Guangdong Shoe Industry Is Deeply Involved In Brand Hollowing Crisis

Guangzhou, Wenzhou, Quanzhou and Chengdu, the "three states and one capital" are China. footwear industry The main force. The four places have started almost the same time and have their own characteristics so far. Chengdu has grown into "the capital of women's shoes in China". AI min, cam Mei do are welcomed by the majority of women, while Fujian is the most popular one. Lining , Anta XTEP, 331, PEAK and other sports shoes have occupied every corner from the mall to the franchised store. Red dragonfly, AOKANG, Kangnai, Augustus and other Wenzhou brands occupy the middle of the shoe market, and look at the international brands in the high market, almost all Wenzhou people are in the agency. While Guangzhou and Dongguan are the center of Guangdong Province, although it is still the largest shoemaking base in the world, the well-known brand seems to be in addition to BELLE or BELLE.

It seems a bit unthinkable, but in fact, it is a historical necessity. As He Guiling, President of the footwear manufacturers association of Guangdong Province, said, "Guangdong shoe factory makes money too easily, and the foreign orders can not be done, and where can we develop our brand"? The innate superiority has finally evolved into the present short board. Today, the profit of the foundry industry has been greatly reduced. Guangdong shoe enterprises, associations and governments are all thinking about the way out for Guangdong's footwear industry.

Born in hardship and died in peace. To make Guangdong shoes go out of their footprints, it is urgent to start the brand strategy of Guangdong footwear industry.

A survey by PRI, an American professional investigative body, shows that 16% of Americans believe that NIKE is a Chinese brand. Behind this survey, which is quite different from the consumption impression of Chinese people, we can see a set of data - 180 of NIKE's 640 factories in the world, with 200 thousand employees in China. Over the past ten years, nearly 40% of NIKE's shoes have been produced in China. Most of them are from the Pearl River Delta. Obviously, the Pearl River Delta's "world factory" is well deserved.

Wu Hang, Secretary General of Guangdong shoe manufacturer, told reporters that Chinese shoes accounted for 65%-70% of global output, 5 billion pairs of shoes produced by more than 8000 shoes in Guangdong Province, accounting for more than half of the country's output, accounting for 1/3 of the world's shoe production. Guangdong has been the largest manufacturing base and trade center of China's footwear products, with about about 5000000000 pairs of foreign sales and more than 100 billion pairs per year. Taking Guangzhou and Dongguan as the core, shoe manufacturers from Chaozhou in eastern Guangdong to Zhanjiang in western Guangdong, such a long line has more than 10 large-scale industrial clusters, an international footwear trade market and a shoe making material supply market. These industrial clusters are very influential all over the world, and each cluster occupies a very important position in the world. The upstream and downstream industry chain is perfect, leather, machinery, plastic and other supporting facilities are complete, and the downstream market system is mature. Chaozhou Jieyang plastic shoes, Chaozhou craft shoes, Wuchuan plastic slippers, Shenzhen fashion women's shoes, Dongguan sports shoes and so on, all over the place have their own characteristics and advantages, and for a long time, they still have great international competitiveness.

　 Cheng also order, lose order.

Yuyuan, Huajian and other large foundries are well known all over the world. Huajian group is the largest shoe manufacturer in Dongguan. In the eyes of many small and medium-sized enterprises in Dongguan, Zhang Huarong is simply "Terry Gou of the footwear industry". Several years from Jiangxi, Zhang Huarong founded or acquired upstream supporting enterprises such as PU bottling plant, shoe material factory, leather factory, printing plant and machinery factory, which has won significant cost advantages in all aspects of freight, packaging, procurement and so on, and has grown to be the leader of the shoe making industry in the whole country. Now, there are 20 thousand employees in Huajian group, with an annual output of 16 million pairs of shoes, providing OEM for 30 of the 50 largest women's shoes brands in the world.

Yuyuan group, a world famous brand of sneakers specially designed for Nike, Adidas, Reebok and so on, has seventy thousand or eighty thousand employees, plus about one hundred thousand family members, with its own hospitals and schools, the size of which is equivalent to a small town.

In addition to these OEM carriers, there are more small factories with dozens of people to hundreds of people, and orders from famous or unknown brands are doing orders, production, delivery and collection. 99% of shoemaking enterprises in Guangdong province are doing foundry production.

Early OEM is a red eye business, with low threshold, low investment, fast output and large profits. In the words of Wu, "this is an industry that can make ordinary people rich." Compared with the self created brand, processing and production for people do not need brand promotion fees, no need to make efforts to promote marketing, "happy to take orders, engage in processing, save energy, save money", attracting a lot of capital to enter this line, many people have been living on shoes, and become rich by shoes.

However, increasing output is not a good phenomenon, because the market always has a capacity. If we all compete in one industry, we can only compete at low cost under the condition of quality. The EU's anti-dumping duty on China's export shoes has proved this truth from the side.

