Lining Light Assets Push Forward Value Chain Integration

In August 8, 2008, the opening of the Beijing Olympic Games witnessed Zhou Songqing's excitement when Lining, a gymnastic prince in China, began to walk around the bird's nest.

Unlike the ordinary people, Zhou Songqing's excitement is accompanied by a sense of accomplishment and glory. In his view, Lining is already part of Jingmen.

Second days after the opening ceremony, the Jingmen municipal government signed a cooperation agreement with the Li Ning Co established by the gymnastic prince, and established the Lining (Jingmen) Industrial Park, covering an area of 3200 mu, with a total investment of RMB 3 billion 200 million yuan. The park plan was put into operation in September 2009 and completed in December 2013.

This is the first large-scale sporting goods industrial park in the country, which is supported by the government, led by brand players and jointly invested by manufacturers.

Zhou Songqing, Jingmen's executive vice mayor of Jingmen, is also the deputy director general of the Lining project service office established by the Jingmen municipal government. The chief commander is Wang Ling, mayor of Jingmen.

Beginning in July 2008, the project team ran between Lining's headquarters in Beijing and Jingmen. "During this period, our party secretary went to the Li Ning Co headquarters once, and the mayor went to two times, and the other executives were frequent."

Zhou said.

The purpose of the working group is clear, and strive for the Lining Industrial Park to settle in Jingmen.

From the geographical location, Jingmen is located in the center of Hubei Province, with a square area of 12 thousand square kilometers. It is a prefecture level city with a population of about 3 million. In 2008, GDP is expected to be 50 billion, and its economic strength is only above average in 17 cities and prefectures in Hubei province.

Previously, the "1+8" city circle planned by Hubei province was not listed in Jingmen. Correspondingly, the two cities adjacent to Xiangfan and Yichang were the two provincial sub centers identified in the Hubei development plan.

Obviously, Jingmen is not in the chessboard of the new strategic layout of Hubei province. "We realized that we want to differentiate", Zhou Songqing said, and striving for the Lining project to settle in Jingmen became the "big project" of Jingmen in 2008.

For Jingmen, the industrial park project can revitalize the existing textile industry of 300 thousand spindles on the one hand. On the other hand, it will spread the brand made by Jingmen with the help of Lining's brand.

There is no doubt that compared with the counties and cities in Guangdong and Jiangsu, which are famous for their manufacturing industry, the "made in Jingmen" is really inadequate.

Even so, Li Ning Co has rebuilt its focus on the development of Jingmen in the next 5 years, and guided its production suppliers and raw materials suppliers in Guangdong, Fujian and Jiangsu to the West.

Luo Xiangyang is a member of West Bank. He is general manager of Hubei kinetic energy Sports Products Co., Ltd. (hereinafter referred to as Hubei kinetic energy), and a small shareholder.

Hubei kinetic energy is a registered company established in September this year, which mainly produces sportswear.

Before he came to Jingmen, Luo lived in Guangdong Shunde for a long time. His Shunde Yongda Garment Co., Ltd. (hereinafter referred to as "Yongda") provided OEM services for knitted sportswear for Li Ning Co. In terms of knitted products, Yongda had about 30% orders for Lining. Another company in the same area, Shunde Qin Shun Knitting Co., Ltd. (hereinafter referred to as "Qin Shun") began to produce sportswear for Li Ning Co OEM 10 years ago.

For a long time, Yongda and Qin Shun compete with each other. After all, if the same cake is separated by a little more, the rest of the people can only tighten their belts and eat less.

In the second half of 2008, there were some changes in the relationship between the two companies in the same district. From competition to competition, there were some good friends.

They joined the KEE zipper company and fabric supplier of Foshan Nanhai, Shanghai crown Tai Hong, and jointly established Hubei kinetic energy. Among them, Yongda owns 40% shares, and has 30% shares, and the remaining two share the remaining 30% shares.

After arriving in Jingmen, Luo Xiangyang, to be more precise, is the management of Hubei's kinetic energy, and has begun to prepare two things. One is to prepare for building a factory in the Lining Industrial Park, the second is to find opportunities for expansion of production capacity.

In November, Hubei kinetic energy acquired two local sports apparel factories in Jingmen, which provided some OEM products for Conway before.

"They also turn back from Guangdong to Jingmen, and the boss is from Jingmen.

Basically, we found two factories in November and decided to buy them that month. "

Luo Xiangyang said.

In less than two weeks, after adjusting the management mode and retraining workers, the two factories that were acquired were pformed into Li Ning Co suppliers.

At the same time, Hubei kinetic energy signed the project entry area agreement in November.

When Hubei entered into the agreement with the kinetic energy of Hubei, there was also a company -- the Fu Li De Shoes Co., Ltd. (hereinafter referred to as: "Fu Li De"), the latter mainly producing sports shoes.

Similar to Hubei's kinetic energy, it is also the pformation of the southern Guangdong and Fujian companies moving northward and westward.

Frid is made up of Guangdong Foshan Li Tian Shoes Co., Ltd., which is made of finished shoes.

Compared with three companies undertaking Lining business volume, three Holdings 60%, 15% and 25% respectively.

Before setting up a joint venture, these three companies are Lining's core suppliers.

"Yide is an upstream supplier of finished shoe manufacturing, so the relationship between the three companies is quite close before the joint venture."

