China Leather Enterprise Orders Cold To Transition To Inflection Point Urgently Need Industrial Innovation

Recently, the China Leather Association issued a report on the economic performance of the leather industry in 2012 and the development forecast for 2013. In the report, Su Chaoying, director of the China Leather Association, said, "the leather industry in 2012 has increased but the growth rate has dropped, especially the import and export growth rate of leather shoes and so on. The Chinese leather industry is expected to maintain steady growth in 2013, but the growth rate will be affected. Annual industrial output growth is above 10%, and annual import and export growth will be less than 10%.

"For the typical export-oriented industry, China's leather industry, the above data means that China's leather industry has gone to the turning point of transformation." Su Chaoying said.

Transformation turning point

"Like spring weather, our industry is also somewhat cold this year." Zhang Chengbin, who has been engaged in leather processing for 10 years, complained to reporters.

Although he is the general manager of a leather bag factory, Zhang Chengbin often drinks tea and talks with friends this year. While he was in the factory of Haining Economic Development Zone in Zhejiang, when he was about to go to work, only a few workers walked slowly into the factory gate, just like an outdoor spring outing.

"No big orders, factories are almost in a state of shutdown, and there is no way to demand the enthusiasm of workers." Zhang Chengbin is also very helpless for this situation. "In previous years, spring and summer season were the peak period for processing foreign orders, and factories often made orders through day and night. But since last year, this kind of good scenery has been no longer, and now most of them are domestic small batch orders.

And a few years ago, Zhang Chengbin was dismissive of such small quantities in China. Although OEM is not well-known for foreign companies, large quantities of orders make it easy for Zhang Chengbin to earn a full pot.

"After two or three years of no good life, the price of raw materials imports is rising constantly, and the export situation is becoming increasingly low. For us," the two sides are out of the country ", the price of raw materials is increasing. Zhang Chengbin sighed.

In fact, the sluggish export situation is also facing a series of attacks. On the one hand, the demand of the developed countries is not strong, but the technical barriers are becoming increasingly harsh. On the other hand, the leather industry of Southeast Asia and other countries are suddenly rising. "There are more and more trade frictions, and our raw materials and labor costs are not dominant compared with those in Southeast Asia, which makes us have no pricing power at all, and can only be placed around orders."

"In fact, factory shutdown is not entirely without orders. Sometimes orders are not available." Zhang Chengbin said, so far, the dollar is still the way of settlement that he and his colleagues accept international orders, but the exchange rate changes often limit their profit space to the limit or even become a negative value. "Therefore, in order to face orders, we have to cautiously refuse."

For processing enterprises, no order means there is no way out. Transformation has also turned to an inflection point. "Many export enterprises have begun to return to the domestic market. This is indeed the driving force for our transformation. This is evident from the international brand's leather products being sold at home. Take bags as an example, many products sold internationally by international brands are actually foundry in Haining. Zhang Chengbin said frankly.

According to the data of China Leather Association, the proportion of domestic sales in leather industry accounted for 72% of sales value in 2012, up 1.4% compared to the same period last year. This is the 12 share of leather industry's domestic sales since 2000.

But how easy is transformation?

Channel problem

"Many partners actually can not continue, and we are also struggling to find a way out." Over the years, like Zhang Chengbin, the leather processing enterprise, which has been doing export market all the year round, although the profit is considerable, it has not established a perfect marketing mode in China. marketing network And it is necessary to transform domestic sales.

The shortage of channels has also become a painful experience in the transformation of export enterprises.

"Now, we envy Hongkong KC group. Its domestic sales outlets cover not only the major cities, but also its footprint in the United States, Italy and France. The Republic of Korea And so on, all over the world, we can only sigh for the ability to distribute such channels and brands. Zhang Chengbin said that the typical tragedy of OEM enterprises is always arriving at a helpless juncture before they begin to think about their shortcomings.

But for most enterprises, this kind of reflection is not easy to become the motive force of breaking the cocoon and becoming a butterfly.

"Many people in the community think that environmental protection will be the primary problem in the transformation of the industry, but not in fact. Raw skins are not polluted and poisoned. Their emissions mainly come from two aspects. One is the use of polluting chemical materials, and the other two is the removal of non tannery substances from raw skins in processing. And through clean leather technology, the two sources of pollution can be avoided in the production process. So at present, for our export-oriented enterprises, the most important test to fight in China is laying the channel. Zhang Chengbin said.

"Our investigation found that the domestic market not only has a long transaction chain, but also has a slow return, and it needs to deposit a large amount of funds in every link. We should consider the special needs, entertainment, customers, terminals and hidden rules. Among them, the middle cost of the channel, the development of various kickbacks in the market, the cost of public relations, and the entry fees are all full of" channel hegemony ", as well as the cost of public relations and safeguarding the rights of the government, which often exceed the capacity of a medium-sized enterprise. Zhang Chengbin said that changing ideas has become a difficult task for enterprises accustomed to foreign trade, and it is even more difficult to change the practice at the same time.

"But if these changes can not be made, they can only be changed or wait to be eliminated. And turning around means restarting from a new industry or field. This test is even greater. "

Brand confusion

The laying of channels is inseparable from brand building.

"The brand consciousness of OEM enterprises is generally poor. Many enterprises have no brand awareness, and many executives think that registration of a trademark is a brand." Zhang Chengbin worried that he did not think about the brand before, but now the industry is forcing the head of the enterprise to think about it.

As we all know, no brand, enterprises have almost no pricing power. At present, the leather foundry enterprises in China are not in the minority. They are still competing in the price, which will allow these enterprises to be at low level and continue to compress profit margins. Without profit margins, it is a mere empty talk to develop domestic and foreign markets independently.

"Now, we also understand that brand building and channel laying are complementary. Without brand, consumers can not be recognized, so it is impossible for enterprises to develop channel construction on a large scale. And the level of channel construction directly determines the expansion of brand influence. But brands and channels are tested. Marketing capability Most of our enterprises have the capacity to produce. " Zhang Chengbin believes that although many export enterprises have realized their limitations, the distance between them is still far away.

In the course of this breakthrough, it is bound to pay high tuition fees, which is a deterrent to many enterprises.

"Foreign trade is mainly for services, and domestic sales are mainly for the market, which are two completely different systems. Foreign trade will turn to domestic sales. It is necessary to pay high economic costs to develop the market, and the important support of market development lies in brand awareness. But consumers' recognition and acceptance of a brand often need a long-term process. Therefore, the path of transformation of most enterprises is actually caught in a vicious circle. Zhang Chengbin told reporters that after weighing the pros and cons, many peers still stick to meager profits and insist on doing foreign trade.

"Actually, for this industry, it is not just our foreign trade enterprises that need to shape brands to domestic sales, that is, those enterprises that develop well in China, and their brand awareness needs to be further promoted. Combing the leather brand sold in China, we can easily find that the high-end market is still occupied by foreign brands, and only some regional brands in our country can compete with these brands locally. Finally, Zhang Chengbin said.