7 Billion Expand The Advanced Capacity! The Profit Margin Is 5 Times That Of Foxconn! Shenzhou Manufacturing Upgrade Accelerate!

　　 Recently, Shenzhou International (02313.HK) announced that the company entered into a framework agreement with the people's Government of Beilun District of Ningbo in July 27th. According to the framework agreement, the partners should provide government support to the group on 18 major projects related to the garment industry in Beilun District of Ningbo. In the process of acquisition and development, partners should provide support, including the promotion of land acquisition, planning and construction approval process and assistance in the construction of supporting facilities in Beilun district and other services and policy support.

The notice indicates that the Group intends to participate in or facilitate the participation of investors in such projects in 2019 and / or 2020. The maximum investment of the 18 projects is estimated at RMB 7 billion 200 million yuan. The company said that because such projects could enable the two sides to use their respective advantages, resources and expertise to form a stable and mutually beneficial strategic relationship, a framework agreement would be beneficial to the company.

Shenzhou International, headquartered in Beilun, is the world's largest vertically integrated knitting manufacturer. It was listed in Hongkong in 2005. In addition to Ningbo Beilun, Anhui Anqing, Zhejiang Quzhou, enterprises in Kampuchea, Vietnam and other Southeast Asian countries also have a production base, has 82 thousand employees, knitted apparel exports and export volume ranks first in the country.

Under the background of the global trade environment is uncertain and most enterprises hesitate, the consistently low-key Shenzhou has chosen to speed up the expansion of production capacity, cope with the market which is short of supply, and show its courage and details to the world.

Profit margins match Tencent in 2018

In today's Shenzhou, there are 1 million 500 thousand garments and 600 tons of fabric coming out of its production line every 24 hours. Many of the famous brands such as Nike, Adidas, UNIQLO, Puma, Anta, Lining and so on are from Shenzhou.

In 2018, the gross profit margin of Enterprises above Designated Size in China's garment and textile industry was 15.1%, with a net profit margin of 5.89%, while Shenzhou International had a gross profit margin of 31.6% and a net profit margin of more than 21%.

We all feel that Tencent is the most profitable enterprise in China. In 2018, the gross profit margin of Tencent was 30%, and its net profit margin was 26%.

It is said that Foxconn is the most OEM factory in the world, but the net interest rate of industrial Fu Lian (Foxconn's A share listed companies) is only 4% in 2018.

　　 Ma Jianrong, chairman of Shenzhou International Board of directors

"I am a fool, so I only do one thing from a cotton thread to a piece of clothing, but I believe that with our team of more than 80 thousand people in Shenzhou, I will be able to do a good job of clothing and textile. This is the leading role of the fashion textile and garment industry in Ningbo's 246 trillion billion industries." Ma Jianrong, chairman of Shenzhou International Board of directors, said.

Build your own moat with technology

So how can a top generation factory like Shenzhou achieve a net interest rate of more than 21%?

The answer is to build a moat with technology.

"What is high technology? What we do not understand is not high technology. High technology must be combined with our industrial production. It is necessary to combine with the needs of consumers in the market, combine technology with materials, and get better cost and higher value. " Ma Jianrong said.

After taking the Shenzhou command from his father in 1997, Ma Jianrong took technological innovation as the first priority to promote the development of enterprises.

In 1998, Ma Jianrong invested $2 million 800 thousand to buy equipment in a year's profit, though he was in a predicament and was on the verge of bankruptcy. After two years of hard work, the market has finally opened up, with tens of thousands of orders. Thanks to the advanced equipment, the accuracy of Shenzhou's printing and dyeing reaches 99%, and the highest reaches 70% of its peers. With the reduction of the defective rate, light can save 60 million in a year.

This experience made Ma Jianrong more willing to spend money on production equipment.

Before 2000, almost 90% of Shenzhou's profits were devoted to technological improvements, such as tens of millions of millions of millions of dollars in the world's most advanced knitting machines.

　　 In 2005, Shenzhou was successfully listed in Hongkong. Ma Jianrong invested all the more than 900 million Hong Kong dollars to upgrade the technology and upgraded the equipment to the most advanced level in the world.

"Shenzhou should achieve three purposes in terms of technological innovation, efficient, comfortable and skilled." Ma Jianrong said.

Today's clothing market is a market dominated by "fast moving consumer goods". Therefore, for Shen Zhou, efficiency is the most important. Compression time, in the efficient standardization process, products can be completed and delivered with quality and quantity, so that greater value can be created.

　　 "We can make 5 million orders, and we can make 500 orders. Each order has different requirements. How can we respond quickly? How to arrange the bill in a reasonable way? How to make workers skilled in operation? The integration of big data and the Internet of things will enable us to do that.

In the current round of investment of 7 billion yuan, Shen Zhou also invested a large part of its capital in technological R & D and upgrading of equipment in order to achieve better production capacity.

