Ma Yun: Chinese Traditional OEM Manufacturers Are Not "Fake" Problems.

"But he doesn't wear any clothes!" Andersen's fairy tale "the emperor's new clothes" is circulating around the world, and Ma Yunzheng has become the brave boy who has broken the delicate relationship between China's OEM (Foundry) enterprises and the world's big brands. Industry experts believe that the way out for Chinese enterprises is to shift from OEM to ODM (original design manufacturer) and OBM (the factory's own private brand) pformation and upgrading, and ultimately take the branding development route.

This is an inevitable choice of history, and the contradiction between this pformation and intellectual property is not irreconcilable.

It is understood that, for the pformation of China's manufacturing industry, Ma Yun was not long ago.

At the investor conference, he expressed his views on OEM. He thinks, "big brands usually use a lot of OEM. China has the most OEM in the world. They have no channels, but suddenly they find that they can sell products through the Internet.

Therefore, the production of genuine and imitation products may be the same factory. Their products are not necessarily inferior to the genuine ones, and they have more competitive prices. They are not facing intellectual property rights. They are faced with new business models. "

After that, some public opinions simply summed up this view as "fake goods are better than the quality of genuine goods", causing controversy.

Yesterday (June 23rd), chairman of Alibaba group's board of directors

The Wall Street journal published a signed article entitled "Alibaba's position and Reflection on the protection of intellectual property rights".

In this article, besides deeply explaining the position, attitude, resolution and persistence of Alibaba in terms of intellectual property protection, Ma stressed that the world is experiencing amazing changes, and Alibaba is responsible for sharing and reminding business partners to observe the new trend, trend and inner real thinking, and will continue to share in the future.

For some misunderstandings, it is a responsible attitude to express their true opinions clearly.

Ma Yun said, "I think it is necessary for me to express my true opinions more clearly, which is also responsible for all."

Ma Yun "restored" his view of OEM: the old links between brands and their foundries, and between brands and their existing customers are shifting and changing.

"That's the real point I want to express, and what I want to share and remind you: these new Internet based successful companies are bringing great impact to those brands based on traditional mature retail business models."

Ma Yun concluded, "this is a reality, and it is also the real background of my article being taken out of context."

Ma Yun once again reiterated and stressed Alibaba's stance and attitude towards the protection of intellectual property rights. "Alibaba will not tolerate connivance, but resolutely crack down on counterfeit goods.

Brands and their intellectual property rights must be protected.

The mission of Alibaba is to support those who innovate and invest in their own brands.

We have zero tolerance for infringing on other people's intellectual property rights, but not now, and not in the future.

Ma Yun also issued a strong appeal and warning - "this protection will be a long battle, and there is no shortcut to go because it is against greed of human nature."

I am more willing to tell the truth than to avoid it. "

Fact: most of the world's major brands are from China's OEM.

China has become the "world factory", which is an objective fact. Especially in the consumer goods such as clothing, shoes and caps, bags, 3C digital, household appliances and so on, China is the largest producer in the world, and the OEM mode also supports most of the famous brand goods in the world. In other words, these products are actually made in China.

In addition to the well-known case of apple, the survey shows that most of the international luxury and luxury goods in Europe and the United States are manufactured through China's OEM factory.

In the home appliance industry, even the enterprises of Haier, GREE and Midea, the famous household appliance brands in China, so far, 30%~40% still comes from OEM revenue.

For example, in 2015, the US group OEM business accounted for about 56000000000 yuan, accounting for 40% of the group's total revenue; for example, Whirlpool's production of refrigerators, air conditioners and washing machines were completed by Hisense.

In the field of clothing, according to the global luxury report, in 2009, 60% of the international luxury brand China has its own production line.

Mainly in two ways: one is to produce finished products in China; the other is to complete most of the processes in China and complete the final process in the brand country.

Most of these European and American luxury Chinese factories are concentrated in Dongguan, Shenzhen, Hangzhou, Wenzhou and Qingdao.

For example, the US traditional luxury brand Ralph Lauren orders the POLO series of Dongguan Lian Tai Group up to several hundred million yuan a year. Lian Tai has branches in Dongguan, Qingyuan and Jiangsu.

Guangdong produces more than 100 million shirts annually, most of which are in Tommy Hilfiger, French crocodile, Polo Ralph Lauren, Nike and other international brands.

