consumers' preferences will shift from domestic brands to foreign brands.

Chinese brands that want to become global champions still do not seem to have completely conquered the local market, let alone other overseas markets.

We have observed similar phenomena in at least four industries.

In addition to the above sporting goods industry and the automotive industry, the white goods industry and the hotel industry all exhibit similar characteristics.

But the situation is slightly better: Haier, which has been promoted to the world's largest white power manufacturer, has not seen a decline in sales. It is trying to build a high terminal brand casesti to win the favor of high value consumers. The largest economy chain hotel in China, though its home market is far from saturated, has launched the four or five star hotel market with the Yi brand.

In the end, many Chinese companies seem to have just realized that the past fascination with scale has made them miss something even more crucial.

Wang Chuanfu, chairman and chief executive of BYD, said BYD should pay more attention to the quality of selling cars instead of blindly pursuing market share. He also said that over the past few years, we have paid too much attention to growth, which is wrong.

At the beginning of this year, Yin Tongyue, chairman and general manager of Chery motor, also said: "it is better to fall to the ten place and implement the strategic pformation of enterprises". In 2011, Chery will shorten the front line, focus on quality improvement, raise the brand premium, instead of blindly pursuing quantity and speed.

Another obvious trend is that the default market scope that is clear in the past is being broken.

Multinational brands that can be called "golden brands" also learn to make use of China's low-cost manufacturing resources.

In the past, they stuck to the high-end market, and now they are fighting for low-end consumers in the form of subbrands or cost-effective products, and accelerate the expansion of retail networks to the three or four tier cities.

This forced the "red brand" - these local champions face two options: upward or downward, continuing to move to the lower end market, or launching a decisive battle in the high price and super large tier cities and the gold brand? Because of the different positions and stages, the "blue brands" have yet to feel the pressure of the red brands, and they can still capture the new consumers in the low-end market by low price and channel size.

Take the sporting goods industry as an example, Liao Tianshu, a partner and managing director of Boston consulting consumer products, believes that a wave of overall growth slowdown will develop from the first tier cities to the low tier cities. Anta's base areas may not be felt in the three or four tier cities.

However, if we go all the way, if Anta stays at the stage of price competition, it will be very bad.

Liao introduced.

This is indeed a question of choice for the future: where do these red brands choose to fight? The key to winning is how to take the lead in a larger and larger middle end market.

With more and more Chinese consumers jumping into the middle class, the dumbbell consumer structure in the past is gradually changing. They are no longer satisfied with purchasing low-priced goods, and increasingly like to participate in treasure hunt games in the middle end market.

McKinsey said in its consumer research report last year that from 2008 to 2009, half of China's retail market growth came from consumption upgrading.

The problem is that Lining and Chery, who are eager to raise the brand's gold content, find it difficult to have such a premium.

The report and analysis will start with the topic of "how the scale advantage is lost" and discuss how to form a "fatal encounter" between the downward penetration of the gold brand and the upgrading of consumer consumption.

How is the scale advantage lost?

During the industrial revolution, the world factory was regarded as Lancashire in the northeast of England. By 1830s, the number of industrial machines there was more than the total number of other parts of the world - that is the age of flying shuttle and steam engine.

And in China, looking for a portrait of pformation that can best represent this ancient farming country in the process of industrialization may be the young girls in the Chinese women workers by Pan Yi, a sociologist.

"The life stage of women's pition from puberty to marriage", pan wrote, coincided with the social time in pition from a planned economy to a market economy.

This is the two sides of the Chinese miracle: prosperity and unrest behind it.

Over the past 30 years, China's low labor cost has provided a "demographic dividend" for the "China model" in the process of globalization. However, the reality facing China is the closure of the demographic dividend window in less than ten years.

With the early arrival of the aging society, the surplus labor in China's rural areas is far less than imagined. China is changing from the labor surplus to the labor shortage era.

Last year, many large factories in China were shut down due to tension in labor relations. Public criticism and dissatisfaction reached its peak after a series of workers' suicide incidents in Foxconn's Shenzhen factory.

