Chapter 23 Chapter 21 Attempts: Battle and Peace of New Brands

Following the tragic and happy year of 2008, China in 2009 was at the forefront of the global economic crisis, which once again ignited the dream of a great country in people's hearts.However, on the other hand, a TV series called "The People's Republic of China" used such a ruthless and sad tone to make some jokes about this: In the era when the national power is getting stronger and stronger, owning a small house of one's own has become an ordinary person's life. The hardest dream. In 2009, the aftermath of the financial tsunami was still unabated, and Influenza A struck again.The speed of social transformation has suddenly accelerated, and the government's reforms to improve people's livelihood are struggling. All kinds of conflicts that have been accumulated for a long time have stimulated various social incidents to emerge one after another.

Until the National Day Ceremony, people saw the mighty PLA phalanx marching across Tiananmen Square through live TV, announcing that New China had passed 60 years ago. Looking back in the name of the country, the sea has turned into mulberry fields.The past is drifting away like smoke, but at the new starting point, complex brilliance radiates. The brilliance of Smith Barney seems to be affected by this complex emotion. In 2009, the goal of achieving a 40% increase in total revenue was not realized, and the net profit decreased by 57.5% year-on-year.The outside world believes that Smith Barney has been in the throes of rapid development.

Zhou Chengjian did not deny the slowdown in 2009. He admitted that he was "too optimistic about the launch of new brands and overestimated his own ability." The annual revenue growth rate is still double digits compared with the previous year. As soon as the summer of 2009 came, Metersbonwe opened three flagship stores across the country, each with an area of ​​about 5,000 square meters, which greatly exceeded the previous flagship store area of ​​less than 2,000 square meters.The plan at the time was to open 50 to 100 such flagship stores in China. Smith Barney, still ambitious, has always been accustomed to using the number of stores to find reasons for his advancement.On the side of ambition, it is the pace of accelerated expansion after entering a new starting point.On the one hand, it is the follow-up of the data, and on the other hand, it is the study and continuation of the model.In 2008, Metersbonwe caught the last train of IPO. This kind of luck made Metersbonwe confirm the model change that it had been preparing for at the beginning of its listing. The unexpected popularity of international chain brands such as H&M and ZARA makes this "fast fashion" road look promising.The fact that Smith Barney is in China but has learned beyond simple copying also means that they are trying to transform their existing "asset-light" business model step by step and in stages.

However, Metersbonwe, which has 15 years of experience in the Chinese market and is the largest clothing brand manufacturer in China, does this change mean that it has touched the atmosphere of a new revolution? In 2008 before the change, many events happened that made Zhou Chengjian feel deeply sad.So many former "asset-light" companies have become yesterday's flowers this year, including ITAT and PPG, which have gained fame for their "asset-light" status. At the same time, the confident new youth consumer group is playing the role of more resolute egoists. They have so many choices and their horizons are broader.International brands such as ZARA, H&M, and Uniqlo have grasped this change, and in the past two or three years, they have conquered countless Chinese consumers.This is not an accidental success, but reflects an increasingly obvious trend: providing customers with a large selection of styles, fast, cheap and fashionable clothing sales methods are becoming the mainstream of the market.

Seeing these changes, if you remain indifferent, the imaginable consequences are horrific.Zhou Chengjian saw a trend to emulate in the success stories of his competitors.On the other hand, transformation means new risks. The biggest risk is to change the existing model.Metersbonwe has changed from a franchise-based model to a self-operated store-based model.In other words, Metersbonwe will objectively change from a light-asset company to a partial heavy-asset company. ZARA adheres to the principle of owning and operating almost all chain store networks, and at the same time invests a lot of money in building factories and logistics systems.Metersbonwe is also trying.

The problem is that Metersbonwe has always been good at operating light assets, and the proportion of its self-operated stores is relatively low.In the face of dealers and end consumers, there are essentially two concepts.The experience at this time and the grasp of consumers will naturally affect the consequences of the change.When the proportion of self-operated stores increases rapidly, Metersbonwe needs a completely different corporate strategy from the past.Another risk is that the fashion model is far from being as simple as it seems, what is needed is a series of supporting services and production supply chains.Every link in this systematic move requires more time, funds, and stronger management skills. It is a daunting task to approach the shorter turnaround time of companies like ZARA in the turnaround time from manufacturing one's own clothing to the market. climbing process.

