INTERCHINA Group Occupies 70% Of The National Munitions Market.

"70 million pieces in the same paragraph. Military uniform "150 million pairs of shoes", measured by a single group, is the largest in the world. But in the transition towards the terminal consumer market, this has also become the "historical burden" of the China group.

Among the two ways to go to the market, China was originally good at B2B. The service shoes of special industries have always been the strength of China. Through government procurement, the China International Group provides products such as professional wear, professional footwear and protective clothing to public security, industry and commerce, taxation, railways and fishery administration every year.

But trying to enter the mass market, the China group cannot rely on the original munitions products. "For ordinary consumers, it looks traditional, backward and low grade, and military uniform itself is no longer allowed to enter the market," said Li Xuecheng, general manager of Jihua Group.

What kind of products should we relocate to a military production enterprise, what products to provide to them, and how to deliver products to consumers? Li Xuecheng said, "this is the problem we need to solve."

　　 Go to sea Merger Reinventing the supply chain

On the big tree of munitions, Li Xuecheng wants to graft the branches of high-end outdoor brands. But with the accumulation of the supply chain of the group, it is difficult to produce a new mass clothing category.

"Looking for acquisitions targets overseas", at the beginning of 2010, at the beginning of the launch of the clothing business, the China business group decided to go to the European continent, which was frustrated in the economic crisis, and acquire the leading fashion design companies.

The target country for acquisition is finally determined in Italy. In 2011, the Li Xuecheng team found that Andrea Terracini's family businesses have their own strengths in two aspects of fabric production and clothing design, many of which are supplied to the European and American armed forces, which are highly compatible with the background of the production of MDF.

However, because of the background of military industry, the China International Group needs to consider the limitation of national security supervision in the acquisition, so it has organized the team of Italian lawyers to evaluate and circumvent. Finally, concerns about the "military background" were excluded. Li Xuecheng said, "this company is an ordinary enterprise in Italy. It is not a direct army, nor does the military invest in it. Products can be sold to the army or to the public".

After the clearance of legal obstacles, the overseas acquisition is officially launched under the negotiation between the two parties. First of all, the group established a "China overseas investment company" in Hongkong as the main body to acquire the trading companies in Italy's Andrea Terracini and Antonio Ferrante, and then acquire some of the latter's production entities by the newly established trading company. The newly established company, NT.MAJOCCHI, has a registered capital of 600 thousand euros (about 4 million 990 thousand RMB), of which 51% of China Overseas Investment Holdings, and Andrea Terracini is the general manager of the new company.

NT.MAJOCCHI subsequently led the reverse takeover. Jihua Group, a wholly owned subsidiary of Jihua Group whose registered capital is 50 million yuan, has transferred 60% stake to NT.MAJOCCHI company, and NT.MAJOCCHI is responsible for the operation and management of chain corporation. Under such restructuring, the China International Group actually controls about 70% of the chain corporation.

Li Xuecheng explained that this round of mergers and acquisitions is mainly for the purpose of fully integration of stock ownership so as to mobilize the enthusiasm of all parties. "The Italians are also very face saving. They do not see many companies, but the circle is so big that they know each other. If this is not done well, there will be a loss in reputation," Li Xuecheng said.

The final outcome is "happy" for all parties. With the solution of the equity problem, the strategy of Jihua Group to build high-end terminal market becomes clearer. In addition to obtaining the resources of the avant-garde design team in Italy, we have also obtained other related resources of the fabric research and development and production enterprises: "if we have 200 SKU categories a year, we should first work out a division of labor according to the aspects that our employees are good at, and then subcontract part of the design which we can not design or not to other overseas studios."

"If we set up a design company by ourselves and go to the British, German and French, we may not be able to walk in a few days," Li Xuecheng stressed. The new company under mixed ownership has no estrangement from the European environment in terms of thinking and working methods, and is easy to retain talents.

