Fujian garment industry shuffles irreversible

Fujian Garment industry suffers a crisis in the run Jinjiang brand golden period has passed

“Businessmen here are caught in an unprecedented crisis of confidence.” A former executive of a clothing listed company in Fujian told reporters in the 21st Century Business Herald: “The person in charge of the company is running away. Not only is the supplier frightened, but the lenders are also scared and the banks are scared. When all came out of debt collection, the industry became chaotic and the company was dispersed."



At the end of July, the news that Ding Hui, the chairman of Fujian Nuoqi, lost contact with the newsletter caused a turmoil in the local area. Then news about Hoples, Crocodile and other brands were heard. Ding Hui’s incident became a fuse, detonating the local confidence crisis, and more often was the question of whether the “winter” of Fujian’s garment enterprises had come again.

"The shuffle is underway and the general trend is difficult to break. This is an irreversible trend. This round of adjustment is far from over." Keystone sports consultancy company ceo Zhang Qing said in an interview with the 21st Century Business Herald: "The previous simple The crude growth model has fallen behind, and the enterprises behind the Ebb Tide will have precise brand positioning and refined management and control.”

Three stepping

The development of commercial enterprises has a long history, and the development in the past 20 years has given the businessmen unprecedented achievements.

Due to geographic advantages and overseas backgrounds, Fujian enterprises are particularly sensitive to policy controls and business opportunities. According to Zhang Qing, garment enterprises in Fujian have also gone through three stages.

From the mid-1980s to the mid-1990s, the clothing enterprises in Fujian Province had just emerged. This stage was dominated by oem production (manufacturers) due to its geographical location and other advantages.

Because China's labor force is cheaper, some overseas garment companies have transferred to coastal areas in China. At the same time, Fujian and Guangzhou, Jiangsu and Zhejiang have formed a three-footed competitive pattern, thus forming a garment industry cluster in Fujian, from raw materials to processing and manufacturing. The whole industrial chain of warehousing and logistics is formed on this basis.

Currently listed companies, Anta and Peak are established at this stage.

Peak had built a factory since 1987 and started the Peak brand in 1991. Prior to this, Peak founder founded a foundry and prepared to cooperate with Nike, but because Nike later withdrew its capital, the foundry did not get an order and gave it away. Chairman Xu Yinan also understands that he must create his own brand. Anta built a factory in 1994 and initially took the wholesale route until it was successfully transformed. At present, Anta and Peak are listed companies in Hong Kong stocks.

From the middle and late 90s of the last century to around 2008, Fujian entered a vigorous "making brand" stage.

At this stage, once China’s pride in exporting was met with resistance, competition among industrial clusters began to intensify. In addition to the original Jiangsu, Zhejiang, and Guangzhou, Tianjin and other new pioneering foundries also expanded. “Intensifying competition means the dilution of profits, and during this time, the market needs to rise, and tourism and leisure will enter people’s lives. At this time, its own brand has started to rise, but the real development is after 2000,” said Zhang Qing.

At the same time as the development of the brand, there is still no doubt that it is not separated from the “famous brands”. There are not a few brands that have the same wording as the international big brands. Some companies with earlier brands are also successfully listed on this time. In 2004, Li Ning and seven wolves were listed; Anta was listed in 2007; in 2009, 361°, Lilang men’s clothing and Peak’s listed... Some companies emerged from the market suddenly, some companies still do OEM, and some companies work hard for listing.

However, in the recent seven or eight years, and even in the last ten years, Fujian garment companies are facing an adjustment phase as a whole. The first challenge was the traditional shoe and clothing company, followed by the sportswear brand. In Zhang Qing’s view, “this phase of adjustment has continued to this day and continues.”

Into spell, defeat also fight

They endorsed brands that have never been heard. "The reason for letting these brands disappear quickly is that the homogenization of products is too serious, there is no design, or that they copy each other, the market sensitivity is not enough, there are not enough production technologies and R&D personnel, and the channel expansion methods are similar. A simple way to join the expansion." said Zhang Qing, "a large number of brands of bees, such as behavior led to the actual excess production capacity."

