How China'S First Tier Shoe Brands Turn To Full OEM

Recently, international sports brands Adidas Announced that it will close its only self owned factory in China later this year, and Adidas' business model in China has shifted to 100% OEM. Before Adidas, Nike, another international sports brand, also closed its only shoe production facility in China and planned to transfer its production to other regions in Asia.

The actions of Nike and Adidas have attracted the general attention of manufacturing enterprises in Quanzhou, especially OEM (contract manufacturing) enterprises. With the loss of manufacturing cost advantage in China, whether enterprises continue to adhere to the path of pure manufacturing or decide to establish their own brands has become a problem they have to think about.

Consignment orders continue to decrease

It is understood that adidas China It has more than 300 foundries. Shortly after the announcement of the closure, 10 foundries that directly serve Adidas have also received a notice of termination of cooperation. According to more than 290 other foundries, although Adidas has not identified it, orders from this famous international brand are decreasing.

Nike, another international sports brand, also plans to transfer the footwear production business managed by Fengtai Group in Taicang, Jiangsu Province, China, to the factory of Fengtai Group in other regions of Asia. The "fate" of these senior OEM enterprises has attracted the attention of Quanzhou industry.

Professor, School of Business Administration, Huaqiao University Yang Shuqing Over the years, he has paid attention to the shoe industry, She said: "Not long ago, I just went to Suzhou, and I did see many local shoe enterprises close down and factory workers leave. These OEM factories have grown with Adidas and other big brands for many years, and they have earned some manufacturing profits. However, because they have long followed the OEM route, the enterprises do not have their own brands. Once the order volume of Adidas drops, these enterprises will face great risks, because after all A large amount of capital has been invested in plant and equipment. "

The fate of Nike and Adidas OEM factories has once again sounded an alarm bell for enterprises in Quanzhou, that is, "the survival mode of pure manufacturing and only earning production profits may be more difficult in the future." Yang Shuqing said.

Enterprises follow the labor force

For shoes and clothing enterprises in Quanzhou, Yang Shuqing thinks: "Unlike many international and domestic big brands, most of the well-known shoes and clothing brands in Quanzhou are self created brands and mainly produce directly by themselves. Generally, 50% - 60% of enterprises' products are produced by themselves, while the other 40% - 50% are contracted by local enterprises. The production and logistics costs of local contracted enterprises are lower."

In this regard, Shi Qingmiao, the chairman of Xiaoyupi Children's Wear, vividly described: "Unlike the contract manufacturing enterprises in the Pearl River Delta, the shoes and clothing enterprises in Quanzhou are all built by the boss from building plants and buying equipment, bit by bit. Therefore, even in the face of profound impacts such as operating difficulties and economic crisis, Quanzhou enterprises will fight to the last."

"There are more than 3000 shoe enterprises in Quanzhou, but there are only seven or eight brands that can be remembered in the London Olympics, and at least half of the enterprises are doing OEM for these seven or eight enterprises," Yang Shuqing said. It is an important feature of Quanzhou's footwear and clothing industry to focus on self support production and localization of OEM production.

It is understood that, with the expansion of the domestic market of Quanzhou footwear and clothing enterprises, in recent years, many Quanzhou enterprises have also set up their own factories in Jiangxi, Hubei, Sichuan, Anhui and other places in China, some of which are jointly established with local enterprises and take the OEM mode. In this regard, the insiders believe that this is due to the market orientation in recent years. "In the past, enterprises followed the market, but now they follow the labor force. Where the labor force is concentrated and cheap, enterprises will go to set up factories".