Chapter 25 Good Boy: World Champion Manufacturer of Baby Carriages

In 1988, Song Zhenghuan, who was the vice principal of Kunshan Lu Middle School in Jiangsu Province at the time, was appointed as the factory director of the school-run enterprise, Xinyi Mold Factory. In 1989, he accidentally discovered the prospect of the stroller market. Song Zhenghuan and his company (renamed Goodbaby Company) concentrated all their resources and capabilities on the production and operation of strollers.By 2005, the annual sales revenue of Jiangsu Goodbaby Group will reach RMB 2.5 billion, the domestic market share will reach 67%, the American market share will exceed 30%, and 80% of the products will be exported to the United States, Japan, Europe, South America, Southeast Asia, In more than 80 countries and regions including Africa, it has become the only "Chinese famous brand" in China's children's products industry and the world's largest manufacturer of baby carriages.

Goodbaby Group is undoubtedly the winner, and it can be said that it is a suitable target for Chinese small and medium-sized enterprises to learn from.What is the key factor for a good boy's success?From the perspective of corporate strategy, the success of Goodbaby is mainly due to its strategic success, and the niche strategy it adopted is the main factor of its success. As the overall growth strategy of the enterprise, researcher Kang Rongping of the Chinese Academy of Social Sciences proposed in 2001 that weak and small enterprises must choose a narrow business field as a strategic starting point, and at the same time set the grand goal of becoming a champion in China and even the world in this small field, and concentrate on Focus all resources and energy on this business field and strategic goals, take practical and effective strategic actions, first become the number one in the local or local market, and then consolidate the number one position in the local market while continuously expanding the scope of the geographical market and creating All kinds of competition barriers, and finally won the throne of the global market champion.

In this article, we combine the growth process of the Goodbaby Group with the key points of the niche strategy, and interpret the niche strategy for its success. The predecessor of Goodbaby Group was a school-run enterprise called "Xinyi Mold Factory" of Lu Middle School in Kunshan, Jiangsu. A new venture in microwave ovens led to debt and, by 1988, to the brink of bankruptcy.At the time of the crisis, Song Zheng, who was the vice principal of Lu Middle School at the time, took up the post of director of the factory. In order to solve the predicament as soon as possible, Song Zheng also looked for projects everywhere, and finally found a project in Shanghai - to make rubber tires for toy cars for a toy factory. The factory finally escaped from death and started to operate again.After that, with the help of a student's parent, he undertook the production of baby carriages for a military factory in Shanghai.In the process of cooperating with this military factory, Song Zheng also discovered the huge prospects of the baby carriage market. Since then, he decided to innovate and develop in this field and officially entered the field of baby carriage manufacturing.

Now it seems that the baby carriage business is indeed a more suitable niche business: first, it is a subdivided product in the vehicle business, and the overall size of the Chinese market is small; second, there were no industry-leading enterprises in China at that time. There are more than 400 baby carriage manufacturers, all of which are state-owned enterprises, with few product categories and relatively small export volume; third, the growth rate of the market is relatively high, and the needs of customers have not really been tapped; fourth, the technical content of baby carriage products It is not high, the investment is not large, and the speed of technological change is average.

Goodbaby chose the stroller business by accident rather than a rational decision based on business intelligence.In China in 1988, the choice of business mainly relied on the vision and ability of entrepreneurs.Song Zhenghuan is just such an entrepreneur. He discovered a niche business with bright market prospects from the baby carriage products manufactured for others, which laid the foundation for Goodbaby's future success. Just like a person faces many choices in his life, what a company chooses as its core business is a frequently discussed issue.When the business selection decision is made, the most important thing is how to enter the market.

Although there were not many types of baby carriages on the market at that time, Song Zheng still decided to develop new products independently. In September 1988, the Soong Ching Ling Foundation organized a national maternity and infant products expo in Beijing. Song Zheng also brought a dual-purpose stroller designed by himself to participate in the exhibition, and it was an instant hit.His two-function stroller won the first place in the expo and was very popular.However, they didn't have the funds and the necessary production equipment, so they couldn't put it into production, so they had to sell the first patented product in the history of Goodbaby Group to a manufacturer in Shenzhen for 40,000 yuan.

