How Does This Chinese Thermal Underwear Manufacturer Do Business?

Antarctic e-commerce is a controversial company

Some people say that if he doesn't do business well, he can't make money by selling trademarks for a long time. Others say that if the white wolf can be copied with his bare hands, why not?

From the perspective of national industry, after the Antarctic e-commerce cut down stores to do brand authorization in 2008, the highly praised Antarctic people are dying out.

However, from a rational business perspective, after selling thermal underwear without making money, Zhang Yuxiang began to do brand licensing; after the business of brand authorization became narrower and narrower, he bought time Internet and now he has become an advertising company completely.

This is an era in which industries struggle to survive and Internet companies live happily when they talk. We can't criticize others for being not pragmatic and down-to-earth just like the perspective of small-scale peasant economy.

In economics, the essence of business is profit. Compared with those enterprises that consume hundreds of millions of dollars of capital and are still unprofitable, why is it not a virtue for Antarctic e-commerce to transform frequently and earn 1.2 billion annually?

Founded for more than 20 years, the company has been walking the pace of the times in the voice of doubt.

Making money easily is not a fault of many people.

In March 2020, the list of unqualified products and enterprises of the second batch of online product quality national supervision in 2019 was disclosed.

Travel cases and bags produced by Antarctic e-commerce (article number c487811011) also appear on the list.

This is not the first time that Antarctic e-commerce has been found to be substandard.

In the past five years, Antarctic e-commerce brands such as Antarctica, Cartier crocodile and Jingdian Teddy have all failed to pass the quality inspection.

According to public reports, in 2018, the Antarctic brand has been blacklisted 14 times by the national quality supervision department and local consumer associations.

Among them, silk quilt, underwear, cotton clothing, children's clothing, shock clothing, electric push scissors, curler, massage stick, etc., are listed in the black list of quality inspection.

Ironically, in 2019, the operating revenue of such a company will reach 3.908 billion yuan, with a year-on-year growth of 16.55%; and its net profit will reach 1.206 billion yuan, with a year-on-year increase of 36.04%.

Compared with the performance of 2014 before listing, the CAGR of Antarctic e-commerce exceeded 80%.

This figure is only 19.78% in Shenzhou International. The latter is the largest vertically integrated knitting manufacturer in China and is also known as the most profitable clothing company in China.

From the clothing industry to the whole industry, the new media "world company" of securities market Weekly reported that:

The growth of Alibaba and Tencent has surpassed that of Tencent.

On the one hand, there are low-quality products, and on the other hand, they are making money. Antarctic e-commerce has become the target of public criticism.

Antarctica who used to rely on quality

Chinese thermal underwear originated from Shanghai Zhaolin Industrial Co., Ltd. Yu Zhaolin, the founder of the company, developed a kind of moisture conduction and thermal insulation composite velvet called "Antarctic cotton".

By the end of 1998, the company had sold 280000 sets of thermal underwear, with an output value of over 100 million yuan.

However, in June of the same year, many fake "Antarctic cotton" products appeared in the market. Yu Zhaolin resolutely abandoned "Antarctic cotton" and used his own name "Yu Zhaolin" as a new brand name.

During this period, a clothing boss named Zhang Yuxiang also wanted to come in and have a share.

But he found an open secret of the industry, that is, the manufacturers of thermal underwear mostly increase the thermal effect by adding 1-2 layers of airtight plastic film to the underwear.

Such underwear is obviously unhealthy.

Zhang Yuxiang hopes to use cotton instead of chemical fiber fabrics, and cooperate with DuPont company in the United States to develop "cotton + Lycra" healthy thermal underwear.

At that time, the cost of R & D and production required 3 million yuan. Zhang Yuxiang, who had no money in hand, advised the dealers to inject the payment in advance and then develop and produce after receiving the payment.

It can be said that the white wolf is empty handed. Zhang Yumian's underwear was similar to that of Nanqi, and soon raised a name for himself.

According to the data, in four months, the sales of Antarctica exceeded 100 million.

By 2000, the number of manufacturers of thermal underwear has increased to more than 300, and the annual sales volume of the industry has exceeded 30 million sets.

Under the fierce competition, "Yu Zhaolin" was the first to be pulled off. At that time, some media reported that "Yu Zhaolin" said it was "like wearing a raincoat on my body".

After receiving media reports, China Consumer Association appointed experts to conduct a comprehensive quality performance test on 38 brands of thermal underwear sold in shopping malls in Beijing and Tianjin.

According to the test report, "Yu Zhaolin" underwear has a layer of plastic film.

