Eight years is a moment for some people, but it is long for others. A private enterprise that has only survived in China for 16 years will spend 8 years to get rid of the industrialization model that it first became famous. This may be the difficult process that every Chinese manufacturing enterprise must undergo in the process of industrial upgrading.
In constant innovation and questioning, Shanshan learned what to change and stick to, what is accumulation and precipitation.
“In my mind, clothing is the core industry, and technology and investment are two wings. It should be said that I have the deepest feelings about clothing. I am an investment decision maker in Other industries. Other industries besides clothing have huge profits, but they just laugh.†Zheng Yonggang, who has been fighting for the Shanshan career for 16 years, uses simple words to interpret what he understands as a company's growth during the transformation.
In the Chinese business community, Zheng Yonggang and his Shanshan have been widely controversial for nearly eight years.
Even Zheng Yonggang referred to himself as a person who likes to create something out of nothing. In the early 1990s, he pioneered the “one-stop production, supply and marketing†model and built the largest direct sales network in China's domestic apparel market at that time; The stock was listed on the stock market and became the first A-share listed company in China's garment industry. In the same year, he hired the two most famous designers in China to promote the “Fan Han poem†fashion brand, and opened the brand name brand with the famous designer. He also drastically carried out “production divestment†and “channel reengineeringâ€, changing all the original self-sales channels to franchise mode; since the headquarters moved from Ningbo to Shanghai, Zheng Yonggang has also involved in diversification, investment, and clothing. Lithium-ion battery materials could not be beaten. In 2001, Shanshan started the "multi-brand internationalization" operation of the "NIKE-like" model in addition to the core brand suits...
In this kind of leap-forward development, it is very unfathomable for outsiders to let outsiders go. As the Shanshan suit LOGO disappeared from the high-end shopping malls in the big cities, silently in the "Huai Shan Department" has risen a number of new brands, "The Shanshan phenomenon" has even become a topic of management academics.
In the journal's opinion, the "shanshan phenomenon" is indeed enough to become a management topic, but not because of the decline in the market share of the former hegemonic market - we found that the changes that Zheng Yonggang and Shanshan began 8 years ago are precisely today's many The common issues faced by Chinese industrial companies are: How do traditional manufacturing industries upgrade their industries, and move along the value chain of the so-called "smile curve" to the higher-end "productive service industry" that Wu Jinglian said? For a company whose main business has a glorious history but is too mature, where to look for a more growth "second main business" to avoid the profit risks that the original single main business's life cycle brings to the company? In addition to relying on labor costs and sales clerk's tactics, how should Chinese companies establish their own brands and exceed the OEM's system lock-in? The transition from a traditional enterprise to a modern international company requires painful changes in organizational structure, internal management, strategic decisions, implementation mechanisms, corporate culture, performance evaluation, and replacement of talents.
Heng Yonggang has been thinking in advance for the vast majority of today's Chinese entrepreneurs, and Zheng Yonggang has been thinking ahead for a few years. Shanshan explored the path he had taken and provided precious examples for his colleagues. Therefore, the journal tries to restore the practice of Shanshan by changing its own practices through detailed interviews over the past eight years. It looks at the fate and exploration of this Chinese company in the last eight years under economic climate change, and also shows the future for the broader Chinese business community. Some possibilities.
In the past 2005, Shanshan ushered in a bumper harvest: more than 8 billion yuan in revenue, 25.8% growth in apparel sales, and 59% profit growth, far exceeding the size of Shanshan's single apparel brand. Zheng Yonggang said he breathed a sigh of relief, but it is still too early to tell whether this is a success or not. For Chinese market-oriented companies with a history of up to 20 years, the only way for them to survive in more and more complex and competitive situations is to innovate, just like Shanshan’s corporate slogan: “Lets change ourselvesâ€
Eight years ago, Shanshan was a miraculous miracle for the Ningbo people. Today's Shanshan is more like history. At least, this has been shown in the streets of Ningbo, which already have a modern urban style.
In March, under the spring sunshine in Ningbo, the lively OCT City faces five stores, Lecoq, Azzali, Renoma, and three French and Italian famous brand stores are dazzling and luxurious. In contrast, the Firs Shanshan clothing store next door is a bit normal.
"In the past 10 years, the Shanshan seems to be busy, but the reputation is not as good as it used to be." A local on the street told reporters.
"This is no wonder. Outsiders can only see the surface. For the current Shanshan, the layout is more important than fame." After listening to the reporter's remarks, Zheng Yonggang smiled and was in no hurry.