In addition, China luggage and foundry enterprise "era leather goods" has 4 factories in Dongguan, providing OEM production for Prada, Fossil, Michael Kors, Coach and French crocodiles for a long time.

The era of cooperation with the largest customer Coach has reached 13 years, while Coach has reached 500 factories in China.

There are more small businesses that offer subcontract services to luxury goods through "second-hand orders".

Because of the hidden rules of the industry, luxury goods are often secretive about Chinese foundry production.

But it is an indisputable fact that Chinese factories have high quality OEM capabilities to achieve world brands.

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It is worth noting that in the long term cooperation with international brands, the production technology, management level and R & D capability of Chinese OEM enterprises have made considerable progress and have the standard of world-class factories.

It is these production and management bases that develop independent brands for China's OEM enterprises.

Brand provides a solid foundation.

In the field of home appliance 3C, in recent years, the rise of new consumer brands such as millet and music is also dependent on the solid foundation of China's manufacturing industry.

Status quo: big international card making big money, China OEM enterprise survival crisis

China is already a factory in the world, and Chinese workers have been working on behalf of the factories to produce international brands from apple to Nike day and night. However, China has not made profits. With the rise of labor prices in China, the OEM of these factories in China has even experienced a crisis.

Take Apple mobile phone as a typical OEM mode, for example, most of which are made by Chinese manufacturers. But Chinese consumers want to buy a mobile phone. They must first export to the United States and then import to China through customs. During the process, Chinese consumers paid a high "consumer price" and apple gained excess profits.

Taking iPhone profit distribution as an example, suppliers such as South Korea and the United States accounted for 4.7% and 2.4% of the profits respectively. China's labor cost accounted for only 1.8%, while Apple Corp accounted for 58.5% of the profits.

According to the "smile curve" put forward by Stan Shih, founder of Acer group, China's consumer goods manufacturing industry is mainly engaged in manufacturing and assembly. Due to its lack of independent brands, it lacks famous brands and has low profits.

For example, the world famous brand HugoBoss shirts manufactured by Chinese foundries cost up to $120 on the fifty-fourth Avenue in New York, of which more than 60% of the profits were given to sales channels, and 30% of them belonged to brand dealers, while China spent a lot of resources and laborious manufacturers only got 10% of the District.

Guangdong Dongguan Qiao hung shoe industry has produced many brands including Hello Kitty, New Balance, Paul Frank.

More than ten years ago, the profit of the foundry was "selling one pair and making a pair", but now it has been reduced to "selling one pair and making a profit".

A factory with a scale of more than 300 people, like Qiao Hong shoes, has to produce more than one hundred thousand pairs of shoes a month to keep balance.

"We are a small factory in Tongxiang, Zhejiang, with only more than 50 people, but we have been providing OEM orders for domestic and foreign brands. Domestic brands include YOUNGOR, Ordos, brother and Zhuang Ji. We have done all the luxury goods Armani and Versace abroad, and we only do the middle and high end orders."

Wang Zhenbo, the general manager of 100% cashmere, said that foreign orders were not made in the past, mainly by tax rebate, and the account period was very long. However, there was more trouble in making domestic orders, that is, all kinds of hidden rules about debts and human relations.

"Competition is very intense!" is Yu Yu Kuo Ping, director of the electricity supplier of Zhejiang Ginza bags Co., Ltd. (hereinafter referred to as "Ginza bags"), who has spoken most frequently in the interview. The company has been doing OEM for Samsonite and French ambassadors.

Yu Guoping is very sorry. In recent years, the fluctuation of foreign trade orders is very large. Many manufacturers around the world do not turn them off, they can only receive very few orders. Fortunately, their factories have not been affected too much by quality, and big customers are also very fixed.

In recent years, with the rise of labor costs in China, international brands have shifted some of their orders to Southeast Asia and Africa. China's export oriented OEM plant has been in a predicament of overcapacity.

For example, Putian, Fujian, the global shoe manufacturing base, exports shoes account for more than 50% of the demand for global sports shoes every year, exports amounted to more than 200 billion a year, Nike, ADI, Puma, CONVERSE, Reebok and other brands have set up OEM factories in Putian. With the large number of international orders pferred to Vietnam and Bangladesh, the original foreign trade foundries are in trouble.

