Is it still a good business?
Wen 丨 Chinese Shang Tao Lue Ayun
Compared with the “fast money” of emerging industries such as the Internet, traditional industries such as shoe making industry are often looked down on, and the considerable productivity and revenue of shoe -making companies in Taiwan can make people think of the foundry of the foundry again. Business.
On May 6, 2021, Forbes was released in Taiwan’s rich list.
Those who are the most richest for the richest people are not Guo Taiming, the founder of Foxconn, the largest founder in the world, nor the Wei family behind Master Kang, who is a food giant, but a net worth of shoes with shoes with shoes. Zhang Congyuan.
Maybe you don’t know who Zhang Congyuan is, but the Converse, Nike, and Puma you wear on your feet are likely to come from his foundry, Walley Group.
Just more than a month ago, the Huali Group successfully listed and became the first sports shoes manufacturer in A shares. The prospectus shows that even in 2020 affected by the epidemic, its net profit is still as high as 1.876 billion yuan, an increase of 7.27%year -on -year.
▲ Wall Group knocked on the bell on the GEM of the Shenzhen Stock Exchange
Zhang Congyuan was born in the countryside of Yunlin County, Taiwan Province in 1948. His father had a living in his early years. He graduated from Chiayi Agricultural School at the age of 18 and entered a shoe factory in Yunlin at the age of 20 to work as an ordinary administrator. After he became famous, the media interviewed his folks and classmates in Tainan. When talking about his achievements, the most described was “unexpected.”
With the management experience in the shoe factory, in the 1980s, Zhang Congyuan decided to create his own shoe factory -Jingxin Shoe Industry. Due to limited funds, he can only buy pig houses and farmhouses as factories. “If you have no money at home, you live without money. If you buy a good location and building, I will buy the pigs and farmhouses in the countryside.”
Insufficient funds, naturally cannot choose products with high thresholds and difficult production. In an interview with the media, Zhang Congyuan said: “If football shoes and basketball shoes are the profit king of the first and second place in the shoes, the addition of sulfur shoes (canvas shoes) is probably the first one.”
And letting him start and stand firmly, it is precisely this “most profitable” sulfur shoe.
Because the rubber in Taiwan is abundant and the materials are cheap, if ordinary sneakers are produced, there is almost no need to develop the cost; and the soles of sulfur shoe should be used to cross the rubber sole and sulfur under a certain temperature and pressure environment, so that the two are firmly stubborn. The combination of land, quality is not easy to guarantee, many shoe companies have given up.
Let Zhang Congyuan change the initial idea, and there is only one logic that chose to do with his peers:
Being a sale that others do not do means less competition. As long as you do well, you can survive.
“I don’t think it can only be the remaining orders from others, it is more hard … The point is whether you have a better determination than others.” Zhang Congyuan said.
Compared with “Huaili”, Zhang Congyuan is more known in Taiwan’s “Hongfu” in his shoe factory. Hongfu is the second largest shoe factory in the world. It has 150,000 employees in the world and is also the world’s largest sulfur shoe factories.
Personal success is inseparable from the creation of the times and the environment. Zhang Congyuan’s story is just a microcosm of the development of the shoe industry in Taiwan.
In 1832, an Irish immigrated to the United States. When he was printed in a small town of Massachusetts, he stood in front of the machine every day. Because he was standing in pain for a long time, he was on a rubber cushion on the soles of his foot, and the pain was significantly reduced. After he returned home, he simply fixed the rubber skin on the soles, and the rubber bottom shoes were invented.
Taiwan, which has huge rubber outputs, has become a “raw material base camp” for rubber soles. It can be said to be logical.
During the Second World War, the Japanese established a large -scale rubber factory in Taiwan, entering natural rubber from Nanyang, and mass production of tires and rubber shoes.
In 1955, Hollywood movie star James Dien became popular with the movie “Rebellion of the None”. He wore jeans and white canvas shoes, making canvas shoes (that is, sulfur shoes). It ’s all the same.
▲ James Dien’s image of canvas shoes
Since then, Converse and Puma have carried out technical research on canvas shoes. Through sulfur vapor technology, the shoe and soles have higher strength and elasticity, which is possible to make large -scale mass production of sulfur shoes and become popular consumer goods.
The earliest companies that were Puma and Converse were Zhang Congyuan’s “Hongfu”.
In the early 1970s, developed countries in Europe and the United States gradually entered the post -industrialization era. The market was in a highly competitive state. The manufacturing industry shifted outwards to reduce the cost of manufacturing and became the common way for European and American companies. The central Taiwan, which has cheap and artificial artificial artificial artificial artificial artificial artificial, has become a “place for heaven”, and the shoe making industry has thus developing rapidly.
