Difficulties in decision-making – solving the survival dilemma of the textile industry from the perspective of business management model
The reason why some textile companies, especially small and medium-sized enterprises, currently face survival difficulties is that, in addition to being affected by many factors in the external environment, entrepreneurs lack innovative thinking. Problems in the company’s own business management, such as product marketization and management thinking planning, cannot be ignored. In today’s volatile market, some entrepreneurs often make blind and romantic decisions that are divorced from reality, pushing textile companies to the edge of life and death.
When running a business or being a boss, no matter which industry you are engaged in, making money is undoubtedly the starting point. But in today’s textile industry, the cruel reality of “three bosses, one making money, and one struggling on the verge of life and death” really makes the bosses anxious and angry but helpless.
“Make the company small, make the customers big”
In March this year, an explosive news caused an uproar in the textile industry – assets exceeded 1 billion yuan, ranking among the top 10 for 8 consecutive years Shandong Sakura Textile Group, one of the top 50 companies in China’s cotton textile industry, sadly “withered” and was acquired by Shandong Ruyi Group. According to people familiar with the matter, Sakura Textile’s problems were mainly due to serious loopholes in its finances and capital chain.
“In the current situation where the profit margins of textile companies are gradually compressed, Sakura Textile’s blind and rapid expansion has become the root cause of its collapse.” Cao Xinyu, vice president of the China Chamber of Commerce for Import and Export of Textile Products, who is very familiar with Sakura Textile think.
When analyzing the reasons for the failure of Chinese entrepreneurs, Liu Yonghao, chairman of New Hope Group, said: “70%-80% lies in investment failure, and investment failure results from decision-making failure.”
The market is So cruel, it brings huge challenges to corporate decision-makers. Even if you are ambitious and conscientious, if you do not have a clear strategic positioning when making decisions, or underestimate the risks, market punishment may come at any time.
The “withering” of cherry blossom textiles is just the tip of the iceberg. According to the reporter’s understanding, many large-scale textile companies have been on the verge of suspending production since 2019, and even the operating situation of some listed companies has become increasingly severe due to financial constraints and other issues. Some people in the industry believe that the plight of these companies is not only caused by financial constraints, but also that companies need to think calmly and deeply reflect on their extensive and predatory survival model.
Upon closer analysis, the crisis encountered by large companies such as Sakura Textile reminds the industry: “The era when sales are above all else is over, and profit is the way of business.” To a certain extent, it can be said, “Make the company a better company” Small, make customers bigger.” Transforming into a light company is the direction of change in the expansion model of enterprises in traditional industries in the future.
“‘Seeking bigness’ is a normal human psychology. When a company develops to a certain level, it is normal for a company to develop beyond textiles or to extend within textiles. But it must be reasonable, healthy, and benign development, otherwise it may fail. Especially under the current situation, entrepreneurs must carefully study the investment value theory of the textile industry chain to truly maximize investment benefits.” Chairman of Zhejiang Cotton Textile Industry Association and Chairman of Huafu Holdings Co., Ltd. Sun Weiting said.
The confusion and clever tips of the “Textile Director”
Regarding the “seeking bigness” mentality prevalent in the current textile industry, Sun Weiting has a vivid way of saying: “Nowadays, many companies start from raw materials to clothing. Some even cross several industries, eating as much as they can, and the owners of textile companies become ‘textile directors.'”
Regarding Huafu’s development strategy, Sun Weiting’s idea is to maintain the professionalization of the company. , be a yarn expert rather than a miscellaneous expert. “Many people ask us to make fabrics, but I think not every segment of the industrial chain in the textile industry has big profits, so we have always insisted on focusing on the yarn link.” He believes that the industrial model of the textile industry is more The key is that if you lock in a certain segment of the industrial chain and become an expert in one aspect, the investment value will be higher, the capital turnover will be faster, and the replicability will be stronger. And if you go from raw materials to clothing, or even across several industries, it will be easy to distract your energy and focus will not be highlighted, which will bring great difficulties to business management.
Relying on the positioning and strategic thinking of being “China’s color spinning yarn strategy”, Huafu has developed into a company with 28 subsidiaries, nearly one million color spinning spindles, and annual sales of several billion yuan. A large textile group. It should be said that Sun Weiting’s decision to “become a professional” deserves the most credit.
Everyone has his or her own ambitions. According to Qiu Yafu, the takeover of Sakura Group and chairman of Shandong Ruyi Group, nearly 20% of companies are currently facing the fate of integration or even elimination, which provides a huge M&A opportunity for large-scale high-quality textile companies. He revealed that after acquiring Sakura, Ruyi Group will become one of the top three companies in the country in the fields of wool spinning, printing and dyeing, and cotton spinning.