Soon, Song Zheng also succeeded in designing a multi-functional stroller that is still popular in the market today. At that time, many people wanted to buy this product at a high price, but this time, he refused one by one.He decided to build the product and bring it to market no matter what, and he wanted the multifunctional stroller to be the cornerstone of his business.Thus, in October 1989, "Goodbaby" was born, and Xinyi Mold Factory was reborn as a goodbaby company. In December 1989, the "Goodbaby" multifunctional stroller was mass-produced and officially launched to the market.In the next few years, the good children born in the cracks grew up rapidly. In 1992, when Goodbaby participated in the National Toy Order Fair in Xiangfan, Hubei, it had already developed 8 series of stroller products, which were beyond the reach of those old state-owned factories with decades of history. In 1993, Goodbaby became the sales champion in China's baby carriage market.According to industry statistics released by the China Toy Association that year, the output value of Goodbaby exceeded 120 million yuan, far ahead of the second-ranked 70 million yuan. "Goodbaby" has become the number one brand in China's baby carriage market.

In the four years from 1989 to 1993, Goodbaby became a champion company in the Chinese market from a latecomer in the baby carriage industry. There are two main factors for its success: one is to choose a niche business that suits itself; Zheng Huan himself has the ability to develop new products with his invention and creativity as the core. In 1994, First Shanghai Investment Co., Ltd., a Hong Kong listed company, invested 45 million yuan to participate in Goodbaby. With the support of investment funds, Goodbaby began to set up sales branches all over the country and gradually established a huge sales network.Goodbaby was established as a group company and became a famous brand in China's children's products industry.

In 1995, First Shanghai purchased another 33% stake in Goodbaby with an investment of US$6.7 million.At this time, the business of "Goodbaby" was booming. Branches were opened in various places, the number of personnel increased rapidly, and Zhejiang Haiba Company was incorporated into the Goodbaby Group.In the first half of 1996, "Jiangsu Goodbaby Group Company" was approved by the State Administration for Industry and Commerce, and was promoted to a national large-scale second-tier enterprise, and its name was changed to "Goodbaby Group Company". Still in 1995, Goodbaby began to explore the international market, and the chosen target market was the United States.After paying hundreds of thousands of dollars in tuition fees at the beginning, Song Zheng also personally focused on overseas markets.Introduced by the company's shareholder, First Shanghai, Goodbaby established a strategic alliance with COSCO, an American company, to jointly develop the American market.

In 1996, Goodbaby developed a new product called "Shake for Dad, Shake for Mom".This car has a unique shape, and two swing functions are added to the car body. When the child is crying, press "Dad Shake", the trolley will shake violently, and press "Mom Shake", it will swing gently.This stroller became the first car for Goodbaby to open the US market. American COSCO was originally the second largest baby product manufacturing company in the United States. It had just retreated from the baby stroller market in 1996. It chose to cooperate with Goodbaby to return them to the leader position.Goodbaby signed a cooperation agreement with COSCO to jointly develop the US baby product market. With the joint brand "COSCOBYGEOBY", the "Goodbaby" stroller was launched to the market, and it was quickly rolled out in the US market, occupying 80% of the US market within half a year. The main retail store, with sales exceeding 15 million US dollars that year, successfully entered the US market.