Feng Guojing, chairman of Li Feng Group, believes that the controversy surrounding Foxconn is an epoch-making event.

Feng believes that this not only marks the end of the era of cheap labor, but will also lead to a reflection on the entire industrial park system that has relied on China's economic growth over the past 30 years.

"Now we can call it the former Foxconn and the post Foxconn era.

The Foxconn incident is really so important.

He said.

Morgan Stanley data show that in the past 10 years, China's manufacturing industry hourly real wage growth of 12.7% per year.

The US is down 0.5% annually.

The output of Chinese workers is 21% per hour in the United States, but the salary is only 11% of that in the United States.

The gap will begin to shrink.

"Since 2010, the rise in labor costs has been explosive growth.

"Li Ning Co CEO Zhang Zhiyong said to" Global Entrepreneur ".

Lining's average wages for most of the factories are between 1800 and 5000 yuan, and 10-15% is expected to rise in the future.

Affected by this, Morgan, managing director of JPMorgan and chairman of China Securities and commodities department, Li Jing believes that wage increases are the most influential factors in the construction, manufacturing, wholesale and retail sectors.

That's not counting.

In terms of raw material costs, there is no need to enumerate the number of macroscopical figures. All walks of life feel the sharp rise in price increases, which directly affects the profit margins of manufacturing and retailing.

Let the elastic space of large scale manufacturing become narrower and the rise of China's new economic zone. It makes consumers' shopping preferences more and more regional differentiation. This means that the single product's super large scale manufacturing and sales have been difficult to achieve.

The Chinese market has been linked by a city and a city. According to the method of ClusterMap, McKinsey divides the Chinese cities into 22 urban agglomerations. Each city group develops around 1 to 2 central cities. All the satellite cities are less than 300 kilometers from 1 central cities, and the GDP of each city group exceeds 1% of the total GDP of China.

This method of classification shows different cities - even hundreds of kilometers apart - there are still huge differences in the buying habits of consumers. For example, Guangzhou and Shenzhen drive distances of only 3 hours, but they differ greatly in terms of population composition, language and consumer preferences.

Among the Shenzhen residents, 4/5 is a migrant worker, who is under 35 years old. He speaks Putonghua or his dialect and likes bars.

The population in Guangzhou only accounts for 1/4. The population age is high. Cantonese is mainly used for drinking tea in restaurants.

The difference between the two is no less than the difference between France and Germany.

Few companies use the same strategy in the French German market, but similar practices are popular in China.

They focus more on cultivating the largest market, ignoring the differences between hundreds of cities in China.

This is why Lining began reorganizing the sales system in March last year. He divided the entire Chinese market into three major regions: East China, North China and Southern China, and no longer ordered the order from headquarters. Instead, the various regions held the order meeting according to the local market characteristics, and decided to decide the matching time and the time of sale.

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Zhang Zhiyong's logic is simple: in the past, the magic of the extensive mode of relying on opening shops to achieve scale growth has been lost.

Although there is still room for expansion of retail terminals in the three or four tier cities, the profit rate of single stores is decreasing due to the rise in real estate rents and labor costs.

In 2009, Lining added 1004 new stores, 80% of which were located in two or three tier cities, but the same store sales growth dropped from 25.8% in 2008 to -2.3%.

The cost of store rental has accounted for 25% to 30% of dealer sales.

This is also the reason why Lining began to vigorously integrate dealer network in the middle of last year.

Only a single small retailer can be integrated into a larger dealer system to further enhance channel efficiency and management level.

The figures prove everything: Lining owned 7915 stores in 2010 and 7249 in 2009.

It is not true that a large number of shops are closed due to the decline of orders and the failure of brand remolding.

In the sporting goods market, the whole consumption demand is divided into three levels: the first tier cities have entered the mature market, the two or three line market is moving from the basic market to the mass market, and the four line, the five line and the six line market are basically in the state of consumption entry.

At present, the intensive cultivation of Nike and Adidas has been completed in the first line, and the next step is to penetrate into the two or three line, while Lining, Anta and other domestic brands are expanding their businesses on scale.

