Zhou Chengjian: Learn From The Lesson And Start Again

Zhou Chengjian, the richest Chinese clothing company, has stumbled through 30 years of entrepreneurial road and is still on thin ice.

In May 18, 2011,

Many shareholders listened to this "positive" news, and not particularly excited.

Because 600% is frightening, but the base of growth is not high. In the first half of 2010, it was a "depression" in the US state: net profit was only four thousand yuan, and the decline was more than 80%.

The United States, namely Metersbonwe, is a Chinese private clothing enterprise famous for its "light asset mode", like Nike. It focuses on brand and marketing, outsourcing production, expanding rapidly through franchisees and direct stores, and has fast fashion brands such as Meters/bonwe and Me&City.

In 2008, Zhou was sent to the Shenzhen stock exchange for listing in the US, so as to become the richest Chinese garment industry at 17 billion yuan in one fell swoop.

In March this year, Forbes magazine published the world's richest list. Its fortune was $4 billion (about 26 billion yuan) and ranked thirteenth in the Chinese mainland.

But in recent years, the United States has been on a roller coaster ride because of its ups and downs.

Since 1982, Zhou Chengjian has been staggering for 30 years.

"I have made a lot of mistakes in the past," Zhou Chengjian told reporters. "Until now, there is still a lingering fear."

Starting from tailoring in Qingtian, Zhejiang, and building Metersbonwe brand, becoming the richest person in China's clothing industry, Zhou Chengjian is always in the process of correcting mistakes.

Failed Entrepreneurship

Zhou Chengjian was born in the village of Huang Keng Village, Qingtian, Zhejiang. There are six brothers and sisters. He ranks the fourth in the family. Several brothers and sisters are now agents in the United States. He has married three times, and has two sons and a daughter (that is, Hu Jiajia who boarded the Hurun rich list).

His father worked in the people's commune, which is equivalent to the present grass-roots government.

Although planned economy age, but a village has a shop index, the index of Shi Keng Ling village finally fell to Zhou Chengjian's home.

If this is regarded as a commercial enlightenment, this grocery store is Zhou Chengjian's earliest commercial consciousness "engine".

Zhou Chengjian spoke of his own life and expressed his gratitude to his father.

When asked who he was the most appreciative entrepreneur at home and abroad, he hesitated for a moment, and said, "I admire my father most, and I appreciate Mao Zedong too."

There is more guilt than gratitude.

Zhou Chengjian, who was 16 years old, earned 300 thousand yuan in 1981 because he participated in the reselling of silver dollars, which was a huge sum at that time.

However, things changed very quickly. 300 thousand yuan was confiscated. Zhou Jia was convicted of speculation.

In 1982, Zhou Chengjian went to Wenzhou to learn tailoring skills, and his uncle provided him with some resources.

Before that, Zhou Chengjian tried to learn masons and carpenters, but finally chose to enter the clothing industry rather than the construction industry.

Not long after, Zhou Chengjian returned to Qingtian from Wenzhou for a loan of 300 thousand yuan and founded the Qingtian garment button factory.

He gathered all the well appointed tailors in dozens of miles, and when he had a client in Wenzhou, he organized the "local tailors" who had not been professionally trained to work overtime.

It is frustrating that his first big ticket, which he looked forward to, failed again.

At this time, Zhou Chengjian spent 300 thousand yuan on the venture capital. After paying the salaries of the tailors, he left less than ten thousand yuan.

At this time, he has two choices. One is to apply for bankruptcy, the other is to start over from two.

He took second roads.

Leave Qingtian County, then go to Wenzhou, and re join the clothing industry to find new breakout opportunities.

But in his more than 20 years in Wenzhou shopping mall, he has never been very good at mixing up with all kinds of people.

"I refuse to communicate with my heart," Zhou Chengjian said. "Plus I am a liberal. I don't want to force myself to be different from different people."

A person who followed Zhou Chengjian's business and now worked in the US state told reporters that only when Zhou Chengjian communicated with consumers did he become truly positive, and his exchanges with peers or industry associations and so on were mostly half hearted.