The ambition of latecomers often conceals this lack of experience and adaptability.Facing a strong opponent who has already occupied the top, can Smith Barney keep up with the pace of learning?You should know that when Metersbonwe was still learning from H&M to open a large number of flagship stores and recruit more fashionable designers, H&M had already cooperated with Japanese national treasure designer Rei Kawakubo and created a market share phenomenon that was beneficial to itself. But in the long run, changes in Smith Barney will come sooner or later. This is actually the general trend.Moreover, the biggest advantage of Smith Barney lies in its healthy cash flow.Before listing, its existing bank deposits amounted to 470 million yuan, and its working capital was about 1.3 billion yuan.And according to its group financial report, in 2007, it achieved sales of 3.157 billion yuan, a total profit of 433 million yuan, and a gross profit rate of 38.8%, which is higher than the average level of A-share listed companies in the apparel industry and comparable listed companies in Hong Kong stocks. Its market share It also ranks first among the 20 major casual apparel companies in China.

The listing undoubtedly provides a more perfect opportunity for this change, and Metersbonwe's prospectus also shows that it will expand against the market. "In 2008, many enterprises in China tightened their money, and it was the time when they were most short of money. From the perspective of the whole society, funds were not abundant. At this time, things would be relatively cheap. But this is the time when Metersbonwe was the richest, so This is our advantage, and what we have to do is to make good use of every penny.” Zhou Chengjian’s ideal is to be a global tailor, but Metersbonwe’s market share in casual wear is the first, but the share is not enough 1%, the market share gap between the second and third place and Metersbonwe is only 0.3%, and the entire industry is still in a state of complete competition. This may be the biggest reason that prompts Smith Barney to adjust quickly and constantly look for new directions.

Optimistic about future ambitions, it seems reasonable under Zhou Chengjian’s explanation, “For an excellent brand, the market share must reach 3% to 4% to be a sustainable brand that can be recognized by consumers. From 1% To 3%, 4%, there is a lot of space. From a static point of view, to achieve sales of 5 billion yuan today, 15 billion yuan will be needed to reach 3% in the future. From the perspective of dynamic market development, China's clothing industry In the past few years, the compound growth rate has reached about 15%, and the compound growth rate of casual wear is even higher. At the same time, the consumption demand of young consumer groups in the 1980s and 1990s has a strong natural demand. The 25-year-old 'Meters Bonwe' brand, or the 'ME&CITY' brand positioned between 22 and 35 years old, have huge market potential."

Space is huge, and the price of breaking into space is also huge. As the first decade of the new century is approaching, people naturally turn their attention to those extraordinary events and extraordinary figures in modern Chinese history.While recalling every detail, I also try to explore how those past events have influenced and changed today's life.In the face of rapid development and rapid changes, the various scenes represented by China's business, politics, and culture make people feel as if they are from another world. In these past memories, fast pace has become synonymous with everything.