As the growth rate of the industry is reduced, the cost of materials, labor and the cost of the retail channel will increase. The power to achieve scale by simply opening stores will be greatly reduced.

Due to the large difference of cities in different levels, it is difficult to realize the replication of "standard" formats in the low tier cities nowadays, and feel dilated.

The types of stores that have been mature for many years in the first and second tier cities are often more difficult to take root and blossom in the three or four line cities. The average efficiency is generally only 50-80% of the first tier cities, and some even fail to make profits after years of adjustment.

Sporting goods currently cover the first tier and second tier markets, and channel retailers are mostly sports retailers with brand operation. Their store location, retail scale, retail operation capacity, logistics and information capabilities have been improved. The other low-level markets are mainly single brand retailers, and are more sensitive to market fluctuations.

"If there is not enough brand premium, subject to rent increases, industry growth slowdown and other factors, these low-level market shops will fall into losses."

Zhang said.

The premise of achieving profits is whether we can achieve high brand premium, which is also the original intention of Lining's brand remodeling.

In order to help dealers pformation, Lining lowered the purchase price this year, giving dealers 3% of the annual deduction points, upgrading department stores, retail stores operation, information and logistics four aspects of the core competitive edge.

However, due to the complexity of the domestic market, it is impossible to manage a different regional market with a unified and simple amplification system, which exacerbates the difficulty of market expansion.

First, the regional differences of consumers are obvious.

The McKinsey survey shows that the major factors leading to the difference in consumer behavior are regional differences, which are more than the key factors of city level and income level. The complexity of China's market is equal to the sum of ten countries abroad.

For example, regional differences in women underwear market performance is very obvious.

Female consumers in big cities are most concerned about materials, workmanship and fit, while female consumers in small cities pay more attention to bright colors and lace appearance.

Northern women like to design sexy, daring, patterned underwear, while Southern female consumers prefer dark colors.

Next is the decentralization of suppliers and logistics systems.

There are about 21 million retail outlets in China. The five largest retailers in the consumer goods market account for only 1/5 of the total market share. Even India, Indonesia, Ukraine and Russia account for at least twice the share of China.

In addition to household appliances and other consumer goods categories, the vast majority of China's consumer goods market still needs to face a very fragmented supplier system.

In addition, the lack of efficient information management systems and professionals also restricts the management level of the retail industry.

Competition makes brands in front-line and leading second tier cities. We need to consider constantly subdividing and improving existing mature "standard" formats, updating the definition of "standards" according to the new needs of consumers.

Just like the pursuit of the flat effect ratio, the retail terminal can also use the "time economy" to separate the shopping hours of consumers, in order to create higher unit time sales, and to increase sales by using the gold selling period, changing the display mode of stores and the proportion of high price commodities.

In this regard, Lining still has much room for improvement.

When Zhang Zhiyong visited South market last November, he found that many of Lining's down garments had been loaded up.

In his view, down products are listed too early, and invalid products not only overstock the normal sales schedule, but also cause inventory to dealers.

"These retail details are opportunities for efficiency growth."

Zhang said.

Lining used to provide more than 1000 SKU (color, style and other stock units) each quarter, but now there are only six hundred or seven hundred SKU in the eastern, southern and northern regions, and the rest is actively filtered by the product department.

Zhang Zhiyong even stipulates that before the new product is listed, the product department needs to filter the product first, then delineate the goods according to the consumption demand of the specific market, then communicate with the buyer of the customer one by one.

In order to speed up the reaction, Lining increased support for backstage logistics. The logistics base in Jingmen has a radiant radius of up to 900 kilometers in the future, raising the distribution speed of 36% to 48%, covering about 50% of the retail storefront.

Many new formats appearing in China's retail market have also exacerbated the difficulty of scale management, such as shopping centers, outlets, and factory stores.

Lining's important strategy this year is to expand the number of factory shops. In 2010, factory stores account for 6-8% of total sales of Lining, and will increase to 15% in the future.

Generally speaking, there will be an increase of 1/4 in every retail store, and these reasonable stocks need to be digested.

