Standing behind Uniqko Adi Nike, Shenzhou International listed in the 8-year market, 53 times

In the 8 years since the market went public, it has turned 53 times. What is Shenzhou International doing right?

Behind Uniqlo, Adidas and Nike, Shenzhou International Group Holdings Co., Ltd. (hereinafter referred to as "Shenzhou International", 02313.HK) was listed for 8 years and its market value has increased 53 times. In the industry, this company, which has always been low-key, is called "Tencent in the apparel industry."

As of last Friday's close, Shenzhou International's share price recorded a continuous increase in the market value of 95 billion Hong Kong dollars, approaching 100 billion Hong Kong dollars, stable in China's highest value clothing group. In contrast, the market value of the second-largest Chinese clothing brand Anta is around 83 billion Hong Kong dollars, and other major clothing brands Haishu House (600398.SH), Metersbonwe (002269.SZ), Peace Bird (603877.SH) The current market capitalization is 44.2 billion yuan (the same below), 9.8 billion yuan, and 12.4 billion yuan.

Despite the high market value, the name of Shenzhou International is not familiar to the public. Its predecessor was Ningbo Shenzhou Weaving Co., Ltd., which was established in 1990 and is mainly based on textiles. Ma Baoxing, then the deputy general manager of the company, had stayed in Japan in the early years. After taking over the company, he decided to introduce the Japanese market as the first export market of Shenzhou International, introducing the operation mode of Japanese enterprises, and positioning the company as “high-end OEM”.

In 1997, Shenzhou International signed the first international major customer Uniqlo, and completed 350,000 production orders within 20 days. Since then, Shenzhou International has gradually reached a cooperative relationship with Nike, Adidas, Hummer and other brands. Today, the company has become China's largest exporter of knitted garments.

According to Bloomberg's supply chain data, among the four important customers of Shenzhou International, the UNIQLO parent company Japan Fast Retailing Group accounted for 21.2% of the revenue, Adidas accounted for 20%, and Nike accounted for 19%. According to Goldman Sachs, the order share of Shenzhou International's major customers will increase from the current 10% to 15%.

The combination of OEM and ODM manufacturing modes and the supply chain that can respond faster are two important reasons why international brands like Shenzhou International.

As early as the end of the 1990s, Shenzhou International began to switch from a single OEM (original equipment manufacturer) model to a semi-ODM model (original design manufacturer), semi-OEM model. The difference between the two modes is that in the ODM mode, the foundry company can have its own design link, and the brand chooses the design that suits itself, fine-tuning or direct OEM production.

At present, Shenzhou International's industrial chain includes middle and lower reaches of weaving, dyeing and finishing, printing and embroidery, cutting, sewing, packaging and logistics. In the production of fabrics, Shenzhou International adopted the ODM model, and the manufacturing process of the garments is still the OEM model. This means that Shenzhou International can produce the corresponding fabrics according to the functional and design characteristics of the clothes. These designed fabrics can enable Shenzhou International to have more intellectual property rights and voice in the process of cooperation with the brand.

On the other hand, in order to reduce logistics costs and improve supply chain efficiency, Shenzhou International has even established special factories for Nike, Adi, Uniqlo and other brands, which can serve a brand from fabric development, design, proofing and production. Brands will also send special designers to special factories to propose changes to the products, shortening the product update time and market release cycle. Therefore, Shenzhou International can complete the product shelves within 2 weeks at the earliest, and it takes about 3 months for the average company to go from order to product.

Shenzhou International is a dedicated factory established by Nike

“Our orders and delivery are all carried out through the network. There is no other channel at all. 15 days delivery of products, this is a very efficient industrial chain, from spinning, weaving to garment and printing, all aspects are fully standardized Production.” Ma Jianrong, the son of Ma Baoxing and the current chairman of Shenzhou International, said to the “Chinese Business Strategy”.

At the same time, with the increase in labor costs, Shenzhou International's factories are also moving to Southeast Asian countries such as Vietnam. According to the company's 2016 financial report, as of the end of 2016, Shenzhou International had 23,005 employees in Vietnam and Cambodia, accounting for 30.84% ​​of the total number of employees. The rest of the employees are in China.

In the first half of 2017, the production of fabrics produced by Shenzhou International Vietnam reached 185 tons/day. The company expects to reach 200 tons/day by the end of 2017 and 250-300 tons/day by 2018. Goldman Sachs expects that Shenzhou International's sales in 2017 and 2018 will increase by 15% and 12% year-on-year. The company's Vietnam business may contribute 14% of its capacity in 2018, while its China business will grow by 5% to 10%.

Editor in charge: Wang Zhen