Chinese garment manufacturing expert
- Shenzhou International (HKG: 2313) – product categories of knitted sportswear and leisurewear
- Co-production model in cooperation with Uniqlo, Nike (NYSE: NKE) and Adidas (ETR: ADS), plus comparison of their ordering models
- Impacts of integration of production processes on production inventories, plus means and room for inventory reduction
- Utilisation of quick response capability in sportswear and leisurewear production and their differences
Nike and Adidas are major clients of Shenzhou International. What about the proportion of knitted sportswear and leisurewear in Nike’s apparel products? Are there some product categories of which Shenzhou International would not engage in the production?
Among Nike’s suppliers, Shenzhou International takes up a share of about 20% while the second largest supplier takes up a share of over 10%. It is probably Shenzhou International’s major competitor. Which company is it? Can you compare it with Shenzhou International?
You just mentioned the whole industry chain and quick response. An important thing is inventory reduction. Can you explain how much inventory can be reduced given a certain sales revenue with previous examples? What are the reasons for inventory reduction and the major links involved?
Can you compare leisurewear brands such as Uniqlo with sportswear brands such as Adidas and Nike in terms of their requirements for quick response? What are the differences in the arrangement for quick response regarding the production of leisurewear and sportswear?
You have mentioned three major quick response models. Uniqlo probably chooses the first model under which a huge number of products need to be delivered on time. For example, a single order it places might be 200,000-300,000 garments and it might also require that a total of one million garments should be delivered in a month. Which model do Adidas and Nike choose? Have they chosen the first model under which a huge number of products are produced at a time so as to reduce costs?
You used to be in charge of fabrics and the production management of garments. What do you think are the advantages of the integration of production processes over other models? Even if brands are willing to act as a bridge, the cooperation among various factories, for example, a fabric factory and a garment factory, may not be as efficient as Shenzhou International’s integration of production processes. Why?
When it comes to product R&D, Shenzhou International has been developing high-performance fabric, including functional fabric for sportswear, elastane fabric and knitted synthetic fabric. The company also cooperates with its clients to manufacture products. How does the company strike a balance between those two aspects?
What’s the cost structure of Shenzhou International and the industry as a whole? What is the relationship between the cost level and the profit margin?
Take Uniqlo as an example of Shenzhou International’s major clients. Is Uniqlo’s production cost high or low? Does Shenzhou International quote Uniqlo the lowest price while keeping its production cost low, so as to ensure a high profit margin? From the perspective of production techniques and processes, could you estimate how much the cost of Uniqlo can be lower than that of other leisurewear brands? 5%, 10% or 20%?
How much is the production cost of Uniqlo lower than that of other leisurewear brands such as Muji and Zara? Do you think Uniqlo’s production cost is much different from other brands’ for one piece of clothing?
How do brands choose from OEMs? Do Shenzhou International’s clients stick with it despite the relatively high costs because they believe in the OEM after long-time cooperation? Does Nike’s secondary supplier enjoy such a pricing power as that of Shenzhou International?
You mentioned earlier that Shenzhou International’s departments in various links are cooperating at the highest efficiency to minimise the inventory on the production side. How is Shenzhou International’s degree of informatisation? Does it keep investing in this aspect? How is Shenzhou International’s informatisation progressing with clients including Uniqlo, Adidas and Nike?
What measures does Shenzhou International take to maximise its efficiency?
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