Foreign-funded shoe companies are encroaching on the Chinese market; domestic companies are transforming and responding
On October 4, the European Commission announced that it would conduct a “sunset review” of anti-dumping duties on leather shoes produced in China and Vietnam, which means that anti-dumping duties may be extended. The export market of Chinese shoe companies is facing the dual test of the financial crisis and European and American anti-dumping measures. Five days later, on October 9, UBS released a research report on China’s footwear industry, which showed that China’s per capita footwear consumption continues to grow. The report predicts that by 2012, Chinese residents will buy an average of 2.3 pairs of shoes per year, and this number In 2006, there were only 1.8 pairs. UBS therefore boldly predicts that China’s domestic sales market of nearly 800 million pairs of shoes per year is gestating.
On the one hand, there are obstacles to export sales, and on the other hand, there is a potentially huge consumer market for domestic sales. The development of Chinese footwear and apparel companies is facing new opportunities and challenges.
Expanding domestic demand
Entering 2008, the “bankruptcy wave” of footwear and clothing companies is surging. Small and medium-sized enterprises that cannot bear the burden of RMB appreciation, rising raw material prices and other factors have stepped into the minefield. Exports of clothing companies have been severely frustrated, and even normal production is unprofitable.
Yu Dong, director of the Foreign Trade and Economic Cooperation Bureau of Yantai City, Shandong Province, recently stated that the original average profit margin of textile and garment import and export companies in Yantai City is currently around 7%. The appreciation of the RMB has forced many companies to withdraw from the international market. Judging from the current economic situation, demand in European and American countries has dropped, and many export companies have not been able to transform immediately, leading to bankruptcy or have already closed down.
Although affected by the financial crisis, China’s GDP growth has recently slowed down and inflation is currently high, UBS still insists on taking a positive view on the Chinese footwear market. On the one hand, it is based on China’s population base and the current relatively low per capita Consumption volume, on the other hand, is due to the fact that China still maintains a relatively stable economic development trend despite the financial crisis.
According to UBS survey data, the value of China’s footwear market increased from US$7 billion in 2003 to US$8.6 billion in 2006, with a compound annual growth rate of 7.2%. China’s urbanization has given rise to tasteful middle-income groups. UBS believes the group’s growth will have a positive impact on China’s footwear market. “Based on China’s 1.3 billion population, each person only buys 1.8 pairs of shoes per year. Compared with 3.5 pairs in South Korea, 5.3 pairs in Japan and 7.8 pairs in the United States, this base is very low.” The report said. It is believed that China’s footwear market has great growth potential.
One issue that cannot be ignored is that China’s potential domestic sales market is attracting many foreign-funded footwear and clothing companies. They have entered China aggressively, established exhibitions and specialty stores for famous clothes and shoes, and are looking for domestic partners in an attempt to carry out business operations. Localized operations. Not long ago, more than 50 Italian brand shoe companies jointly built a famous shoe museum in Chengdu, the “Capital of Women’s Shoes in China”. The shoe store covers an area of 800 square meters and displays nearly 500 new shoes from Italy’s first-tier brands. Sample. The relevant person in charge even said that the famous shoe store is a channel for the Italian shoe industry to directly enter the Chinese market. With the development of the economy, the Italian shoe industry has also begun to enter the Chinese market in a big way.
Deng Yongbing, a marketing management researcher, believes that the strong entry of foreign-funded enterprises in China will have an impact on China’s footwear and apparel companies, and the impact will be great. In the long run, it may mean the loss of local positions, because local footwear and apparel companies have not yet established high-end brands. Form a camp. Foreign investors may disdain low-end brands, but that doesn’t mean they won’t do them.
Transforming to cope with foreign competition
The American “Witt Daily News” published an article on October 8 saying that it is too difficult to give up “Made in China”. The author described it from personal experience: ” My shoes are made in India, but my shirt, underwear, and pants are all made in China. What about the sterile gauze in my first aid kit? Made in China. My portable coffee cup is from China, as are the wooden chopsticks I keep in my desk drawer. . A small toy car commemorating the Beatles video Yellow Submarine is also labeled with ‘Made in China.'” There is even a long-standing joke in the foreign trade industry, saying that if there is a lack of Chinese manufacturing in the European and American markets, Jesus will not even have a birthday party It couldn’t be done smoothly.
It seems that the export market is still inseparable from Chinese footwear and apparel companies, but companies cannot blindly stick to the old business methods of OEM production in the past. To achieve long-term operating benefits, enterprises need to make qualitative changes.
Professor Hong Tao, director of the Institute of Economics at Beijing Technology and Business University, said that in an environment where exports are not smooth, companies can only have better development space by adjusting their industrial structure and shifting their focus to the domestic market. Only by relying on the company’s own brand and With its strength in the domestic market, focusing on the export market is the long-term way to operate.
Huajian Shoes, which has been engaged in research on personalized customized shoes and is exploring the establishment of its own future industry standards through data collection, its president Mr. Zhang Huarong said in a recent interview with TV media: “Italy’s shoemaking industry is developed. But in the past, their company also started as an OEM manufacturer. After slowly accumulating experience in making shoes, they gradually developed their own brand and went abroad. However, if they want to change from ‘OEM’ to a self-owned brand trade model, Enterprises need to go a long way and need stronger self-Main R&D capabilities and more investment in market development. Building a brand is a long-term matter and cannot be rushed. ”
Deng Yongbing, a marketing management researcher, pointed out that the main dilemma of domestic footwear and clothing companies is that they have not been able to form a strong brand. Strategic adjustments for Chinese footwear and clothing companies seem to be inevitable. The development of foreign brands in China’s domestic market is currently coming to an end. It is still difficult to see whether it is a success, because foreign brands are not familiar with the local market and are not familiar with channels. The key depends on the marketing behavior in the past three years. Channels are a powerful force in the local market. In this regard, domestic shoes Service companies still have advantages.
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