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From A Garment How To Climb The Value Chain Of Textile Industry

Author: name From: name Modify: Jun. 17, 2020
Apr. 02, 2022

  On Yongjiang Road, Beilun District, Ningbo city, a two-meter-high corporate door wall with a red brick background looks slightly dated. This is the Ningbo factory of Shenzhou International, which produces about 850,000 pieces of garments every day. Shenzhou produces about 2m garments a day, including factories in Anqing and Quzhou, as well as in Vietnam and Cambodia.

  It makes clothing for uniqlo, Nike, Adidas, Puma and other brands, with annual revenue of more than 20 billion yuan and a net profit margin of 20 percent for many consecutive years. This has overturned the cognition inside and outside the industry: how can a garment contract manufacturer have such a high profit.

  “It's supply and demand that determines profits." Shenzhou International Group Holding Limited chairman Ma Jianrong said. He has seen China's textile industry climb up the value chain for more than 40 years, from the age of 13 when he was an apprentice in a textile factory to the continuous growth of his company.

Speaking of the core competitiveness of enterprises, Ma Jianrong does not shy away. He said that the global clothing market "fast fashion" trend, Shenzhou international supply capacity has an absolute advantage. This capability is added value, especially in the context of the global pandemic

The so-called supply capacity can be simplified into two words: one is "fast", the industry delivery cycle is more than 3 months, Shenzhou International only 45 days, the fastest can be within 15 days; Second, "stability". Through vertically integrated production and global layout, enterprises can better cope with the uncertainty of supply chain and trade environment.

  More than half of the company's profits have been spent on introducing and developing equipment since it went public in 2005, and it is now investing billions of yuan in digital reform, Ma Jianrong said. In addition, in 2008, the enterprise started the global layout, stable the whole industry chain, improve the ability to resist risks.

  Industry insiders told reporters that there are thousands of garment foreign trade enterprises in Zhejiang, and the gross profit rate of manufacturing a garment lingers between 10% and 20% for a long time, while the net profit rate is often less than 10%. With the industrial transformation and further concentration in recent years, China's textile industry continues to climb upstream in the global value chain, and Shenzhou International is a typical one.

  Some labour-intensive manufacturing plants wonder, how can Shenzhou keep tens of thousands of employees? How to make young people want to stay in the workshop?

  Manufacturing is not in conflict with young people." Chen Chiffen, who has worked for Shenzhou International for 31 years, from garment worker to deputy general manager, admits that young people should not be labeled as "impetuous". They also want stable and decent jobs.

   We invested hundreds of millions of yuan to build staff canteen, chartered more than 300 buses to transport staff across the province every year, and took special care of non-local staff... In Shenzhou International, "putting employees first" is the development concept passed down to today, and implemented in every corner of business management.

  At one time, textile industry was regarded as "sunset industry" and "low-end industry" with heavy pollution pressure, narrow profit margin and bleak prospects.

  In the eyes of the industry, Shenzhou international has many easy cross-industry, make quick money opportunities. For example, to raise tens of billions of yuan at low interest rates, and then turn out to make a difference, or invest in real estate, finance. In fact, Shenzhou international not only did not cross-industry investment, and even their own brands do not do, focus on deep manufacturing links.

  “It's good enough to make a dress." When asked why he only does OEM manufacturing, Ma Jianrong said frankly that this focus comes from the entrepreneurship feelings, but more from the rational outlook on the industryGarment making is a demand industry with a large market, it is true that many textile enterprises have been shut down and transformed due to pollution or are unable to continue due to high costs. However, this is often due to bottlenecks in the development mode of enterprises and lack of competitiveness, rather than problems in the industry itself.

  He told reporters that as early as 2000, when Shenzhou International had just turned from debt to profit, it decided to use 30 million yuan of profit to build a sewage treatment plant.

  Making a piece of clothing is a "low end" or "high end" industry, the deciding factor is ultimately the path. From the perspective of Shenzhou International, by focusing on the textile industry and practicing the high-quality development path of green, innovative and open, we will be able to achieve steady progress and reach the upper reaches of the value chain.

  Source: the Xinhua News Agency

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