“The five brands you have seen in OCT City are different from each other, and all of them are controlled by Shanshan Group.†Zheng Yonggang, chairman of the board of directors of Shanshan Investment Holdings Co., Ltd., said, “This is the layout. It is an international mature experience. It is from 1997. In the past 8 years, they have been learning from others and changing their own results."
This scene can indeed be found on the Champs Elysées in Paris. This famous fashion brand on both sides of the street is full of different brands of high-end apparel and luxury goods stores, a considerable part of which belongs to a group - LVMH. The world's top fashion group was founded in 1987 and has more than 50 top luxury brands including Louis Vuitton, Christian Dior, Givenchy, Ji Xue and Fendi.
“Ten years ago, we were able to monopolize 37.4% of the Chinese market with a single stroke by offering one-stop production, supply and marketing.†Zheng Yonggang told BusinessWeek, “But we must learn the complex thinking in the international fashion industry today.â€
"We are prepared to silence for another 3-5 years and work hard. By then, Shanshan and all garment companies in China are 'consistent and different'," said Zheng Xueming. As the vice chairman of the board of directors of Shanshan Holding Co., Ltd. and the president of Shanshan Group, who is in charge of clothing, Zheng Xueming and Shan Shan’s family Zheng Yonggang created the Shanshan brand 16 years ago.
In Zheng Yonggang's view of the entire Shanshan enterprise, Shanshan and all garment enterprises in China are no longer on one level. Today's Shanshan is quietly "unrecognizable" compared with eight years ago.
The Silence of the Shortage Era and the Silence of the Excess Times
The frenzied Shanshan has become calm, but the outside world has observed little change in the angles and standards of Shanshan.
“People are still accustomed to looking for the old suits of the fir trees 16 years ago.†said Zhou Shifen, vice president of Shanshan Investment Holding Co., Ltd. “Actually, Shanshan’s sales revenue is more than 8 billion yuan this year, of which apparel only accounts for 1 3, and Shanshan suits only account for 8-10 billion yuan."
The origin of Shanshan began in 1989. That year, Zheng Yonggang took over a small factory near the end of the collapse - this company named Ningbo Yigang garment factory is the predecessor of the Shanshan Group.
Not long after he took the job, Zheng Yonggang saw a young man wearing a suit fashionable and free and easy when he was on a train trip. He asked curiously to find out that it was a “garment trash†imported from abroad. This "garbage garment" not only keeps the traditional suit crisp but is also very light and soft.
Inspired by this "garbage costume", Zheng Yonggang immediately returned to Ningbo and organized technical forces to develop new style suits. Different from the thick and stiff style of the traditional suits, the fir suits were highly praised as soon as they appeared. The slogans “Saishan suits, don’t be too smart†also aptly displayed the unique selling points of Shanshan suits at that time. Zheng Yonggang also pioneered the “one-stop production, supply, and sales†model. By 1992, Shanshan built the largest direct sales network in China’s domestic apparel market at the time. 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. In 1996, Shanshan Co., Ltd. (600884) became the first A-share listed company in China's garment industry.
Eight years later, how did the splendid founders evaluate this suit of Susan? “At that time, it brought fame and money to Shanshan and could buy a luxury car every day, one car a day for four to five years.†“It is an industrialized brand in the era of short-run economy, positioned at 18-60. Years old, regardless of the level of consumption ";"No design elements, poor understanding of the brand concept"; "One-stop model, professional division of labor is poor, has not adapted to changes in market segmentation"; "In order to maintain 2 billion in revenue, inventory There must be 8-9 billion, which is a time bomb."
These arguments in different perspectives, especially the aftermath of the golden age, have already begun to emerge in 1996, which has caused Zheng Yonggang’s attention.
“Zheng Yonggang is a person who loves to challenge, change, or surpass himself. It can also be said to be a person with a strong sense of crisis,†said Zhou Fen. Zhou and Zheng Yonggang had known each other for many years to understand the personality characteristics of the godfather-level figure in China's apparel industry and the difficult road to entrepreneurship he had walked through.
Although the sales revenue at that time was still on board, Zheng Yonggang experienced the rain coming from a series of details: too much inventory; advance payment not coming; the terminal seller who obeyed the manufacturer's pricing and even waited to pull the goods required price negotiations; Competitors with homogenous competition began to appear. They also started advertising and introduced technical talents; the most important thing was that gross profit fell from about 30% to 12%...
