How Should Brand Clothing Enterprises Cope With Rising Costs?

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Special guest: Ding Hui, chairman of Limited by Share Ltd, Fujian

Cao Shengkui, chairman of Beijing Carmen apparel Co., Ltd.

Chen Guoqiang, deputy director of the Institute of industrial economics, China Apparel Association

Topic: since last year, there has been a general increase in wages. The situation in the central and western regions seems to be more than that on the coast. Do brands feel pressure?

Ding Hui: there must be some pressure. But for the odd, there is no pressure on other traditional clothing brands. Because the company does not produce, all the goods are produced under the designated suppliers. Most of the recruits are office workers and shop salesmen. To a certain extent, they get rid of the predicament of traditional clothing enterprises' dependence on labor force.

Cao Shengkui: the upward pressure on labour is still obvious.

The salary level demanded by new recruits has increased by about 20%.

Because of the increase in labor costs, processing fees in Beijing have increased by 20%~30%, so many of our company's processing orders have shifted to areas with relatively low wage levels in other provinces.

Chen Guoqiang: the rising labor cost is a common phenomenon in China. The labor cost in the central and western regions has risen more than that in the coastal areas. Because the pfer of industries this year has made the garment enterprises in the Midwest develop faster than the East, and the labor demand is large, so the labor cost will also rise.

But we must see clearly that the rise of labor costs is an inevitable trend. China's mode of development driven by low labor costs has come to a turning point. China's demographic dividend is coming to an end. We must realize this point in order to cope with the future development.

Topic two recently, although cotton prices have fallen, but clothing prices have not risen, how do you see this phenomenon? How can consumers be loyal to the rising clothing brands?

Ding Hui: the rise in clothing prices is not only a result of the rise of raw materials, but also a rise in the price of cotton, which has led to almost all of the fast rising prices of clothing raw materials. The rise in wage and welfare costs and the decrease in the number of labour force have also increased labor costs; the rise in commercial rents and the increase in pport prices have increased business costs; water and electricity and other resource prices have risen and the tight supply of energy has increased the manufacturing costs of high buildings; several adjusted fiscal policies have raised the cost of industrial credit.

So I think cotton price is falling, but the price of clothing is not falling, but it is an inevitable phenomenon.

In order for consumers to be loyal to the continuously rising clothing brands, the clothing brands should find breakthroughs from themselves.

The most important thing is to do well in products and services, and establish brand reputation.

In the meantime, with the help of the consumer data, members of the company will analyze consumer demand and introduce products that are closely related to popular trends but meet the needs of the mass consumer. On the other hand, we must constantly improve and improve customer service, do well in emotional support, and provide customers with more than expected services.

In fact, one of the most obvious phenomena in the clothing industry is that once the product rises to brand, the motivation for customers to buy really is emotion rather than product itself.

In this way, enterprise marketing should leap from traditional marketing mode to marketing emotional strategy.

Cao Shengkui: the cotton price has dropped, but it has not been reflected in the finished cloth market. The price of the finished goods market has not gone down because of the rising price level, but there is an upward trend.

Therefore, the fall in cotton prices will not soon be pmitted to the clothing market.

Although consumers feel that the price of clothing is higher than before, consumers can understand it because of the rise of comprehensive price level, but they will affect their purchasing power.

So this year, clothing enterprises feel that the growth rate of sales has slowed down, the profit level has declined, and the market pressure has increased.

Brand loyalty is particularly important in such a market environment.

In addition to making the greatest efforts to reduce costs, Brand Company should appropriately increase investment in brand building.

We will continuously and unremittingly create brand unique charm and enhance brand awareness and reputation.

Chen Guoqiang: cotton prices are only part of the cost of raw materials, and the cost of raw materials is only part of the cost of the enterprise.

Now, for the operation of enterprises, labor costs, energy costs, financing costs, product sales costs and so on are showing an upward trend.

Of course, this is consistent with the rising costs of the whole society.

I believe that the rise in clothing prices is not necessarily related to consumer loyalty. Now we are faced with the return of agricultural and sideline products. Should the price of our clothing products return? We have already bid farewell to the era of low cost and low price in the past. We should think about how to increase the added value of brand in the era of high cost, so that the brand can have a reasonable relationship with its price.

Topic three: how do enterprises cope with the rise of costs? Is it the only way to increase the cost?

Ding Hui: in the face of rising costs, price increases have become inevitable, but not only a price increase can digest the rise of costs, but also can be alleviated through the refinement and upgrading of internal operation and management.

In the face of rising costs, the company has made full use of its advantages in the business model through its "membership database marketing" and various low-cost and efficient information technology.

Specifically, first of all, "member database marketing" is to accurately grasp the needs of members, to achieve customer demand oriented commodity supply mode, and reduce the risk of commodity development and supply.

