Is Shanshan apparel's multi-brand strategy "harvest"?

In recent years, Shanshan Group has been keeping a quiet, low-key stance. Until this year, the China International Clothing & Accessories Fair held in Beijing actively opened its doors to the media. After years of hard work, the Shanshan Group finally has something to say.

From formal wear to outdoor leisure wear to golf special clothing, from the sportswear and casual wear designated for mass consumption to international top brand clothing, Shanshan's brands cover most of the subdivided apparel markets. “All of our joint-venture brands, including the controlling joint-venture brand, have all achieved profitability,” said Zheng Yonggang, chairman of Shanshan Group. “The Shanshan internationalization and multi-brand strategy has achieved initial success.”

Do not be the industry leader

In the past 16 years, the Shanshan's development model has been changed again and again, each time causing widespread controversy in the industry. In 1990, Shanshan first created a "one-stop production and sales model" and built the country's largest clothing sales network. In 1996, Shanshan was listed on the stock market and became the first listed company in the textile industry. In the same year, Shanshan first hired domestic fashion designers to build high-end clothing brands. In 1999, Shanshan changed its original proprietary sales channels to franchise mode. In 2001, Shanshan cooperated with Italy's Faro Group and Japan's ITOCHU Corporation to jointly operate the international brand of Martha Essani. Today, in addition to 13 original brands, Shanshan also owns 9 exclusive licenses or operating franchises for international brands in China.

With more and more brands in the hands, Shanshan Group's sales of its “Fir Shan” suits have dropped from RMB 2 billion at its peak period to less than RMB 1 billion, and it has achieved 8 billion yuan in Shanshan. In sales, the garment industry only accounts for 1/3. In the organizational structure of Shanshan, along with the Shanshan Group, which is dominated by clothing, there are also Shanshan Technology, Shanshan Biotechnology, Kechuang Economic and Trade Co., and Songjiang Copper Group. The risk of diversification is also increasing. In response, Zheng Yonggang smiled. "The garment industry is most afraid of an inventory backlog. At that time, in order to maintain a revenue of 2 billion yuan, the stock would have to be 8.9 billion yuan. It must be said that economies of scale must be attached to the economies of scale. One billion yuan is enough. More brands are not."

The development of the enterprise must adapt to changes in the market. When entering the department stores in Beijing and Shanghai, it is difficult to see local high-end clothing brands. The world’s top 20 apparel brand companies have all entered the Chinese market, and strong domestic demand has become the driving force behind the steady growth of the Chinese apparel industry. The competition of domestic apparel brands has already begun. Taking into account the overall market structure, Shanshan took the strategy of opening up cooperation and self-development, opened up markets from different levels, and ultimately occupied the market with brand groups to cultivate branded apparel companies that had both competitiveness and profitability.

For the 12 original brands of different market segments that have been incubated through investments and acquisitions, Shanshan Group has strict "three-year profitability" requirements. If it can't turn a profit, Shanshan will no longer invest in additional investment. At present, most of the original brands have achieved profitability.

Cooperation is harder than competition

Cross-border cooperation with the internationally renowned clothing company brands, Shanshan is not the first, but the real operation of international brands, Shanshan is the forerunner. At present, Shanshan is operating nine international brands in joint ventures or partnerships with companies such as Itochu Corporation of Japan and De Santer Corporation. Among them, some of the joint venture brands that Shanshan has absolutely controlled because of its good profitability, the brand holders have repeatedly asked for additional shares.

For the cooperation with international brands, Zheng Yonggang is very optimistic: “The year of Shanshan is not doing OEM for international garment companies, but through the introduction of international brand operations, absorbing the brand culture of international brands, in the process of cooperation with international brands. Train and train your business talents and design talents."

In Zheng Yonggang’s view, cooperation is more difficult than competition. “First, we need to consider the interests of each other and leave room for others. This is the essence of cooperation.” As for the basis for cooperation, Zheng Yonggang is summed up in four aspects———in line with international standards. Concept recognition, Shanshan good quality reputation, high-quality, low-cost manufacturing advantages and network channels woven in 1,500 stores advantage.

Since September 2001, the “multi-brand internationalization” strategy has been launched. After the brand layout in recent years, Shanshan’s transformation has been recognized by the market. In 2005, Shanshan clothing sales increased by 25.8%, and profit increased by 59%. Partially achieved global procurement and global orders. Regardless of the scale or profit considerations, Shanshan's multi-brand “high yield” is only one step away from the bumper harvest.

“Costume will always be our main business, and we will upgrade it into a fashion brand industry. I believe that after 8 to 10 years, domestic apparel brands will go abroad in batches, and I hope to lead the second trend of domestic garment industry reform. "Zheng Yonggang expressed his confidence in the future of Shanshan. Text/Reporter Chen Yan

Reporter observes nurturing independent brands in learning

Why did Shanshan cause a lot of controversy? Because Shanshan is always innovating. More than ten years ago, when competitors used to organize production and operations in a “front-to-back-factory” mode, Shanshan took the lead in adopting the “production, supply, and sales” model, and achieved direct sales of Shanshan suits with annual sales of 2 billion yuan. yuan. Today, when multinational corporations in the world use China's high quality and low cost to reintegrate their global supply chains, Shanshan in turn uses its domestic market and cost advantages, and uses the world's most inadequate brand resources in the apparel industry in China to expand itself.

"What the apparel industry lacks is brand promotion and international operation." This is a costume expert's sigh. The craftsmanship of many of our clothing brands has already reached the standards of international brands, but the core values ​​and brand cultural connotations have not yet reached the international level. When there is no strength to compete with international brands on the same stage, it may be helpful to learn in open cooperation, integrate industrial chain resources, continuously improve the connotation of independent brands, and enhance the ability to manage brands and operate brands.

In the context of the overall development of the textile and apparel market, the multi-brand strategy of Shanshan is reflected in the fact that there are two changes in Shanshan's compliance: First, as Du Fuzhou, president of the China Textile Industry Association, said, the textile industry has entered. The best development period of history. The comprehensive competitiveness of China's textile industry is being comprehensively improved. A number of powerful textile companies have begun to operate internationally. A few large enterprise groups initially possess the shape of multinational companies, and the level of brand marketing and management has made great progress. Second, the domestic demand has played a much bigger role than the export in the textile industry. The rapid growth in the consumption of clothing products has not only stimulated the domestic textile consumer market but also has stimulated the world market. In the past, the production and processing model has been unable to adapt to the new market competition pattern, backed by the domestic market, and only by developing the brand and strengthening the brand with the market as the precursor, can it win its own stage in the international market competition.

Looking at the multi-brand strategy of Shanshan from the development trajectory of Shanshan, it can be found that Shanshan still faces many challenges. The creation of famous brands and the management of brands require a large amount of capital investment and talented personnel reserves. Balancing the relationship between the development of apparel industry and investment income will directly affect the future competitiveness of Shanshan.