The Commentary on Chinese Men's Clothing (V) - Criticism of the American Business Weekly

At the end of 2007, a major event took place in China's garment industry - the industry leader Youngor Group was criticized.

The critic is the American Business Weekly. Founded in 1929, it provides in-depth and unique business reports, management knowledge, and information for professionals around the world. It is recognized as one of the top three commercial magazines in the United States with Fortune and Forbes. According to relevant data, "Business Weekly" has a circulation of 1.2 million copies per week and a distribution range of more than 140 countries. It is the world's largest business magazine. "Business Week"'s attention is mainly focused on "the world's largest 1000 companies", Youngor Group is "be criticized" approach has been paid attention to, from a certain point of view, is also a manifestation of corporate strength.

In 2007, the US "Business Weekly" criticized some Chinese listed companies as "not doing business properly and profiting from speculation." Among them, the Youngor Group was the only one publicly criticized. Business Week’s criticism of the Youngor Group concluded that “in addition to the stock and real estate investment business, the company’s other businesses have become insignificant”; in the report, “Business Week” pointed out that Youngor holds CITIC Securities, The stocks of Ningbo Bank, China Life Insurance and many other companies allowed the company's investment income in the first nine months of 2007 to reach US$220 million, accounting for 98.5% of the company’s total profit.

In 2008, one year after being criticized, Youngor’s situation of “doing nothing” has not changed much. According to its 2008 annual report, the proportion of net profits contributed by the three major sectors of textiles, clothing, real estate and investment are: 32.7%, 53%, and 14.3% respectively. Compared with 2007, Youngor's net profit fell by 36.05% year-on-year, mainly because of investment losses. Even in 2010, its real estate business reached 47% of the overall revenue.

How does Younger's boss Mr. Li Rucheng criticize Businessweek? In late June 2008, the Sohu 2008 “Made in China” tour team went into Youngor, and an interview team composed of 13 national mainstream media interviewed Li Rucheng. Mr. Li responded to “criticism” and “comprehensively from a positive perspective” and mainly reflected in two perspectives: First, “I think it doesn’t know Youngor, or it has other intentions, and thinks that investment is only It can be done by the United States. How can your Chinese private enterprise invest? They don't understand that we already have several billion assets; another view is, "We did it for other industries without giving up our main business. To explore, I think companies should continue to explore in different stages of development. Just as Toyota used to be a loom, Itochu started from the textile industry. ”

In July 2010, Mr. Li was interviewed by the “21st Century Business Herald”. He said: “They are reminding us to go well. I think, first, that we have attracted the attention of the US Business Weekly. Explaining that Youngor has reached this stage, he must be careful to take a good step. Second, what is a positive industry? I used to be a farmer. The peasant is my real job. I later made a shirt, my shirt was my real job, and I later made a suit. What is GE's business? What is Toyota's business? Toyota's business was first made of textiles."

As a leader in the Chinese apparel industry, Mr. Li Rucheng apparently did not recognize the criticism of the US Business Weekly, and he was concerned. Youngor is a well-known clothing listed company. Textile and apparel are obviously its “positive business”.

Around March 2008, Dr. Jiang Haoxiang’s financial commentary, “Why is the United States’ Business Week” criticizing Youngor, attracted widespread attention. Here, the author no longer talks about Dr. Jiang’s point of view on “criticism.” The author’s concern is that he has extended two meaningful and unique views – thus interpreting his “constructiveness to Youngor”. criticism". Dr. Jiang Yuxiang used to be the product marketing manager and strategic planning manager of Motorola, deputy director of the senior economic training center of Guanghua School of Management at Peking University, and a special contributing writer for management experts of Fortune magazine and Harvard Business Review.

One point of view: "We finally understand that what Youngor has done is to establish a three-tier business chain growth approach. The cash flow business is textile and apparel, the growth business is real estate, and the seed business is financial investment." The business chain, Dr. Jiang’s proposal is to seek business growth in the main industry, such as through regional or product line expansion, continuation of the product life cycle, and the initiation of internationalization.

Point Two: "The reason is so, the reason why Youngor can dance with high profits (real estate and financial investment), the reason behind the original is his grasp of China's national conditions. What is the meaning of China's so-called development stage? Isn't it just to use China's immature development and make use of opportunities during the transitional society to make money?" Dr. Jiang took foreign languages ​​as an example to consider that the essence of diversity is capacity, not opportunity. (Chen Shixin works)

The financial investment and real estate industry is a highly profitable industry. High profits are often accompanied by high risks. The profit and loss of financial investment will directly affect Youngor's share price that has this business. Real estate business is also closely related to national policies. From 2007 to now, the development of the Youngor Group is also a steady development. It has its own way of success. The question is how to avoid unnecessary criticism.