In March 1996, Goodbaby Group registered an American branch in California, which played a major role in the development of the American and North American markets by Goodbaby Group.With the help of the strategic cooperation platform with COSCO, Goodbaby Group has directly entered the "Daddy Shake, Momma Shake" into Wal-Mart, the largest supermarket chain in the United States. In 1998, at the Dallas Baby Products Expo in the United States, the "Good Boy" stroller full of inspiration and innovation was successfully exhibited.Then quickly entered the mainstream sales channels of the US market. By 1999, "Goodbaby" had a market share of 33% in the US, ranking first; sales also accounted for 26%, ranking second. During the four years from 1996 to 1999, Goodbaby became a champion brand in the US market from a foreign latecomer in the US baby carriage market.There are two main factors for its success: first, new products with independent intellectual property rights based on the new product development capabilities of Goodbaby Group; US market. Although "Daddy's Shake, Mommy's Shake" opened up the American market and became popular for two or three years, the situation was not good afterwards.This gave Goodbaby a new understanding of product development and product quality.Goodbaby focuses on the study of American consumer psychology, honestly consults outside experts, from color to small accessories, and has successively invited professional designers in the United States, Europe, Germany, Japan, and at the same time invited 3 designers in Hong Kong Cooperate with law firms and use external brains to quickly adapt to the consumption psychology of consumers in other countries. In 1999, the restructured Goodbaby implemented a more flexible business strategy and began to rely on the US market to enter the South American and European markets. By cooperating with international capitals such as Japan's Softbank Group and American International Group, Goodbaby has begun to allocate resources on a global scale, implement strategic cooperation, and establish good cooperative relations with multinational children's product companies around the world.In fact, it is the cooperation with COSCO, through the integration of Goodbaby's design and manufacturing resources and COSCO's brand channel resources, that Goodbaby has really embarked on a road to success in the US market.Since then, the successful strategic cooperation model in the US market has been copied to the European and Japanese markets, and has also achieved success. In 2001, at the Cologne Expo in Germany, Goodbaby successfully signed long-term cooperative relations with distributors in many countries such as the Netherlands, Germany, and the United Kingdom, and successfully entered the European market.By 2002, Wal-Mart, Sears, Carrefour and other end-customer international giants received orders one after another, and Goodbaby's international influence further increased. After Goodbaby became the champion of China's children's car market in 1993, its champion position has been stable, and its market share has been rising, from 20% in 1993 to 50% in 1995, and then to about 70% in 1998.Around 2000, Goodbaby saw the stagnation of the domestic market and decided to change its business model to reverse the situation. The main contents include: changing the main product line and finding new profit points; becoming a sales platform for world-renowned children's brands to enter the Chinese market , to provide them with the marketing, network and management of the Chinese market; at the same time, to re-establish a solid foreign channel, to transform itself from a manufacturer and supplier of children's products to an agent and service provider. In September 2002, the NIKEKids brand children's clothing represented by Goodbaby officially opened a counter with the logo of "Goodbaby NIKEKIDS", and the business was booming.By the beginning of 2004, 10 world-renowned children's clothing brands such as Tommee Tippee, Cakewalk, and PARROT have formed partnerships with Goodbaby Group, with Goodbaby acting as their general agent in China. Moreover, all children's clothing except NIKEkids will be provided by the brand owner. Design, image requirements and training are processed by Goodbaby, which has accumulated experience in research and development and sales of different products for Goodbaby.Therefore, Goodbaby has set a bigger goal: to become the world's largest retail agent of children's products in the Chinese market, and to establish a global children's products retail network. In 2004, Goodbaby's annual output value and sales revenue both exceeded 2.5 billion yuan, reaching a market share of nearly 70% in China, and maintaining a market share of more than 30% in the United States.At this time, Goodbaby has already owned the world's largest baby carriage factory, children's bicycle factory, children's electric car factory, and children's wooden bed factory. In 2005, Goodbay continued to expand.Song Zheng also hopes to implement a chain store of mother and baby products in China based on the existing domestic retail and distribution system, and become the largest distributor and retailer of children's products in China; Relying on the development of other series of baby and children's products such as car seats, milk bottle pacifiers, children's shoes, stationery, sports equipment, etc., to realize the all-round operation of children's products. Goodbaby Group's children's vehicle business has achieved success in both the Chinese and American markets. By 2002, Goodbaby had maintained its champion position in the Chinese market for nine years, and it had also maintained its champion position in the American market for four years.Five years after the success of the first niche business and the consolidation of the champion position, the enterprise has the ability and conditions to choose a new business for development. This is a strategic choice issue after the success of the niche strategy. It is basically appropriate for Goodbaby Group to choose children's clothing business.Although children's clothing and baby carriages lack correlation in terms of technology and production, they are highly correlated in terms of marketing and customers.The market size of children's clothing is much larger than that of children's carriages. The children's carriage champion should enter a new market that is larger than the children's carriage market in order to continue to develop.However, the children's clothing market is basically a fragmented and highly trendy market, in which it is very difficult to become the first enterprise and consolidate its position.Goodbaby entered the market by cooperating with international famous children's wear products, which avoided the risk of Goodbaby Group entering alone.However, not long after Goodbaby entered the children's wear market, it suddenly expanded the scope of children's products, and declared that "except for food, it produces and sells all children's products". scope, is not an appropriate strategic choice. In particular, Goodbaby Group announced in 2005 that it would transform from a