Zhou Chengjian said that in Wenzhou, many clothing companies had well-known trademarks and famous brand products. "My company has no honor. My department went through the ditch." they told me that your boss would go over there. I wouldn't go.

No, no, no, not for me. "

"Strategic experts fooled me."

Zhou was founded in 1993 in Wenzhou to set up the mate clothing company. After 3 years, it decided to outsource production.

This is because he once did research in the clothing market of Guangdong, and saw many garment processing enterprises that made foreign trade foundry, well-equipped and skilled workers, but the machine idling rate was very high.

That is to say, the "light asset model" of the United States which later became hot for the industry stems from Zhou Chengjian's "misunderstanding".

In 2001, when the United States set up a branch in Shanghai, the sales revenue of the whole country increased from 10 million yuan in 1995 to more than 800 million yuan, representing an increase of 80 times in 6 years.

In 2005, the United States headquarters moved to Shanghai, which was Zhou Chengjian's own idea. A former US state executive said that the voice of opposition was prevailed in the core team of the United States. Everyone thought that they could not be the leader in Wenzhou, and that they were going to die in Shanghai.

"But Zhou Chengjian insisted," he said. "Though he has become more open, he is still a strong and arbitrary man."

In the Chinese business community, the relocation of headquarters has always been a sensitive topic, especially for some local star enterprises, especially those with special political and business relations, such as real estate and resources.

Clothing is a fast selling product, and the United States has always had a temperate character in Wenzhou, so his departure did not cause anything in Wenzhou's clothing industry.

"If I have any know-how to start the situation in Shanghai," Zhou Chengjian said, "that's because" sesame mung bean "means that enterprises can't attract too many people's attention. I don't have to communicate with the government departments or greet them, so I can put my mind on opening up the market and creating brands.

In fact, before his move to Shanghai in 2005, Zhou Chengjian experienced his first big labor pains since he founded the United States.

There are two representative events.

First, the dispute over jurisdiction between Wenzhou headquarters and Shanghai branch led to some business leaders and executives leaving. Two, in 2003, he closed the brand "kege" which was newly created a year ago.

Now look at these two events. For the former, Zhou Chengjian thought that although he was somewhat annoyed at the time, he did not feel much loss. "I think my subordinates are not allowed to leave because they do not agree with my values. As the head of the enterprise, I can only adapt to a few people, and it is impossible to satisfy all the people."

For the latter, Zhou Chengjian still regrets. "The so-called strategic expert fooled me." Zhou Chengjian, who was lying in front of the chair, suddenly sat upright and said very seriously, "what can the experts say not to make two brands at the same time?

I must have known that I had invested about fifty million yuan for "keg" and opened more than 200 stores.

He said he had recently restarted the brand.

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Raise a new brand, tuition 6 hundred million

Shortly after Zhou Chengjian arrived in Shanghai, he began to pform the "light asset mode", that is, to reduce the proportion of franchisees and increase the speed of opening stores.

More than half of the internationally renowned casual wear retailers choose direct outlets, such as H&M and UNIQLO. ZARA is a 90% direct store plus 10% franchise or joint venture.

From 2005 to 2008, the annual compound growth rate of the United States direct stores exceeded 35%, faster than the annual compound growth rate of 30% of the franchised stores, and the revenue increased from 900 million yuan to 4 billion 500 million yuan, a six fold increase, and the net profit increased from 7 million 340 thousand to 588 million yuan, increasing by 80 times.

Zhou Chengjian became a famous figure in Shanghai for a time, and the listing of American state made him a star of Chinese business.

However, even before the adoption of the IPO application by the China Securities Regulatory Commission, Zhou Chengjian was still very hesitant. The reason is that the business model of the United States has not found a precedent in the listed companies of A shares.

"I was called directly to the SFC for five times," Zhou Chengjian said. "I want to answer the questions on the spot, but after I explained, I don't know whether they really understand, so they are still very upset."

Listing is still a "face project" for Zhou Chengjian.

One of his subordinates said that if the listing was aborted, it might not matter if the company failed to invest. At that time, it was not bad money. It was Zhou Chengjian who worried about the influence of American state morale. He himself would feel "lose face" in the circle.

The US fundraising amount is more than 1 billion 300 million yuan.