Fatal encounter

The loss of scale advantage is disappointing enough. If nothing is done, Zhang Zhiyong sees a more frightening future: with the gradual infiltration of multinational companies and the upward trend of Chinese consumers' consumption power, the encounter between them will be doomed, but "it will be disastrous for Chinese brands".

Multinational companies are doing that.

After being overtaken by Lining in the Chinese market in 2009, Adidas announced in November last year that it would open 2500 new stores in China. The focus is that the larger sales network will cover 1400 cities in China, shifting from a near saturated first tier city to smaller cities and less wealthy consumers.

From the initial stage will cover more than 500 thousand of the population of the city, "by 2015, we will cover seven cities."

Du Bairui, managing director of Adidas Greater China, said that this means that Adidas will appear in those towns with a population of only 50 thousand or more. Christophe Bezu.

At the same time, these stores scattered in smaller cities will choose to sell lower priced products, which will be cheaper than the consumer oriented entry prices compared with the products of big city stores.

Adidas had optimistic forecasts before the Beijing Olympics that its Chinese sales would exceed 1 billion euros last year.

Adidas vowed that this goal will be achieved this year.

As early as in 2007, Adidas launched a brand new NEO brand for the Chinese market, targeting young people between the age of 14 and 19. The design style is more fashionable and casual. The price is about half of the Adidas sports performance series, and the gap with the local sports brand is about 100 yuan.

According to Nike's "50 dollar theory", when the low end product line of Nike, Adidas and other international brands differ from the local brand price by about 50 yuan, the psychological balance of consumers will turn to international brands.

At present, NEO has quietly developed more than 600 stores in China and will increase another 200 in the future.

Similar stories in the automotive industry are just beginning.

According to Alix Partners, a consultancy, the proportion of self owned brands in China's automobile sales in 2009 increased from 21% in 2004 to 32%, which filled the market gap left by multinational giants: low price market.

A survey by J.D. Power and Associates, a consultancy, shows that most Chinese primary buyers often prefer cars with around 60 thousand yuan, but there are few international brands in this area.

As China's auto sales reach tens of millions of levels, multinational companies are determined to implement cross-border attacks in the context of limited market capacity expansion.

General Motors (GM) has launched a local brand, Chun Chun, to join the competitive market of cheap cars.

Gan Wenwei, President of General Motors China, said: "we have concluded many years ago that competition in this market area is meaningful." (Kevin Wale)

He predicts that in the next 5 years, GM will be able to sell 4 million to 6 million Bao Chun brand cars. "From this point of view, the market will be bigger than Germany".

In March 26th of this year, Guangzhou Honda officially released a new brand concept for the Chinese market.

In view of this, the former Honda president Fukui Wei Fu did not deny that the joint venture with Honda brand in the same channel will sell its own brand with low price and small cars, and compete directly with the local car brands.

As early as 7 years ago, when the production capacity of Guang Ben jumped to 360 thousand, the general manager of Honda Honda later thought that simple expansion of production capacity was not the best solution. We must focus on local demand to develop targeted and localized products.

At that time, there was really a lack of a real economy car.

Judging from the appearance of the concept of the first car S1, this car is indeed mediocre, and it doesn't make anyone see the light, but it fits the positioning of the national car, priced between 7 and 90 thousand yuan.

"We can completely design cars that are beyond our imagination and turn them into revolutionary things, but this is not what consumers in this market want."

Yao Yiming, executive vice president of Guangzhou Honda, told Global Entrepreneur.

According to the idea of Guang Ben, the idea is not satisfied with only small cars.

The appearance of S1 is only a small part of their ambition.

We will develop and localize the market according to the Chinese market. Once the strategy is successful, the concept will develop to high-end cars.

At this point, Honda does not have a "ban", but it will always follow the principle of mismatch with Honda's existing models and do not form direct competition.

In order to put forward the concept, the research and development staff interviewed more than 3000 target consumers, and some localization design ideas were adopted finally.

One of the most impressive suggestions for Yao Yiming is that consumers hope that the storage space of the auxiliary driver's seat can be designed to be open and easy to pick up at any time. This is the details that most cars can't meet at present.