Forced: the difficult pformation from OEM to OBM

From the perspective of industrial chain, China's foundry enterprises have been at the bottom of the market, and the basic labor cost is the most basic labor force. Under the background of rising labor prices, these enterprises are facing a crisis of survival.

In reality, these OEM enterprises will not continue to die on the OEM mode. Otherwise, they will start selling some OEM products under the risk of "counterfeit" such as trademarks and patent infringement.

It is against this background that in June 14th, Ma Yun, chairman of the board of directors of Alibaba group, extended an olive branch to these OEM and gave his solution -- business model. Ma Yun believes that the traditional Chinese OEM manufacturers are not faced with the "fake" problem of simple meaning, but the business mode. The Internet is becoming the most important way for the pformation of Chinese traditional OEM manufacturers.

In order to change the predicament, it is understood that some Chinese OEM enterprises have begun to try to take the branding way.

"Consumer preference is an objective existence. Whether luxury goods are expensive or the OEM products produced by OEM enterprises, they have their own market, brand self-produced and OEM OEM production. Because the same brand is used in the process of external sales, the final decision is mainly about product quality, and the quality of products is solid enough for OEM enterprises to move from behind the scenes to the stage."

Xue Shengwen, senior researcher of CIC consultant, pointed out.

However, due to the limitations of traditional mode, most of them are not successful.

For example, the domestic leading OEM enterprise, Guangdong Yida, has long been the top international garment brand OEM of CK and Hugo Boss.

In 2000, the "PYE" brand launched the first store in a shopping mall in Beijing. Its products are mainly men's and women's shirts, from 52 US dollars to 107 dollars, and the same production line with international brands. They are exactly the same from material and technology, and even some advanced materials and techniques will first be applied to domestic brands.

The price and location are brand names.

From the actual business situation, "faction" brand promotion and operation is not ideal.

Shandong's rouge, the domestic brand of "the top brand" produced by the top technology, is only a brand with little influence.

Shandong Ruyi group, a luxury Armani foundry, has been struggling to build its own brand. "Ruyi Western-style clothes" is not well known in China. In recent years, it has just taken the first step through acquiring Japanese brands.

Similarly, Ginza luggage is also taking the branding road. According to Yu Guoping's statement, the factory is pforming from 100% foreign trade foundry into a part of its own brand.

Since it is still in the process of pformation, its own brand is only a small part, most of which are still doing foreign trade foundry, but he hopes to gradually reduce the proportion of OEM in the future, so that the private brand can reach more than half or 60%, so that the enterprise's flexibility will be high, which includes premium space and product renewal.

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Opportunity: Internet becomes China's OEM breakthrough opportunity, intellectual property protection is not contradictory.

In the view of the industry, the future manufacturing industry is software defined manufacturing, and the future manufacturing industry is data driven manufacturing.

About the pformation of OEM: first, the Internet provides a good opportunity; secondly, build its own brand; thirdly, the flexibility of production capacity.

It is undeniable that the advent of the Internet era is providing new opportunities for China's OEM factory.

Yu Guoping said frankly, in the brand establishment, the traditional way needs large-scale advertising and media input, but it is difficult to see the effect. In the Internet age, more reliance on enterprises and customers, fans interaction, customer participation, SNS word of mouth.

Taking his own brand as a platform for Taobao, for example, the biggest surprise came from the sale of its own brand on Taobao platform and its rapid spread.

Not only that, for example, the Internet brands such as Xiaomi mobile phone, cracking silk and Yin man, for example, in terms of channel establishment, enterprises have established time-consuming and laborious distribution channels in the whole country and the whole world from the traditional order conferences, press conferences and Distribution Agency modes, and now, through more channels such as electric business self-service and network distribution, they have rapidly established channels to cover tens of thousands of consumers.

It can be said that the Internet has opened up new space for the pformation and upgrading of small and medium-sized enterprises and Chinese OEM enterprises.

For example, on the Taobao platform, there are hundreds of "Amoy brands" pformed from OEM factories, Linshi wood, Yin men dress, ODO lamps, bear appliances, SKG appliances and so on.

However, the objective fact is that there will be some legal disputes when OEM produces and sells products.

According to Xue Shengwen's statement, Chinese OEM enterprises carry out OEM production on the premise of accepting the brand and authorization provided by the buyers, and their existence does not have legal disputes themselves.