"The shortage era has passed and the buyer's market has come." Zheng Yonggang's strategic judgment is extremely accurate.
He began to consider ways to get rid of the previous industrial production model from both sales network and design. “In the era of industrialization, the production and sales of garments were mainly reflected in the expansion of quantity and the reduction of costs, ignoring the brand-new connotation that the real clothing design brought to the product.†Zheng Yonggang concluded in an internal speech at the time, “What is the old model? There must be a precondition for the transformation of the production and marketing model: the market has great demand, how many goods are sold, and once the market's demand has slowed down, the channels are no longer the channels, and they become 'depots', just like a city. Once there is a problem with the transportation system, the street and the road will become temporary parking lots."
At that time, Shanshan had 26 branch offices and more than 30 offices across the country, and its sales staff had more than 6,000 sales personnel. "The direct-run shop is to use Shanshan money to buy Shanshan products, and then sell products for Shanshan." Zheng Xueming said, "In fact, this is not sales, can only be regarded as a warehouse transfer, everyone is willing to buy more, sell and sell." He can't care less if he can't afford it, which leads to high operating costs and serious inventory overstock."
As the creator of this model, Zheng Yonggang recalled to Business Weekly: “In the beginning, in order to expand the apparel industry, the first integrated production, supply and marketing model in the apparel industry was based on the unique shortage of China’s economy at the time. In fact, there is no such practice abroad."
In 1999, Shanshan’s efforts to eliminate the “public ownership of private enterprises†began with drastic changes in the network. All the direct-operated stores were cancelled and replaced by franchises. Zheng Yonggang's belief in overdoing emphasizes that franchising is the only way out for the Chinese garment industry and even for the garment industry on Earth. He mobilized and said: "In the past, Shanshan created a number of 'millionaires'. After implementing the franchise plan, it will create a number of 'millionaires' in the next five to 10 years."
Shanshan's franchise stores are divided into two levels, one is regional headquarters, and the other is subsidiary stores. Whether it is the Shanshan company's relationship with the regional headquarters or regional headquarters and specialty stores, it becomes a contractual relationship in sales. The franchisee system has successfully solved the problems of adverse selection and moral hazard in the original franchise relationship between the franchised stores. The inventory discount originally belonged to the Shanshan was transferred to the franchise owner. Those who used to understate sales and accumulate stocks for the second year The discounted prices of inventories have returned to the headquarters of direct sales stores have emerged. For newly-opened franchised stores, Shanshan sells stores for it in installments or with funds. The change from owed goods to owed money also means that the business interests and risks of Shanshan's merchandise have been changed from the original Shanshan's commitment to becoming a joint venture between manufacturers and franchisees.
Soon after, nearly 10 years ago, the accumulated stock foam of Shanshan was squeezed all at once. The timing bomb that threatened Shanshan was gone, and several hundred million yuan was recovered.
However, at the same time as the initial success of the franchise system, negative influences also emerged. Shanshan lost its position in the suit market. During the interview, Zheng Yonggang also reflected on this: “The network transformation solved the problem of ownership, but since the large-scale garment companies implemented franchising for the first time in China, there are indeed many ideas, policies, or explorations. Well, I'm not going to comment on it. I insist that it's best for myself."
“The ever-backward economic shortage era has always made fashion traders in China nostalgic. After the Shanshan channel reform in 1999, local companies in Fujian and Zhejiang, including Ningbo, followed suit.†Zheng Yonggang firmly believes that what Shanshan did was What the industry has to do after three or five years, he said: “The Shanshan has provided forward-looking practices for the industry, which reflects the role of leading companies and helps the industry to move closer to the international level in industrial upgrading. For this, I I am very pleased."
As for the current market share of Shanshan suits, Zheng Yonggang thinks it is not too low, but it is too high. "From 1988 to 1999, Shanshan suits once reached the highest share of 37%, it is because Shanshan first started to do brand, almost in a state of non-competition." Zheng Yonggang believes that with the increase of the brand, the market share is inevitable According to the law, “Doing branding should not pursue quantity. For example, top brands such as LV and Armani only supply a small number of people. It is sufficient to open 35 stores across the country. Like the Italian high-end brand Macro Azzali, we operate 100 stores across the country. Sufficient." Therefore, he believes that Shanshan suits to open 500 stores have a sale of 1 billion yuan is enough, "more is not a brand, it should enter the wholesale market."