In addition to product homogeneity and overcapacity, the profit-driven nature of capital has also given these apparel companies a strong sense of risk. In Magang's view, these local clothing brand merchants are very radical, always expanding, and when the market is good, they make more money. When the market declines, there is no way to turn around and it is difficult to make a transition.

"This is the consequence of changing from quantitative change to qualitative change." Zhang Qing said. The all-over-expanding expansion is plunging companies into overstocked positions. On the other hand, the company's capital chain is becoming increasingly tense, because of the expansion of loans and the need to tide over difficulties.

There is a common spiritual slogan in the merchants - "Fighting will win." It is this kind of spirit that has created a once-famous garment industry, and also caused today's fears to look around.

In the vigorous stage of brand building, everyone in the clothing industry in Fujian is well-known. “It is a high profit for the brand and it is also a demand of the consumer market. This is a reason why a company makes a brand,” said Ma Gang, an independent observer of clothing.

In early 2000, the CCTV Sports Channel was once dubbed the "Jinjiang Channel," because the eye-catching advertisements were all Jinjiang sports brands, although not many brands were remembered.

The model of "TV advertising plus celebrity endorsement" is not rare in this era, but in that era it was an advanced marketing model that was successfully developed. “Today it seems that there is no new idea, but in that era, many small businesses are willing to spend a lot of money to invite spokespersons and go to CCTV advertising. This is in itself an innovation, and everybody imitates one, and the sales volume of channel terminals is indeed Responsive, rapid sales growth, this is the internal cause of the brand's prosperity." Zhang Qing said, "The external cause is that China is indeed a huge market demand at this stage, and people have reached the stage from the quality to the brand, fitness sports market Constantly expanding, the market is huge to these brand space."

However, the golden age will always pass.

Under the impact of the financial crisis in 2008, some brands did not fall out, but the companies that survived the shock also entered a downturn or an adjustment period.

Numerous brand "simple and crude" marketing models are no longer new, and advertising stars on the streets of Quanzhou

The borrowings have made it difficult for the company to move forward, but there is no market to open up. If you turn back, you can't afford to lose too much debt. "Some bosses say that if they win, they will succeed. If they can't win, they will run. The roads run every year. This year it seems to be more concentrated," said Ma Gang.

The transformation

In fact, Fujian garment companies have begun to think about transformation in the past two years. "But the boat is very good at making a comeback. Those enterprises with large-scale listings are doing better in fine management. Transformation is also easy. The most difficult is the medium-sized enterprises with several hundred million yuan. It is very difficult for the transition," said Zhang Qing.

Earlier this year, in addition to Crohnette’s debt, Quanzhou’s 25-year-old clothing company, Lean Garment, had to go out of business due to unsuccessful listing and eventually sold 25 million copies.

Lean clothing is started by many OEMs like many Quanzhou companies. In its peak period, there were more than 2,000 employees. However, companies like Peak and Anta did not make timely transitions to the brand, but later they lost their chance. . The lean founder also wanted to plan for the listing, and had successively operated in Canada and Thailand, but none of them succeeded. As a result, lean companies can only maintain their operations through private lending. Before Lean was auctioned, the local court received a number of reports about its borrowings. The industry eventually slumped, there were many creditors, employees’ wages were owed and many other issues were superimposed. Lean could not go on anymore, and the boss did not know where to go.

“Some companies once talked about transformation in a good situation, but these companies think that now they have the money to accelerate the expansion, and this model can also make money without transformation. However, the real cold winter, want to transition late, medium-sized enterprises If you want to go public, you will need to do a good job, but the three-year performance will be difficult to whitewash. If you don't go public, you will face the difficulties of debt-strengthening.” said Zhang Qing.

Small-scale companies are driven by the power of listing, borrowing expansion, whitewashing results, and paying taxes, etc., have no money to find private lending, carrying large amounts of debt to the final listing but found that can not alleviate the problems faced, can only run. Noci is one of the representatives. Companies that are struggling to get listed are also at risk of bankruptcy.

"The rest of the enterprises in this round must create value and do a good job in supply chain management. The cruelest competition is the king. This round of elimination is irreversible," said Magang.