Chapter 8 Meters Bonwe: Should we give up "virtual management"?

counting field.In the domestic apparel industry, it is difficult for other companies to compete with Meters-Bonwe in the skillful use of "virtual management". In 1986, Zhou Chengjian, who was born in the rural areas of southern Zhejiang, set off from his hometown to Wenzhou to make a living. In addition to his background as a farmer, he was a tailor when he was just 20 years old. With this ancient and stable occupation, Zhou Chengjian was able to make a living here. After several years of hard work, Zhou Chengjian, with some savings, entered the Wenzhou Miaoguo Temple clothing market, selling clothes during the day and making clothes at night, working more than 16 hours a day.

In 1992, snow jackets and jackets from Fujian Shishi swept the clothing market in Wenzhou.The businessman’s sensitivity made Zhou Chengjian seize the market opportunity, and he began to make this kind of clothing according to the market. At this time, the opportunity to complete the original capital accumulation also came. At that time, a Northeast boss ordered 300 pieces of clothing from him at one time. For a small workshop, getting such a large order is undoubtedly very important for the operator.Guaranteed product quality opened up the market for Zhou Chengjian. Customers followed one another, and the order quantity increased from 300 pieces to several thousand pieces. Over the course of a year, he earned several million yuan.In this way, Zhou Chengjian initially completed the original capital accumulation.

Zhou Chengjian, who has millions of dollars, decided to build his own garment factory by relying on the business experience accumulated in the market for several years. Zhou Chengjian discovered with the unique keen eyesight of a businessman that most of the clothing industry in Wenzhou at that time produced suits and styles. Much the same, but a few foreign casual wear brands have just appeared in Wenzhou.Zhou Chengjian felt that casual wear would have a great market potential, so after a period of deliberation, in 1993, Zhou Chengjian's Wenzhou Kailisa Garment Factory was established to officially produce casual wear.

In the clothing industry, in order to expand production to meet the market, the traditional method is to purchase a large number of machines and establish a production scale.At that time, Meters-Bonwe did not have such capital conditions. The capital was not much, and after the establishment of the factory, Zhou Chengjian had very little capital at his disposal.As a small private enterprise, it is quite difficult to get a loan from the bank. Under the pressure of this situation, Zhou Chengjian had to come up with a solution in a short time. So in desperation, Zhou Chengjian thought of using external force to make up for his lack of funds. The "virtual management" method of borrowing chickens to lay eggs (custom brand production) and "borrowing nets to fish" (franchise chain operation) occupied Zhou Chengjian's business thinking .After inspecting the national clothing production market, Zhou Chengjian found that many domestic clothing production enterprises have advanced and complete equipment, but their products cannot find a market, resulting in a large number of idle machines.Therefore, Zhou Chengjian decided to get rid of the traditional practice and no longer make repeated investment in machinery and equipment, but to use the power of the outside world to realize his leapfrog development.Zhou Chengjian sold the original factory and decided to take the road of virtual operation.

In 1994, Meters Bonwe Co., Ltd. was established, Zhou Chengjian served as the chairman and general manager, and carried out "virtual operation", adopting the method of fixed-brand production and franchise chain operation.In terms of production, he has successively established long-term cooperative relations with more than 200 state-owned and joint venture garment processing factories with first-class production equipment and standardized management in Guangdong and Jiangsu, and adopts OEM production. If Zhou Chengjian invests in these enterprises, at least need 300 million yuan.In terms of expanding market share, Zhou Chengjian adopts franchise chain operation, that is, the company transfers the franchise to the franchise stores, and the franchise stores must use Meters-Bonwe's trademark, trade name, service method, etc., and pay a certain franchise fee to the company .This method works quite well. After the opening of the first specialty store in May 1995, the number of specialty stores has increased by 50 every year. The development of Bangwe has brought a lot of capital. If so many stores invest by themselves, they will need 150 million to 200 million yuan.

