What Does AOKANG Group Meet With BELLE International?

In 2007, the Chinese footwear market was very lively. BELLE's listing and subsequent heavyweight acquisitions scrambled the original "calm" market competition in China. Subsequently, AOKANG followed up the acquisition of "Wanli Wei" in Italy in a disguised form.

Entering the 2008, with the appreciation of the exchange rate, the external factors such as labor force and raw materials rising, the situation of Chinese shoe enterprises is becoming increasingly difficult. Therefore, the industry integration shuffle is becoming more and more intense. People are beginning to care about who will win in this pain.

What are the characteristics of market competition?

And in the face of BELLE's aggressive offensive, who will come forward?

A few days ago, at the fourth China West footwear industry international exposition, our reporter gave an exclusive interview with Wang Zhentao, President of AOKANG group, in order to visit AOKANG's development strategy and its basic judgement on future competition pattern from AOKANG's recent series of actions, such as building the West shoe capital and the power market channel.

Investing in the West: entrepreneurs need to see the long term reporters: Why did they choose to invest in the western shoes city in Bishan, Chongqing?

Wang Zhentao: Frankly speaking, 5 years ago when I came to Bishan County, I came from a preliminary idea.

First of all, from an industrial perspective, 5 years ago, we thought there would be a bigger shift in the domestic market.

This is the conclusion drawn from my analysis of the changes in domestic and foreign markets.

We can see that the speed of development in the international shoe market has been very high. But back to the 50 and 60s of last century, we can find that the most developed area of shoe industry was in Italy, and then gradually pferred to Germany, Japan and Korea.

5 years ago, few of us realized that China would go through such industries.

But at that time we had a hunch that the domestic market would certainly shift from the developed eastern coastal areas to the backward areas in the central and western regions, like production and consumption.

However, the process of China's industrial gradient pfer may not be like other countries, not after 20 years of development. At present, we can still see that the developed areas of footwear industry and the fastest growing are still the eastern coastal areas such as Wenzhou and Guangzhou.

Therefore, perhaps the process of industrial pfer will take longer.

Reporter: at present, the industry has discussed more about the industry pfer to India and some Southeast Asian countries. How do you view this trend?

Wang Zhentao: not long ago, I received 8 investors from the footwear industry in Italy. While investing in China, they also invested in India and Vietnam.

But they told me that the production of 20 production lines in India is not as good as AOKANG's five production lines, no matter from quality, output or technology.

In Vietnam and India, they believe that there is a cheaper labor force, but the obvious point is that the shoe industry is far less than China in India and Vietnam, and at the same time, the labor force in Vietnam and India is at 30%, and the shortage of labor in the next five and ten years will be an inevitable reality.

Therefore, promoting the westward shift of the eastern coastal industry is an opportunity for China's footwear industry.

Encountering cost pressure: "shoe industry winter" has arrived. Reporter: what do you think of the phenomenon of many coastal shoe companies closing and changing this year?

Wang Zhentao: this year I have a deep feeling that the real winter of Chinese shoe industry has come.

First of all, from the point of view of foreign trade, the depreciation of the US dollar is quite large.

Followed by the tax rebate, last year 13%, 11% this year, two percentage points down within a year. If it is ordered in 2007, the profits of these enterprises will obviously become very low, and other enterprises will become more and more difficult to do.

The third aspect is indeed related to the labor law.

Last week, a special director of the Ministry of labor has devoted a special exchange. The shoe enterprises are labor intensive enterprises.

However, I first think that the labour law itself is not a problem, it is good, but it may not be appropriate at the right time.

For us, the labor law has been launched sooner or later than it is now.

From the point of view of the employee law, some people think that this is an opportunity, so many people choose to leave.

If it is 2002, there will be no pay for processing or leaving.

But now employees can ask for compensation from you. It is said that some enterprises compensate 130 thousand.

For enterprises, especially small and medium-sized enterprises, this influence is very great.

At present, many enterprises in the eastern coastal areas, including Wenzhou enterprises, are very sad.

Reporter: under such a severe external environment, we can see that the trend of integration of domestic footwear industry is intensifying. What are the actions and plans of AOKANG in this respect?

Wang Zhentao: at present, what AOKANG is doing is to combine the advantages of wanwade and AOKANG's operation integration. First, Wanli Wei's brand reputation in Italy is very high; the two is Wanli Wei is positioning high-end brand shoes in Italy.

AOKANG will take advantage of these two resources to carry out similar packaging and integration with Kappa and promote it with China's market.

Force shopping mall channel: BELLE may be more worried about our reporter: recently BELLE formally completed the acquisition of beautiful treasure, plus BELLE's acquisition of sago and a series of frequent efforts to force men's shoes to see whether AOKANG has brought pressure?

Wang Zhentao: Frankly speaking, the pressure is really great.

However, from the positioning of the industry itself, BELLE shoes for women, 90% for women's shoes, and AOKANG for men's shoes, more than 65% for men's shoes, this is the first difference; second different competition channels are different, BELLE more than 85% into the mall, AOKANG 85% or more as a franchised store, therefore, for BELLE and AOKANG both sides have a large market space.

As for the market competition in the future, we also want to eat some braised pork. After that, the expansion of AOKANG's channels will enhance the expansion of shopping malls, including many of us going to the mall last year, such as the department stores of Nanchang department store.

Shopping mall is the main direction for AOKANG to focus on the layout. We will also buy some brands to enter the shopping mall, including the cooperation we have seen with Wanli Wade.

Of course, from the point of view of market competition, there is still some competition with BELLE.

Reporter: at present, almost half of the major shopping malls in shopping malls are owned by BELLE group. How do you view this situation?

Wang Zhentao: no shopping malls would like to see all brands in their stores come from the same business. In fact, some stores have begun to contact us and hope that we will be stationed.

Before that, we were the main channel to store stores. Now we have to enter the shopping mall vigorously. I think this is easier for us. BELLE may be more worried about us.

Reporter: there is a view that BELLE's rapid expansion may also have hidden dangers. How do you view this view?

Wang Zhentao: any rapid expansion requires effective matching of management and talent. If these can not keep up, the problem will follow.

Reporter: BELLE's rapid expansion after its listing seems to show the future wave of integration of China's footwear industry. In your opinion, will there be a large-scale wave of integration in China's footwear industry in the next few years?

Wang Zhentao: BELLE's merger and acquisition explains from the external environment of the enterprise that the integration of the shoe market has really arrived.

In the future, there may be several major footwear industry groups. Taking into account factors such as cultural differences in different regions, there may be a big group like Wenzhou. Fujian will come out one after another. Guangdong will have another one, because the shoe industry in these places is relatively developed, and there are differences in culture and consumption habits.

Reporter: in your opinion, which group will emerge in Wenzhou?

Wang Zhentao: it's hard to say now. After 5 years, you may see more clearly.

Reporter: BELLE's listing has brought a great impact on China's footwear industry. Chinese shoe companies have also seen the power of capital operation. When will AOKANG be listed?

Wang Zhentao: after 20 years of making shoes, AOKANG's strategy is still stronger and bigger.

I am thinking that the future AOKANG must be healthy first, from a small scale to a large-scale, standardized enterprise.

At present, AOKANG is fully planning to go public, but when to appear on the market will take a process, especially considering the norms of the enterprise.

Listing is really important. AOKANG will divestiture the whole shoe industry's production and marketing and pack it together, so that it can avoid many small problems.

Maybe soon, maybe one or two years, this is related to the whole environment of the country. If all aspects are normal, it should be very fast.