Jinjiang Shoe Industry: Behind The Success Of The "Shanzhai" And "Rich" Label

In Jinjiang, the once poor county level city, less than 10% of the farming population, has more than 600 thousand lives in the shoe manufacturing industry chain.

The total output value exceeds RMB 60 billion yuan.

Jinjiang makes fortunes at an amazing rate: 14 of the 1000 list of Hurun rich list in 2011 came directly from Jinjiang, almost entirely related to shoes and clothing.

The assets of the Ding Shizhong family are as high as 14 billion 500 million, the assets of XTEP's Ding Shui Bo 5 billion, the PEAK Xu Jingnan family and the 361 degree Ding Wuhao family assets also reach 4 billion 500 million and 3 billion 100 million respectively.

Ding Shizhong, the 42 year old Anta sports president, said that from "micro" to "small", from "small" to "big", there are different worries in different stages of growth.

American basketball legend Michael Jordan has brought Jordan sports to court, accusing the Jinjiang shoe company, which is waiting to be listed, used its name as a registered trademark without authorization.

"Shanzhai" and "rich side" are not a new "annoyance" in Jinjiang.

There are not only "Jordan", but also "Yao Ming", "Kobe" and "ADI king".

Scenery no longer

After the financial turmoil in 2008, the volume of foreign trade of footwear industry in Jinjiang sharply decreased, and the OEM orders of foreign brands shifted to Burma and Kampuchea. The domestic market was severely overcapacity, and the rise of labor costs and shortage of funds made many shoe factory owners unsustainable.

In two or three years, hundreds of shoe factories have been closed down in Jinjiang.

In terms of wealth alone, the assets of Ding Shizhong family, Ding Shuibo, Xu Jingnan family and Ding Wu family were 21 billion, 8 billion, 6 billion 800 million and 7 billion respectively in 2010.

"Not only is the footwear industry in Jinjiang, but the golden age of the entire manufacturing industry is over."

A shoe factory manager who has been engaged in shoe making industry for over 20 years in Jinjiang sighs.

According to southern weekly magazine, Jinjiang is big and small.

Almost the same family history.

Before and after the 90s of the last century, sports shoes entered the era of "lying and making money", especially for Nike ADI, so that locals saw the money market of sports shoes, and shoes business began to become popular.

Lv Qinghua, a professor at the Fujian business research center of Huaqiao University, believes that the commercial gene of Fu is planted abroad and sprouted in the country.

Jinjiang's first generation shoemaker entrepreneurs will surely have the smell of grass.

A copycat strategy similar to Jordan's famous trademark for sports is only the tip of the iceberg.

It is also destined that Jinjiang shoe makers need two or even three business ventures, from businessmen to entrepreneurs.

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Brand itch

"Jordan has been doing this for many years. In fact, everyone is of the same quality. It is a typical shoe manufacturer in Jinjiang. Jordan can see the shadow of a group of Jinjiang shoe companies.

As long as there are Nike, Jinjiang will have PEAK, gold lake, flying gram, Buick, Reebok has XTEP, Hongxing Erke's trademark is also changed from MIZUNO.

A local shoemaker said, "their idea is actually very simple, that is to do publicity. First, we should open up their fame."

There is a popular saying in Quanzhou: "bold ride on a dragon, ride a tiger, ride a cat on a rabbit".

XTEP, who spent 4 million 700 thousand to invite Nicholas Tse to endorse, soon set a record of selling 1 million 200 thousand pairs of single shoe products.

Anta's stores reached more than 2000 in 2004, reaching 4000 after two years.

PEAK, whose total assets are only a few hundred million, hit the advertisement at Yao Ming TOYOTA center in Houston. Sales broke 1 billion in a few years.

Even after changing the name of 361 degrees, the market share has been among the top five in the country.

Lv Qinghua believes that the famous shoe enterprises in Jinjiang can achieve great success in establishing brands. Even if there are hidden dangers of blind money smashing and Shanzhai, after all, there are several well-known shoe companies in China, and a number of excellent entrepreneurs have also emerged.

But as a low-end consumer goods, the initial visibility is easy to digest, and these enterprises are less well-known.

It is the fundamental problem that the product, the service and the image of the enterprise can not match.

"Enterprises have crossed the brand threshold, so they must not stop."

Lu said.

Capital puzzle

Like many traditional business groups in China, Fujian merchants have a tradition of inherit their father's career.

Ding Jiantong's son Ding Wu has fully taken over 361 degrees a few years ago.

In 2000, Xu Jingnan, 45, took the eldest son Xu Zhihua from HUAWEI to PEAK, and PEAK entered the TOYOTA center. It was Xu Zhihua's idea.

"There are hundreds of billions of Companies in Jinjiang, but there are few more.

They have a natural conflict with capital operation, especially for stocks and real estate.

Most people's idea is even at a loss, at least the factory machinery is still there.

A senior executive who made shoes and clothing raw materials business in Jinjiang said.

His assets are close to 1 billion, but he has never considered listing, because "his own capital is fully operational. Once a listed company is someone else," he said that if he bought land, he would only rent the plant.

In 2007, Anta listed on HKEx at HK $5.28.

Before and after the 2008 Beijing Olympic Games, Jinjiang shoe enterprises entered the capital market one after another, XTEP, 361 degrees,

Listed in Hongkong, Hongxing Erke and Xi De long are listed in Singapore.

In a few years, the listed companies related to footwear industry in Jinjiang rapidly expanded to more than 20. If not for infringement cases, Jordan sports will also be landing at Shanghai stock exchange this year.

By 2010, more than 7000 Anta, PEAK and 361 degree stores have been listed.

"For those of us in the industry, we don't see how many branches they have, whether they are listed companies or not. They only look at capital and performance."

Zhang Wanquan runs foundry factories in Quanzhou, and many of the big brands are his clients.

He said that if an enterprise has the strength, the word of mouth can be seen. "Now there are many problems in the gold chain of many listed footwear companies. Some of them are unwilling to cooperate with OEM, including suppliers of raw materials. They are required to pay cash, and only a few funds are healthy."

Jinjiang style turn

Tan Ke, an analyst with Dongxing's textile and garment industry, believes that the convergence of Jinjiang brand positioning and operation mode has led to their respective lack of characteristics, and the ability of enterprises to differ little.

The enterprises in the early stage are familiar with the way of success of the leading enterprises, so long as they can grasp the growth opportunities of the industry, they can catch up quickly.

When the industry enters the adjustment period, the competition pattern is solidified, which makes it difficult for these brands to produce a real breakout.

From open shop, brand building to listing and internationalization.

Almost all of them are done at the same time, but mutual imitation between enterprises does not enhance communication among employers.

"Basically, there is not much interaction between Jinjiang enterprises, there is neither favor nor hatred, unlike Zhejiang companies.

Jinjiang enterprises are doing their own things. They are alone in their respective positions, and no one can afford them.

A Jinjiang businessman who has been engaged in shoe industry for many years said.

"As family businesses, many bosses already have the sense of introducing foreign managers," said Liu Mingyong, an executive who listed footwear companies in Jinjiang.

But not completely, the managers' living conditions are not very optimistic. They can not be tied up in the enterprise, involving the issue of authorization, trust, regional culture, and the concept of an entrepreneur.

A shoe business owner said with great interest: "maybe only when the tide goes out, do we know who wears clothes and who is naked."