Zhou Chengjian has a very direct expression on "virtual management": "Virtual management is simply borrowing power. It can avoid large-scale and small-scale redundant construction, take the road of specialization, socialize production, and The market is socialized." It is believed that the high flexibility of the "virtual management" mode of operation can avoid business risks to a large extent: the supply can be satisfied in the peak season, and there is no need to worry about idle equipment and workers in the off-season. Once the market changes or strategic goals If there is a change, new competitive advantages can be created only by disbanding the original virtual organization and forming a new virtual enterprise.Generally speaking, from the perspective of enterprises that implement "virtual management", considerable resources of traditional enterprises, such as physical assets such as plant equipment, are not very important from a certain point of view, because physical objects will be depreciated, or even depreciated. It may also become a burden for enterprises. Therefore, it may be one of the magic weapons for market success to hand over the production of enterprises to more suitable enterprises in the market through external procurement and remote cooperation.

In the world clothing industry, the successful case of "virtual operation" is Nike.Nike does not need to purchase raw materials, does not need a huge transportation team, and does not have such "realities" as factory buildings, production lines and production workers, but its own value lies in its brand, design ability, reasonable market positioning and extensive marketing network, etc. "Virtual".This kind of "virtual management" makes the composition of the headquarters very simple, and the expenditure is relatively reduced. In this way, the company can concentrate on product design and marketing issues, collect market information in time, and reflect it in product design in a timely manner. Fast production to market.Nike has now become a giant in the world's apparel industry, and its success has undoubtedly set an example for Zhou Chengjian.However, Zhou Chengjian believes that their "virtual operation" is not "virtual" in the full sense, "We may focus on the 'front-end' work such as marketing and publicity at the initial stage of enterprise development, but after our brand reaches a certain scale, It may also start to turn its attention to the construction of the mid-end and back-end.”Today in the clothing industry, "virtual management" has become a trend.According to relevant industry leaders of the Wenzhou Economic and Trade Commission, at present, there are more than 70 casual clothing enterprises engaged in "virtual management" in Wenzhou alone.

Since the establishment of Meters Bonwe Group 10 years ago, more than 200 garment factories in China have been producing garments under their own brands, and more than 1,200 franchise stores scattered across the country are selling them. Relying on this "virtual management" model, in 2004 In 2018, Meters-Bonwe Group achieved sales of 2.5 billion yuan and a sales myth of more than 20 million sets of ready-made garments, and eventually became the leader of China's casual wear. In the process of "virtual management", there is a link that cannot be virtualized, that is, human resource management.The innovative spirit of decision makers, the management ability of managers, the professional knowledge and experience of employees, and the loyalty to the enterprise are all necessary conditions for the success of virtual business enterprises.However, Meters Bonwe has been suffering in this aspect on the road of virtual management. According to media reports and related materials, in the short ten years of development, Meters Bonwe has experienced too many incidents. Up to six personnel shocks.

In 1996, just two years after its establishment, Meters Bonwe was exploring "virtual management" and transitioning to a modern enterprise. Hong Wei and Li Zheng, who started their business together with Zhou Chengjian, were responsible for the construction of sales network and product development respectively. They can be said to be Zhou Chengjian's "right-hand man", but they left Metersbonwe together in March of this year to join Gaobang Group, another casual wear company, and Metersbonwe encountered its first personnel shock . In 1997, Zheng Yunjie, who is now working in the flying ostrich shoe industry, and other five management employees of Bonwe Group "rebelled" Zhou Chengjian at the same time. The management's "collective escape" made Zhou Chengjian a "polished commander" for a while, which dealt a heavy blow to Zhou Chengjian at that time , and it was in this year that Bangwe encountered a cold wave of funds, and issues such as personnel and funds became a "threshold" for Bangwe's development in 1997.Meters Bonwe suffered the second personnel shock.

In 1998, after the second personnel turmoil, Zhou Chengjian learned from the painful experience and took a big move: spent more than 3 million yuan to buy 20 sets of commercial houses and distribute them to 20 out-of-town employees with outstanding performance, and issued property rights certificates for them.Zhou Chengjian hopes to use this to build his own credibility among employees, so that they can trust and recognize him, and feel that the company has hope. In May 1999, a vice president named Yang Xiongfei resigned from Bonwe, and Meters Bonwe suffered the third personnel shock.But unlike other ex-managers, Yang Xiongfei returned to Bangwe after a few years, until now.