Chen Tianwen said Chen Tianwen is assistant to Chairman of the company.

Luo Xiangyang remembers Li Ning Co's proposal to set up a new production base around July this year. At that time, the idea of Li Ning Co was to integrate some suppliers. In the next 5 years, the new production base could consume about 40%-50% of Li Ning Co's orders and build a brand-new logistics base in the base.

In recent years, the total cost increase has allowed manufacturers in the Pearl River Delta to seriously consider the possibility of "gradient pfer", and will shift some of the less competitive manufacturing businesses to the central and western regions.

However, the Setback Experience of the forerunners caused many companies to worry about it.

Yongda and Li Tian and other companies have also considered whether to go to the west to get gold. After all, Yu Yuan, OEM's biggest sports product producer in Dongguan, has begun to expand its capacity in Jiangxi and Hubei.

However, compared with Yuyuan, Li Tian and Yongda can only be regarded as small companies. Even if they are interested in westbound travel, they may not be able to get "courtesy".

Although the proposal of the big customer was a bit sudden, he quickly calculated that the overall cost could be reduced by at least 10%-15%. At the same time, the Jingmen municipal government promised to provide enough labor for the industrial park, and more importantly, "the Li Ning Co indicated that they would come to protect the order of the industrial park." at that time, many suppliers wanted to join it. Luo Xiangyang recalled, "we have gone through the screening process. On the one hand, they will consider our strength, on the other hand, it is very important for Li Ning Co to be loyal."

Reconstruction is bound to touch vested interests, so it is unavoidable to run into each other when deciding the entry list. "At first, it was said that three garment factories went together, and the result of the negotiation was two garments, a zipper company and a fabric company."

Luo Xiangyang said.

Even after the establishment of a joint venture in several companies, "every time a board of directors is opened, it will be noisy" and normal.

But when we open the door, we smile together.

In fact, in the overall westward movement, Li Ning Co undoubtedly holds the greatest say.

For the 7 suppliers mentioned above, the orders from Lining can basically contribute to the turnover of 70%-80%. On the contrary, for Lining, each company is just a corner of its production layout. Taking Yongda as an example, its turnover is about 200 million yuan in 2007.

All suppliers said that without Li Ning Co's commitment to supply future orders in cooperation agreements, they would not be easily "displaced".

So, for business, under the leadership of Li Ning Co, everything can be pushed forward quickly.

In the year before the move to "move" to the supplier, the CEO Zhang Zhiyong and his team of Li Ning Co began planning the 2009-2013 year five year plan, including the Jingmen Industrial Park.

"Our last five year plan ended in 2008, so in the middle of 2007, we began to think about the planning for the next 5 years, and at the end of the year, we approved the approval of the board of directors."

In 2008, in addition to focusing on some issues related to the Olympic Games, Zhang Zhiyong basically stopped asking questions about production and marketing.

Before that, Li Ning Co set the 2014 -2018 as the stage of "Lining's comprehensive internationalization". For the Lining brand, if we want to consolidate the original local advantage and pform it into a sustainable competitive power that is compatible with Nike and Adidas, the internationalization trend is inevitable.

China's market capacity can provide space for sporting goods manufacturers to grow at a stage of growth. However, if we want to achieve longer performance growth, such as thirty or fifty years, a strong brand soul is indispensable, and internationalization is an important condition for a strong sports brand.

In the past, the past 5 years will be very critical if we need to prepare everything in 2014 or not.

Zhang Zhiyong set three goals for the coming 5 years: consumer goals, product goals, and matching backstage construction, that is, supply chain goals.

Zhang Zhiyong's two top goals are inseparable from creativity. Whether it's brand building or product design, creativity is like the lilac girl in the rain lane. It is beautiful but scarce. At this time, ZARA's success in the world has led many people to see the synergy effect of the value chain.

As a typical light asset operation company, while analyzing ZARA, Li Ning Co's decision makers began to consider how to reform the original supply chain to improve the efficiency of capital use in the value chain.

Which experience of ZARA can be used for reference?

In the end, Zhang Zhiyong regarded "pformation of wholesale logistics to retail logistics" as the focus of supply chain pformation in the next 5 years.

"We still use the big DC (distribution center / warehouse) to the logistics framework of small DC.

The problem is that as long as consumers do not consume, the previous circulation is invalid, and we hope to shorten the circulation time of commodities.

Zhang Zhiyong said, "for example, we used 70 days from the next order to the real listing of products, can I shorten the time to 50 days or 40 days, and ROE (asset yield) is very strong.

We aim at that.

The establishment of an industrial park around Li Ning Co, which has both production and logistics functions, is regarded as a solution to the above problems.

If we carefully study the ZARA mode, the park mode or the invisible Inditex group's value chain collaboration mode will emerge.

ZARA's extreme speed supply chain benefits from the supply chain integration of parent company Inditex group. Within a park or a group, ZARA can complete the whole process of design, purchase, production, distribution and so on, and achieve the end to end logistics distribution from production to shops.

Unlike Inditex, the Li Ning Co advocates "light assets", using third party partners from production to logistics to retail.

How to guide partners in a virtual value chain to move in the same direction step by step is not achieved by "moving and integrating" in space.

"In the past two years, we have been pushing forward the integration of value chains, but this is not a solution to Li Ning Co's internal pformation. It can't happen overnight."

Zhang Zhiyong sighed.

Yang Jing: editor in charge