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Shanghai foreign trade enterprises' road to success: being pragmatic and focusing on internal building

(www.ecf.gov.cn)        Updated: 2018-02-28

Samsung's and Apple's products are widely used and are seen everywhere. They are world renowned brands. However, products of Intel and Cisco aren't commonly seen. But they are also renowned brands. And so is MUJI. It is often said that people from Shanghai are smart; in fact the current enterprises in Shanghai are even smarter. In Shanghai, there are batches of trade enterprises, which are set to become the future Intel, Cisco, and MUJI that pay more attention to the connotation of a company instead of merely pursuing fame. They are also good at using their own advantages to grow bigger and stronger. Some enterprises have gained high reputation in the industry because they have become the best in one or several fields of the industrial chain. Some have become industry leaders because they have focused on one type of products and do their best are that specialty. These enterprises are the epitome of Shanghai's foreign trade enterprises. Their pragmatic spirit plays a significant role in promoting the upgrading of Shanghai's foreign trade.

Shartex International Trading Co: China's ODM total solution provider in the sweater industry

Booth number: E2D28-- E2D32, E2C41--E2C45

Shartex has focused on the woolen knitwear field for more than three decades. Its concentration in the field has made it a ODM total solution provider in the industry, which has also given them confidence to become China's best resource integrator in the knitwear industry.

Developing from a "middleman" to an ODM solution provider

Shartex specializes in the export of its own produced sweaters and provides professional ODM solutions for renowned global brands. Its size ranks top in the industry and it has also gained abundant resources, technological advantages and a good reputation in the sweater industry over the past years. Its products are exported worldwide but primarily to the European Union, the United States, Australia, and Russia. It also maintains good partnerships with many world-renowned clothing companies.

Even so, Shartex had to go through a very confusing period. Struggling with pains and gains, the company eventually transformed from an export agent to an original design manufacturer (ODM).

Like most Chinese foreign trade companies, Shartex used to be a "middleman" for a long time, which means it received orders from overseas companies, then looked for domestic factories to produce the products based on the sweater samples given by overseas companies, and finally exported the products to overseas countries. In such situation, the company was short of core competitiveness and the increasingly intense price competition drove the company to find a way out.

At that time, Shartex had three choices. The first was to build its own factory and develop into a company integrating manufacturing and trade. But this required large investments and excellent production management professionals, which were beyond Shartex's capacity. The second was to offer foreign trade proxy services. But this was risky and hard to control. The third was to be a resource integrator, namely ODM, providing overseas buyers with design, sample making, and related services. At last, after careful thoughts, Shartex chose the third option.

As of 2005, Shartex began building its own sweater design and R&D center and cooperating with five of China's top-rated fashion-featured colleges including Beijing Institute of Fashion Technology. In this way, the company's capacity of receiving orders was strengthened because it was able to offer a package of services including the selection and design of fabrics, colors and styles, instead of depending on the design and sweater samples provided by the overseas buyers like it used to. With five years of development, its average export profit of each sweater increased by nearly 60 percent.

In 2007, Shartex started working together with Shima Seiki Win Win Shanghai Ltd and recommended each other's design and technology to their clients. For instance, Shartex displayed Shima Seiki Win Win's design and manufacturing systems and introduced the products to the clients while attending exhibitions.

Shartex said that the sweater industry faces great cost pressure, and its cooperation with leading companies in the industry can avoid homogeneous competition so as to get relatively high-priced orders. Also, this kind of cooperation can help promote the development of ODM, and help improve added value of products.

Shartex's foresight is admirable. It has already transformed from OEM to ODM when most foreign trade clothing companies still work as OEMs for overseas companies.

Small products, big achievements

Shanghai Dongjin Co: creating the fashion trend of modern homes by virtue of ingenious space utilization

Booth number: W2E39--W2D42

Founded in 2001, Shanghai Dongjin Co is a professional tech company focusing on ingenious space utilization. It aims to develop creative products and services suitable to modern homes and has built a household product brand "Bao You Ni" and produced a series of products such as drying racks and storage racks. With a team of talented professionals, strong R&D capacity, good product quality, and full-fledged quality and service systems, Dongjin has developed into one of the industry leaders. Its products are environmental-friendly, low-carbon, easy to store, and attractive and doesn't cause any damange to walls. How did Dongjin make such outstanding achievements by only producing laundry racks? Let's take a close look at the booth of Dongjin at the 28th East China Fair.