The footsteps of Smith Barney have highlighted this "happiness". In the garment manufacturing industry that wins quickly, their speed is almost equal to the speed of the spread of national business culture.However, here lies the worrying part.Fast, after losing reflection and conditioning, is often the most dangerous factor.Our country and enterprises have entered the highway. Once the speed exceeds the warning line, the car will crash and people will die. 2009 Smith Barney, luckily only minor scratches.After testing the water for more than a year, the results of the new brand ME&CITY are as elusive as the initial TV advertisement.Many people don't know that this mysterious brand comes from Metersbonwe.Zhou Chengjian concluded by himself, "The birth of a new brand requires a growth period of 3 to 5 years. At that time, we thought we had 15 years of experience, and we were too confident to think that we would reach a balance in one year." From two product series of one big brand to multiple series of two big brands, Smith Barney once again encountered difficulties in the expansion of excessive pursuit of speed.Like China's overall environment in a vortex, such a difficult price is an unavoidable pass on the road to change. Statistics show that among migrant workers who went out in 2009, 39.1% were engaged in the manufacturing industry, 17.3% in the construction industry, and 11.8% in the service industry, ranking the top three.In terms of wages, in 2009 the industries with the lowest wages for migrant workers were the accommodation and catering industry, the service industry, and the manufacturing industry. Their average monthly wages were 1,264 yuan, 1,276 yuan, and 1,331 yuan, respectively. A large number of workers in the manufacturing industry have been temporarily suspended from going out due to the aftermath of the financial turmoil.In the Pearl River Delta where the manufacturing industry is concentrated, this low-cost, large-scale labor shortage has led to many crises in the garment manufacturing industry. Zhou Chengjian suffered greatly from it, "The performance in the first half of 2009 was not particularly satisfactory. In addition to the large investment in ME&CITY in the early stage, there was also a labor shortage that caused suppliers to delay delivery." On the other hand, it is the rapid advancement of Smith Barney's direct store strategy. In 2009, the number of direct sales stores of Meibang Apparel increased by 27% to 523, the area increased by about 74% to 270,000 square meters, and the revenue increased by 61% to 2.3 billion yuan.Among them, almost all ME&CITY develops in the form of direct sales.In the first period of time when the new brand was launched, many people were as confident as Zhou Chengjian.However, after a year in operation, the rapidly expanding store size is almost certain to surprise people.Zhou Chengjian originally hoped to open hundreds of ME&CITY directly-operated stores in 2009, but in reality there are only more than 70. Even so, the size of the 70 stores that failed to reach the target has already revealed some kind of dangerous signal. "ME&CITY is developing too fast. In just one year, more than 70 stores have been opened in first- and second-tier cities across the country, and the store areas are all very large." Insiders of ME&CITY smiled and said, "No way, the boss is rich." However, laughing Afterwards, the insider seemed reluctant to admit that Zhou Chengjian was actually very worried during those days. In the third quarter of 2009, Smith Barney's net profit fell by nearly 60%; ME&CITY, which has invested heavily, has been unable to make profits for a long time. According to the financial report for the third quarter of 2009, the net profit of Smith Barney was 69 million yuan, a year-on-year decrease of 58%; the total operating income increased by 8% year-on-year, which were significantly lower than market expectations. Relatively speaking, such a predicament seems to be unintentional, and Smith Barney hopes it will be short-lived.However, in the eyes of many people who are looking for reasons, it is the hasty launch of new brands that has caused such a disaster.Soon, ME&CITY, as the key strategy for the whole year, fell into a bigger controversy.The original ambitions are about to go to waste: a lot of money to hire the popular Hollywood niche, actor Wentworth Miller and international supermodel Bruna Tenorio as the brand's global image spokesperson, invited designer Luc Bruno led a team of international designers... Zhou Chengjian's heavy investment in ME&CITY gave people the illusion that ME&CITY only does this one thing throughout the year. For the new brand, Zhou Chengjian is really full of heart.As a complement and extension of the campus-focused Smith Barney brand, Zhou Chengjian's original intention now appears to be forward-looking: he wants to grasp the loyal consumers cultivated by Smith Barney over the past ten years, so as to adapt to their age growth and pace. Changes in consumption habits and preferences after entering the workplace.However, the market will not lie, let alone cater to the wishful thinking of entrepreneurs. ME&CITY has never stopped building momentum. After spending a lot of money to invite spokespersons and designers, ME&CITY, as the main body behind the big store strategy, started a nationwide "store buying movement". In the first eight months of 2009, Smith Barney's "buyers" traveled almost all over the country.Successively acquired 39 commercial properties in 19 provinces and cities by way of buying or renting.Among them, 6 commercial real estates of nearly 30,000 square meters were purchased in 6 provinces including Zhejiang and Fujian, each with an average construction area of ​​nearly 5,000 square meters, involving nearly 800 million yuan of funds. Such a huge corporate movement seems powerless for a strong brand like Smith Barney.Due to insufficient operating experience, the process of opening a store was delayed. The average delay time for a single store was about 77 days. Observers’ comments quickly pointed out Smith Barney’s risk-taking behavior, “It is unreasonable to plan to roll out hundreds of stores at one time, and the cost-benefit time does not match well; the construction of new brand stores does not meet expectations, and the construction speed is greatly delayed. At the same time, the construction of stores and headquarters needs to increase a lot of talents, and the labor cost has also greatly increased. These problems have increased a lot of costs for the company.” However, is Smith Barney really inexperienced? As everyone knows, in the past 15 years, Smith Barney has been in the clothing business, and its reputation and performance have been rising steadily. In 2006, the retail sales of the whole system exceeded 4 billion yuan, creating a miracle of growth in the clothing industry. In 2008, the sales volume of the whole system reached 7 billion yuan, ranking first among local and international leisure clothing brands in the Chinese market.Shouldn't