Since the outbreak of the financial crisis in 2008, foreign trade orders have fallen sharply, leading to the collapse of some small and medium-sized shoe enterprises. The profits of the enterprises that have been maintained are also compressed. According to the boss of a certain factory, OEM profits have fallen by a large margin. The women's shoes sold for $more than 100 in the US market before, and the manufacturers could earn 5 dollars, and the profits after the financial crisis in 2008 dropped by 10%.

As labor costs rise and raw material prices rise, the days of small and medium sized shoemaking enterprises are getting worse and worse. Guangzhou Customs recently released statistics show that in April this year, Guangdong exported 1 billion 320 million pairs of shoes, worth 3 billion 430 million US dollars, up 18.5% and 9.9% respectively over the same period last year. It is worth noting that the above data show that Guangdong's export shoes have seen a trend of volume increase and price drop. Customs data show that in April this year, the average export price was $2.3 per pair, down 5.5% from the same period last year, and the average export price was the lowest since 2009. Among them, the export volume accounted for the largest proportion of low-grade plastic shoes, the average export price of the former April even dropped to $1.7 per pair, converted to less than 12 yuan.

Reporters visited several shoe exporters in Dongguan to understand that the current situation of export enterprises is: export orders are very good, but gross margins are decreasing. According to He Guiling, President of Guangdong Footwear Manufacturers Association, there are many reasons for the reduction of gross margin, including the appreciation of RMB and the increase of labor cost of raw materials. Therefore, gross margins will continue to decrease when prices are unchanged or slightly lower.

In contrast, the export data of Wenzhou are enviable. According to the statistics of Wenzhou entry exit inspection and Quarantine Bureau, in the first 5 months of this year, 10 shoe manufacturers in Wenzhou, such as Kangnai, AOKANG and Dongyi, exported nearly 92 thousand and 700 pairs of high-end men and women leather shoes, and the export price was more than 40 US dollars, and the value of goods increased by 322.48% over the same period last year.

It can be seen that after more than ten years' steady and steady progress, the brand effect of Wenzhou enterprises has completely appeared, and the development of its own brand can fully enjoy the maximum profit of each pair of shoes, instead of the upstream brand manufacturers' nose.

　 This makes Guangdong shoe enterprises have to reflect: is it really born of hardship and died of peace and happiness?

Fortunately, the reflection of Guangdong shoe enterprises is not yet too late.

Migration: relocation or relocation?

To gain more profits, there are two ways in front of Guangdong shoe companies. First, under the premise of the rising cost of land, labor and raw materials, the factory will be transferred to the lower cost of land cost in the mainland to maximize cost savings and maintain profitability. Many enterprises have chosen this road under the pressure of cost, and have turned their attention to the relatively backward regions of the central and western regions and Southeast Asia. According to the statistics of the footwear association of Asia, about 50% of the footwear enterprises in Dongguan now have factories in the central and western parts of China, such as Hunan, Jiangxi, Sichuan, Guangxi and Henan. About 25% of them are located in Vietnam, Bangladesh, India, Burma and other Southeast Asian countries.

Judging from the current development trend, industrial transfer will be a major trend in the development of the industry. However, the transfer of industries is not achieved overnight. Large-scale and comprehensive transfer takes a longer process. Experts say domestic industrial transfer will last for at least ten years. The speed and breadth of transfer depend on whether the central and Southeast Asian regions have the ability and premise to transfer to the tail. In addition to geographical location, transportation, land resources, human capital flow and industrial chain capital flow, policy and knowledge also play a crucial role in the success or failure of transfer.

Industrial transfer follows the "gradient principle", which is transferred from higher cost to lower level. In the final analysis, it is a kind of market behavior. But it is not a panacea for shoe manufacturers. There are many difficulties in the process of shoemaking. Wu expressed his disloyalty to Guangdong shoe companies. "We can not help to push the industry forward. Objectively, shoe companies do not agree. Shoes are not like garments. A piece of cloth can be woven for a long time to make many clothes. It depends on the supply of materials very much. Besides synthetic leather, it is different from each piece of leather.

Industry experts pointed out that processing enterprises need to design R & D, spare parts and logistics services, and the conditions for transferring to the land are hard to fully meet. The local government departments are willing to invest their energies in attracting investment, but they often lack pertinence. They only talk about advantages but not enough. Enterprises are most concerned about inadequacy, because it is directly related to whether enterprises can survive locally. For example, the logistics service industry is lagging behind; lack of industrial chains, opening a shoe factory, supply chain has roots, shoelaces, leather, hardware, shoeboxes and so on. The Pearl River Delta has all kinds of specialized markets such as building materials, hardware, coatings, moulds and other specialized markets besides the supporting factories. There are basically no local delivery sites, and the land is basically not there; the policy situation is poor, the cash flow is not strong; the lack of social services, the enterprises' "extra" commitment and the lack of attraction for senior management talents.