In 1971, the shoes exported in Taiwan reached 100 million pairs. In 1976, the export volume of the shoe industry in Taiwan has exceeded Italy, becoming the world’s largest export area. Together with the two major industries of electronics and textiles, the shoe making industry is considered to create an economic miracle in Taiwan in the 1970s.
In the 1980s, Hongfu, Baocheng, Fengtai, Yuqi, Long Dian, Qinglu, Kaan, Jiu Xing and other well -known foundry shoe factories emerged in Taiwan. name.
In 1986, the total amount of export shoes in Taiwan reached its peak, exceeding 800 million pairs.
At that time, the global population was about 4.9 billion, which means that one of the six people around the world could put on shoes made in Taiwan.
▲ In the 70s and 80s of the last century, the shoe factory in Taiwan
In 1987, the export value of rubber products in Taiwan for a total of RMB 7.46 billion (about 287 million US dollars), of which the export value of rubber shoes was 3 billion yuan, almost 1/2.
However, the economy of Taiwan, which has risen rapidly by “foundry” in various industries, has gradually become unbalanced due to the long -term excess output that has caused the industrial structure to gradually be unbalanced, and at the same time, it is greatly affected by the export market, which has laid hidden dangers for its industrial dilemma.
In 1988, the economy in Taiwan was overheating, and the Taiwan dollar accelerated the appreciation of the US dollar, which led to the sudden cold export of the shoe industry. From January to April of this year, shoes exported to the United States in Taiwan were 29%lower than the same period of the previous year.
According to statistics from the Shoe Making Association in Taiwan, in 1988 and 1989, more than 600 production lines in Taiwan were discontinued.
The export is cold, the production is trapped, and the line of “thin profits and more sales” is unsustainable.
Taiwan’s shoe companies that control more than 80%of brand shoes in the world put their sights on the other side of the Strait.
In the 1990s, many Taiwanese shoe companies migrated the factory to the mainland, including Zhang Congyuan’s enterprises.
He established a Xinyu Group with a joint venture and engaged in sports shoe foundry in the mainland. In 1995, the company was established in Hong Kong and successfully listed. Zhang Congyuan had 15.7%of the shares.
The cheap and sufficient labor force was the advantage of the mainland’s attractive shoe -making companies in Taiwan at that time. According to the data, in 1987, the salary of shoes -making workers in Taiwan was $ 1.55/hour, while the salary of mainland shoe workers was only $ 1.75/day.
Coupled with the policy advantage of reform and opening up,
In a very short period of time, the mainland shoe industry copied the glory of the shoe industry in Taiwan.
The closest Guangdong and Fujian provinces to Taiwan have become the destination of the shoe industry transfer industry in Taiwan. Dongguan, Putian, Jinjiang and other cities have become the beneficiary of this wave of industry transfer.
Taking Putian as an example, before Taiwanese businessmen entered Putian, Putian was the center of Fujian’s shoe making industry. In 1986, the total output value of Putian Shoe Demon Industry exceeded 100 million yuan, accounting for more than 70%of the province. After the Taiwanese businessmen brought a large number of international orders, it broke out of amazing development speed.
In 1993, Putian already had more than 100 shoe companies, and exceeded 100 million shoes each year. By 1996, the total output value of Putian’s shoe industry rose to 4.29 billion yuan.
Relying on the advantages of labor and the glory created by the foundry model, it is also short.
To put it plainly, what foundries still earn money. According to the survey of the International Consumer Alliance, in the cost of a pair of shoes, the gross profit of the factory accounted for 2%, labor costs accounted for 0.4%, and labor costs accounted for 20%of the factory gross profit.
The rising cost of raw materials is inevitable. Factory wants to increase net profit to make articles that account for 20%of articles.
Thanks to the regional economic development brought about by the rise of manufacturing, the rise in labor costs in mainland China once again caused foundries to inevitably fall into a strange circle. In 2001, the minimum wage standard in Fujian Province was 380 yuan/month, while Vietnam’s minimum wage at that time was about 164 yuan/month.
In 2012, the sports shoe giant Adidas announced that it had closed its own own factories in China, relocated the production line to Southeast Asia, and kicked off a new wave of industrial transfer. Shoe companies in Taiwan have also begun to transfer to Southeast Asia, which are less labor costs.
The cost of labor is continuously rising, and it can no longer bring considerable profits by relying on shoes alone.
After Zhang Congyuan’s newly launched, Zhang Congyuan began to turn to diversified development and created a number of sports brands, and even increased the real estate investment. Part of the business proportion of shoes made from the overall business was increasing.
In July 2013, Xinyu Group announced that it sold all equity of Yiming Investment at a total cost of 429 million yuan, and its main business was to manufacture shoe products.
The person who took over was the Zhang Congyuan family. Zhang Congyuan, who started to make shoes, was obviously unwilling to give up the “old bank” accumulated for many years. He renamed the shoe -making business of Xinyu Group for “Huali” and began to operate independently.
