Market Research: An Attempt To Explore The Garment Industry Belt In Humen Town, Dongguan

Every year, as the Spring Festival approaches, Zhang Ming, the owner of a garment factory in Humen Town, Dongguan, falls into anxiety. Looking at the workers packing their bags and preparing to return home, he was not sure how many workers would arrive on time in the coming year.

The reality is that many migrant workers will bid farewell to their "Hometown" after years of hard work and return to their "Hometown" accompanied by family and friends. This change is not only the result of returning home employment policy, but also the token of many coastal manufacturing enterprises moving inland.

In the first industrial park of Humen zhenkou, Zhang Ming has set up a garment factory for nearly 20 years. "Many people are nominally returning home to visit their relatives for weeks," he said. In recent years, he has become more and more used to the workers' "leaving without saying goodbye." this situation may not come back

Unlike Zhang Ming, who is a little lonely, Zhang Hewen, who started his business in Humen, is looking forward to the addition of a new group of employees. The new members are from Shenzhen and are good at cross-border independent station operation.

Eight years ago, Zhang Hewen resigned from a state-owned enterprise to start a business, and joined in cross-border e-commerce. Today, the company has not only opened stores in overseas e-commerce platforms such as Amazon and Wal Mart, but also established Tongxin, an investment company covering the upstream and downstream of cross-border e-commerce industry chain. This independent station team that makes him full of expectations is the company's recent venture project.

Dongguan is a city with a large number of migrants. In 2021, the permanent resident population is 10.47 million, including 8.31 million floating population (1.76 million floating population within the province and 6.2 million inflow population from other provinces).

Zhang Ming and Zhang Hewen are one of these foreign entrepreneurs. They came to Humen Town ten years later, but they also chose to start their business in the "casual women's wear" track. Humen is mainly composed of casual women's wear and large size women's clothing, which is the main production area of China's "southern style clothing". In 1978, Taiping handbag factory was born in Humen, the country's first "three to one supplement" enterprise.

Now, in the fourth year of cooperation between the two, one is opening a factory in the upstream of the industrial chain, and the other is doing cross-border e-commerce in the downstream of the industrial chain. Desolation and expectation are not only the different states of the two entrepreneurs, but also the portrayal of the two times and two development paths at present.

As of 2021, there are more than 3100 garment manufacturing enterprises in Humen, 40 specialized clothing markets, more than 200000 employees, and an annual output value of about 41 billion yuan. Famous clothing brands such as Yichun, Sanmu bidi, Kuaiyu, Oudian, Carman and Qiaobo have been born.

However, the traditional manufacturing feast is over. Cross border e-commerce is a new industry emerging in Humen Town in recent five years. The scale of local cross-border e-commerce enterprises is 10-20 people, and the revenue is about 10-100 million yuan.

Recently, Yibang power visited the garment industry belt in Humen Town, Dongguan, trying to explore:

In cities with immature cross-border e-commerce development, how can young entrepreneurs maximize the integration of local and surrounding industrial resources and achieve sustained performance growth?  

What "sparks" will cross-border e-commerce enterprises encounter in the cooperation with local garment factories?

What are the "new troubles" facing the fast growing cross-border e-commerce rookies

　　 01  SHEIN！ Stand alone! TikTok！ Cultivate entrepreneurial soil, invest employees to go out to sea to "dig for gold"

At 9:00 a.m., in the small conference room on the 8th floor of Humen keying Industrial Park, three new staff members who have just joined Tongxin sit around their desks, waiting for the first training course after their induction. The speaker of this course is Zhang Hewen, general manager of Tongxin. He is 35 years old and has been engaged in cross-border e-commerce entrepreneurship for eight years.

The three young people come from the traditional clothing industry and know little about cross-border e-commerce. Zhang Hewen hopes that they will not only understand the fashion design and printing, but also understand the demand of overseas markets and commodity trading process, so that eventually everyone can be on their own and operate stores on cross-border e-commerce platforms.

Back to eight years ago, Zhang Hewen was a gold medal lecturer in express sales, and had the same expectations for business students.

From 2012 to 2013, cross-border e-commerce has just emerged in China. The cross-border e-commerce platforms represented by Alibaba international station and express express express have sunk into the industrial belt to "dig for gold". Zhang Hewen is one of the young people who follow tuyere to start a business. Before that, he worked in a top 500 central enterprise and served many foreign trade enterprises in Guangdong.

