Kangnai Integrates Global Resources To Push Wenzhou Enterprises Three Times

With the preeminative advantages of the system and the endogenous development mode, Wenzhou people have won the "first pot of gold" in the wave of market economy. The second pioneering work of "quality city and famous brand development" has also achieved the massive economy and the strength of "Wenzhou manufacturing". Today, in the process of China's reform and opening up, can Wenzhou, with its specimen significance, become the pioneer of emancipating the mind again, and take the lead in achieving the third leap?

In August 28, 2007, "the integration and leap - Kangnai internationalization strategy and Chinese enterprises' opportunities and challenges forum", this challenging question has been actively responded by Kangnai, who has been fighting abroad for 6 years, and the idea of "integrating global power, advancing upstream of the global industrial value chain and achieving the three leap" has stirred everyone's mind.

Zheng Xiukang: "we can not always stand in the lower reaches". The history of 27 years is a long time for a Chinese private enterprise. After all, reform and opening up has been in the 30 years.

Since its inception in 1980, Kangnai has benefited from the budding market economy and witnessed the landing of the "world factory" in China. Now it has become the Chinese shoe king with an annual output of about 9000000 pairs of high-end leather shoes and a sales volume of over 1 billion 800 million yuan.

However, as an entrepreneur who persists in making the brand a classic, there are some problems that must be considered and avoided.

In the minds of Zheng Xiukang, chairman of Kangnai group, there is such a problem: "MADEINCHINA" shoes account for 60% of the world's total output, but every year tens of millions of pairs of foreign brands entering China are in control of the domestic high-end market. He decisively concluded that China is a big shoemaking country, but not a big brand country, not a brand power.

Further analysis of the operation of the world famous brand shoes and hat enterprises has found the difference between them. For example, the top brand HugoBoss's fine shirts are priced at US $120 in the fifty-fourth avenue of New York, and the price will be found out. More than 60% of the profits will be given to the sales channels, and 30% of them will belong to the brand dealers, while the manufacturers will get only 10% of them. Even in the heavy industry, there is also a dilemma. For example, China's steel output has already occupied three parts of the global market, but the "Steelers" who take the world as a leader in mergers and integration are the same as India enterprises in developing countries.

Numerous facts show that Chinese enterprises are mostly in the lower reaches of the global industrial chain, and Chinese enterprises are successful in going out, but most of them do not "go up".

Late start Chinese enterprises can start from the following tour, but we must never stand on the lower side forever.

Pragmatic but equally creative Kangnai has sprouted the idea of global layout and upstream, and boldly deployed the plan of "going out, walking in and going up" 6 years ago.

In 2001, OEM was still popular among businesses because of its low risk and steady profits. However, Kangnai opened the store with the hang of "KANGNAI" logo to the 19 district of Paris, France.

Many people have discouraged Zheng Xiukang from ventured directly in expensive European stores, but he insisted that first-class enterprises must have their own brands and channels to get development opportunities.

As a result, Kangnai's top leather shoes, which cost the highest price of $150, were sold out once a day, and profits soon thereafter.

Soon, Kangnai group entered Queens, the fashion center of the United States, facing the most brutal competition.

Because 90% of American leather shoes come from abroad, and all brands will use Thunderbolt in Queens.

However, with the comfort and elegance of the company, and with a large number of TV and road signs ads, Kangnai realized the profit of the flagship store in the same year, and was cited as a legend by the local media.

Then, Kangnai moved towards Italy, which shocked the industry again.

However, Zheng Xiukang insists that Kangnai's global expansion plan can only rely on its own stronghold in the world's fashion birthplace.

The result is still gratifying, and the quality of Kangnai leather shoes comparable to the vast majority of Italy leather shoes is firmly rooted in Italy.

In fact, from 2001 to 2007, Kangnai quietly opened more than 200 stores in more than 20 countries in the world, including the world's top landmarks in Paris, New York, Milan, Venice, Barcelona and Berlin.

Today, Kangnai group, which manages the global supply chain with ERP software, has been proud to hang out in its exclusive stores in Paris: "our goods are synchronized with the latest models of China".

Looking for the non cost advantages of Chinese enterprises to extend their tentacles to the international market means that the role of enterprises in the global value chain has changed.

However, the change of roles will also challenge the adaptability, control and innovation ability of enterprises.

From the beginning of reform and opening up, Kangnai has seen a number of Chinese companies go abroad, but the result is "pay tuition fees".

A typical phenomenon is the fragility of the single cost advantage: Although China's manufacturing industry has low cost advantages, if the supply chain is too long, the product will slow down in the overseas market, and the advantage may be washed away. In recent years, the technical barriers that frequently plagued Chinese enterprises have seriously affected the survival and development of many enterprises.

Kangnai wants to prove the fact that in addition to low cost manufacturing, Chinese enterprises can also gain advantages in R & D, design, management and brand management of raw materials.