After taking over, the Zhang Congyuan family first acquired 15 Vietnamese factories and Dominan plants, acquired the trade business of 15 Vietnamese factories and Dominu Organ, and then acquired 15 companies in Hong Kong, China through the subsidiaries of Huali Co., Ltd. Essence
At present, most of the employees of the Brief Group are in northern Vietnam, and the proportion of manufacturers in mainland China and Taiwan is only 0.3%. As of the first half of 2020, the company’s self -producing output totaling 75.4 million pairs, of which Vietnam produced 74.61 million pairs, and Dominica produced 800,000 pairs, each accounted for 98.9%and 1.1%.
▲ The development process
Photo source: Futures Group Prospectus
Zhang Congyuan’s consistent style of “thin profits and more sales” determines that the low labor force of Southeast Asia will be the key to Huaili for profit.
In the first half of 2020,
The average unit price of Vove to Converse is 72.50 yuan/pair, and the average sales unit price to Nike is 80.20 yuan/double.
Another factory is mainly concentrated in Taiwan’s shoe companies in Taiwan and the mainland. The sales unit price to Nike is about 120 yuan to 140 yuan, which is nearly twice that of Villers.
In terms of output, Huali also led in a lot of shoes companies in Taiwan. In 2019, Yuyuan, Yuqi, and Fengtai’s per capita shoes were 929 double/year, 927 double/year, and 792 double/year, while Huali reached 1378 double/year.
In addition, compared with other Southeast Asian countries, Vietnam has the advantage of nearly China that can effectively save transportation costs and low import tariffs on European and American countries. This is why Huali chose to set the factory here.
In 2018, the growth rates of the revenue of shoe manufacturing business in Taiwan ’s large shoes companies Yuyuan, Yuqi, and Fengtai were -3.12%,-3.91%, and 9.41%, respectively. The average growth rate was 0.79%. The collection has achieved a high growth of 23.96%.
Judging from the disclosure of the Fresh and Bulletin’s prospectus, the number of employees of the Hualile Group in 2020 is close to 136,000, with more than 180 million shoe -making, operating income of more than 15 billion yuan, and net profit of 1.821 billion yuan.
Walley’s considerable productivity and revenue of stable growth throughout the year allow people to see the amazing toughness of traditional industries such as shoes, and began to re -understand the business of “foundry”.
However, everything has two sides,
What people see is brilliant and cannot see crisis.
Under the influence of the epidemic, European and American sports shoes brands have cut orders. The revenue of Nike and VF, the two major customers of Huali, have declined significantly. Nike reported that the net profit of the fourth quarter in 2019 was directly losing 5.634 billion yuan; VF revenue also plummeted, and the revenue of the first fiscal quarter in 2020 decreased by 47.51%.
Vietnam, who has the advantage of labor, has also been exposed to “labor shortage”.
Vietnam Exxpress pointed out that for Ho Chi Minh City, Binh Duong, the labor monthly salary of labor and shoe factories contains social insurance and lunch. Even if you pay 15 million (about RMB 4,200), it is still difficult to find workers.
At the same time, the emergence of emerging economy has also allowed some young people to accelerate the escape from traditional manufacturing. The prospectus listed on the Walley Group also shows that the company’s departure rate in the past three years is 22.04%, 22.83%, and 27.31%. At least two employees have left the employees each year, and the resignation rate has risen.
Zhang Congyuan, who followed the footsteps of the shoe industry in Taiwan, chased by the fast -moving force of cheaper labor, now he is the first to be the “dark horse”, but under the trend of accelerating human cost advantages, the future challenges will only be only possible. More.
The traditional “foundry” is still favorable, but when the “low -cost labor force” no longer becomes the advantage of the shoe making industry, can Taiwan foundries represented by Huali still continue their shoe -making kingdom? In other words, whether the dependence on labor can be reduced will largely determine the future of “foundry”.
In fact, Walley is also planning for his future, that is, upgrading from foundry production to design and foundry production, and gradually has strong product research and development design strength.
“Exclusive Interview: From Pigg House to New Richest Man” Commercial Weekly Commercial Weekly
“The First Stock of the” Sports Shoes OEM “Huali Shares: R & D investment is only 2%, binding Nike and other big names, what is the competitive advantage” of vitality capital
“New Richest Man in Taiwan, Making Shoes Make 100 Bill Ball Wear | Giant Tide” huge wave business comments
“Taiwan’s Export Industry -the rise and fall of the shoe industry” Journal of Hangzhou Normal University
“Taiwan Shoes Industry Recent Period” western leather
Welcome to pay attention to [Huashang Tao strategies], know the characters of the wind, and read the legend of Tao Tao.
Copyright, prohibit private reprint!
Part of the picture comes from the Internet
If it involves infringement, please contact to delete