"At that time, there was no concept of cross-border e-commerce. People called this online trading mode oriented to overseas markets as" foreign trade e-commerce. " Zhang Hewen recalled that this kind of online B2C foreign trade transactions grew rapidly, making entrepreneurs more excited than Taobao e-commerce.

2014 is known as "the first year of cross border e-commerce" in China. In July, Zhang Hewen became the official training service provider of express express, founded the Gebo Business School of sumitong university to accompany the growth of platform businesses. Since then, he and his team have been running in Dongguan, Guangzhou, Zhongshan, Zhuhai, Jiangmen, Foshan and other places to launch various online and offline training courses, so as to drive the industry to enter the "new world" of cross-border e-commerce.

"We are equivalent to spreading the" spark "of cross-border e-commerce in various industrial zones of Guangdong Province." Zhang Hewen told Yibang power that he was even more gratified that not only the industrial belt merchants, but also many college students who had received training finally joined the army of cross-border e-commerce.

In 2016, Zhang Hewen founded Tongxin, a cross-border e-commerce company, from "e-commerce training" to "e-commerce operation". He has set up a number of clothing brand stores with Humen characteristic industry "casual women's wear" as the main category, Amazon, Wal Mart and lazada as the main platform.

"We choose to enter the market from casual women's wear, which can cover consumers aged 20-60." For the main categories of stores, Zhang Hewen has a precise input-output consideration. The leisure clothing mainly made of knitted fabric has stronger tolerance for body shape and more extensive consumer groups; Compared with woven fabrics, the production efficiency and capital turnover efficiency of knitted garments can be doubled.

In 2020, Tongxin cooperated with the fast fashion brand sheen to become the OBM (own brand & Manufacturing) supplier of the latter; In 2021, an independent station team will be established to explore new cross-border e-commerce businesses such as independent station and tiktok.

"On Amazon and Wal Mart platforms, we prefer popular models; on sheen platforms, we prefer fashion." Based on the differences in style and workmanship, Tongxin's products usually cost about $30 per customer in Amazon and Wal Mart, and around $20-25 in sheen, Zhang said.

Compared with Zhang Hewen, Anxin is a "new comer" of cross-border e-commerce in Humen. He worked in cross-border e-commerce enterprises in Shenzhen, and was dispatched to humen to carry out new business in early 2021.

"Our company is mainly engaged in overseas sales of mobile phone brands, and in recent years, we have begun to expand the category of self owned clothing." Anxin told Yibang power that the overseas business of acting mobile phone brands can only play the role of "middleman" and it is difficult to deposit enterprise brand assets. Therefore, the company plans to develop its own clothing product line and gradually do brand business.

"Closer to the origin" has become one of the means for cross-border e-commerce enterprises to control the supply chain. In March last year, the clothing operation team led by Anxin came to humen and rented an office building not far from Tongxin. In the next year, he visited ten factories around Humen Town to learn more about the upstream and downstream operation of Humen garment factories.

What impressed him most was that compared with most of the inland cities, the production and return speed of garment factories in Dongguan were relatively efficient, and the production rhythm was in place.

Compared with Anxin, who temporarily works in Humen through the company's assignment, Zhang Hewen considers more about how to keep cross-border e-commerce talents in Humen Town for a long time.

"In the industrial belt outside the first tier cities, the operation of cross-border e-commerce generally faces the problem of talent shortage." Zhang Hewen told Yibang power. At present, many e-commerce talents in first tier cities tend to shift to second tier cities under the pressure of life, but they often worry that there is no good growth soil (stock mechanism, supply chain, capital, technology, etc.).

"Dongguan's enterprises are rarely able to provide the same talent growth environment as Shenzhen, and the inflow of cross-border e-commerce talents is small, even if the inflow, enterprises may not be unable to catch up." Based on the pain point of talent matching, Zhang Hewen tries to build an "ecology" that can support talents' entrepreneurship to the greatest extent.

"You can understand that we are both a clothing company, an e-commerce company and an investment company." He said with a smile.