Footwear industry is currently more successful only Jiangxi Ganzhou Huajian shoe industry and Baocheng Jiangxi high Yu Sheng footwear industry, most other shoe factories are still in the running in period, and it takes some time to adapt. At present, most of the shoe factories belong to the nature of the processing field, mainly in shoe processing, and other high technology links are still in Guangdong.

Overseas routes are harder and longer than moving inland, and shoemaking enterprises set up factories in India, Bangladesh, Vietnam, Burma and Kampuchea have encountered many difficulties. For example, although labor costs seem to be relatively low, the local labor force is low in quality and lacks skilled industrial workers. The industrial chain is incomplete, which restricts the development of the footwear industry. Based on the differences and obstacles of language, religion and lifestyle, many enterprises encounter great problems in management, and the result is not imagined.

In addition, Guangdong is the material supplier of shoe enterprises in the province, and is also the purchasing center of Southeast Asian shoe making enterprises. Vietnam, Thailand, Malaysia, 80%-90% procurement in Guangdong.

For the transfer of NIKE production base, Wu Hang thought it was only a case. He believes that for Taiwanese enterprises that are highly migratory birds, they rarely migrate to Southeast Asia. "In the past, they developed very little and did not develop well."

It is precisely the various difficulties in the transfer process that force Guangdong to move towards the target of "headquarters economy". It is a new choice for many enterprises to keep their headquarters, brand, technology R & D and other departments in Guangdong, and to place factories that require large amounts of land and intensive labor in the mainland.

That is to say, at the same time of industrial transfer, it is more important to transform and upgrade, create its own brand and step on its footprints. {page_break}

　 Wenzhou people firmly control channels

There is such a story: a famous shopping mall in some place has delayed the opening of two months by abandoning tens of millions of real gold and silver. The reason is that an international brand invited by the mall to spend 2 million yuan does not like the decoration style of the shopping malls' faces and requires the shopping center to be reformed. The brand name is "Louis? Vuitton". This is the charm of the brand.

There is such a group of data: the number of world-renowned brands, only 3% of the total number of global brands, but the market share accounted for 40% of the world, sales of more than 50%. This is the allure of brand.

There is a saying: "ten years of grinding a sword, creating a brand in the past hundred years", it is obvious to build a brand.

According to Guo Binwen, vice president of Guangdong footwear technology innovation Committee, OEM is a relatively low-level part of the whole shoemaking industry chain. Today, the profit of foundry is very poor. The profit of producing a shoe can only be 5%-8% or even lower than that of the factory. More than 90% of the profits are taken away by the brand manufacturers. This is the reason why Guo Binwen took the brand road at the beginning of his own business when he had been immersed in shoes for more than 10 years.

Guo Binwen did not create his own brand, but took the shortcut of Acting internationally. Two years ago, Guo Binwen spent a lot of money on the general agent of the Dupont shoes in China, and then opened more than 100 exclusive counters and stores in the next two years.

Many brand agents like Guo Binwen appeared before and after 1999. At that time, a large number of international brands wanted to enter the Chinese market. They actively sought Chinese agents, but the agency fees of several million yuan a year had scared many people out of their hands, even those who had enough money were afraid to take the risk. Finally, the Wenzhou people ate crab, acting Cartier Le crocodile, and achieved great success. Since then, playboys, Montagut, Goldlion, kangaroo, Valentino, Cardanro, woodpecker and other brands have entered. This mode of "authorized operation, first level agency and multi-level distribution" is very simple and easy to imitate. More and more Wenzhou people have seized the brand agency power, and agency fees have also risen rapidly, tens of millions of yuan. But once the agent gets the right hand, it will immediately start investment promotion activities and attract the agents with the huge influence of the brand. The total generation only needs to place orders, deliver goods and collect agency fees at the headquarters, or even after the first charge. In this way, large sums of money were quickly gathered in a short time, followed by a special store or shop in the country. According to the general agent of a brand China, under normal circumstances, net assets can turn 3 to 5 times in 2 years.

This mode of agency was quickly developed to the extreme by smart businessmen. Once a Wenzhou people invested hundreds of millions of yuan to sign more than 100 European brands. And Wenzhou enterprises have set up specialized teams to search potential brands around the world.

Guo Binwen believes that in the 90s of last century, Guangdong shoe enterprises had been faced with a good opportunity to make a brand. In the two or three years before 2000, there were some famous brands in Guangdong Jiangmen area, for example, when the national retail sale in 1997, the "Alibaba" brand shoes were very popular. But after 2000, the shoe factory in Guangdong began to pick up orders very well, and a large number of foreigners orders were thrown over, so we were very happy to do the foundry work for foreigners. After all, it's hard to make a brand, so it's not like making products.