Once and again understand what a brand is
At the same time as channel reengineering, Zheng Yonggang directed Shanshan to carry out another far-reaching change of significance: brand operations.
The purpose of the brand operation reform is also very clear, that is, to increase product segmentation for the market segments, in order to increase the design elements to enhance the brand gold content and fashion sense.
At first, Shanshan seems to understand the brand operation as a leap from large-scale industrial products to design products.
“Design is the soul. Designers are the carrier of the soul. We must put the soul back in place. I have no doubt that the era of Chinese designers has arrived.†This is the slogan that Zheng Yonggang shouted at the time – and it was also the first time that the Chinese clothing industry had proposed it. Independent innovation ideas.
Some people say that the history of clothing is 3500 years of human self-display. Unlike the West, China’s clothing culture is constantly cut off by history, and it was not until the late 1980s that there was a clothing designer. “Compared with Europe and the United States, China has a cultural gap in its clothing and accessories. Compared with international brands, the Chinese national apparel industry lacks design art and culture,†said Zheng Yonggang. He had long been clear about the fact that the suits produced in the Shanshan factory were made of the same fabric, the same worker, and the same machine, and they were affixed with some top international brands and they could sell for 10,000 yuan. The trademark can only sell more than 2,000 yuan.
As early as 1996, Shanshan began to cooperate with famous brands and famous companies. This is a precedent for domestic garment companies and designers. At the annual salary of RMB 1 million, Zheng Yonggang hired the two most famous Chinese designers, Zhang Yida and Wang Xinyuan, to Shanshan to try to design the best fashion ladies dress in China. At the 1997 Winter Show in Shanshan, the two designers launched more than 200 garments in 17 series. In April 1998, Wang and Zhang Erren introduced the theme of "I am not a fan," the theme of the national tour, making a sensation.
Since then, Fhan Han poetry and Vatican men's wear have become the original brands that Shanshan has created according to the international advanced clothing concept and quality. For these two designer brands, Shanshan was very confident at the time - because they not only had extraordinary designers, but also had deep management of enterprise management. At the same time, Shanshan also dispatched technical backbones in batches to Japan and Italy for training and brought the quality culture of foreign companies back to Shanshan. Even Shanshan has set up its own design studio in Paris, the world's fashion capital.
The transformation of Shanshan has driven China's apparel industry into the “design brand†era from the industrial age. However, this landmark test that promoted China's garment industry was once again reconsidered for Shanshan.
Zheng Xueming, the general manager of Ren Shanshan's Fashion Design Department at that time, recalled laughing: “Chinese designers are more like the 'politicians' in the design world. They only work in companies for more than a week a year, and they are busy with lectures and performances. To participate in competitions, there are no professional designers in foreign countries who create according to market demand."
Shanshan's incubation period for the brand is generally 3 years, which means one-year loss, two-year profit, and three-year profit. However, after the end of the three-year period, the two companies, Fa Hanshi and Vatican, which were built as high-end brands, failed to achieve the desired goals. The two original brands had to be transferred.
"Where does a well-known designer come from? It's only a matter of designing a product and becoming a brand. Designers who don't have their own products are sad." Zheng Xueming said.
To create a designer brand this way, the Shanshan had to look around the world. Since 2001, the company has embarked on a more effective branding approach from the market practice - "multi-brand internationalization", that is, through cooperation with international brand companies to pull their own original brand. Currently, in addition to the core brand Shanshan, Shanshan Group also directly controls 22 brands, including 3 self-created brands, 9 internationally registered designer brands, and 8 international cooperative brands. The cultivation period of each brand is 3 year.
In the "multi-brand internationalization" practice, Shanshan's understanding of the brand has once again been sublimated. “We are now working as a brand operator. Like Nike, Louis Vuitton and ITOCHU Corporation, Shanshan is an investment company. It controls a lot of fashion brands with capital as its link, but each brand’s operations are handed over to specific brands. The company did it, and the production process was also stripped.†Zheng Yonggang said, “What we are doing now is the way that multinational companies make money.â€
However, Shanshan did not give up its dream of creating an international fashion brand. “Our cooperation with international brand companies, in addition to making money, has become more tangible, learning from the people and cultivating our own designers and business talents.†Zheng Xueming said, “There is no reputation, indicating that he did not participate in the award, his professionalism Stronger and more marketable."