In the new training class, Zhang He Wen drew a tree with luxuriant branches and leaves for everyone. This big tree represents "Tongxin", each branch represents a "project team", the members of each team are the scattered "flowers" and "leaves", and the "soil" supporting the growth of the tree is provided by the investment company, including capital, technology, environment, organizational structure, team management, etc Personnel recruitment and other essential elements of enterprise operation.

Zhang Hewen's project of employee entrepreneurship covers the upstream and downstream of cross-border e-commerce industry chain, including supply chain management, brand store operation, warehousing and logistics, photography and video. Each company is responsible for its own profits and losses. Each subsidiary operates in the way of "big Tong" and "small Tong", and stimulates the enthusiasm of employees at each level through scientific and reasonable dividend mechanism.

"Altruism" and "win-win" are the key words of Zhang Hewen's management team. In the organizational ecology constructed by Tongxin, "soil" and "trunk" will continuously nourish "flowers" and "leaves", in turn, "flowers" and "leaves" are also feeding the whole tree through photosynthesis.

This kind of enterprise management value stems from his "unhappiness" in his second year. At that time, because of the difficulty of capital turnover, enterprises accepted the merger and acquisition of large companies, but they fell into a "trap". "The other party bought us and broke up my team, which is like dismantling the team to fill their business sector." Zhang Hewen said that in the reorganized team, he was "marginalized" step by step, lost his "real power", and could not "shelter" the old employees who had joined him, watching them apply for resignation one after another.

"At the beginning, ten of our colleagues were merged together. In the end, only four core backbones were left with me." Soon after, Zhang and the company parted ways due to a conflict of values. He does not want young people with entrepreneurial dreams to experience the "bloody" capital too early. He is more willing to witness their growth with warm investment.

The innovative talent incentive mechanism has begun to show results. Five years after its establishment, Tongxin has recruited many professionals in the field of clothing industry, including the quality inspection director who has been working in Hong Kong clothing trade company for 30 years, the senior logistics personnel engaged in overseas trade in international top 500 enterprises, and the senior designer engaged in fashion design in fast fish, a leading local enterprise At the same time, employees in financial, administrative and other service-oriented positions can also "earn extra money" by participating in e-commerce operation projects.

The idea of encouraging entrepreneurship extends to university campuses. Zhang Hewen has actively carried out school enterprise cooperation in Guangdong, Guangxi and other places, hoping to provide an entrepreneurial environment for students majoring in cross-border e-commerce during his university stay.

"Our business model has been embedded in the daily teaching content, and we have carried out practical operation projects of shopee, lazada and other cross-border e-commerce operations through co building studios." Zhang Hewen said.

At present, many college students have joined Tongxin's team. Most of them understand Tongxin's business philosophy and working methods during their study. From internship to employment, "seamless connection", many of the company's operation managers are trained through school enterprise cooperation.

　　 02  About 10% of net profit has become a "negative asset" of the bank The factory said that we should be cautious about the change! Be careful! Be careful!

In Zhang Hewen's cross-border e-commerce investment map, the only one not included in the planning is the clothing factory. At present, Tongxin cooperates with more than ten garment suppliers, most of which are 30-80 people, and have certain years of foreign trade production experience.

In his opinion, engaging in cross-border e-commerce needs to maintain certain flexibility and allocate production resources at any time according to the needs of business volume. If the investment or construction of a factory is deeply bound with the factory, it will be dragged down by a series of production factors of the factory.

Zhang Ming has been working in the garment manufacturing industry for nearly 20 years.

In the 1990s, Humen Town of Dongguan, relying on its location advantage adjacent to Hong Kong, accepted overseas orders through Hong Kong and Taiwan customers. At that time, opening a garment factory in Dongguan was a relatively profitable business project, which attracted a large number of entrepreneurs from Sichuan, Guangxi, Jiangxi, Hubei and other provinces.

Zhang Ming is a native of Jingmen, Hubei Province. In his early years, he worked in a Hong Kong funded enterprise in Shenzhen. He accepted European and American clothing orders through the Hong Kong headquarters, and then sent them to mainland factories for production. In 2003, Zhang Ming quit his job and decided to set up a garment factory in Humen Town.