It is noteworthy that it is precisely because the regular orders of Chinese OEM enterprises usually come from overseas, the so-called two heads are outside, but most of these products enjoy the patent and trademark rights from overseas enterprises. Therefore, Chinese OEM enterprises have legal infringement risks in the process of undertaking orders.

And when OEM enterprises form their products through ODM and so on, they are more vulnerable to accusation of infringement by overseas enterprises when they sell them in China.

This problem has actually appeared on the largest business platform in China.

Alibaba has revealed that there have been various counterfeit products from overseas brands on Alibaba platform. For this reason, Alibaba has never recognized fake products. Even if the quality of the imitation products is good, it is also a violation of intellectual property rights.

As for what exactly is fake, legal and academic circles are also beginning to dispute.

Wang Peng, vice president of China Electronic Information Industry Development Research Institute, pointed out that there are two kinds of counterfeit goods, one is a genuine fake, and the quality is very bad. It must be dealt with. This is a bottom line. The other one is produced by OEM manufacturers, and the quality is no problem. The OEM manufacturers should not be regarded as a fake.

It is undeniable that whether you see or not, the OEM market's low price and high quality products are flowing to the market through various channels. Some of these products are fake, and some are true and false.

As Ma Yun said in June 14th, "fake goods, we are victims, but we never stop fighting. We are the leaders of global counterfeiting."

It is understood that, in the face of the current situation of OEM enterprises in China, Ma Yun decided to extend olive branches to help China's OEM Factory online break through in a way of "combination of blocking and blocking". In Alibaba's view, OEM and intellectual property protection are not irreconcilable.

Alibaba practices such as martial arts experts, both hands.

First, we must resolutely crack down on fake goods and protect intellectual property rights.

According to the introduction, since 2010, Alibaba has begun to study the treatment of fake big data. At the same time, it has hired experienced data experts and criminal investigation professionals to join the team. Now, more than 2000 fake teams have been set up.

In 2014, Alibaba cleared 130 million fake products.

Nearly 90% of these 130 million were Taobao's initiative to discover and punish the sellers for the first time.

In Putian, from 2015 to now, with the help of Alibaba, the Putian Public Security Bureau of Fujian province has knocked out 4 large black shoe factories, involving Adidas, Nike and other well-known brand fake shoes, with a total value of tens of millions.

While assisting in the fight against counterfeiting, Alibaba is not idle about helping China OEM create new markets and win the market.

In 2015, Alibaba launched the "China Quality" project, with the help of Taobao platform to promote the rapid growth of independent brands in Putian and other domestic major industries. In early 2015, children's clothing manufacturing in Jimo, Shandong felt the cold of the market, affected by the international trade environment, and the export orders declined, resulting in small orders or even no orders.

As China's quality building projects entered Jimo, children's clothing industry in Jimo began to change. At present, there are more than 50 children's clothing enterprises in China. The sales performance of 30 million yuan was created during the first time of the activity. The subsequent daily average of 1 to 20 thousand yuan per store was 1 to 20 thousand yuan. In April 2015, "China Quality" promoted Putian sports shoes, during the activities, more than 10 million people paid close attention to Putian shoes through many channels such as Taobao in 4 days, and brought about 160 million yuan in sales of independent brand in Putian and so on.

In fact, thanks to the first-class manufacturing level of China's OEM plant, the "China made" project has set high standards.

It is reported that all the "Putian made shoes" made in China have far higher manufacturing standards than international standards.

"There are too many products on the Internet, and I like the project of" Chinese quality ". Actually, it is helping consumers to make a screening, and the enterprises screened are basically to do the OEM for foreign brands.

Because of its high entry threshold, for our enterprises, it can also be less competitive.

Yu Guoping hopes that the stricter the threshold of this project is, the better it will be in the future, including quality inspection and other supporting measures, so that enterprises can go all out to develop better products.

According to the insiders, China's OEM enterprises rely on Alibaba's creative Internet companies. They can pform themselves into global high quality and low price products suppliers and benefit from global consumers.

For the future of Chinese OEM enterprises and global brands, Yu Guoping believes that Ma Yun's position in the signature article deserves careful consideration: "it is obligatory to tell business partners that the world is undergoing amazing changes."

"The mission of Alibaba is to let the world have no difficulty in doing business. Whatever helps us to judge the future, as long as we can see the trend and trend, we will clearly and resolutely share it with you."