Stop 2: Shenzhen

Company Brief

Mark Fairwhale

Mark Fairwhale is the leading fashion brand in China. It was established in 2001. There are four brands: Mark Fairwhale, Fairwhale Jeans for Men, Fairwhale Creative Urban Wear, and Fairwhale Shake. This segmentation creates a separate shopping experience for men and women. Mark Fairwhale already opened 1200 stores across the whole main land China. The parent company offers several training and training departments to the franchisees. In the south of China the people are more willing to spend money on food while in the north they have more disposable income. The south is also easier to start a business. Some of Mark Fairwhale’s marketing initiatives consists of fashion shows, charities, and advertisements.

The online business market is booming in China, this became a great opportunity for Mark Fairwhale. Their online business started 2-3 years ago and it’s going well and growing. Mark Fairwhale established the five news campaign: new growth point, new strategy, new structure, new transformation, new goals. They don’t plan to do what they have done the last ten years because the consumers and market continue to drastically change. Mark Fairwhale launched ten focuses for 2012: corporate culture, e commerce, people, brand, KPI, SAP, products, POS, customer, and merchandise. These practices will enhance their business and strength their consumer market. The 2012 objective is to have 1500 new stores.

Wal-Mart

China is Wal-Mart’s largest market with “16 Years of Saving People Money So They Can Live Better Lives”. Three engines that drive China’s economy are investment, exports, and domestic consumption. The government intervenes a lot because China is not a market economy, China features one central government. Wal-Mart currently has 10,100 global stores and the US and UK stores are the most developed. In 1996 opened first Supercenter and Sam’s Club in Shenzhen. Wal-Mart’s main mantra is the Everyday Low Price (EDLP) containing 3 key values, customer focus, price leadership, food safety, and compliance.

The most competitive market is when it comes to price. The general customer profile: price sensitive, food safety, shopping environment, quality, and value; supercenter shopping: mid aged female average household income, shops 2-3 times a week, and travels by foot. Wal-Mart has become a top 100 retailers and has 23% of the total market. The retail industry market is highly competitive, and Wal-Mart has developed practices that have made it a leader in this industry. A reason for Wal-Mart’s success is the Corporate Social Responsibility within the company, consisting of: women’s empowerment, giving back to community’s, nutrition health and wellness, environmental protection and sustainability, education initiatives, and disaster relief. At the Sam’s Club we got to see all the American products being sold to the Chinese consumers. We also saw the people catching their own fish out of the tanks and grabbing the shrimp out of the tanks with their bare hands because they value fresh quality food

Collective Brands

Collective Brands wants to be the leader in bringing compelling lifestyle, performance and fashion brands for footwear and related accessories to consumers worldwide. The company has a hybrid business model consisting of retail, ecommerce, wholesale, and licensing. Collective Brands has 3 lines of business: Payless (lower income consumers), Performance and Lifestyle Group (higher income and young consumers), premium brands (Saucony, Sperry Top-Sider, Keds, Stride Rite). In 2010 created a licensing agreement with Li & Fung Retailing (first time entering the Asian market).

We met with the Project Manager who focuses his time from production to purchase (lead time). Stride Rite children’s group product development process: ensure that communication is efficient and effective; build products on existing styles, historical references and key models; work to the product creation calendar. Collective Brands has 9 factories handling 11 million shoes.

Umbra

Umbra prides itself with an innovative, modern, causal, and affordable design. They believe that good design in an affordable way. Great designs come from great designers, are fresh and creative, from a creative environment, are recognized worldwide, are prolific and first, and are for people everywhere. Some of the worldwide partners include Bed Bath and Beyond, Target, and Crate & Barrel.

We also got to visit the manufacturing facility to see how these products are made. AMBO is a subsidiary of Umbra. Each Umbra store around the world has a different vibe because of the cultural differences. Europe will have bolder colors than North America. All the designs are innovative and useful to provide fun and easier lifestyles. The higher end collection of Umbra exists for upscale stores. At the Umbra AMBO factory we saw the products being created and manufactured by the workers. The detail in every design was impeccable. It was interesting to see actual products I have at home being manufactured from start to finish.