such an amazing growth rate equate to experience? In terms of opening stores, Smith Barney's experience is undoubtedly an expert in domestic fast fashion clothing.The experience of nearly 3,000 specialty stores all over the country has essentially given Smith Barney not only a successful model of opening a store, but also a clear grasp of the needs of the Chinese market as a producer.Its network coverage rate of 100% in first-tier cities, 66% in second-tier cities, and 33% in third-tier cities puts pressure on domestic and foreign competitors. However, the crux of the problem does not seem to be as simple as opening a store.The huge deviation between the initial positioning of the new brand and the subsequent market practice seems to be the most fundamental reason.And this deviation is also passive under the force of the market. "ME&CITY initially wanted to be a high-end brand that entered the high-end market at a low price, but in the end it succumbed to market demand and became a fast fashion." The speech of the insider of ME&CITY reveals a touch of helplessness. The helplessness of positioning can be sighed, but the huge resources paid for this brand are irreversible. "In terms of ME&CITY, the company did pay a lot of tuition fees. At the beginning, it overestimated itself and set unrealistic goals." Under the burden of cost pressure, Smith Barney's profit growth in 2009 was very slow.In this regard, Zhou Chengjian still insisted on his original opinion, "ME&CITY needs a large investment to achieve a large development. Judging from the situation in 2009 and the first half of 2010, the cost is too high. The company has decided to slow down the long-term investment. , focusing on management improvement and efficiency improvement. Once the efficiency is improved this year, we will make appropriate investment next year.” Today's Meibang is no longer the small tailor shop in Miaoguo Temple, nor is it the batch of parkas that Zhou Chengjian took the risk of modifying styles.As the person in charge of a listed company, he must not only guarantee the interests of the year, but also balance the long-term and short-term interests. "You cannot blindly pursue the future regardless of today." "The listing of the company brought me back to rationality," said Zhou Chengjian, who said that he was an impulsive personality. Before the listing, he was not too keen on the report results and considered development goals more, but now he has to slow down the pace of development and pay more attention to risk control.Looking forward to the company's development prospects, Zhou Chengjian expressed confidence, "The tossing in the past year has expanded the company's development platform, and it is expected to be in good condition in the next 3 to 5 years." The price of "fast fashion" is not limited to today's "ME&CITY".As early as 2002, Meibang Apparel launched a mid-to-high-end brand called CHIN (Qige). The product positioning style is somewhat similar to ME&CITY. water.Two years later, CHIN lost millions.In order to concentrate on doing a good job of Metersbonwe, Zhou Chengjian had to suspend the operation of the CHIN brand. "CHIN is our test of the high-end ready-to-wear market. It seems that there are deficiencies in all aspects of market positioning, product planning, marketing promotion, and terminal construction." Zhou Chengjian at the time did not shy away from the price of such haste, "However, CHIN The most critical problem is that the timing of the launch is not right. This timing includes Metersbonwe’s lack of experience in high-end ready-to-wear brands. At that time, Metersbonwe was not strong enough to operate two brands, and the market’s Unfamiliar mid-to-high-end brands are not well accepted.” After 6 years, is the market for the new brand ME&CITY mature? "I think it's an opportunity. Many overseas large and medium-sized leisure brands have entered China, which has changed the consumption concept of Chinese people to a certain extent. But compared with Metersbonwe, they must still lack understanding and research on the Chinese market, or they still have There is a lack of development strategy for the Chinese market, and similar domestic brands are not strong enough, so there is a gap in demand. In my opinion, this is the right time to launch ME&CITY." Now it seems that Chinese consumers do not seem to buy Zhou Chengjian. In fact, the appearance of ME&CITY on the market seems too hasty, although the previous planning has always been going on.As early as around 2005, Smith Barney had already started formal preparations.The past few years have happened to be the hottest years for fast fashion in the Chinese market. In 2006, the Spanish brand ZARA took the lead in grabbing the Chinese market and achieved a sensational effect; a year later, H&M in Sweden and C&A in the UK were not to be outdone, and opened their first stores in the Chinese market one after another.As the world's three giants of affordable clothing stores gather in China, the "Fast Fashion War" has completely started. By September 2009, the number of ZARA stores in China had doubled to 60 within 9 months, and it continued to expand to second-tier cities.When many first-line big names either went bankrupt or were forced to sell their shares, these fast fashions, known as replicas of big names, were rapidly creating wealth miracles. "The success of some international fashion brands entering China and the data we have accumulated over the years make us believe that Chinese consumers have a strong demand for fashion consumption, and the time is ripe to be a relatively high-end fashion brand." It is not ugly from such a statement It has been said that ME&CITY has a long-standing idea of ​​taking a share of the high-end brand market. However, for Smith Barney, which has built a deep-rooted brand image, the battle for the new brand has just started, and it has to turn to a low profile. This may be the choice that the new brand must make between war and peace.In the head-to-head confrontation with international fast fashion brands, ME&CITY is obviously at a disadvantage.Regardless of the number of consumers, frequency of fittings and transaction volume, ME&CITY is currently unable to pose a threat to other major brands. "The current brand awareness is not enough, and consumers' recognition is not high." ME&CITY is still unable to cultivate more loyal customers with its current popularity. "Those who are 'loyal' are not loyal brands, but discounts." The price has been paid, and the outcome is yet to be decided.In fact, Zhou Chengjian can succeed, but he can also fail.Success is holistic and macroscopic, while failure appears to be temporary and partial.From this perspective, his failure is really part of his success.Although there are many concerns from the outside world, some experts firmly believe that ME&CITY has a bright future.Some people even predict that the revenue of this brand in 2010 is conservatively estimated to be 1 billion yuan, and the growth rate will exceed 50% in the next two years.