The results of Shanshan’s diversification strategy are unpredictable, and “investment diversification and professional management” is the king

Bravely eating crabs

For now, Shanshan, which started with clothing, is no longer a mere clothing company. After years of channel integration, brand creation, and diversified development, Shanshan has grown into a production-oriented investment company through continuous transformation. Borrowing the words of Zheng Yonggang, chairman of the board of directors of Shanshan Holdings Co., Ltd., Shanshan is striving to “integrate global resources” and transform itself into an integrated trading company model with Chinese characteristics.

In the era of commodity shortage, single category, and lack of brand, Shanshan Suit has become one of the identification marks of high-end men's clothing in that era with the help of a large number of advertisements and production and sales channels. In 1997, the annual sales income of Shanshan suits was RMB 2 billion, ranking the first place in China's apparel market for 7 consecutive years, and the exclusive market share of 37.4% at the highest. This means that one out of every three people in suits wears a fir.

In 1996, Shanshan Co., Ltd. was listed on the Shanghai Stock Exchange and became the first listed company in the Chinese garment industry. The reputation of the brand needs to be improved. At that time, Zheng Yonggang, who was not in a doubtful age, believes that consumers who pursue individuality will have higher requirements for clothing after going through the food and clothing stage. Therefore, Shanshan began the design of the brand road, the extension of the brand is also logical, Shanshan women's clothing, Shanshan down jackets, fir fir knitted underwear, Shanshan children's clothing, Shanshan jeans, Shanshan home textiles, Shanshan leather goods, a time Crowded.

Cui Tao, an industry veteran, told reporters that the dream of Shanshan “creating the first brand of Chinese suits” has come true. The reality is even more perfect than the dream itself, but the problem will still arise. Since the brand was introduced in the market in 1989, by 1998, Shanshan has established more than 30 branches and 1,000 franchised stores throughout the country, forming a huge market organization structure and marketing network system. However, the branches established by Shanshan's wholly-owned investment have no direct connection with the ownership system. After the passion for entrepreneurship subsides, they gradually become lazy and the idea of ​​eating “big pot rice” spreads.

In addition, Cui Tao said that according to the sales network established in the traditional way, the operating cost is extremely expensive, including operating costs and inventory. For this system to function effectively, there must be a premise: the market is large enough. Once the market demand has slowed down, the channel is no longer a channel, and it becomes a "depot."

At about the same time, at the end of the 1990s, the shortage economy caused by the long-term planned economy gradually disappeared, and the market began to shift to buyers. The end of the era of clothing profits. Although Shanshan is still the first share of Chinese clothing, it is also facing the test of a rapid decline in market share.

Those great achievements that once had been admired began to show a "big and incompetent" condition, which made Shanshan become tangled. Surprisingly, the entwined Shanshan has thrown a bold idea at the time: With the help of franchising, it gradually fades out sales and production, learns NIKE's approach, and only focuses on brand management.

Now, franchising has become a common mode of operation for China's garment industry. However, at the time, this was an innovation. Zheng Yonggang, who fully implemented franchising, was likened to “the first person to eat crabs”.

Through this channel revolution, Shanshan has stripped about 70% of its production capacity and switched to outsourced production, dismantling all 35 branches and more than 3,600 salespeople of Shanshan and replacing it with hundreds of others. Franchisees have embarked on the road of “brand management”. Currently, Shanshan operates more than 20 brands.

Shining into the dream of reality

Now open the official website of Shanshan, a few words of “Fir Shan, China Trading Company” on the green motion screen, and it suddenly came into view. It is not difficult to speculate that Shanshan has pledged to have an industrial ideal of a comprehensive trading company with Chinese characteristics.

In fact, as early as 2009, Shanshan Group Co., Ltd. signed a comprehensive strategic cooperation agreement with Japan's ITOCHU Corporation, sharing the resource advantages of the century-old enterprise Itochu, configuring global resources, and integrating industries. As a result, Shanshan's ideal of building a Chinese-style “integrated trading company” surfaced.

On September 23, 2011, Shanshan opened the first “Outlet” store in Ningbo, with a scale of more than 20,000 square meters. Currently, more than 120 brands have settled in. The operating brands are internationally renowned brands. It is understood that "Outlet" is the result of the cooperation between Sanshu and Japan's Mitsui Real Estate. Mitsui is the largest Outlets operator in Japan and operates one-third of Japan's Outlet stores and Fortune 500 companies. Shanshan hopes to lay out 15 to 20 outlet stores across the country in the next 5 to 10 years. At the same time, Shanshan also hopes to cooperate with outstanding operators of commercial real estate in the Americas and Europe to further optimize channels.