But even the design requirements of a storage grid have encountered many problems in development: how to ensure that things will not fall out when driving? For this reason, the R & D company has repeatedly simulated the tilt angle of storage grid.

The low price and high quality required by S1 is very paradoxical. If the use of existing brand parts, parts of technology and import materials is expensive, but looking for alternatives in China, it will be checked by Honda.

For example, door handle, electric remote control, engine parts, etc., Honda requires tens of thousands of times, more than 2 years of experiments.

Eventually, parts of the concept S1 60% were redesigned.

For the 12 years since its establishment, the idea has also opened up a new page of the joint venture auto company.

"The idea was born in China, but not limited to the Chinese market, and it will grow and export overseas someday."

Yao Yiming said, this is like the birth of the United States of the Song Shi map eventually become part of the Honda global system.

If multinational companies begin to rush into the low-end market, will the good days of Chery, BYD and Geely continue? Bad signs have emerged.

After implementing the Yaohao restriction policy in Beijing this year, a BYD dealer said that most consumers may have to wait for months or even 1 years to shake a license plate number, so they are very cautious about choosing cars and buying cars. Many consumers even want to take the first step to buy cars.

Although BYD has announced a new round of sharp price cuts, it has produced little effect.

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Where to fight?

It is easy for critics to take the plight of Li Ning Co as the evidence of its failure to rebuild the brand at the end of June last year.

This may explain some problems, but not all of them.

In fact, when Lining changed the new LOGO and redefined the brand connotation and product line, the integration of dealer network was also in progress.

The decline in orders reflects the dealer's hesitant attitude towards the new strategy, which is always inevitable.

The real problem is that when Lining wants to "sell more and more expensive", he finds that consumers' brand premium is not yet fully recognized.

Goldman Sachs said that Lining's brand positioning is between the global high-end brands and the domestic mass market brands. This lack of clear value orientation and the status of cards in the middle are risky.

But Zhang Zhiyong knows that Li Ning Co must make changes happen.

The reason is that the driving force of China's sporting goods industry has weakened in the past.

Zhang predicted that the industry's average growth rate will be 13% to 14% this year, compared with 35% before 2009.

But one question arises naturally: the trend of slowing industry growth has rewritten Lining's earnings figures. Why did it not affect Anta (02020.HK) pursuers? Its turnover increased by 26.1% to 7 billion 408 million yuan last year, and the amount of Q3 order in 2011 increased by about 20% compared with the same period last year, and the gap with Lining was further narrowed.

The reason is that the development stage of Lining, a red brand, is different from that of Anta.

In the super large and first tier cities, the growth rate of the industry has been decreasing, the higher the relative growth rate goes to the low level city market.

In the three line market with Anta's dominant position, there is a large number of emerging consumers whose per capita income has just crossed 1000 dollars.

Zhang Zhiyong said that this situation is similar to that of Lining 10 years ago.

At that time, Lining's products were mainly in such a low price segment. The emerging consumers in the first and second tier cities became the main source of market share, and also grew rapidly.

Therefore, "the best way to make a brand is to go from top to bottom."

Zhang said.

When these consumers began to swarm into Nike and Adidas stores, Lining could only retreat to the lower line market. "So you can only choose the following market and be squeezed down one after another."

Lining came to the crossroads earlier than Anta.

Or continue to retreat to the low line market, or counter attack on the high-end market.

In fact, the choice is not difficult to make.

According to Deutsche Bank's statistics, in 2004, the largest share of China's sports consumer goods market came from products under 200 yuan, accounting for 40%; 300-500 yuan accounted for 30%; and 500 yuan or more accounted for 30%.

But by 2009, this data has changed greatly. The price of products at 300-500 yuan is more than 40%, which is equal to 500 yuan or above, while the product below 200 yuan has dropped to 12%.

There is no doubt that the price range of more than 400 yuan will be the largest increment of the market.

"Li Ning Co does not choose to compete in the basic market, but must compete in the mainstream consumer market."

Lining himself said in an earlier speech.