Gaining technological experience from Japan

Dongjin's laundry rack brand has a history of nearly 20 years. It has formed its own characteristics with three stages of development – innovation, product update, and layout of marketing channels.

The modern laundry rack industry began in 1990s and has undergone three developmental stages, from the floor, wall-mounted, and hand-operated type, to electronic type, and to the intelligent type seen in the recent years. Those professional tools have changed people's habits of drying clothes, which in turn helps expand and enrich functions of laundry racks.

Back in 1990s, China's overall living standard was low and there was almost no market for laundry racks. Dongjin noticed the promising market prospect of laundry racks in Japan. Therefore, it mainly focused on export business at that time and has cooperated with Japanese companies for over a decade. In this way, it gained valuable technological experience.

Thereafter, China's reform and opening up dramatically changed the country. Chinese people's living standards greatly improved. Particularly after 2006, Chinese economy accelerated, real estate industry expanded rapidly, and home decoration and furnishing industry started booming. The market of laundry racks also enlarged. A large number of related companies have sprung up and the industry gradually grows and matures. Before that, Dongjin began building its own brand and targeting the domestic market.

Encountered with new opportunities, Dongjin implemented the strategy of "based in Shanghai, targeting Chinese market, and reaching the global market". It also made a series of marketing strategies. It found accurate product positioning and market positioning, and used multiple ways such as franchising, chain stores, and brand agency to promote its products and services in China.

Focusing on developing DIY products

"Innovation and upgrading" has been the underlying theme for the manufacturing industry in the recent two years. Labor cost has gotten higher. Restrictions on production emission have become stricter. Consumers' needs constantly change with the arrival of an era of consumption upgrading. Consumers used to prefer cheap products but now focus more on quality and individualized products. Thus, most manufacturers are under the pressure of upgrading production technology and techniques. In the home furnishing industry, consumption upgrading means the upgrade of functionality and product appearance. But in laundry rack industry, product function is more important than appearance. Under such circumstances, Dongjin has realized the importance of innovation and upgrading very early, and used this as its core driving force to success.

With years of development in the Japanese market, Dongjin noticed that Japanese people use DIY laundry racks. Consumers can assemble the racks themselves and the cost is low. On the contrary, the commonly-used laundry racks in China require professional service personnel to install at consumers' home and the cost is relatively higher. Dongjin realizes that this is a business opportunity and started working on developing DIY products, and intends to transform and upgrade itself through this move.

In the process of transformation, Dongjin has invested large funds and developed many products. At present, it has applied for more than 100 patents. The company keeps innovating its technologies and upgrading its products and leads the innovation of household products to a new direction. It also makes many industry standards and has received more than 70 national patents.

Dongjin has also taken advantages of the internet to do marketing. In 2012, the company opened an online store at Tmall and its products have sold extremely well because the DIY laundry racks is home installation-free, which is convenient. It can also know consumers' needs via direct communication with clients online. In order to make good use of e-commerce channels, Dongjin has now also built a professional internet marketing team. Nowadays, Dongjin has developed into an e-commerce company combining product design, R&D, manufacturing and sales.

Dongjin counts on its brand advantage to expand the international market. It uses East China Fair and Canton Fair to tap into the Japanese and southeast Asian markets. Using multiple measures, the company's annul sale revenue has surpassed 20 million yuan ($3.17 million).

Currently, global home furnishing industry features a huge market, many commodity categories, and a large proportion of international trade, internationalization, and cluster development. In general, the global home furnishing market maintains certain demand and certain trade volume to ensure the existence of rigid demand. To be more specific, in the laundry rack industry, the usage of laundry racks in China is about 40 percent, indicating a large room for future development, according to statistics provided by China Drying Racks Association. It is predicted that China's laundry rack market size will reach 30 billion yuan by 2020.

A huge market is the driving force for development. Dongjin will strive to be more standardized, more industrialized, and more professional, to build up its brand, and to provide better and diversified products to domestic and overseas markets.