Jian Sheng Group Has An Annual Output Of 800 Million Yuan Sports Socks.

In 2015, the first year of the real Chinese marathon, Amazon's online sales data showed that sales of runners increased by 300% over the same period last year, while women's sports bra increased by 1000%, and sales of compressed clothing increased by more than 5000%. But the biggest increase in sales, more than 10000% of the single product, actually is an insignificant sport socks.

Socks are small, but they can also make big deals with scale effect and technology push. Jian Sheng group (hereinafter referred to as kin Sheng) coordinates Zhejiang Hangzhou Xiaoshan, the world's largest hosiery foundry enterprise, also listed in 2015. Recently, the company released its 2019 annual earnings report: 1 billion 780 million yuan in revenue, 273 million yuan in net profit to women, and 230 million yuan in net profit to women, up 12.86%, 32.39%, 27.32%, respectively.

Cut into sportswear, track, sports, and revenue into pillar of revenue.

Cotton socks are the traditional strengths of Jen Sheng. In 2017, through the acquisition of lingerin, the underwear manufacturer, the business expanded to seamless underwear, and the two categories had a common target audience. At present, Jenn Sheng is gradually transforming into a producer and service provider of knitted sportswear with globalization and industrial chain integration.

According to the application scenario, the company's products can be subdivided into sportswear, casual wear and home dress, among which the track of sportswear is in a fast rising period. In the 2019 earnings report, Jian Sheng group first divided the revenue of two categories of cotton socks and seamless underwear into sports and leisure classes.

According to the results of the report, in 2019, the income of cotton socks and seamless underwear was 1 billion 104 million yuan and 640 million yuan respectively, up 8.7% and 16.8% compared with that of the previous year. Among them, cotton socks were sold for 291 million pairs throughout the year, and sales volume and unit price increased by 5.73% and 2.8% respectively.

According to the subdivision category, in 2019, the company's sports cotton socks and sports seamless underwear revenue reached 831 million yuan and 452 million yuan respectively, up 10.41% and 27.08% compared with the same period last year. The income of casual cotton socks and leisure seamless underwear reached 273 million yuan and 188 million yuan, the former increased 3.77%, while the latter reduced 2.18%.

Sales of sports apparel such as sports cotton socks, sports seamless underwear and so on have accounted for 72.88% of the total revenue of the company, and the growth rate is obviously faster than that of casual wear. Sportswear is becoming the core development power of the company. Among them, sports cotton socks occupy 47.2% of the company's revenue, close to half of the country.

In the United States, Japan, Europe and other developed countries, the consumption of cotton socks has been upgraded to form a reasonable distribution structure of medium and high grade products. There are basically no low-grade products, most of which are retail channel brands, and the unit price is about 10 yuan / double. The top and middle grade products are mainly high-quality clothing brands, including UNIQLO, Adidas and Nike brands. The unit price center is 20-35 yuan / double. High quality products are usually designed with high quality professional sports socks, the unit price is generally more than 50 yuan / double, the high can reach nearly 200 yuan / double.

Although it is only a foundry, cotton socks produced by the production of sports usually get higher commodity premiums than ordinary cotton socks. According to the results of the report, the gross profit rates of sports cotton socks and leisure cotton socks produced by Junsheng are 28.04% and 25.89% respectively.

R & D investment to speed up the binding of international brand customers

When people exercise, the strength of the foot may be as high as 7-10 times the weight, and the pressure and impact of different sports are different. Scientific research proves that sports shoes and cotton socks are necessary for sports assisting and protection of feet, just like sports shoes.

Athletic cotton socks with excellent texture can improve the plantar force. According to the financial report, in 2019, the R & D expenses of the company were 50 million 380 thousand yuan and 40 million 540 thousand yuan in 2018, an increase of 24.27% over the same period last year, and the growth rate was much faster than the company's revenue growth. According to media reports, Jian Sheng has developed running socks, Ski socks, mountaineering socks, riding socks, golf socks, badminton socks, yoga socks and other functional sports socks.

The market generally believes that the traditional OEM industry is in the sunset stage of overcapacity. But the sports dress track of kin Sheng is small and beautiful, with high prosperity. From the perspective of downstream brands, there is a clear trend of increasing concentration of suppliers.

Data show that Nike's shoe factory has fallen from 150 in fiscal year 2014 to 112 in fiscal 2019, and garment factories have fallen from 430 to 334. The production of its largest footwear manufacturer increased from 7% in fiscal 2014 to 14% in fiscal 2019.