Zheng Yonggang is unwilling to predict how long it will take to realize the ultimate goal, because the history of product manufacturing can be achieved through compression, but cultural connotation is impossible to obtain through compression. "It must be admitted that for quite a long period of time, China's autos and garments are unlikely to produce top international brands. Because China's real fashion design is only 20 years old, from extensive products to fashion, this qualitative change process took nearly 100 years in France. Japan spent 50 years, and the clothing brand contains culture and history.†Zheng Yonggang believes that this needs to be Chinese culture to become the mainstream culture in the world, but he firmly believes that “With the increase in economic strength, China will emerge in the world. Sexual mass brands, like the American POLO and CK."
No product company and no depreciable assets
By 2004, Shanshan's garment industry and other new industries were in a period of adjustment, with little revenue growth, but profit margins were rising. Shanshangufen, for example, had a net profit rate of 16% in 2000, which was lower than the industry's average net profit rate of 18%. By the third quarter of 2004, Shanshan’s net profit rate was 12%, which was much higher. The industry's average net profit rate is 4%.
In 2005, Shanshan finally ushered in a bumper harvest: clothing sales rose by 25.8%, and profit increased by 59%. From a digital perspective, it is far more than the size of Shanshan's single brand. All sectors such as science and technology and investment started to blossom in the year. "We have achieved a global victory." Zheng Yonggang said.
Zhou Shifen, vice president of Shanshan Investment Holding Co., Ltd., metaphorically stated: “It is like a seedling planted on a hotbed. When transplanted into the field, it will surely shrink a bit, but only after transplanting can rice be grown.â€
If the birthplace of Ningbo is a hotbed for the cultivation of Chinese fir trees, Shanghai, where the current headquarters is located, can be seen as a rice paddy field where the Shanshan harvest can be harvested.
At the end of the 1990s, the radical channel reforms and trials of the brand operation model implemented by Shanshan proposed new propositions for Shanshan’s decision-making ability and strategic thinking. On the one hand, the revenue from the service of the Shanshan declined, and the market scale was reduced. On the other hand, the original accumulated hundreds of millions of funds still had no place to invest. The development at this time is nothing but two paths: one is specialization and the other is diversification.
"There is no right or wrong between these two directions, but we can only choose one." Zheng Yonggang said, "It stands to reason that the garment industry can develop upstream and downstream and extend the industry chain, but from the situation at that time, this road It is very slow. Moreover, once we choose specialization, it means that we still have to stay in Ningbo. This is contrary to the internationalization and modernization goals that Shanshan proposed in his early years."
In January 1999, Shanshan Group moved its headquarters from Ningbo to Pudong, Shanghai. Zheng Yonggang said: "Shanghai is a sea. When we come to the sea and swim with the 'sharks', we will grow faster."
However, not every entrepreneurial veteran of the original Ningbo Shanshan had the opportunity to swim with sharks. “There are only a few Shanshan people who came to Shanghai from Ningbo with me.†Zheng Yonggang told BusinessWeek. “When an enterprise is small, what you want to do is done. However, after a company has achieved a considerable scale, it is necessary to operate. Specialization, which puts higher requirements on the talent structure."
It is difficult to say whether Zheng Yonggang had already made this clear, but as early as 1996, Zheng Yonggang made equity arrangements through the capital market and successfully solved the problem of the distribution of the interests of Shanshan entrepreneurs and the issue of staying in Ningbo.
In 1996, Shanshan was listed on the stock market. According to the then national policy, it could have internal staff shares and allow internal shares to be listed three years later. "We have 300-400 old employees who immediately value hundreds of thousands or even millions," said Zhou Shifen, vice president of Shanshan Investment Holdings.
While the elders stayed in Ningbo, cutting-edge began to assume important responsibilities. Hu Haiping, 31-year-old vice president of Shanshan Group, emerged from the water at this time. Hu Haiping is the chairman of the postgraduate committee of Zhejiang University. In the early years, he was the senior executive of the marketing department of Asia Pacific of Procter & Gamble.
After the headquarters moved to Shanghai, Hu Haiping was appointed as the president of Shanshan Technology Co., Ltd. His main responsibility is to build a high-tech segment of Shanshan with the help of Shanghai's policy advantages and human resources. In 1999, Hu Haiping introduced the first high-tech project, the industrialization of lithium ion battery carbon anode materials. The project belongs to the national 863 plan development project, which fills the domestic gap. At present, Shanshan Technology Co., Ltd. has developed into the world's largest lithium battery integrated material base.