Cultural Analysis

Wednesday, May 16th

This morning we had a company visit at the Wal-mart Headquarter of Sam’s Club. In 1996, Wal-Mart entered the Chinese market and opened the first Supercenter and Sam’s Club in Shenzhen. Since 2012, Wal-Mart owns 370 units in 140 cities in 21 provinces, establishing over 106,500 job opportunities across China.

In our meeting with Chris Buchanan, we learned more about their investment, exports, domestic consumption, and the challenges faced with government intervention. After the overview of the company, we then toured their Sam’s Club facility and I, for one, was blown away by the selection, variety, food samplings on every aisle, and volume of merchandise in the store. We were told that the Sam’s Club in Shenzhen is actually the largest volume in the world. That came to me as no surprise.

I was shocked by the variety inside this Sam’s Club. They had samplings of Absolut Vodka of which I was not shy to try. When in China, right? If they had that in the states, I’d have a Sam’s membership in no time. After our visit to Sam’s Club we had a group lunch and then headed to our next visit, Collective Brand. We learned more about their hybrid business model (retail/eCommerce/Wholesale/Licensing), their history, their three lines of business (Payless ShoeSource, Performance + Lifestyle Group, Collective Licensing International), as well as their entrance into Asia. Like many of our previous company visits, they were so hospitable to our arrival. Each company usually offers water, tea, and coffee. In addition, each meeting is conducted formally with a presentation on each business and an in-depth explanation of their company.

Each member of Collective Brand was so enthusiastic and so passionate about their shoe line. They actually had me model one of their shoes by dressing up at the front of the meeting room in a white gown. After our visit to Collective Brand we got back to the hotel around 5:00PM. Many of us were so exhausted when we had gotten back that we decided to stay in the hotel for dinner. Champs Grill for dinner? I think so.

Thursday, May 17th

With my jetlagged-self more in check, I was beginning to wake up at a more reasonable time, thankfully. This morning we had our company visit with Umbra, the leader in design and accessories for the home. The meeting was fascinating. Their unique and original ideas are developed by many of their own clients and employees.

The company is partnered with Pratt Institute, a school for art and design in the United States that encourages and develops new innovative products to be produced by Umbra and sold to the general public. After learning so much about their history and mission, we were then able to see products in their development stage and then as a finished product. We traveled to their offsite factory and were able to see their manufacturing process. After our factory visit and while eating lunch with us, the factory owner, Henry, explained to me his frustrations as a factory owner.

A graduate from the prestigious Beijing University, Henry continued to pursue his doctorate degree at McGill University in Montreal. After many years of study he opted to receive only a master’s degree in business to shorten his time of study in Montreal. After completing and receiving his master’s degree in business, he returned to China and started his job in factory management. At lunch I was interested to learn more about his life and about managing a factory. He expressed to me his worries with the factory, his responsibilities for the factory and its workers, and the immense pressure put on him to run the factory efficiently and effectively.

His English was impeccable and his story enlightened my knowledge of factory work and factory management in China. I have to be honest, seeing the factory and workers putting together simple picture frames in the assembly line made me quite sad. In fact, I own one of the picture frames that they were so meticulously assembling. The reason why everything in the U.S. is made in China is because labor is cheap and the availability of workers in China is much greater. The work is repetitious, the work is mundane, and the workers produce the work in order for us, me, the consumer, to enjoy. I had never really thought so much about it until I visited the factory. The conditions of their factory were extremely nice and wonderfully organized. They provide the workers with housing and with meals throughout the day. And to think, in China, there are so many more factories, factories not like this one, that have conditions not up to standards acceptable in China or in the United States. After our lunch we had free time to explore the city. Around four we loaded the bus and departed for Guangzhou.

We arrived to the Guangzhou Holiday Inn Shifu, dropped our stuff off in the hotel room, and then headed back out to roam the city streets of Guangzhou and grab dinner. Christina, Lucy and I stopped at the first stand, ordered three bubble milk tea drinks, and enjoyed them as we continued down the crowded streets of Guangzhou.

 

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