Chuan men's clothing is one of the backbones of China's men's clothing industry. Seven wolves are the representative brands of men's clothing. Fujian Septwolves Industrial Co., Ltd. is a subsidiary of the Septwolves Group and was successfully listed on the Shenzhen Stock Exchange in 2004. Similarly, the Septwolves Group has made numerous achievements in investment, textile and clothing, real estate, wine, and trade. However, we have not seen seven Septwox Industries being questioned because of the diversification of the Group or the investment in real estate business. The reason is not complicated. The listed company Septwolves Industry focuses on the textile and apparel business, and other businesses are managed and operated by the Group. For Youngor, splitting a listed company into three parts - textile and clothing, financial investment, and real estate - is a worthwhile approach.

Specialization and diversification are the two strategic choices for business operations and development. Should companies choose to specialize or diversify? Diversification strategy generally refers to a development strategy in which a company simultaneously operates products or services with more than two different uses. It is generally divided into related diversification and non-relevant diversification. As opposed to diversified development, a specialization strategy refers to the concentration of company resources. In a business that excels, it drives the development of the company by focusing on one area.

An important point of view in the industry is that most of the companies in the world have failed to diversify, and they will generally mention the model of successful diversification—GE. The author has endorsed another view. There are many people who work in multiple industry companies, but some people succeed, and some people fail. Younger, Seven Wolf, Haier, Midea, Fosun Group, Panasonic and other companies have diversified, and they have all succeeded. Companies such as Coca Cola, Gree, Anta, and Kinba have been dedicated, professional and successful.

Regarding specialization and diversification, Dr. Jiang’s point of view is that diversification is essentially a capacity issue, not an opportunity issue. Regarding the choice of a company for specialized or diversified development strategies, the author's opinion is that the choice of development strategy depends on the size of the company. (Chen Shixin's works) For example, a company has been in the top three positions (preferably the industry first) in an industry for three consecutive years, or its revenue has reached billions or more. Taking the Wahaha Group as an example, this large-scale private enterprise, which has focused on food and beverage for many years, has been diversified in recent years (real estate, retail). In 2011, Wahaha Group achieved a revenue of 67.8 billion yuan, paid taxes of 5.4 billion yuan, revenue of 55 billion yuan in 2010, and profits of more than 6 billion yuan. For Wahaha's diversified road, it has sufficient resources such as funds and talents to do other industries. Even if other businesses fail to succeed, it will not have much impact on its main business. Therefore, the author agrees with one of the viewpoints mentioned by Mr. Li Rucheng above. “I think companies should carry out continuous exploration in different stages of development.”

From the men's wear field alone, from the perspective of sales revenues of seven wolves, nine grazing kings, Kinba, Lilang, and Haopai brands, it is not an exaggeration to say that they have been promoted to domestic first-tier brands. For leading brands such as Youngor and Shanshan, as the group spreads its focus across multiple industries, company leaders have also focused on non-apparel industries (although they have repeatedly claimed that clothing is the basic industry, it is fundamental) that they are in China. The speed of influence within the industry has not been improved by sending men. With the introduction of some of the leading companies in Handan Men's Menswear Company, with the advantages of marketing and promotion, capital strength, channel layout, and leadership focus (Mr. Zhou Shaoxiong of Seven Wolves focuses on the operations of listed companies), their future influence in the Chinese men's wear pattern. The force will rise further. Youngor, Shanshan, and other groups have successfully achieved diversification. The scale is very large and the strength is super strong. The only chance of surpassing men's wear is to focus on professionalism - but only in the field of clothing.

Mr. Chen Shixin, sports brand observer, special writer of "Fashion Guide".

She works in the brand market center of leading menswear companies in China, and has unique insights on brand management strategy, brand promotion strategy, positioning, planning and competitive strategy, and dissemination. He pays special attention to the sporting goods industry, and pays attention to company development strategies and strategies and corporate management. Many works and opinions are published in the "First Financial Daily", "Southern Metropolis Daily", "Hubei Daily", "Southern Weekly", "Times Weekly", "Business Weekly", "Sales and Markets" (Sports Edition), " China Textile News, China Garment, International Advertising, Manager Daily, Shanghai Economy, Fashion Guide, Modern Corporate Culture, Advertising Grand View, Shoes World Guide, and "Informative Guide", "Finance" and other paper media and Sina.com, NetEase, the first marketing network, Tencent.com, HC.com, MSN China, China Garment Network, Phoenix.com and other mainstream sites, the World Factory Network, China Sports Network, global brand Net, China Advertising Association Network, brand China Network, Global Shoes Network columnist.