Win the big deal with close service

The world giants such as Nike, Puma, Adidas and UNIQLO have a core skill for Shen Zhou, like Shenzhou and Shenzhou, which are quality and service.

For these international giants, the quality of a foundry depends not only on cost and technology, but on more valuable and convenient services, which is often referred to as "high added value".

Shen Zhou's first core high value-added project is the fabric R & D capability.

According to the USFIA (American Apparel Association) survey, in recent years, brand manufacturers tend to choose "fabric + OEM" integrated suppliers, and choose the intention to increase from 37% to 59%. As Shenzhou is starting from weaving to the whole production chain of garments, the research and development of fabrics is a good play by Shen Zhou.

　　 The persistence of Shenzhou R & D fabric is almost crazy. To what extent? Ma Jianrong gave an example.

"In order to develop a waterproof fabric for everyday leisure, our R & D personnel have entered the American living environment to test the average time that he may be exposed to the outdoors when he goes out to the supermarket and goes to work, so as to design and develop a waterproof fabric for 15 minutes. Why only 15 minutes? Because outdoor waterproof fabric is not breathable, and is not suitable for daily life, and its cost and cost performance are not high. And 15 minutes of water resistance, not only to meet the needs of leisure, but also to prevent unnecessary needs, because he went to the supermarket, work may get caught in the rain for an average of 15 minutes.

At the same time, Shen Zhou is well versed in Chinese business intelligence and is good at taking care of the international giants.

As we all know, Nike and Adidas are the two big rival giants in the sporting goods industry. In order to protect the trade secrets of both sides and avoid the production of homogeneous products, Shenzhou International has set up exclusive factories for Nike and Adidas in 2006 and 2007 respectively. Such intimate behavior has also deepened the binding with downstream clients.

In addition, under the automatic production mode, Shenzhou International capacity has been expanding, and the fabric factories and garment factories have been established in Vietnam. The investment is also aimed at further improving production capacity.

Stick to talents as the foundation

In the 14 years since its listing in 2005, Shenzhou can achieve 9.3 times of output value, 7.5 times of sales revenue, 12.3 times of tax contribution, 13 times of pre tax profits and 4.2 times of export earnings. Apart from its unique strategy, it can not do without its attention to talents and care for employees.

　　 In the process of internationalization, Shenzhou has been committed to creating a reserve pool of resources suitable for multinational companies. In addition to actively introducing professional talents, it also creates a "core management talent pool".

Recruit students from the society and choose the best people to enter the reserve pool. Once you enter the talent list, you can enjoy a special reward policy: a subsidy of 5-20 yuan in three years. After three years of training, some of them are expected to be promoted to business executives or deputy directors.

Matching this is that the reserve talents are trained as "executive secretary", "Assistant Minister" and "technical backbone disciple" respectively.

A distinctive feature of the Shenzhou talent plan is to cultivate the sense of belonging of excellent employees to enterprises by establishing mentoring ties.

Shen Zhou also has its own Shenzhou Management College, so that employees entering Shenzhou will have the opportunity to receive training and education so that ordinary grass-roots workers will have the chance to get promoted and create greater value. At present, Shenzhou management school has accumulated 349307 hours of commencement, of which 65776 people have received training for front-line workers, with a total time of 234580 hours.

Every year, Shenzhou has invested hundreds of millions of dollars in improving the living environment of employees. "Decent work and dignity life" is the corporate culture of Shen Zhou. Ma Jianrong said that this is not only a matter of concern only to unions, rather than slogans hanging on the walls of enterprises, but should be a warning word for corporate executives at all times.

Stick to Ningbo's native land

"Ningbo is my eyesight, the best business environment in the world, the highest efficiency of government, and the simplest relationship between government and business. So though I am not a native of Ningbo, I have long been determined to take root in Ningbo. Ma Jianrong said.

At present, Shenzhou's design, R & D, purchase orders and 65% capacity are all located in Ningbo. With the current 7 billion yuan investment and construction start up, Ningbo's central position in Shenzhou's globalization process is more prominent.

Because of choosing Ningbo as hometown, Shen Zhou cares about every landscape at his feet. He always uses the most green technology to produce and protect Ningbo's green hills and green hills.

　　 Boiler heat energy reuse, printing and dyeing water reuse, resources can be reused, Shen Zhou will not waste. Shenzhou has set up a academician workstation at its International Textile Research Institute, employing two academicians as consultants, and a academician focusing on the development and application of new fabrics and new materials. Another academician is mainly studying how to reduce resource ownership, study environmental governance and green printing and dyeing technology, and reach the "2025 zero emission" plan set by Shenzhou with sophisticated technology.

For more than 20 years, Ma Jianrong and Shenzhou in Ningbo are competing with a cotton yarn, competing with a piece of cloth, struggling with a drop of dyeing and printing sewage, and competing with themselves. They have made a step by step in the clothing industry and become the world's first vertically integrated garment manufacturer.