Light travelers travel far and Shanshan began to run wild on the high-tech road. At present, Shanshan has 4 national 863 projects including 18-micron copper foil materials, lithium-ion anode materials, heat-shrinkable materials, and high-temperature pressure sensors. In addition, there are 9 high-tech projects such as biological oxygen-consuming bacteria fermentation waste, nano-surface heating materials, super-capacitors, Aosi materials. Shanshan Group’s cumulative investment in high-tech fields is about 1 billion yuan, and its nearly 20 high-tech companies.
In August 2004, Shanshan Investment Holdings Co., Ltd. was established and all enterprises of Shanshan were reclassified. The holding company controls more than 50 companies including Shanshan Group, Shanshan Technology Group and its subordinates. It is the highest representative of the Shanshan Enterprise Community. The holding company's board of directors is the highest decision-making body and has investment decisions and strategic development under the board of directors. Two committees.
Simply put, Shanshan Investment Holdings Co., Ltd. is a corporate community legally formed by all enterprises under its name of wholly owned, controlled, equity, and intangible asset management. The relationship of assets is the basic production relationship of Shanshan enterprises. In general, the three-tier structure of “holding company-industry group-industrial company†is the basic organizational structure. The current structure is the holding company management of Shanshan Group, Shanshan Technology Group, Shanshan Bio Group, Kechuang Economic and Trade Group and Songjiang Copper Group.
The responsibilities of the three levels of architecture vary. Holding company has investment decision-making right, personnel management rights and investment income rights, is the strategic investment decision-making center of Shanshan enterprises; the industrial group has the executive, management and coordination rights, is the management center for the operation of Shanshan enterprises; various industrial companies enjoy sufficient The right to self-management is the profit and cost accounting center of Shanshan Enterprises.
Under this framework, Shanshan Jiang directly controlled by Zheng Yonggang has not involved specific products. "As an investment company, its products are one company and one person," said Zhou Fen.
After the establishment of the holding company's framework, the state-owned enterprise MBO, which has improved the efficiency of the property system, has given Zheng Yonggang greater inspiration. Once again, he introduced the principle of ensuring power to corporate management, and promoted stocks at the second floor of the Shanshan corporate structure, namely, the industrial company level. Shanshan’s internal system was called “federalismâ€.
Zheng Yonggang will control the companies controlled by Shanshan, according to the number of holdings divided into ABC three categories, the operators of these companies are the boss regardless of their size and ownership of their operating companies. Taking Shanshan Technology Corporation as an example, President Hu Haiping personally contributed 6 million yuan to buy 25% of the shares, while the holding company rewarded him 15%. Hu actually owns 40% of the shares in the technology company.
"This is what I designed." Zheng Yonggang said to Business Weekly that his expression was slightly proud. "Everyone is unconvinced." He said, "When you work for someone else, the motivation is certainly not enough. If the managers don't contribute their own money, they will all be rewarded, and there will be excessive incentives."
In addition to holding companies without products, brand assets that will not be depreciated and will continue to increase in value over time will become increasingly important in Shanshan. This is another important step in the industrialization of Shanshan.
After the sale was changed to join, the production of Shanshan also began to lose weight. At the beginning of 2002, Shanshan withdrew from the field of garment production and processing. Previously, the controlling rights and specific operating rights of the five garment processing factories wholly established by Shanshan in Ningbo were transferred to foreign companies or individuals. At this time, Zheng Yonggang completely separated production and sales of Shanshan through processing outsourcing and the use of franchisees.
According to reports, currently only half of the Shanshan Group’s garments are produced in its own factory, while 30% are produced in other domestic factories, and another 20% are processed abroad. “We have already partially achieved global procurement and global orders. Where's good to do where to do.†Zheng Xueming said. The countries currently producing and processing clothing for Shanshan include Japan, South Korea and Italy.
After detachment from the industrialized Shanshan, “Federalism†focuses on the “most core value†link in the apparel industry—brands, that is, through international cooperation to promote their own brands. The current cooperation has brought great confidence to Zheng Xueming. “Two more years of study, the rapid upgrading period of the original brand has arrived, and in 2007, we will begin to increase investment.†Zheng said.
At the same time, Shanshan also authorized and transferred its own brand of mature products. In 2005, the Shanshan shares benefited from the franchise of Shanshan denim and Shanshan underwear.
“The era of defining corporate value by counting the number of fixed assets such as factory buildings and machines is out of date. We value intangible assets that will not follow the depreciation of fixed assets,†said Zheng Yonggang.
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