At present, Zhongshan's 3A shoe industry is the most influential one in Guangdong province. The company was founded in 1987 as one of the earliest international famous brand agents and promotion companies in China. Now it has become the distributor of many famous brands in Europe, including Dupont, Italy, Italy, Italy, and so on.

In this way, the brand marketing channels of the major shopping malls have been controlled by the Wenzhou people. It is hard for Guangdong shoe enterprises to make a brand again.

It is not difficult to say difficult, because Wenzhou's advantage lies in its marketing and brand building capabilities. The advantage of Guangzhou lies in the integration of R & D and trend information. Therefore, Guangzhou's products have always been at the forefront of fashion in product R & D, design and production.

　 Brand: self creation or agency?

Yin Jiqi, the Dongguan Qisheng shoe industry, is one of the few people who have long vision. He has gone through the high-end line from the beginning, and only orders for high-end shoes. This means that he has lost many opportunities to make money. At the same time, he was very aware of the importance of brand. However, to build a brand from scratch, it is not yet known when to enter the threshold of high-end shopping malls, so he thought of the curve "licensing" mode.

In 2002, Yin Jiqi bought the brand of "Dibao - ah" brand in Italy, the world's shoemaking kingdom. Buyout brands are largely aimed at getting tickets to high-end stores in China. Qisheng entered the high-end shopping malls as expected, but difficulties followed Yin Jiqi's expectations. His product was placed in the last counter at the beginning of the store. The location was not good, the product price was high, and the lack of popularity in the country, its own operation experience and confidence were not enough. The first month only sold 60 pairs of shoes, far from the high store rent.

In contrast, domestic brands are often broken off because of too little production, and orders for OEM are frequently shipped out one by one. For a long time, the domestic sales situation of Qisheng footwear industry was in a state of loss, and basically the money earned by the foundry was used to fill the hole. "Take a long view and adapt to the needs process." In the process of burning money in the early days, Yin Jiqi often inflate himself like this.

In 2008, the Beijing Olympic Organizing Committee issued the order of 2000 pairs of leather shoes for Qisheng shoe industry. The Qisheng shoe industry made the leather shoes of the Chinese delegation and the Chinese Olympic Organizing Committee officials at the opening ceremony of the Beijing Olympic Games, which greatly enhanced the brand awareness of the enterprise.

In the same year, when the global financial crisis broke out, many export foundry factories around Yin Jiqi closed down due to shrinking international orders. From this year on, he was glad that he had taken a step in advance and made it more determined to take the route of his own brand.

Since creating brands is so difficult, is there no other successful path to follow? Perhaps BELLE will have more say in building brands.

Liu Xiaoyi, general manager of BELLE Dongguan branch, said that BELLE launched the market in 1993, from small to large, from weak to strong. Up to now, the loyalty of consumers to BELLE brand is the most proud thing for them.

"First, consumers must try your brand. After one to two years, consumers will feel the quality of your product." Liu Xiaoyi said that 10 brands in Dongguan BELLE group are selling, but not all brands are recognized by consumers because it takes time. But the situation of BELLE is better because it is a multi brand business. Many new listed brands can be promoted by relying on the brand effect of the old brands, such as selling in the same store and guiding consumers, but some independent brands do not have such advantages at all, so it takes longer.

Industry analysts pointed out that the impact of the brand is not enough, then the sales of single stores will not be too high. Some central shopping malls will set a threshold for sales to enter the mall brand. If they fail to reach the threshold, they will affect the revenue of the mall. So some brands can only look up to the mall, but some of BELLE's original brands can be driven by BELLE. In Dongguan, the total sales volume of BELLE's 10 sub brands is 80 million yuan, while BELLE's main brand has 30 million yuan. Without BELLE's promotion, the other sub brands probably won't taste that 50 million yuan cake at all. "Franchisees are also a reason. Who will join us without influence?"

Now, another problem faced by Guangdong shoe enterprises is that the government encourages enterprises to create brands, but thousands of enterprises are made. It is not realistic to make brands. As a result, folk wisdom emerged again.

In June 2010, seven shareholders who had rich experience in shoe production and marketing were invested in the establishment of Guangdong Xiang AI Shoes Co., Ltd. In a short time, Xiang Lian, a brand co founded by seven companies, has been well received by consumers at home and abroad. At present, the company has opened more than 50 terminal chain stores in Guangdong, Hainan and other places, and plans to expand more than 300 stores in Guangdong in three years, expand to 600 stores in the whole country, and strive to develop into a shoe industry group that integrates resources listing and financing in 3 to 5 years.

In any case, making brand has become an important choice for Guangdong shoe enterprises, because only the brand will bring excess profits, only the brand will bring enormous integration power.