More importantly, if Chinese designers are "closed behind doors", even if the quality of products is guaranteed, they will never catch up with the fashion trend and form a large number of outdated and off-season stocks, and directly enable the European team, and to some extent, let the 2C clothing production of China avoid the embarrassment of "always following others' tail".

But bigger problems lie at the end of domestic production: can China's standardized munitions production line meet the various styles of overseas companies? "This is not just a problem for our enterprises, but all production enterprises are facing this problem," Li Xuecheng admits. "The orders received by the China group have not been answered by tens of thousands of pieces, and now hundreds of pieces are dry." But this is exactly the driving force for China's transition. "Look at the adaptability of this enterprise, and whether it can really integrate with foreign enterprises after the gradual transition."

"No matter how the style changes, some core things will not change," Li Xuecheng said. Jihua focuses on the innovative design of mold clamping tools, applies for hundreds of new national patents every year, and applies standardized production tools in every specific link of clothing production, so as to ensure the batch production of complex patterns.

　 　 channel Self built: an adventure?

In the field of B2C, compared with the reconstruction of supply terminals, the terminal construction of China Unicom is from zero to one, and the evolution is more thorough.

In order to face end consumers, China has set up a team to do research, design and marketing. For private companies, such a team building has no fundamental institutional obstacles, but as a central enterprise, China needs to adapt itself to the pattern of marketization.

"From the staffing of shop assistants and shop assistants to the full marketization of product and sales management", Li Xuecheng told reporters that first of all, we should solve the problem of employing people by changing the incentive mechanism of state-owned enterprises. "According to performance, a marketing director can take a product from a state of no sale to create tens of millions of annual sales. This kind of person can give 2 million annual salary, not 200 thousand of the state-owned enterprise."

After the election is the selection shop. In the expansion of Direct stores, the Sino China Group has strategic cooperation with the department stores of the central enterprises such as COFCO Joy City and Huarun the Mixc, so it enjoys the resource advantages of commercial real estate. Up to now, a total of eleven JH1912 stores have been put into operation in Beijing, Shanghai, Nanjing, Shenyang and Milan. Among them, Milan store is the first flagship store of JH1912 in Europe, located in the prosperous area of "Via Monte Napoleone", one of the ten shopping streets in the world.

Li Xuecheng said that in the first half of 2014, the number of stores will reach 30, which will double by the end of the year.

However, the direct brand store has played a leading role in the new business expansion of Jihua Group. In Li Xuecheng's view, Jihua is not only a traditional product supplier for clothing and footwear production, but also a provider of products and channels.

More specifically, the goal of China is to point to the modern service industry and trade logistics, and the landing carrier is named "the center of China's destination" - the integration of several formats, and Oteri J is the most important part of it. According to Li Xuecheng, there are more than 500 outlets in the country, but most of them are real estate. They are enlisted in the name of Oteri J, but they lack real formats. They are less than 5% of the total level of organization in Europe and the United States. The relatively standard samples are Tianjin Florence town and Shanghai Qingpu Oteri J.

Professional matters should be assigned to professional teams. In the planning of the "destination center", the China Group has gained more strength from overseas professional operation management companies. During this period, Li Xuecheng was attracted by the projects designed and operated by GestioniArcotecnicaS.r.l (GA) in Italy. In this connection, we established INTERCHINA operations management company through cooperation, aiming to introduce the authentic business mode into the domestic market.

According to the plan of the China International Group, the "destination center" project will take the lead in Changchun and Chongqing. After successful experience, it will steadily promote all over the country, and it will be located within 8 million hours within 1.5 hours.

It is understood that the "destination center" intends to invest in the construction of comprehensive service formats including the outlets, sports facilities, leisure and entertainment centers, commercial buildings and supporting service facilities. 70% of the shopping center will be high-end brand clothing abroad, and consumers can do indoor skiing, indoor rock climbing, indoor simulation parachuting and racing simulation.

Can such a strategy be recognized by the capital market in the future?