Knowing that Zhang Ming is going to open a factory in Humen, villagers from ten miles and eight directions in Jingmen followed suit. "When we started our business, there were hundreds of people. All the workers were brought from their hometown. They were very easy to bring and there were many opportunities to make money." Zhang Ming recalled.

From undertaking foreign trade orders from Hong Kong, Taiwan, Southeast Asia, Japan and South Korea, and then to supplying goods for offline clothing wholesale cities such as Humen Town Fumin and Yellow River, Zhang Ming's clothing business has experienced a "golden decade". "At that time, as long as the clothes were well done, the stall would send people to rob them, and the foreign trade and domestic sales were very prosperous." He said.

Nowadays, the situation has changed. He has set up a clothing factory for 20 years. Every few years, Zhang Ming has the idea of giving up his career. "Do not do well, do not do strong, production costs are higher and higher, the industry ceiling is clearly visible.".

Zhang Ming told Yibang power that in the past ten years, processing costs have been unable to go up, but labor costs have increased more than ten times. "Ten years ago, the wages of workers were five or six hundred a month, but now they are more than 7000."

2008 is an obvious watershed, the mobility of workers is stronger, and the cost of labor begins to rise. When encountering the "labor shortage", he had to go back to his hometown and invite the villagers to work. Later, there were fewer and fewer fellow workers in the factory. Most of the workers Zhang Ming recruited came from the provinces around Guangdong, with Hunan, Jiangxi, Guangxi and Sichuan as the majority.

In the whole garment industry chain, the factory seems to be the most needed to be transformed, but it is also the most difficult link.

"Why does the factory owner prefer to stick to it rather than reform? Because the current market competition environment is forcing him to press the profit points of all links to death. If you move it easily, it is likely that $3.5 million will be gone." Zhang Ming takes "moving" as an example. When an e-commerce enterprise moves, the boss with a group of people can shoot a gun and change a place; If the factory wants to move, all kinds of equipment transportation, plant decoration and production line adjustment will be built in.

"When we go to the bank for loans, people will see that it is the clothing industry and small and medium-sized enterprises, which will basically be regarded as negative assets." Zhang Ming said that even in good years, with the growth of revenue, the cost of raw materials, labor costs and environmental protection transformation costs have also risen with the tide.

In order to win customers' orders, many increased costs can only be borne by the factory itself. Factories without capital support are likely to grow smaller and smaller, with net profits floating around 10%.

In the past five years, cross-border e-commerce enterprises have become new customers of garment factories, and to some extent help factories boost their production capacity. However, the vast majority of factories are still engaged in OEM business, at the end of the value chain.

In Xiangbei village, Luwu, Dongguan, there are dozens of garment processing factories with a scale of no more than 100 people, similar to Zhang Ming's entrepreneurial experience. More than 10 years ago, the owners of these factories came to humen from Sichuan, Jiangxi, Chongqing and other places to start their business. They mainly supply offline wholesale outlets for a long time. In recent years, they began to supply products for emerging sales channels such as live e-commerce and cross-border e-commerce.

The factories at the end of the industrial value chain have not considered the transformation of e-commerce or brand development. However, after operating clothing factories for many years, Zhang Ming has seen too many e-commerce stories of ups and downs.

"When an enterprise reaches a certain stage of operation, it must consider those systemic risks. It may be because of a few small problems that eventually lead to the whole enterprise losing its vitality and even going bankrupt. This is a very terrible thing." He said.

Take the once booming "Taobao brand" as an example. In Zhang Ming's opinion, "Taobao brand" is only the product of a specific era. Most of them are "volume" players, so it is difficult to call it a brand. Once the platform is opened to discharge water, more and more competitive international brands will be introduced, and the outcome will be immediately known.

"A brand can only be called a" brand "if it has the ability of brand premium. If you sell it for $100 at a cost of 80 yuan, it can only be called" carrying "; if you want to lower the profit point and make a large-scale operation, it can only be called" running volume. " Zhang Ming described it.

Because of this, the factory owners who bear the real industry dare not act rashly, let alone carry out drastic reform. Those predictable and unpredictable risks, all remind him to be cautious and cautious! Be careful! Be careful!

　　 03  70% increase in performance but "new troubles" Why is the landing effect of flexible rapid response system not ideal?

In 2021, many domestic cross-border e-commerce sellers are affected by Amazon's title, but the cross-border sellers in Humen Town of Dongguan are not affected.