Then, the various brands of thermal underwear in succession, in addition to the already prepared Antarctica.

Since then, the market share and sales volume of Antarctica have been among the best for six consecutive years, and 20000 terminals have been set up in various cities, with a total sales volume of 1 billion yuan.

Price butcher in marketing war

"Yu Zhaolin" suffered the most in the turmoil of thermal underwear. In March 2001, Shanghai yuzhaolin Industrial Co., Ltd. was reorganized.

Since then, a company called xinzhaolin Textile Technology Co., Ltd. was established in Shanghai, with Huang Xiaoyu, the southwest agent of Yu Zhaolin, as the general manager.

The latter admitted that in order to compete for the market and customers, Zhaolin company launched a buy one get one free activity, and reduced the wholesale price to 40 yuan per piece. In addition, it invested nearly 50 million yuan in advertising expenses, which greatly weakened the competitiveness of "Yu Zhaolin".

At that time, Yu Zhaolin invited Hong Kong Film and television star Zheng Shaoqiu as his brand image spokesman. The sentence "Yu Zhaolin, really powerful" resounds from the north and south of the river, creating the precedent of inviting stars to advertise thermal underwear.

At this time, one of China's earliest leading brands of thermal underwear, Arctic velvet, also invited Zhao Benshan. "Fear of cold wear Arctic velvet, the earth all know", can be said to become many people's childhood memory.

Antarctica is also declining. At that time, Zhang Yuxiang invited ge you, Xu Fan, Liu Dehua, Yuan Yongyi, Haiqing and other first-line stars to shoot a 15 second advertisement, "the Antarctic is not afraid of cold.".

In 2002, the total amount of brand companies in the national media reached 392 million yuan. The manufacturers were confused by the sky high advertising and sales volume, and ignored the balance of supply and demand when they continued to expand production.

But in the next two years, the single function of underwear to keep warm and cold has been unable to meet consumers' picky demand for product diversification. Their purchasing power has declined, and the backlog of enterprises' inventory has gradually increased.

What to do if the product can't be sold? Then lower the price. In September 2004, Antarctica announced a 50% reduction in prices.

At that time, the Economic Reference News reported that the only "well-known trademark" and the only "Chinese famous brand" of China's thermal underwear industry announced in Beijing that they would be "Galanz of thermal underwear industry" and reshuffle the whole industry with the "bloody" campaign of 50% price reduction.

This is not a heavy burden that ordinary enterprises can bear. Enterprises such as Arctic velvet, Tingmei and ciliated birds have all boycotted, but "ran and egg".

At that time, Antarctica was already the largest manufacturer of thermal underwear in China.

Heng Yuanxiang's Apprentice

Zhang Yuxiang estimates that the market share of the Antarctic in 2004 was 15% - 20%, and they hope to expand this figure to about 35% through price war.

It's only a thousand people who hurt themselves in this way. Because of the huge pressure on the terminal and the terminal chain, we are under great pressure.

In the 2006 "leaders show Shanghai" activity, Zhang Yuxiang talked about the industry war and still believed that:

It is not the fault of a decision maker or a brand, but a disordered state caused by the loss of core competitiveness and the difficulty of extensive marketing and management to adapt to the new market situation.

However, Zhang Yuxiang has also been reflecting. He once felt in front of the media reporters that in those years, the Antarctica successively put in 300 million yuan of advertising, is it really a waste?

"Perhaps the necessary investment cannot be less, but it is more realistic to make full use of the existing brand resources and rediscover the value behind the brand."

How to excavate the value behind the brand?

In 2008, Zhang Yuxiang cut off all the self-supporting links at the production and sales end, and sold the factories he had worked hard for more than 10 years, including an industrial area of more than 40000 square meters and an office building and staff dormitory of 7000 square meters.

Only the words "Antarctica" are retained.

"We will add new materials and accessories under the brand as an extension of the brand. Basically referring to the Hengyuanxiang model and combining with the social alliance, we will cooperate with each other in production, sales and brand to establish an existing one-stop clothing enterprise. "

Along Hengyuanxiang's path, Zhang Yuxiang is macroscopic and confident about the transformation of the Antarctic people.

"Hengyuanxiang, sheep and sheep." With this slogan, Hengyuanxiang is the first enterprise in the thermal underwear industry to cut off the production end and put forward the consortium model.

Hengyuanxiang's brand operation mode is not to invest in building factories and channels, but to develop more than 100 franchise factories in the upstream and 9000 distribution outlets in the downstream through franchise.

