There was once a brand in the clothing industry called “Fanke”, which ranked only behind JD.com in e-commerce clothing. At that time, Vanke sold 80-count pure cotton T-shirts, Polo shirts, etc. for 29 yuan. It quickly captured the hearts of the public at low prices and set off a nationwide craze. However, a few years later, Vanke began to lose its way and fell off the altar.
When the customer’s inventory backlog was at its most serious, it was as high as 2 billion yuan. At that time, there was still a rumor circulating that it was old An entire floor of the office building was cleared out specifically to store the company’s backlog of clothing inventory. And when I wanted to find a shirt that I could get out of the mountains of clothes, I turned around several times and couldn’t find a satisfactory finished garment.
Low prices, small profits or even high sales without profits have led to a decline in the quality of clothing and a huge inventory backlog, which has become the straw that breaks the camel’s back. Similar to Fanke back then, some of the clothes sold by some live-streaming e-commerce companies today, when consumers buy them, they find that they have a lot of threads that need to be cut by themselves, and they don’t take shape after a few washes…
Is the apparel manufacturing industry paying a high price for low prices? !
The purpose of publishing this article today is to spark some reflections on China’s manufacturing industry, especially the garment industry.
Stop dumping low prices and inferior quality. If you continue, China’s manufacturing industry will only die! It is a matter of course that good products should have good prices. Only with good prices can there be good profits. With good profits can there be good research and development. Only with good research and development can there be better products. No Fortune 500 company in the world has made its fortune by relying on cheapness, and no country has risen by relying on cheapness. Stop hyping Internet+ all day long. For the manufacturing industry, you can only concentrate on research and development. Whether it is the Internet or Internet+, it is just a channel for the manufacturing industry, nothing more!
In the mid-1990s, I went to Wenzhou to investigate the lighter industry. Wenzhou people spread more than a dozen spare parts on the table, picked them up one by one, and told me the price difference between those made in Wenzhou and those made in Japan: Electronic igniters cost 1.1 in Japan yuan, 0.2 yuan for Wenzhou people; sealing rings, 0.2 yuan for Japan, 0.01 yuan for Wenzhou people; plastic parts, 0.6 yuan for Japan, 0.08 yuan for Wenzhou people, plus the monthly salary of Wenzhou workers is 20 times lower than that of Japanese workers. After calculating the cost, the young Wenzhou boss slapped the table proudly: “The retail price of a lighter made in Japan is one dollar, and that made in Wenzhou is one yuan. Let’s see if we can kill the little Japanese!” he said loudly. When this passage was published, there were more than 3,000 lighter factories in Wenzhou, large and small, with an annual output of 2 billion pieces, ranking first in the world.
How did the myth of Made in China come about?
In the past history of the rise of Chinese enterprises, such a scene has never been unfamiliar. For the same commodity, our entrepreneurs have amazing cost control capabilities – including raw material costs, manufacturing process costs, labor costs, land costs, tax costs, land costs, environmental governance costs, marketing costs, etc., hard It has defeated international competitors in one field after another, creating the myth of Made in China.
Ni Runfeng, chairman of Sichuan Changhong, once the largest color TV factory in China, summed up a “30% life and death line” competition law: under the premise of the same functions, Changhong color TVs must be 3% cheaper than Japanese and European brands. Ten, this is the “life and death line” that must be guarded. We have guarded this “life and death line” for thirty years.
As of today, it seems that we should answer this question: Can we hold on to this “life and death line”? Should we still hold on to this “life and death line”?
Back to the lighter.
Just when the young Wenzhou boss was arrogantly banging the table, I picked up his lighter and hit it three times before it started to light up. However, the thin piece of steel almost fell off. He was very calm. Di explained to me: “This is a disposable lighter. Many people lose it after using it a few times. There is no need to make it as strong as the Japanese.” This detail implies the fact that Wenzhou lighters have a huge price advantage. In addition to various cost differences, it also comes from the deliberate decline in accessory quality and user experience. In addition, as an imitation latecomer in the industry, there is no need to invest in technology iterations.
Therefore, the so-called “cheap and good quality” means “cheap” in a rigid sense, but “good quality” may not necessarily be true.