Internationally renowned brands are constantly adjusting to reduce the number of suppliers, improve the proportion of procurement of core suppliers, and put forward higher requirements for core suppliers to jointly develop, have fast reverse supply chain capabilities, and strong automation capabilities.

According to the 2019 earnings report, the major international customers of Junsheng group are famous sports brands such as Nike, Adidas, Decathlon, PUMA, LULULEMON and so on. These brands are generally positioned at the middle and high end, and the rate of increase is basically 5 times. Among them, the foreign brands such as LULULEMON, UA and PUMA have increased the price even more than 13 times. High markup rate makes customer price sensitivity relatively low, and pays more attention to the comprehensive research and development strength of OEM enterprises.

With the increase in R & D investment, the company can solve the order development problems and enhance customer stickiness for international big brand customers.

In addition, since 2013, Jian Sheng has been preparing for a comprehensive industrial chain in Vietnam. In 2019, the subsidiary of Jonsson Vietnam has reached 145 million pairs of design capacity, an increase of 32% over the same period last year, and sales of cotton socks in coastal defense production base reached 146 million pairs, an increase of 30% over the same period last year. Under the background of Sino US trade friction last year, Jian Sheng can guarantee the stability of product quality and delivery time, which has been further recognized by international customers. The sales revenue of the top five customers increased by 27.2% over the previous year, accounting for 63.9%.

Foreign trade orders become too heavy as a constraint to promote private brand setback.

According to the earnings report, the income of Jian Sheng group in 2019 was 198 million yuan and 1 billion 560 million yuan respectively, accounting for 11.3% and 88.8% respectively, representing a decrease of 14.8%/ and an increase of 16.6% compared with 2018 respectively.

That is to say, in 2019, Chien Sheng's foreign trade orders accounted for nearly 90% of the company's revenue, while domestic sales did not grow.

When the new crown pneumonia epidemic was effectively controlled in the country, the group successfully resumed work in February. But then the epidemic spread rapidly overseas, and brands such as Nike, ADI, Decathlon, PUMA, LULULEMON and UNIQLO were shutting down stores, such as the H&M group that closed most stores in Europe, including Italy, France and Spain.

As the global epidemic continues to increase, various countries have stepped up the blockade, and the social consumer demand has fallen off the cliff. Secondary economic disasters caused by the epidemic are being staged.

Many investors inquired about whether the foreign trade orders produced by the company were affected by the epidemic. But entering the April, the sudden change of voice: there was indeed a delay and cancellation of orders due to the impact of overseas epidemic.

The Tokyo Olympic Games postponed, the European Cup was cancelled, the NBA, the Premier League and so on various sports events postponed, the consumer side extremely extremely dispirited, caused Nike, ADI and other international sports brands to suffer great damage, inevitably to the middle and upper reaches of the supply chain.

The capital market is most sensitive to the industry's troubles. Shenzhou International, the largest knitting vertical garment manufacturer in China, dropped from HK $119 to HK $72 at the beginning of the year, with a drop of over 40%, and the market value evaporated over HK $50 billion. The price of JSG also rose from 12.12 yuan in February to 8.6 yuan in April 7th, or nearly 30%.

Too much reliance on foreign trade orders, how to solve the immediate predicament is a pressing matter of the moment. In response to investors, Jian Sheng said: the company has been exploring the form of online and domestic trade to promote the domestic private brand business.

But according to the results of the report, compared with the brilliant OEM, the fitness group's own brand "jensheng home" earned 6 million 142 thousand and 400 yuan in 2019, less than 1 billion 750 million yuan in the OEM market, a decrease of 46.78% compared with the same period last year. The number of stores in the "Jian Sheng family" was reduced from 15 at the end of 2018 to 1 at the end of 2019, with only 1 direct outlets and 14 franchises closed.

In Hangzhou, the most developed Yangtze River Delta and the electricity supplier capital of China, the performance of Jen Sheng's own brand is really bleak. This can be seen from the company's neglect of the sales side: in 2019, the sales cost of the company was 55 million yuan, and in 2018 it was 64 million yuan, a decrease of 12.89% compared with the same period last year.

Today, there is no obvious turning point in overseas epidemic, and businesses are struggling to tap the potential of domestic consumption. Not long ago, Alibaba pushed the C2M mode to emphasize consumers' direct access to factories, and Luo Yonghao, the new Internet pioneer, was also transforming the "take the goods one brother".

Walking on two legs of foreign trade and domestic demand, first of all, to revive the "dying" private brand, Jian Sheng has begun to realize this.