It is a breakthrough for Kangnai to strive to integrate with international technical standards and to participate in the formulation of standards.

The data from the Ministry of Commerce show that foreign trade losses of Chinese enterprises affected by technical barriers in 2002 alone amounted to 17 billion US dollars, equivalent to 5.2% of that year's exports. At present, there are three kinds of methods for Chinese enterprises to crack down on international trade barriers. One is to bypass the standards of importing countries, which can not cover their products. Although they can win the game, they are always in a passive position. Two, they should actively respond to actions, that is, through international litigation or lobbying, they try to make importing countries give up restrictions on technical barriers, which are difficult and costly. Three, they are temporary investment in huge capital, breaking through barriers to conform to the standards of importing countries, and the situation of winning or losing is exacerbating the risks of enterprises.

By joining the SATRA, which represents the world's top footwear certification level, Kangnai has found fourth roads.

Zheng Xiukang said that since implementing the strategy of "going out, going in and going up", Kangnai has also sent technical elites to Europe for many years to study and learn, and constantly improve consumer comfort through research, but there is always a lack of some latest technology and theoretical content.

Through cooperation with SATRA, Kangnai has not only integrated itself with international standards in terms of safety, comfort, restricted chemical substances, etc., but also made use of its instruments and standards to develop multiple technologies, laying the foundation for developing the footwear comfort index with Chinese characteristics, and becoming the initiative and forerunner of cracking technical barriers to trade.

To integrate international resources leaping development since 1990s, the world has become more and more flat. The emergence of global markets has accelerated the pace of pnational corporations' pformation to global companies. Integrating global resources has become the most attractive proposition in this process.

Kangnai, who is stepping into the "go up" stage, is no exception. Zheng Xiukang, who is well versed in the success of the world's first-line brand, seems to jump out of the regional concept to achieve a truly global brand.

Zheng Xiukang said, the real global brand is good at making use of the resources distributed everywhere. Taking the footwear industry as an example, Italy's most meaningful artistic atmosphere is the easiest way to inspire fashion inspiration. The rigorous national characteristics of the UK are the most suitable criteria for the induction of technology. China's huge population and increasing population quality undoubtedly have the advantage of labor, while Russia's vast land and resources can provide the best quality raw materials.

In addition, the strong media both at home and abroad will play a positive role in the creation of global brands.

In the meticulous analysis, Kangnai has vigorously promoted the integration of international resources since 2007.

The consumer information collected from the global stores will be integrated into the global foot database of SATRA to match the comfort standards designed by its own R & D institutions. Then it will be submitted to the master of Italy for careful design. The Kangnai group led the formation of the Russian usurik economic and trade cooperation zone, which provided a large quantity of high-quality raw materials and more convenient access to the European market for the Chinese footwear giant, and finally realized the simultaneous global listing of the new shoes.

The process of starting from the terminal to the terminal, starting from the world and going all over the world is showing the emergence of a quasi international brand that successfully integrated the global resources of enterprises and jumped out of the geographical concept.

In particular, it is worth mentioning that the construction of the usurusk economic and trade cooperation zone in Russia has played a very important role in Kangnai's integration of resources.

The usurusk economic and trade cooperation zone was officially launched in September 28, 2006. Kangnai group and Dongning Jixin Group Co invested, with a total investment of more than 2 billion yuan, and about 60 Chinese enterprises will take root here.

Zheng Laili, vice president of Kangnai group, commented on the significance of this capital export act: "we hope to become an integrator of strategic resources at home and abroad and become the most integrated resource in the industrial chain."

In fact, a simple calculation can explain the benefits brought by this action to the enterprises: the export tariffs of a pair of semi finished leather shoes are only 5%, while the finished products' shoes tariff is as high as 15%. If it goes to Russia by "grey customs clearance", it will be more than 3 months from Wenzhou to St Petersburg, and may face the possibility of being forced to be pulled by the tax police. However, if the enterprises assemble the semi-finished products in the wusulinke Park in Russia, they can play the "MADEINRUSSIA", not only can they be sold safely in Russia, but also can be sold to the main market of the EU, not only do they have to worry about such problems as "anti-dumping", but also reduce the cost of customs duties by at least 70%, and the profitability of enterprises is significantly enhanced.

From the output of products to the output of brands, from the brand output to the capital export, the next step for Kangnai to integrate global resources is to promote the globalization of Kangnai brand with the global development of enterprises.

Kangnai Group believes that: when China's domestic enterprises are facing bottlenecks in development, they are beginning to formulate the era of going global strategy. Kangnai is also a part of many of them to explore the road one by one. Kangnai uses a creative and constructive way of thinking to design the international strategy of exporting products to the brand output and then to capital export, and is committed to fully integrate these international achievements, so that enterprises can continuously advance towards the upstream of the international industrial value chain.

This road is full of opportunities but also challenges. The case of Kangnai is very useful for Chinese enterprises going abroad.