Secondly, we should reduce intermediate links, reduce operating costs, take the terminal as the guide, develop the downstream first, then gradually penetrate upstream, and establish a vertical supply chain.

The whole chain is placed in a community of interests, without any intermediate links, which achieves quick response and cost control, and makes the retail price of the company have obvious competitive advantages.

Cao Shengkui: we can not simply use the price increase to digest the rising cost.

We can first expand market share, increase sales and average average cost.

Two is to improve the design level, so that customers feel value for money.

The three is to consider the cost reduction factors in the design, so as to reduce the price of clothing as much as possible.

Chen Guoqiang: the clothing industry is indeed a labor-intensive industry, but we should make it clear that China's current garment industry's labor efficiency and value-added products are not high.

We should work hard to improve labor productivity, raise the level of mechanization, reduce labor costs and reduce the cost of sales links.

Moreover, as we all know, sales are the biggest profit in clothing. We can not reduce our cost by thinking only in the production process. We should consider how we can improve the reaction speed, how to reduce the cost in circulation, and how to raise the ratio of sales to sales.

Topic four: what are your expectations for the future development of garment industry? What challenges will Chinese brand enterprises face before rising costs, and how to deal with them?

Ding Hui: China's clothing industry is in the post crisis era of industry recovery and the starting stage of pattern pformation.

In the future, the improvement of the industry is intertwined with various new and old constraints.

I combine some professional news reports and my own business operation to analyze the future of China's clothing industry will face the following challenges:

First, it may cause the whole industry to fall short of the overall operating rate due to "recruitment difficulties".

Although many garment enterprises are gradually moving from independent production to brand operation and foundry production, the supply chain problems of China's garment industry will gradually increase with the processing requirements of "outsourcing", and some production enterprises can not adapt to the fast and accurate mode of supply, which restricts the fast operation of the apparel brand supply chain.

At the same time, many garment enterprises are gradually developing towards the direction of commercial brands. However, their ability to control terminal channels is insufficient, talent training is not enough, and there is no standardized chain operation system.

Secondly, the rising cost is still an important constraint factor in the development of China's garment industry.

As I said before, the irrational rise in cotton prices has led to a rapid increase in the price of other raw materials, the increasing cost of labor, the rising cost of commercial land rent, the increase in the price of logistics and the increase in the price of resources such as water and electricity, including the fluctuation of the macro fiscal policy to the credit cost of the industry and so on.

Taking all these factors into account, the rising cost and the further shortage of resources are adjusting the supply capability and structure of the industry.

At the same time, many international clothing brands aim at the big cake in the Chinese market and accelerate landing in the Chinese market, such as ZARA in Spain and UNIQLO in Japan, and have extended to the two or three line market.

Competition in the domestic market will become fiercer and more uncertain, and market volatility will also emerge.

In addition, the domestic demand market has been gradually out of the doldrums, especially the two or three line city market has developed rapidly, and has become the main force and strong growth point to stimulate domestic demand growth. But consumers' expectations for inflation are strong. Although the price has been released in the financial crisis, it is not that all enterprises can solve the cost pressure through the price increase. Therefore, some enterprises will be eliminated before the rigid rising cost.

To sum up, in the face of these difficulties, I believe that garment enterprises should start from the pformation and take the road of new industrialization, and try to find a way out by changing the way of development, adjusting and upgrading the industrial structure and changing the business mode.

Government departments and trade associations are more involved in guiding clothing enterprises, setting up platforms for enterprises and improving supply chain management. Enterprises themselves must also work hard to improve their internal strength, enhance their efforts in personnel training, terminal management, brand building, supply chain management, commodity research and development, etc., borrow more information technology to improve management and management, and constantly enhance their competitiveness, breaking through from the red sea of China's garment industry.

Cao Shengkui: any price increase will make the bad management enterprises withdraw from the market, which will enable competitive enterprises to experience and develop.

The clothing industry is more standardized in the process of constantly improving the fittest.

Excellent clothing brands can become the backbone of the market, increase the reputation of the market in the process of growth, and establish brand loyalty among customers.

Therefore, for garment enterprises, in the case of rising costs and fierce competition, we should strengthen brand building.

Chen Guoqiang: the rising cost of Chinese clothing brand is an inevitable trend.

What clothing companies need to consider now is how to improve themselves.

Improve labor productivity, reduce the cost of circulation, and change the traditional sales mode.

In the past, we were developing at the cost of low labor force and energy consumption, but we are facing the development stage of entering the brand's comprehensive upgrading. The brand has entered the modern management mode, and we need to really enhance ourselves from management, enhance effective production, raise the ratio of production and marketing, and enhance the competitiveness of the brand itself.