The combination of upstream and downstream makes Hengyuanxiang look like a United Fleet

Nearly 70% of the fleet's (main) companies are Hengxiang group's main fleet. They are concentrated in Jiangsu and Zhejiang, and the rest of the franchised factories are distributed all over the country.

The distribution of frigates is similar to the distribution of frigates in more than 30 provinces and cities in China.

It is Hengyuanxiang's main profit model to collect trademark usage fee and realize brand equity.

China Business Daily reported that Hengyuanxiang's revenue in 2007 was about 300 million yuan, of which 266 million yuan was collected from upstream franchise factories, accounting for more than 80% of the total. At the same time, it is also one of its profit sources to collect franchise fees from downstream distributors or distribution outlets.

The path of Antarctic e-commerce is similar to that of Antarctic e-commerce, which takes the brand matrix composed of logo brand, IP brand and personal brand as the core, and manages brand authorization, e-commerce service, flexible supply chain park business and small amount of goods sales.

Hengyuanxiang has a community, and Antarctic e-commerce has an ngtt community - flexible supply chain park.

Hengyuanxiang has subsidiaries, responsible for the shaping and maintenance of relevant brands, as well as the control and coordination of upstream franchise factories and downstream market sales.

Antarctic e-commerce has set up subsidiaries such as one stop beauty, craftsman's heart, South future and small bag to provide value-added services such as store image design, management and supply chain finance for suppliers and dealers.

The gross profit margin of this brand integrated service business reached 92.3%.

From 2014 to 2016, Antarctic e-commerce brand comprehensive services were the main modern services, accounting for 77.85%, 72.47% and 96.29% of the revenue. By selling trademarks, the company made more than 300 million yuan in 2016.

Antarctica becomes an advertising company

In 2016, Antarctic e-commerce acquired Cartier crocodile and Jingdian Teddy, and cooperated with Palladio and pony series.

This means that the licensing business of a single brand in Antarctica may be narrower and narrower.

Qian Mou, the owner of a Antarctic thermal underwear agent factory, said that the requirements of Antarctic e-commerce on product quality control are not high.

Just established factories, even if the production qualification is very low, as long as the headquarters money can get the trademark. "A set of trademarks costs 5 yuan, and they can get 8.5% discount for a trademark with 1 million yuan at a time."

"When the products are reported, they only care about the factory cost and the standard fee. In this mode, it is responsible for introducing customers to the factory, but does not guarantee and does not participate in any transaction between the manufacturer and the customer. If customers purchase finished products or have requirements, they will directly ask the factory. The only thing we have to abide by is that the products sold to our customers must be products with the "Antarctic" trademark. "

Traffic may be the inherent advantage of Antarctic e-commerce. For example, the access mechanism of cat and Taobao is more and more strict today. It is difficult for a new brand that missed the golden age to make its debut. The thousands of online shops of Antarctica are scarce resources.

It can not control the quality of franchisees for a long time, but only seek for quantity growth and expansion speed. As the root of the flow of brand, word-of-mouth will decline rapidly, and the licensing business will become narrower and narrower.

In 2017, acquisition time interconnection became its new growth pole.

This is an advertising agency. Entrusted by customers such as May 8th information, vipshop and Meitu home, it purchased resources and launched customer app on platforms such as Tencent app store, baidu mobile assistant, oppo store, Tencent GDT, today's headlines, cheetah and other platforms.

It's a business that has nothing to do with thermal underwear.

But when time Internet was acquired, the company's business accounted for 24.28% of its revenue. By 2018, only 69.08% of the digital brands were authorized, and only 69.30% of them were authorized.

From the revenue structure of 2015-2019h1, we can see that the Antarctic e-commerce has completed the third transformation and directly transformed into a mobile Internet service company.

epilogue

I still remember that in 2016, a listed company named Xinmin Technology issued shares to purchase assets.

This comprehensive joint-stock enterprise with chemical fiber spinning and weaving as its main business, printing and dyeing, clothing, textile auxiliaries, trade and other diversified development, announced the acquisition of 100% of a company whose main business is brand comprehensive service and dealer brand authorization service.

This company is antarctic e-commerce.

Since then, the name of Xinmin technology stock was renamed as Antarctic e-commerce, which was backdoor listed by the latter.

The same is true of Antarctic e-commerce and time interconnection.

Founded in 1998, one of the earliest brands of thermal underwear in China and the largest manufacturer of thermal underwear in China, Antarctica is slowly disappearing.

An advertising agency that has nothing to do with it is rising.

However, our industry is moving towards the biggest brand. But in the brutal, profit-making world of business, it's true to make money.

If you look back at the thermal underwear industry since 1996, the only one who really came out is Zhang Yuxiang, who made money.