The Vosges Group chose the path of its own brand. To this end, Vosges invested 100 million yuan this year to build a research and development center and pilot plant. While laying out the domestic market, it also established its own sales companies in Australia, the United States, Russia and other countries to sell under its own brands. “The profit of products sold under private label brands is more than 30% higher than that of OEM products.”Sun Rigui, chairman of the Vosges Group, revealed that products sold under the group’s own brands currently account for more than 20% of all exports.
For Shandong Weiqiao Entrepreneurship Group Co., Ltd., the “giant” in the textile industry, although it has been subject to constant controversy, it is undeniable that its development strategy does provide a template for the textile industry. Zhang Shiping, chairman of the group, said that the key to the reason why Weiqiao Entrepreneurship has maintained a good development trend for more than 20 years is to focus on the research of market strategies. Regarding the two basic questions of “what does a company do” and “how to do a good job in the company”, We always keep a clear head. From “acting according to one’s ability and rolling development” to “doing one’s best and developing by leaps and bounds”, Weiqiao relied on the cost-based market competition strategy to achieve extraordinary development of the enterprise.
The path of cultivation of “small bosses”
The experience and lessons of large enterprises are important, but after all, they are only a small part of the “top of the pyramid”. Not universally applicable. At present, more than 90% of China’s textile industry is small and medium-sized enterprises. For these “small bosses”, if they make mistakes and cause poor business management, the outcome may be even more tragic.
In addition to the influence of the external environment, these large numbers of small and medium-sized enterprises are facing more severe tests – unconventional development that is inconsistent with the laws of the market economy is gradually becoming history, and the chance of success is getting smaller and smaller. Intuition and courage tend to fail in business operations. In this period of change when the market is gradually transitioning to standardization, the knockout competition has begun. What is faced by small and medium-sized enterprises is undoubtedly the choice between survival and death.
Zhuang Zhenli, chairman of Shandong Qingdao Huaxin Textile Machinery Co., Ltd., has been working hard in the textile machinery industry for nearly 20 years. He originally worked as a sales clerk in a large local textile machinery company, and later set up his own business. Become a boss.
“In the past few years, the textile industry has developed rapidly and the demand for water-jet looms has been strong. Our products are in short supply and business is still booming.” Zhuang Zhenli said. However, in recent years, due to the hindered development of the textile industry, Huaxin’s development has also been affected. Although Zhuang Zhenli is quite far-sighted and has invested nearly 10 million yuan in developing new air-jet looms in cooperation with South Korea since the year before last, sales have been flat. Zhuang Zhenli said that he could not see clearly about the future, and there was a vague doubt in his tone about his decision-making.
An industry insider analyzed that at present, the bosses of textile companies can be roughly divided into two categories: one is an engineer or technical background, focusing on product manufacturing, but is not good at sales; the other is a salesman who started out, Selling products is fine, but strategic vision is not. No matter what kind of boss, there may be deviations in decision-making, not to mention that there are more people who just put down the hoe and become the boss.
He said frankly that the problems faced by many small and medium-sized enterprises now are not technical issues such as marketing management, but personal problems of entrepreneurs. The limitations of entrepreneurs in terms of knowledge structure, thinking level and operational capabilities are currently the main bottlenecks restricting the development of small and medium-sized enterprises. Behind the surface phenomena of weak marketing, lagging management and lack of culture, it is the personal cultivation of entrepreneurs that can break through the difficulties of small and medium-sized enterprises. key.
Unclear understanding of the industry situation, serious speculative mentality, complex debt chains, short-term loans and long-term investments, blind diversification and expansion… Too many decision-making errors have led to the difficulties of many companies. Behind this, the leadership style of business bosses who rely on their heads to make decisions, who firmly believe in personal experience and distrust market research cannot help but make people think deeply.
He warned some entrepreneurs to take advantage of the market rather than “against” the market. The decision-making of an enterprise must be a system with continuity, rather than an isolated and intermittent decision-making behavior. In the current market, it is doomed to be a dream for enterprises to obtain permanent interests and status through one or two correct decisions. The idea and practice of “one trick can make a difference” has no future in the modern market with advanced information. At the same time, it should also be noted that decisions cannot always be right. When wrong decisions occur, strategies must be changed immediately to resolve and make up for the losses caused by the mistakes.
As Du Yuzhou, President of the China Textile Industry Association, said: “At any time, companies need to think about what their strategic decisions are, where they are positioned, and how they should achieve their positioning. While absorbing foreign experience, China Enterprises must find their own way.”
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