China's Footwear Industry Is Facing A Challenge Of Shutting Down, And Strategic Transformation Is Imperative.

No one denies China. Footwear processing industry Faced with enormous challenges, from the statistics of the first five months of this year, the total export volume of Chinese shoes and clothing increased by only 2.5% compared to the same period last year. Compared with the data in previous years, the number of nearly zero growth figures is indeed unacceptable. Even more difficult to accept the decline in profits, especially small and medium enterprises, has led to the recent news of small businesses shutting down.

We do not need too much ink in the analysis of causes. It is obvious that the cost of labor is rising, the cost of production resources such as land and energy is rising, and the appreciation of RMB has been increasing. Export tax rebate The reduction of a series of cost problems has greatly puzzled Chinese enterprises. It is an indisputable fact that China's demographic dividend is disappearing and international brands are transferring capacity. For Chinese enterprises specializing in garment processing and trade, under the background of the integration of global footwear and apparel supply chain, China's past cost advantages and productivity advantages are gradually disappearing, and the challenge from the external environment of enterprises is irreversible.

From 08 years financial crisis Since then, the voice that calls for the concept of "made in China" concept to accelerate transformation has never stopped. It should be said that in the past 10 years, the main advantage of the rapid rise of the concept of "made in China" is still the cost. And along the way, the direction of Chinese enterprises' efforts has always been through efficiency improvement to protect the gross profit of enterprises. Although many improvements have been made at the operational level, these achievements are obviously not enough to withstand the trend of power in the context of the disappearance of the demographic dividend and the integration of the global industrial chain.

However, we observed that most of the current transformation of Chinese enterprises lacks effective paths: Transformation of brand dealers, transition lines, and transformation of foreign trade into domestic trade. These are the most common means, but because almost all enterprises rush in at the same time, the fierce competition of the Red Sea appears to be more crowded, and many enterprises fail to achieve the goal of transformation.

Is the international processing and trade really in the west? Obviously not! The cost advantage is definitely not the international clothing brand's demand for the supply chain today. Zara still has considerable capacity in Europe to cope with the demand for rapid response in the supply chain, and the transfer of these capacity has not really started. If we can effectively undertake this part of the capacity, China still has a lot of value-added space to contribute, and the gross margin of this part of the added value is obviously much better than that brought by the compression cost.

In the past cases, we have also found many enterprises that enhance competitiveness through strategic transformation. If we can give a definition to these enterprises, we think that the added value of creating cost advantages is the secret of these enterprises' growth today. By summarizing these cases, two transformation paths are relatively replicative:

　 First, create more added value by extending its position in the industrial chain.

Such transformation calls for the integration of more supply chain links and the transformation from the role of past processing trade to the role of supply chain management. Li Feng, Hongkong, is a typical representative of this strategy. Take processing and manufacturing as an example, if we only operate the incoming processing business, it is obvious that its added value is not as good as that of the contractor. If we continue to extend this way, if we extend to the brand store's logistics and extend to the development and management of product and even brand, the added value of this supply chain service will obviously be more competitive.

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In this mode, it should be said that besides the management of channel and retailing, the business capability of an enterprise has already been very close to that of a brand enterprise. It should be said that if we have these abilities, with the help of good cost advantage, the enterprises will be transformed into brand dealers again, whether online or offline, the probability of success will be even higher.

　　当然，这类转型同样是需要漫长的过程的，对企业而言，管理复杂的到店物流需要良好的物流规划系统和快速反应能力，同时要求与品牌商实现更好的无缝信息连接，这些显然都是非常困难的;而产品开发则对企业的各类设计数据库、产品设计、版型开发、品类管理等一系列的能力都存在巨大考验以我们服务过的企业为例，其团队重点建设了三方面的能力：一是通过已经掌握生产资源和过往的经验，建立适用于其客户的产品数据库，包括色彩、版型、面料等等;二是通过组建设计团队，为那些长期合作的战略伙伴提供产品开发服务(对于那些更有经验和团队资源的企业，还可以提供当季全盘货品的开发服务);三是通过积极整合后向的面料供应商，无缝参与品牌商的垂直商品开发，包括最初的商品企划、面料开发等一系列活动。 We believe that these strategic initiatives are more smooth than Chinese enterprises in direct transition to brand operation, and the demand for resources and capabilities is also more focused. However, this strategy requires enterprises to have closer cooperation with downstream customers, mainly brands. At the same time, it also requires enterprises to have a better understanding of brand positioning and product differentiation. Taking our customers as an example, it is necessary for these customers to establish relatively independent organizations to provide specialized services and constantly achieve two-way integration with the brand's process, which requires continuous efforts of enterprises.

　　 Two, create more value-added through highly refined management of processing trade.

Fast fashion, represented by Zara, is sweeping the global clothing market. How can we achieve the fastest speed from product concept to store display? How to achieve small batch and multi batch product management? How to dig out the potential value of the bestseller? There are some new answers to the problems that are difficult to solve in the traditional fashion distribution mode, but this also puts forward new requirements for the supply chain, which must be characterized by flexibility and efficiency. This is a highly refined management requirement.

Take an enterprise that we serve as an example, its production line has been able to manage products with one piece instead of one batch as a management unit, and each product in the production line has different accessories, models and processing requirements. In the past many years, the enterprise has consistently invested in the process and information system. In general, several aspects are very critical: first, we should grasp the different version of the design requirements and the characteristics of the surface accessories, and set up a very large database for ready calls. Two, we design a production line technology standard with single product as the management unit; the three is the corresponding management system for the production capacity, procurement and inventory design, prevent excessive stocking from affecting capital turnover efficiency; four, we are training our customers for their own technology and standard, so that the clients can provide accurate and complete demand data for their own database, so as to ensure the correct supply of the final products.

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However, in order to achieve this mode, we must make great efforts in information systems, production line planning, personnel training, data management and so on. To achieve such transformation, enterprises must synchronously push forward the synchronization of these tasks and raise corresponding organizational and information resources. It is very difficult to achieve this mass customization production line management, how to ensure the balance of cost competitiveness and processing efficiency, but it is very honored that we have seen that Chinese enterprises have achieved, and their gross margin level is considerable.

In any case, we must clearly realize that the era of obtaining profits from orders only by cost advantage is no longer a Chinese enterprise. We must firmly implement it. Strategic transformation 。 It is precisely because of the lack of growth that the transformation is very difficult. Therefore, confidence and determination are the basic conditions for successful transformation. Secondly, as a transformation enterprise, it is necessary to choose clear strategic positioning and formulate clear strategic objectives and paths, concentrate resources and energy to carry out transformation, and any strategy focusing on behavior is very dangerous. Third, actively raising resources and establishing corresponding capabilities is the key to strategic implementation, including human resources and information resources in key links. Fourth, business management must formulate detailed short-term work plans and carry out adequate internal communication. Only in this way can strategic transformation be carried out.

Over the past ten years, China has undertaken a large number of garment production capacity from all over the world, which is mostly based on cost advantages and large-scale production capacity. In the future, we hope that China's huge production capacity can be further developed and effectively utilized. As the protagonist of the undertaking, enterprises have reason to strengthen confidence and change positively. Sincerely hope that in the next ten years, China will not only become the center of global garment production, but also the center of supply chain management.