After having more capital, Zhou Chengjian began to build a new brand, ME&CITY. He wanted to change the impression of "student clothes" left by US state intentionally or unintentionally.

However, he walked too fast and made too much strides. From the very beginning, he divided the two brands, ME&CITY and Metersbonwe, into two business units, operating independently and even in marketing.

On the choice of spokesperson, ME&CITY launched the first time, namely the heavy gold sign "prison break" actor Wentworth Miller and the famous model Bruna Tenorio.

But later proved that Zhou Chengjian paid a high price for this.

In 2009, the sales expense rate of Smith Barney increased by 6.7 percentage points to 27.8% in the previous year, which is almost two times that of another garment enterprise, the sales cost of seven wolves.

And because ME&CITY's store area is thousands of square meters, the rent and decoration cost in 2009 increased by 79% and 69% respectively.

The two most surprising number for investors is that in the first quarter of 2010, the net profit of Smith Barney fell by 90% compared with the same period last year. Net profit in the first half of the year dropped by 83% compared with the same period last year. The drag effect of ME&CITY was exposed at this time.

To this day, ME&CITY was a chagrin of Zhou Chengjian.

He said that in the past ten years, he has gone through two tortuous ways to take a single brand or a diversified way. For the first time, he mentioned the advice from experts that the keg brand, which has good development momentum, was hastily closed.

The second time was not to listen to the experts' opinions, nor to investigate and demonstrate, and hurriedly decided to launch the ME&CITY brand.

"Making ME&CITY is very valuable, and the timing is good. Unfortunately, our method is wrong," Zhou long, director of marketing at the US brand, told reporters. "The tuition fee we pay for this is as high as six hundred million."

A person in charge of a Zhejiang clothing company who did not want to be named said that Zhou Chengjian had always been a self abased person. It was this inferiority that prompted him to surpass himself and create a "richest man in clothing". But sometimes, this inferiority would make him eager to forge ahead to prove himself.

A new mistake in "new domestic products"?

Zhou Chengjian once again surprised the industry that he recently put forward the slogan and promotion of "I am a new national product". "Although it is a global brand, 60% of ZARA income comes from the Spanish mainland, and 80% of UNIQLO's income comes from Japan," he said. "Based on this consideration, I want to get back to the concept of" Chinese goods ", which is not related to specific brands, but more to wake up national consciousness and let them know that we are truly understanding and suitable for Chinese local brands.

Zhou Chengjian and his team chose 8 celebrities in different fields to become the benchmark of "new domestic products". "Take the lead" is Zhou Chengjian himself, and the remaining 7 are "pop king" Jay Chou, famous publisher Shao Zhong, art critic Lu Rong, creative designer Bao Yimin, stylist Chen Xingru, cross-border artist Deng Zhuoyue, and new photographer Chen Xingru.

But the problem is that when consumers see this slogan, it is impossible not to associate with brands and products: Meters/bonwe and ME&CITY are going to give people a sense of "foreign brands". Now suddenly they say "I am a new national product". Is this going to be abrupt or even counterproductive?

While the United States now has a sharp rise in net profit in the first quarter, it is still on thin ice.

In the first quarter, its financial expenses increased by 303% compared with the same period last year, reaching about 44000000 yuan. Inventory continued to rise, and inventories at the end of the first quarter exceeded 3 billion yuan, an increase of 600 million yuan compared with the end of 2010. Cash flow is still not optimistic.

The net cash flow generated by business activities in 2009 was 856 million yuan, and then rapidly deteriorated to -10.53 billion by the end of 2010. As of the end of the first quarter of this year, although the figure had greatly improved, the figure was still negative (-718 million yuan); on the other hand, ME&CITY still did not get out of the deficit situation.

It is not difficult to understand why in March, when the United States released the first phase of short-term financing and margin trading of 500 million yuan in 2011, it issued second short-term financing bills in less than two months, and raised 500 million yuan again.

At the shareholders' meeting in May 18th, Zhou Chengjian said that much of the stock was due to climate anomalies, and ME&CITY is expected to lose 50 million yuan this year, and will make profits next year.

But these explanations clearly fail to dispel worries among all shareholders.