In contrast, as a catch-up brand, as long as we focus on the mass market, we can still make full use of China's urbanization process to make profits.

Anta and PEAK are expected to continue strong growth over the next two years.

However, Liao Tianshu, an expert on consumer goods consulting in Boston, believes that these brands need to change the "cheap concept" which is left to consumers for a long time.

Because the price range of sporting goods industry is not very broad, the price ratio of top brands is lower than that of low-end brands, so customers who constantly seek to upgrade their consumption are still concentrated in the middle end market, and enterprises should strive to do something here.

Before reaching the ceiling, size is still the top priority for blue brands.

In the economic chain hotel industry, the 7 day story is similar.

"At the initial stage, it is more valuable to circle the ground than you planted on the ground."

7 Days Inn CEO Zheng Nanyan told Global Entrepreneur, "the quality of products can be optimized step by step with the expansion of your strength."

The 7 day is a typical example of Chinese expansion.

As of December 31, 2010, a total of 568 hotels were put into operation on the 7 day, including 321 Direct stores and 247 management shops, with 56410 rooms. The scale has reached two times that before 2009, after home.

In addition, there are 25 Direct stores on the 7 day in preparation period, and 172 management shops have signed but not yet opened.

The number of new shops announced in 2011 was 290, higher than that of the family.

The number of its members is increasing.

Over the 7 day of last year, membership has increased by 16 million 500 thousand, an increase of 69.2% over the same period last year.

The number of effective members is 5 million 600 thousand, such as the number of households is 3 million 800 thousand.

Zheng Nanyan once observed the changing rule of the proportion of effective members. If the shop speed slows down, the proportion will rise to 50%.

Because every opening shop, there will be a surrounding publicity effect, resulting in more people to register.

For the 7 day, the advantage of the large number of registered members is that the number of members pferred to consumption will also increase.

The secret of Zheng's expansion is to give full store authorization to encourage internal competition, or even "internal merger".

In the first two quarters, the manager who has excellent business performance has the right to issue "merger invitation" to the store with poor performance.

After taking charge of the management, the manager can take more profits according to the task completion rate set by headquarters and himself.

"The 7 day store manager always faces competition and wants to have his own motivation.

If he has no motivation and does not participate in such competition, he will be squeezed out by others.

Zheng Nanyan said.

Speed and scale are still the rules of the game in this industry.

The customer base that Econo Hotel can affect can accept the accommodation conditions below Samsung.

The number of hotels under China's Samsung now is between 2 and 3, so it is a conservative estimate that the overall size of the chain hotel as a powerful alternative competitor will not be lower than this figure.

And now the top 4 brands account for less than 10% of the market share, which means that the top 4 brands will reach at least 2000 of the above scale to enter the market saturation period.

"The sooner the scale is achieved, the more influential and valuable it becomes.

Based on this, we have formulated a strategy for rapid expansion.

Zheng said.

In this regard, such as home CEO Sun Jian also holds the same view.

However, sun saw another market: four or five star hotel.

In 2008, the family launched the brand.

Sun believes that China's high-end hotels do not have a real platform. In the 234 tier cities, such hotels are mostly single based, and the middle end hotels have not yet formed a scale. Consumer upgrading will make consumers want to seek higher quality products.

At the same time, cost pressures compel families to increase their value and price and seek greater profit margins.

The birth of harmony is not easy.

The global financial crisis has slowed the growth of Yee for two years.

Until the end of last year, he began to make efforts to enter the two or three line market, such as Chengdu, Xi'an and Taiyuan.

Sun hopes to copy the competitive gene of the family to the cheek, which is to focus on the feelings of the guests and remove all unnecessary designs and services.

The first Harmony Hotel in Caobao Road, Shanghai, is designed by a designer from California, USA. The carpet on the hallway is a black background representing the universe. Every room has different colors of lighting, blue represents empty rooms, and red shows people live.

The furniture is made of piano lacquer, and the cost of each room is 120 thousand yuan.

Sun Jian soon discovered that such complicated designs abroad would be a fatal blow to a home that specializes in chain hotels.

