On August 18, 2009, the conference room of the Gushan Town Government Building was packed with people. The heads of the town’s underwear companies gathered together to usher in a milestone day for their second entrepreneurial journey— —Gushan Town Underwear Industry Association was officially established.
From decentralization to agglomeration, the establishment of the industry association marks the transformation of the Gushan underwear industry from individual enterprises to group enterprises to fight risks together, marking the accelerated formation of an underwear industry cluster.
"One high and two low" restrict the underwear industry from becoming stronger and better
Driving into Gushan Town, local underwear brand advertisements on the streets constantly come into view, reminding people that this is an underwear production place base.
“We have two treasures in Gushan, one is Gushan Red Beans and the other is Gushan Underwear.” Wang Qiang, deputy mayor of Gushan Town Industry and president of Gushan Town Underwear Industry Association, said with a smile .
As early as the late 1970s and early 1980s, some people opened underwear workshops in Gushan Town. In that era, underwear production was secretive and did not dare to "publicize" it. Many customers from Shanghai, Changshu and other surrounding areas come to Gushan to purchase underwear, and Gushan underwear has become quite famous.
With the deepening of reform and opening up, Gu Shan’s underwear companies have opened more and more businesses, and their scale has become larger and larger. By the end of last year, the town had 73 underwear companies with more than 8,000 employees, an annual production of 30 million pieces/sets of underwear, and annual sales of 600 million yuan. There are 52 brands of underwear in the town, laying a solid foundation for the development of the entire underwear industry.
However, as the underwear industry continues to expand and competition in the underwear market continues to intensify, Gushan’s underwear industry has increasingly exposed its shortcomings - "one high and two low" , Gushan underwear enterprises have such a phenomenon, that is, high labor occupation, low product value, and low technical content. Due to the low entry threshold, underwear companies once rushed to the top, with more low-level duplication, less standardized competition among peers, and poor product quality and product added value.
On the other hand, as a labor-intensive enterprise, with the implementation of the Labor Law, labor costs have increased, the profit margins of underwear manufacturers have become smaller and smaller, and enterprises lack innovation, product creation, and innovation. Brand ability and weak market competitiveness.
In the first half of this year, Gushan Underwear’s sales were 300 million yuan, accounting for less than 1/10 of the town’s industrial and commercial invoicing sales revenue.
Gushan Underwear has reached a crossroads in development.
"Crisis" changes the business philosophy of corporate leaders
Change leads to generalization, and generalization leads to success.
The pursuit of profit maximization is the goal of an enterprise. However, in order to compete for labor and market, wages have risen again and again, and prices have fallen again and again. "Companies always try to find out the bottom prices of other companies before quoting. Some companies even go to the extent of vicious bargaining in order to obtain orders. If you quote a low price, I will be lower than you. I will grab the order even if I don't make any money." The CEO of an underwear company who did not want to be named said helplessly.
In 2008, a sudden global financial crisis made the competitive landscape particularly fierce. It was this crisis that completely changed the Gushan underwear company's philosophy of "peers are enemies" and "peers must be jealous". Companies in the same industry no longer oppose each other due to competition, but instead sympathize with, understand and support each other.
The ship is strong and resistant to risks. More and more entrepreneurs are turning their attention to the establishment of industry associations.
At the same time, the development status of Gushan Underwear has also attracted great attention from the town party committee and government. By convening industry symposiums, we extensively listened to the opinions and suggestions of enterprise CEOs on the preparation of industry associations, and organized enterprise CEOs to go to Qingdao, Shandong to learn from experience, which unified the understanding of enterprises on the preparation of associations.
Wu Jianping, the boss of Qiqiang, is enthusiastic about the establishment of Gushan Underwear Industry Association. From starting a business in 1989 to registering the "Qiqiang" trademark in 1996, Jiangsu Qiqiang Clothing Co., Ltd. has gone through ups and downs for 20 years. Its underwear products have become national inspection-free products and have established marketing relationships with more than 2,000 stores at home and abroad.
"Disorderly competition and lack of information exchange hinder the development of enterprises. Our enterprises have the need to standardize industry competition and become bigger and stronger through government guidance. This is a win-win move for enterprises and the government."