"We do cross-border e-commerce with the thinking of investment, and always talk about risk aversion." Zhang Hewen told Yibang power that most of the cross-border e-commerce sellers in Dongguan are people who have jumped out of traditional industries. They do not have the entrepreneurial psychology of getting rich overnight, so they are relatively pragmatic and solid. "Standardized operation has become the bottom line of our business thinking. Playing a little smart may earn one or two million yuan, but once it is closed, it will be tens of millions of losses, which is not worth it."

Although Tongxin's sales performance in 2021 has increased by 70% compared with that of last year, and Tongxin has grown into a small and well-known cross-border garment e-commerce enterprise in Humen, based on a sound business philosophy, it is also facing "new troubles" in its fifth year of establishment.

The first thing that makes the enterprise fall into a passive situation is the straight-line rise of shipping cost. "In 2021, except for May June, the whole year will be in an atmosphere of" man-made "peak season. The epidemic situation is combined with maritime factors, and a large number of containers are piled up in American ports and wharves, resulting in serious congestion." Zhang Hewen said.

In 2020, the U.S. shipping price will remain within 10 yuan per kilogram. In 2021, after the spread of the "Dasai port" phenomenon in the US market, the highest shipping price will rise to 30 yuan per kilogram.

"Last year, the shipping situation has changed day by day. We have to pay attention to the changes in the US market every day. What kind of ships will the shipping companies bring back? 1000 containers of small boats and 4000 containers of large ships will directly affect our delivery efficiency." Tong Xin Investment in charge of the logistics subsidiary Mai Sheng said.

Anxin, which has just opened the cross-border clothing e-commerce business in Humen Town, is also facing the problem of soaring shipping costs. "We have no room for negotiation at all. We can only passively follow up."

When the shipping cost rises, enterprises still need to ensure the market competitive advantage in the front end, so they can only squeeze the pressure on the back-end factories. "We also know that the factory is difficult, so we will discuss it and try to control the flow within a reasonable range." An Xin said.

In addition to the rising cost of shipping, there is also a long-term problem perplexing cross-border garment e-commerce enterprises - the uncontrollable production capacity of factories.

In 2021, after Tongxin added the sheen business line, the production department felt obvious pressure. "Last March, orders couldn't be sent out, and there weren't so many workers on the market to complete the orders." Zhang Hewen said that although he can manage the organization in an orderly way by means of division of labor, dividends, empowerment and other means, he said that he could not do anything to improve the capacity and efficiency of external cooperative factories.

In 2020, the fast fashion cross-border e-commerce brand sheen intends to expand Amazon sellers and become a cooperative supplier of sheen platform. Tongxin's many clothing stores in Amazon have a good reputation and stable supply chain capacity, so it has become the focus of the business negotiation of sheen investment team.

In October of that year, Tongxin became the OBM supplier of sheen. The brand products independently developed by the company can be sold independently on this fast fashion platform.

"Our biggest pain point last year was that we were dragged by the factory so hard!" Zhang Hewen said that from the perspective of cross-border sellers, we certainly hope that the shorter the delivery cycle of the factory, the better, but there are many difficulties in actual operation.

If you want to run fast, it means higher cost investment. In fact, the so-called "small order quick response" will bring burden to the production line of the factory. If the profit margin is not given enough, the factory is not interested in undertaking these small orders.

"We can clearly feel that the production costs of Humen factory continue to increase and the operating pressure is increasing, which will also increase our operating costs in reverse." Zhang Hewen calculated that if we want to improve the production efficiency of the factory, we need workers to work overtime, which means higher cost investment. And this part of the increased cost, and finally back to the seller side, only by increasing the unit price of products, can there be profit space.

In the peak employment season in Humen Town, the mobility of workers is stronger, and the average daily wage for odd jobs can be twice that of long-term workers. In the peak season of cross-border e-commerce preparation, Zhang Ming will also face the problem of "labor shortage". In order to reduce operating costs, Zhang Ming will send part of the orders to the garment factory in Yueyang, Hunan Province, when orders are approaching saturation and production capacity is limited in Humen Town, Dongguan.