Sun began subtraction, cut off unnecessary designs, and calculated the rate of return on Investment: the investment was almost 1 times as fast as that of home, but sales revenue reached 1.8 times that of the latter.

"Heyi is only a new engine for future development. It is still far behind the current home speed, and can not put the cart before the horse."

Sun Jian said, "maybe in 10 years, it will become the main engine, but it can't be seen today."

If the home is going up, the international high-end hotel brand is also accelerating to penetrate into the mid end market.

IHG CEO CEO Cosslet said that the opening of the Chinese market must follow the Pyramid principles: enter the hotel with five star hotels, and then radiate from the concept of quality products and the middle end The Market Inn Hotel.

Intercontinental Beijing Lido Holiday Inn opened in 1984, making it the first international chain hotel group stationed in China.

Since November last year, a special pformation plan has been carried out in the intercontinental area. The Chinese name of the Holiday Inn Express introduced into China in 2004 has been changed to "Smart Choice", which is different from the cheap image of the economic chain hotel such as home.

InterContinental Hotel believes that Chinese travelers are becoming smarter and smarter. They know very well what they want. They will choose some of their highly valued hotel characteristics and are not willing to spend money on services that they simply can not enjoy or enjoy.

The problem is that the quality of China's current three or four star hotels is not uniform, which has caused consumers' concerns.

Just like the market opportunities of Ho Chi aimed, the crux of the problem of "linking but not locking" in China's mid-range hotels has given a huge business opportunity to foreign groups who are good at operating hotel brands.

Now, the intercontinental has decided to increase the expansion of the Holiday Inn, from the current 29 to double in the next three years.

"There are not many brand names in China. We hope to be the leader in this market."

Ni Xuanyu, vice president of marketing in Greater China, Nick (Barton).

How to

The right way to avoid being marginalized is to become the real leader of the industry.

It has nothing to do with scale, though Chinese companies are good at squeezing western competitors out of the market by mass and low-cost manufacturing, as is the case in microwave ovens and other fields.

But in essence, it is a war about the share of the brand in the minds of consumers.

"I admire the speed of catching up with Chinese people, combining Western technology with independent technology, with the wisdom and wisdom of low cost production.

Chinese brands need a promotion stage, but they may be shorter than the developed countries. "

Tang Shide, Torsten Stocker, director of consumer goods business in the Asia Pacific region, said to Global Entrepreneur.

Tang Shide's view may represent the majority of westerners' understanding of Chinese brands, that is, Chinese people are good at serving the production line, but they lack skills in brand building.

It's really hard, but it's worth a try.

Perhaps the example of Haier can give many Chinese enterprises the same confidence.

In 2010, Haier achieved a global turnover of 135 billion 700 million yuan, an increase of 9% over the same period of last year, and realized a profit of 6 billion 200 million yuan in the whole year. The increase in profits was 8 times the increase in revenue.

In China, many large manufacturing enterprises whose sales revenue is over 100 billion are facing the bottleneck of scale growth. How can Haier achieve profit multiplier under such circumstances?

What they rely on is to enter the high-end market, adjust the product structure, and make high-end products the profit engine.

Take Haier's main product refrigerator as an example, Haier launched the high-end brand Casarte in September 2007, and its profit contribution rate is 6 times faster than that of the traditional Haier refrigerator.

The endorsement is that Euromonitor, the world's leading market research firm, has once again ranked first in the world in 6.1% of its global market share in the field of large white goods, while maintaining its champion position in the Chinese refrigerator market for 21 consecutive years. The statistics show that Haier has the largest market share in the world.

This growth has benefited from Haier's progress in the three overseas markets: North America, the Middle East and the Asia Pacific region.

"Haier will end its dependence on the Chinese market."

The international evaluation said.

But we must realize that building a high terminal brand often means establishing a completely different business mode and process. It may be difficult to match the old mode.

For example, Haier set up a special R & D team for the brand of the brand in the refrigerator business department, and the new operation process.

For example, for a family, he may be like another company.

New global challengers from China are moving beyond the low cost business model and expanding the scope of service market.