The “myth” shattered by internal and external attacks
Since around 2003, as domestic raw material and labor costs have risen in turn, Wenzhou lighter factories have been under increasing pressure, and the industry’s average profit margin has dropped to 2% A large number of factories have closed down and switched production, and more than 3,000 companies have shrunk to more than 100, and all of them are surviving. In these years, Wenzhou people’s contribution to the technological iteration and progress of the lighter industry has been almost zero.
A small lighter is a small microcosm, from which we can read the ambition, dedication and limitations of a generation.
The manufacturing industry can be said to be the fundamental foundation of China’s economy, and its sustainable growth depends on the balanced progress of quantity and quality. Over the past thirty years, our manufacturing capacity has been unprecedentedly improved. From buttons and home appliances to automobiles and mobile phones, everything ranks first in the world. However, the cost advantage we rely on to win…��It disappeared without realizing it, so the space of “cheap and good quality” has actually been extremely squashed.
More importantly, hundreds of millions of middle-class people have emerged in China today, and they have begun to pay serious attention to the quality and performance of goods. This group has four distinctive consumption characteristics.
First, they are typical performance preferences. Even if they go to buy a pair of sports shoes, they know clearly whether they need jogging shoes, casual shoes, or hiking shoes. When they open their wardrobe, they will find a dozen refreshing shirts, different for spring and autumn. , formal and casual must be distinguished, segmentation means taste, taste appeals to quality, and quality points to the brand;
Second, they are shrewd advertising discerners. In their view, vulgar, melatonin-style brainwashing advertisements are an insult to their IQ. They are superstitious about experience and prefer to believe in word-of-mouth communication from the same aesthetic level. It is difficult for them to identify with a brand, but once they get acquainted with it, they will become continuous consumers and generous sharers;
Third, they are willing to pay for high quality. They believe that good products should have matching prices. This is not only a respect and reward for the product provider, but also a recognition of their own taste. The necessity of consumption behavior gives way to aesthetics. They are willing to pay for services and provide services for them. Paying for design, paying for technology, paying for popular elements, every intention of the product provider is worthy of recognition with more money;
Fourth, the pricing of products has nothing to do with cost, but depends on consumer psychology. Value recognition. Whether a Xiaokun bag is made of real leather or artificial leather has nothing to do with whether its price tag is 30,000 yuan or 1,000 yuan. Those early adopters who order an Apple smart watch for 120,000 yuan have no interest in the manufacturing cost of watch accessories. .
These new consumption characteristics are a sign of an era of abundant materials and mean changes in new mainstream consumption concepts, and they are all the abandonment of the concept of “cheap, good quality”.
The era of “cheap and good quality” is over
What is slightly disappointing is that the vast majority of domestic manufacturers today have not noticed this change in the trend. Even in the emerging Internet industry, we What we are still witnessing is the continuation of the old “cheap and good” strategy.
We saw some cutting-edge entrepreneurs, wearing designer jeans, standing in front of a huge LED screen, telling the audience in great detail that their upcoming shirts use the best cotton threads and the best quality in the world. The latest printing and dyeing process and the best no-iron technology, from quality to appearance, comfort to dignity, are comparable to all the shirts sold by Shin Kong Department Store that cost several thousand yuan, but the price is only 129 yuan.
Every time I see such a speech scene, I can’t help but think of the Wenzhou boss and Ni Runfeng. I believe in his sincerity, but I really don’t believe in his future.
I would rather believe that good products should have good prices. Only with good prices can there be good profits. Only with good profits can there be good research and development. Only with good research and development can there be better products. Good merchandise.
The so-called “cheap and good quality” can exist as an advertising concept, and even as a periodic promotional attack strategy, it is worth trying, but it should no longer be the ultimate magic trick of “Made in China”, but more It is impossible to bring “Made in China” to a new level of upgrade.
I would rather believe that the middle-class people who have made their debut are willing to pay good prices for good products. They want the companies they trust to prosper, have higher profits and price-earnings ratios, and spend more investment to provide them with better products. .
The stars change and everything changes. In today’s Chinese market, the “30% life-and-death line” is not only untenable, but also no longer necessary. In this sense, the era of “cheap and good” can really be over.
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