In Yueyang, Hunan, Zhang Ming cooperated with several small garment processing factories. Due to being located in the inland area, the factory scale and technical strength are limited, so we can only rely on the "spillover" orders of clothing factories in coastal areas to survive. "They are the end of the whole industry chain, and life is even more difficult." Zhang Ming said.

In recent years, the demand of apparel cross-border e-commerce enterprises for flexible supply chain is growing day by day. Tongxin, which is growing rapidly, also hopes to find more factories that can cooperate with the rapid reaction production.

"We visited many so-called flexible supply chain service companies in Guangzhou and Beijing, and the factories they cooperated with were all in the industrial belt. After cooperation, we found that the factory they found for us was still in Humen, and the effect was not ideal when it finally landed. It was also unable to solve our pain points and demands." Zhang Hewen said.

In his opinion, the so-called intelligent production of clothing factories must be a one-time investment of tens of thousands of orders for a single model, and the overall improvement of production efficiency is the realization of real intelligence. However, more than 90% of domestic enterprises can not meet the order quantity.

"In fact, we are facing the same problem as sheen. I need to replenish the products sold on the platform, and I have to find a factory with such quick response capability." Zhang Hewen told Yibang power that although Sheen has brought the garment industry in many places across the country, it has not found enough fast reaction factories that are strong enough.

"Why is it constantly developing new models? Because there are not so many powerful fast reaction factories to support the production capacity of a single model, it can only cover the shortage of single production capacity through a large number of new models, no matter how much capacity the factory has and how much output it can produce." He said.

Many garment factories in Humen Town are also paying attention to sheen. At the end of last year, the circle discussed that mocan, a cross-border e-commerce company in Shenzhen, was on the verge of bankruptcy. Compared with Mo can, the most recognized thing about sheen is that it does not need to be passively prepared.

"The fine operation ability of sheen is incomparable with that of mocan, which greatly reduces the pressure on goods preparation and capital of the factory." Clothing factory owner Cao Wei said. Cao Wei runs a clothing factory with less than 100 people in Humen, mainly engaged in knitted garments.

Due to the small scale and limited production capacity of the factory, he did not choose to cooperate directly with sheen. Instead, he accepted some orders sent by sheen to relatives' factories. Around the opening of clothing factory friends, generally show a strong interest in sheen.

As an indirect supplier of sheen, Cao Wei has a clear understanding of this new business after two years of cooperation. "Some people make money, others lose money. It's hard to say whether it's good or bad. It's all up to you to control it. It's impossible for you to taste the sweetness at the beginning of cooperation. You need to run through this mode in the system by yourself, and more importantly, you need constant investment." He said that many garment factories around him stopped working after 2-3 months of cooperation, complaining that the types of orders were too miscellaneous, the unit price was too low and there was no profit.

In his opinion, this is a normal phenomenon in the initial running in period, and all order styles must be new ones. "If this order is returned 10 times, 20 times or 30 times, and the workers are familiar with it, there will be no such problems. Everything is important to adhere to it. Once it is measured, there will be profit margin." Cao Wei said that in his orders, there are several basic knitwear, from the year before last to now, there has been a return order.

"Pragmatic" is the essence of Dongguan entrepreneurs. Nowadays, most factory owners who have experienced ups and downs have accepted their role in the whole industry chain.

As Cao Wei said, "a cake needs everyone to eat together, and it is impossible for one person to monopolize all of them. Since we choose to be a factory, we should do our best to do what we are good at. It is high risk and high return. We should make sure that we can make the money we deserve."

Most of the cross-border e-commerce entrepreneurs, who are in the rising period of their career, also include "brand going abroad" in their long-term planning, even as a "grand proposition".

In the ever-changing cross-border e-commerce track, and in a large clothing category in the Red Sea, they need to establish a highly agile team, carefully consider the input-output ratio, and maintain healthy cash flow.

It has been 40 years since the garment industry was developed in Humen, Dongguan. Garment factories, large and small, and a large number of e-commerce enterprises are scattered in the crisscross streets and lanes, integrating into humen's market life. Whether it is the first generation of factory entrepreneurs or the second generation of e-commerce entrepreneurs, they all leave their youth in humen and write the story of hot blood entrepreneurship here.

(at the request of the interviewees, Zhang Ming, an Xin and Cao Wei are pseudonyms)