manufacturer to a distribution and retailer. This is a major strategic transformation. matching relationship between them.However, judging from the current situation, the strategic transformation of Goodbaby Group is a bit hasty, and the possibility of success is small.Be aware that there is a huge gap between manufacturing and distribution retailing, even though the product range is the same.The success factors of the Goodbaby Group in the manufacturing industry are almost useless in the distribution and retail industry, and the new key success factors required by the distribution and retail industry have not been cultivated and formed by the Goodbaby Group in time.Although it cooperates with world-renowned brands, since the level of cooperation is on products and brands, it does not help the distribution and retail capabilities that Goodbaby Group needs. We hope that Goodbaby Group will seriously examine its strategic ideas and plans for 2005, and it is best to return to its core business and grow step by step.After the bases are consolidated, new bases will be opened up, and the bases will be connected step by step, and eventually become multiple champions in the global children's products market. The above describes and analyzes the success of Goodbaby Group from the dimension of growth process.Now, we specifically interpret its strategy.For the success of Goodbaby's niche strategy, the following experiences are worth learning from for Chinese companies. ⊙ Long-term focus on the field of baby carriages Long-term focus on a certain four-digit or even five-digit industry is the most basic feature of a niche strategy.It has been nearly 17 years since Goodbaby Group was formally established in 1989. Over the years, Goodbaby has been working hard in the children's products industry, from baby carriages in the early days, to children's clothing in 2002, and to other children's products.Children's vehicles (including strollers, children's electric vehicles, bicycles, walkers, tricycles, etc.) are the core business of Goodbaby Group, accounting for 80% of the total sales revenue in 2005. It is precisely because of the "focus" that has favored Goodbaby for more than ten years that many domestic and foreign buyout funds are very interested in Goodbaby. At the beginning of 2006, PAG (Pacific Alliance Group), a private fund from Europe, acquired 68% of the shares of Goodbaby Group for US$122.5 million. This is undoubtedly because of the unique value of "Goodbaby" long-term focus on the children's product market. ⊙Independent innovation, R & D to win Although the field of stroller manufacturing is not a high-tech industry, only by possessing core patented technologies can we gain a firm foothold in the international market, and only by continuous product development can we maintain the growth of domestic and foreign markets. This is what Goodbaby Group has accumulated for more than ten years. Important conclusions drawn from lessons learned. Before 2002, "Goodbaby" invested in research and development, equivalent to 1.6% of the group's annual sales. In the following three years, the proportion of research and development funds has remained at 3%-4%.At present, Goodbaby has more than 2,000 patents and more than 40 overseas patents. The number of patent applications is far ahead among domestic counterparts. ⊙Construct independent brands and create joint brands skillfully In 1992, Song Zheng also put forward the slogan "I want to be number one, because I can be number one" at a conference, encouraging all employees to continue to innovate, create excellence, and create brands, so that consumers can feel safe about good children , trust, intimacy and brand dependence. Since then, Goodbaby has embarked on the road of independent brand building. Since 1996, Goodbaby's market share has remained at about 70%, firmly establishing its position as the number one brand of baby carriages in China. In the international market, Goodbaby has chosen to walk on "two legs": one is to create its own brand Goodbaby or Geoby (Geoby is a registered trademark of Goodbaby abroad); the other is to form a joint brand with local famous children's products, mainly in the US and European markets. ⊙Strictly implement the principle of quality leadership In 2005, the results of a spot check by the General Administration of Quality Supervision, Inspection and Quarantine showed that the quality of domestic baby strollers was worrying: the sampling pass rate was only 25.8%.In sharp contrast to this, Goodbaby has won the first place in national sales volume and product quality inspection of similar products for ten consecutive years. People have given Goodbaby products to foreign friends as national gifts many times.There is a set of data that can well illustrate the quality of "Goodbaby" products - 100% of each batch of Geoby strollers exported to the United States has passed the U.S. import commodity inspection; the current average return rate in the US children's products market is 3%, while Goodbaby's Less than 1%. ⊙Extensive cooperation with global experts, adhere to the principle of independence Mainly manifested in the following aspects: (1) Overall characteristics: equality, trust, respect, independence; (2) Joint brand strategic cooperation model; (3) Sole agency and exclusive licensing cooperation; (4) OEM production for world famous brands; (5) Global product development and design; (6) Interactive cooperation with famous retail giants. ⊙Successful financing model and institutional advantages The growth history of Goodbaby Group is also the history of continuous entry of international capital.Every important expansion or business shift in the growth process of Goodbaby is accompanied by the intervention of investment capital.So far, "Good Boy" has carried out four successful overseas financings.Every time after borrowing overseas capital, "Good Boy" has achieved significant development.International capital has brought a global vision, and Goodbaby Group has also transformed from a school-run factory into a world-renowned manufacturer of children's products. In the early 1990s, Goodbaby defeated hundreds of state-owned baby carriage companies with product innovation and flexible mechanism, and became the sales champion of China’s baby carriage market (1993). After that, it quickly entered the international market. It has grown into a world-renowned manufacturer of children's products and a global king of baby carriages. ⊙Innovative corporate culture Goodbaby's corporate philosophy can be summarized into five points: (1) Pursuit of excellence; (2) Down-to-earth; (3) Pioneering, enterprising, creative, innovative; (4) Unity and cooperation; (5) Never satisfied.Among them, the most prominent and core feature is innovation.Song Zheng also said: "The spirit of innovation is the entrepreneurial spirit that we set at the beginning of our business and we must always adhere to it." In fact, the growth process of Goodbaby is a history of continuous innovation, including product innovation, concept innovation, Management innovation, marketing innovation, system innovation and other all-round innovation.