In 2002, starting from September, in just two months, 19 managers left Meters Bonwe one after another, and their positions involved important positions such as business director, chief designer of the design center, and financial director.This group of people all joined Bonwe back then, and most of them have relatively high academic qualifications, work backgrounds in foreign-funded enterprises, and some are even "returnees".Meters Bonwe suffered the fourth personnel shock.The personnel turmoil has attracted widespread media attention. In 2003, the general manager Wu Jianfeng resigned. This is the highest position among the managers who left Bangwe.Before taking office in Meters Bonwe, Wu Jianfeng was the director of a local bureau with a little official background, and he was an "offshore" official introduced by Bonwe.Meters Bonwe suffered the fifth personnel shock. In October 2004, Tao Weiping, who had worked in Bonwe for 9 years, resigned from his position as executive vice president, his wife and three other Bonwe members. Meters Bonwe suffered the sixth personnel shock. However, Zhou Chengjian did not fall into the six personnel disputes from 1996 to 2004. He was able to survive the personnel crises one after another, and Meters Bonwe gradually grew stronger. The skillful technology of "virtual management" and the personnel turmoil did not hurt the fatal core of Meters Bonwe. In the clothing industry, rapid change is its most prominent feature.The real peak season for a season of clothing may only last half a month, and the efficiency of previous forecasting, stocking, production and other links is particularly important.The traditional mode of operation of the clothing industry is that the goods produced by the processing factory are sent to the company's logistics center, and then distributed to various distribution centers or branches across the country.In every warehouse or logistics center, there will be turnover inventory, that is to say, if there is only one item, about 5 items may be prepared for this item.Therefore, if the operation is not good, the inventory backlog becomes a big burden for the enterprise.In order to reduce this risk, Meters Bonwe uses information technology to strengthen supply chain management and move the company's warehouse forward. Zhou Chengjian believes that the competition that enterprises will face in the future is no longer a single competition, but the competition of the entire supply chain.Whoever can gain an advantage in supply chain management will be able to gain an upper hand in the market.Therefore, when Metersbonwe builds its own informatization construction, it also regards the information construction of upstream and downstream manufacturers as part of the enterprise informatization and helps them jointly carry out informatization construction.Therefore, a set of information system integrating management, production and sales was put into use, which consists of manufacturer resource management system (MBFAC-ERP), group internal resource management system (MB-ERP) and agent resource management system ( MBAGT-ERP) together.Through it, it is possible to grasp the purchase, sale and storage status of each specialty store in real time, and to change production orders at any time according to these figures. It is said that this IT management system with an investment of 100 million yuan has realized the "control" of the entire process of upstream manufacturers and downstream specialty stores. Zhou Chengjian said that the processing cycle of an order used to take 10 days, but now it only takes 2 to 3 days.It takes only one week from order to shipment.The changes in financial settlement are even more astonishing. Before the realization of informatization, it took 40 days to complete the financial settlement, but now the real-time settlement can be completed by a person from the financial department. In the first half of 2005, the frequent occurrence of textile trade disputes caused 20% of China's textile and garment enterprises to underoperate or even stop production, a large number of export orders lagged or even disappeared, and domestic textile processing enterprises had excess capacity. "Export to domestic sales", but in the past, most domestic textile enterprises have always been "outward-looking", busy with the processing of foreign brand clothing, and "not very interested" in domestic sales orders.On the contrary, the textile trade dispute is a good development opportunity for Meters-Bonwe. In the process of selecting a processing company, the company can have room to lower prices and put forward its own requirements. Some companies even come to Meters-Bonwe on their own initiative. Wei does OEM production and competes for its domestic sales orders. "Export to domestic sales" has brought sufficient supply of goods and guaranteed the completion of its domestic sales orders as scheduled. However, Zhou Chengjian also saw with worry that compared with domestic processing enterprises, those enterprises that have been long-term foreign OEMs have more confidence in fashion trends, management models, and fabric information during the long-term contact with foreign enterprises. Once they create or acquire brands to participate in the domestic market competition, the competition in the domestic market