It seems that Shanshan "multi-brand, international" has entered a higher level implementation stage, to do height, breadth, depth, is the future of Shanshan's efforts in the clothing sector. With the cooperation platform of “multi-brand and internationalization”, Shanshan will base itself on the basic soil, allocate industrial resources on a global scale, integrate the power of brands, industries, capital and people, and strive to become the first choice partner for international brands to expand the Chinese market. This is the basic orientation of Shanshan's first step in the global apparel industry landscape.

Nowadays, Shanshan’s “China Trading Company” has developed its initial development path, including cooperation with Mitsui, and Shanshan’s clothing, lithium battery, investment and other businesses have blossomed all over the world. They are doing well and gradually move closer to the “China Trading Company”.

However, what is more important is that for the main business apparel, Shanshan has long been not relying on selling clothes and clothing to seek survival and development, but is focusing on investment and capital operation as the main body, with originality, joint venture, agency and authorization. Such forms as means, using the advantages of international resources, operating a complete brand echelon in the Chinese market, to realize the magnificent turn to the "global brand integrated operator".

After all, in the value chain of the global apparel industry, China's garment industry can only gain the right to speak and decide if it has an original brand with international influence. At this level, Shanshan is only one step ahead, integrates brand resources globally, and uses China's huge market to re-establish the position of domestic apparel companies in the global value chain. With all the planning and all the ideals, Shanshan will be realized in the way of becoming the "global brand integrated operator."

It is worth mentioning that when Shanshan and "Itochu", which has more than 150 brand operation rights in the world, achieved a strategic joint venture, it has formed deeper cooperation and cooperation with international fashion industry groups such as Italy, France, Japan, and South Korea. When working with Mitsui to develop and operate the Outlets project, it can be said that Shanshan's “Global Brand Integrated Operator” dream has a more supportive reality basis. Cui Tao believes that, in fact, Shanshan alone is an important step in this regard. However, in the face of the cruel reality of the global economic downturn, this beautiful dream of a diversification strategy is experiencing an unprecedented impact.

The puzzle behind diversity

Regarding the dispute between "diversification" and "professionalism", Zheng Yonggang believes that diversification should not be contrary to specialization. After diversification, the operation of each dollar must be specialized, that is to say, investment diversification and professionalism.

However, the reality is that many companies have encountered bottlenecks in their diversification. Like many garment companies, Shanshan has expanded its lithium battery business and has become a member of the diversified development team in the precarious situation of the main business. The diversification of the textile and apparel industry is basically concentrated in the real estate, finance, and emerging industries. However, the real estate and financial industries are currently not in a good position. The risk of emerging industries is generally large, and the operating conditions are often unsuccessful. Relatively speaking, diversified companies are generally slower in growth rate or have losses, and are more stable or main business, “said industry insiders.

Previously the earliest rags for the diversification of the real estate business of the clothing company Youngor, public data shows that its investment in real estate and returns do not match. Before this, although the company did not announce the news, but a number of media recently announced that Youngor is about to return to the main business of traditional clothing, real estate business will be strictly limited investment.

In addition, the net profit of the Shanshan Lithium Battery business in the first half of the year was 9.14% lower than the same period of last year to 47,200,000 yuan. The company explained that the net profit of the cathode material precursor business was mainly due to a large decline. The decline in net profit of this business, as analysts said earlier, is the risk that diversification cannot escape.

Also in the men's clothing industry, the gap between the Shanshan and seven wolf performances is in stark contrast to the positioning of the brand. "Comparatively, the development of casual men's clothing will be faster, and sales growth like Youngor, Shanshan will not be rapid." Securities analysts said that Shanshan is a suit, but in the suit business Does not have much advantage, and seven wolves are clearly the leader in casual men's clothing.

Asked about the views on the development of Shanshan City, experts said that Shanshan Co., Ltd. began to promote the integration of the apparel industry in the second half of the year, and it is expected to close some of its branches with a sluggish sales turnover. At the same time, it will expand its sales promotion model and further establish its own brand image. .

The Shanshan staff members said that for the future of the company, management is not a bad evaluation, but still optimistic about the company's layout. Returning to the entire industry, the current pressure is still very large, and various economic indicators have not yet improved.