However, in the next ten years, the competitiveness of many Chinese local champions will still be tested, even if the establishment of a truly global organization and business scope of Chinese enterprises is no exception.

This tug of war will be presented in different ways in every industry.

Over the past ten years, veteran enterprises have protected their main businesses in the following four ways: adjusting business models to remain competitive, integrating fast developing economies into global supply chains, acquiring or collaborate with challengers, and strengthening traditional technologies and services.

These methods will soon be emulated by the newcomers.

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Chinese enterprises can use local advantages to focus on market segmentation, which may mean greater success. However, they still need to demonstrate their strong learning and brand operation capabilities in the consumer goods market.

The difference between the taste and consumption habits of Chinese middle class and affluent consumers may require enterprises to emphasize the special benefits that their products can bring to other products, or require enterprises to provide more customized products.

In this regard, pnational giants undoubtedly provide the best reference frame.

The acquisition of key resources in the value chain will provide a key boost for Chinese brands to achieve "Leaping Longmen".

In the automotive sector, this change has already taken place.

One of the most notable deals is Geely holdings's $1 billion 800 million acquisition of Volvo (Volvo) brand, a landmark deal aimed at driving Chinese auto giants to a higher level in the global automotive industry.

Some smaller acquisitions focus more on proprietary technology in special market segments.

Last year, BYD sold the Japanese pavilion forest factory owned by Hagiwara, a famous Japanese auto mold maker (Ogihara), and Hagiwara was one of the largest independent automotive mold manufacturers in the world.

At present, the high-end BYD model G6, which is supplied by the forest factory, has a full set of stamping dies.

"The purpose of this acquisition is to make up for the shortage, improve the industrial chain and fill the market assets, so as to get the core technology patents that the enterprises need urgently."

Xia Zhibing, vice president of BYD, said to "Global Entrepreneur".

The strength of Chinese mergers and acquisitions has become a recurring topic in the global trading circles.

In 2010, China's overseas M & A pactions jumped 37% to 55 billion 400 million US dollars, accounting for 1/3 of China's total purchases, according to Thomson Reuters.

As of March 23rd, the total amount of M & A has reached about US $14 billion 700 million this year.

10 years ago, Chinese companies bought overseas for only $1 billion 500 million a year.

"International giants want to sell certain types of assets and will probably find Chinese buyers because they are likely to be the best buyers.

Mergers and acquisitions have changed from Western acquisitions in China to China in the West.

Tang Shide said.

"5 years ago, this is not the case."

Most of these overseas companies seeking overseas acquisitions are exposed to "pparent ceilings": either because their businesses in China can no longer grow, or because they exist such as upstream raw materials, resources or technology needs.

Not only in commodities, machinery manufacturing, consumer goods trade activities are increasing, bright food has participated in a number of overseas mergers and acquisitions, Ausnutria dairy mergers and acquisitions of the world's top goat milk manufacturers - Holland dairy enterprise Hai Pu Kai 51% stake.

However, Chinese entrepreneurs want to break the existing pattern may be more difficult than imagined.

Peter Nolan, director of development research at University of Cambridge, called the Cascade Effect the phenomenon of capital concentration in the whole value chain, while the pnational giants were the biggest beneficiaries.

The most obvious part of industrial concentration is those famous companies with advanced technology and famous brand names. They become the "system integrators" or "organizational brains" of the highest value chain in the extended value chain, and the main customers are the middle class of the whole world.

In many industries, a few companies account for half or more of the total sales revenue of the industry.

This "waterfall effect" has a profound impact on the nature of business competition and technological progress.

This means that the challenges faced by companies in developing countries are far more severe than before.

They have great difficulties not only in catching up with the leading "system integrators" (that is, the visible part of the iceberg of the industrial structure), but also having great difficulties in catching up with the powerful companies that dominate almost all the chain of the global supply chain (that is, the invisible part of the industrial structure belonging to the "iceberg").

Chinese enterprises have a long way to go.

Everything is just like Nolan said: "you (the West) has gone deep into me (China), but I haven't penetrated you (I have you within me, but you do not have me me").