will also intensify, and even the transformation of this enterprise advantage will drive a new round of competition in the domestic clothing brand market.According to industry insiders, at least 30% of exported clothing is returning to the domestic market in large quantities, and domestic brands such as Metersbonwe will be under increasing pressure. Under such circumstances, since the company needs to speed up its development to a larger scale on the one hand, and is already facing pressure on the other, what options does Metersbonwe or Zhou Chengjian have and what should they do?Let's look at the following two aspects: Zhou Chengjian believes that there is almost no core technology in the clothing industry, and its greatest added value is the brand.As long as we do a good job in brand management and clothing design, Meters Bonwe will be a management enterprise at the core of the virtual chain.In terms of product design and development, Meters Bonwe has established and cultivated a team of designers with international standards, and has carried out long-term cooperation with well-known designers in France, Italy, Hong Kong and other places, designing more than 1,500 new styles of clothing every year .And just at the beginning of 2005, Meters Bonwe acquired 160 acres of land in Pudong, Shanghai, with a total investment of more than 100 million yuan to build a logistics center and leisure industry design village of more than 20,000 square meters. In August 2005, Meters Bonwe opened a 4,000-square-meter brand image store in Jinan, Shandong, and then launched a 2,000-square-meter brand store in Nanjing Road Pedestrian Street, Shanghai, and plans to open 100 stores nationwide by 2010 The flagship store with a scale of 5,000-10,000 square meters will achieve the sales target of 4 billion yuan in 2005 and 10 billion yuan in 2010. Through the expansion and establishment of brand stores, as well as large investment in design and development, Meters Bonwe is trying to firmly control the highest value-added industry chain - brand and design fields in the "virtual operation".In the domestic apparel industry, it is difficult for other companies to compete with Meters Bonwe in the skillful use of "virtual management". Continued "virtual management" seems to be the bright future of Meters Bonwe's ambitious goal smooth road. Zhou Chengjian once said to the outside world, "If 10%-20% of the production capacity is controlled by ourselves, we can provide consumers with faster and more fashionable products." What is capacity control?The method is to build a factory yourself.Zhou Chengjian proposed that Meters-Bonwe will build a core processing plant of its own within the next five years. Opinions on this proposal, however, vary.Some people think that this proposal is correct and has a long-term strategic vision.After all, virtual operation has its own weaknesses and carries great risks. Moreover, in the current Chinese clothing industry, "virtual operation" has become a norm, and one day it will have to build its own factory to control production capacity.It is undoubtedly a wise choice to start self-built factories in this time period to control production capacity. Others believe that Meters Bonwe has been focusing on "virtual operation" in the past 10 years of development, and has no advantage in production and processing. The self-built factory will definitely have a lot of capital investment, and the front line will be too long. Growth will inevitably affect the capital chain of the entire company and disperse the company's energy.Moreover, the frequent occurrence of international textile trade frictions has caused many uncertain factors, and many export-oriented clothing manufacturers have a tendency to return to the domestic market. Is it still necessary to build our own processing plant for the domestic sales orders of Tesbonwe?Is the risk of abandoning "virtual operation" and self-built factories greater than the risk of virtual operation itself? "Unconventional way", what kind of path should Meters Bonwe take in the post-"virtual management" era?In the face of these debates, should we continue to focus on "virtual management" and further shape our brand image?Or self-built factories to control production capacity and retail terminals?Or are there other options?What should Metersbonwe or Zhou Chengjian do and how should they make decisions? The essence of "virtual management" is a business model that expands its own development space and makes up for its own shortcomings and disadvantages by integrating external resources for my own use.There are five main methods: 1. The enterprise invests in the construction of production sites and equips production lines, and outsources production to other manufacturers; 2. The enterprise itself is good at a certain aspect of work, but based on cost or confidentiality considerations, several enterprises will form an operation center to jointly be responsible for this work; 3. Several companies with the same key resources form an alliance for mutual benefit to create a competitive advantage; 4. The company headquarters liberates the "property rights" relationship from the subordinate sales organizations, making them a sales company with independent legal personality; 5. Virtualization of administrative departments.