Investigation in Nantong:The Spring of new channels of home textiles is coming

Consumption upgrade brings us into the new consumption era. How to cultivate brands and how to change the business model of bedding enterprises?In order to grasp the new trends of home textile industry, find new features of brand development and explore new bright spots of channel innovation, Yang Zhaohua, Vice President of China National Textile and Apparel Council and President of China Home Textile Association, Zhu Sha, President of China Fashion &Color Association, Hua Shan, Executive Vice President of Industry Research Institute of China National Textile and Apparel Council, Qian Youqing, Executive Vice President of China Silk Association, and Qu Fei,Deputy Director of Brand Work Office of China National Textile and Apparel Council, formed a research group, went deep into Nantong Tongzhou District and Haimen City, and carried out special research on the above issues.

Tongzhou: Taking the spring train of “micro supply”

With only more than two years, Nantong micro supply market has developed from dozens of enterprises to 520 enterprises and its sales volume has jumped from 2 billion to 6 billion, becoming a new engine that leverages the market of one hundred billion level and leads industrial transformation and upgrading. How to achieve this breakthrough? What insights do Tongzhou’s home textile enterprises have in expanding new channels and developing high-quality products? On the morning of March 20th, the research group came to Tongzhou and conducted discussions and exchanges with Cao Jianxin, Deputy Head of Tongzhou District, Cao Jinlong, Deputy Head of Tongzhou District, Shi Weidong, Deputy Director of Development and Reform Commission and Commission of Economy and Information Technology, Shao Aijun, Deputy Secretary of Party Working Committee of Nantong Textile City Administrative Committee and Director of Administrative Committee, as well as persons in charge of Violet,Haoshen, Sanfondo, JOES HOME, Byford, Goldsun, Lansiu, Baoman,Jiayusi, Word Ofdream and Kairui.

In China, when it comes to the bedding industry, hardly anyone knows Nantong, which is the country’s largest distribution center for bedding products. The two leaders of Nantong Home Textiles City and China Dieshiqiao International Home Textiles have driven the onehundred-billion-level home textile industrial clusters of Tongzhou and Haimen. According to conservative estimates of persons concerned, the nationwide share of bedding products manufactured by Nantong is over 50%.

At present, there are 349 enterprises above designated size in Tongzhou, in 2017, the scale industry output value was 48,860 million yuan, and the export volume was more than 6 billion yuan.

“Judging by the economic situation, we feel that it began to stop falling and returned to be stable in 2017, and since the market was opened in 2018, the rents in Nantong Home Textile City has been keeping rising steadily and has been quadrupled. The prices of industrial lands have increased to a substantial extent, which is unprecedented before. The logistics delivery of Home Textile City is 800,000 pieces/day,and this number did not exceed 300,000/day 4 years ago.” Shao Aijun, Deputy Secretary of Party Working Committee of Nantong Textile City Administrative Committee and Director of Administrative Committee,used a few figures to clearly describe the current vitality and vigor of Tongzhou home textile industry, and he also analyzed: “The future positioning of Nantong Home Textile City is to dominate the high-end home textiles of the industry and turn traditional industries into advanced manufacturing industries to achieve high-quality development, every link needs to break through from the design drive at the front end of the industrial chain to the wisdom logistics at the back end of the industrial chain.”

Encouragingly, a new engine cultivated by Tongzhou Home Textile City started to exert its strength: at the end of 2015, Nantong Home Textile City planned to set up a micro-supply market, providing personalized and high-quality supply of goods for online and offline community marketing based on consumption upgrading. In the past two years, it has gathered 520 merchants rapidly with the trading volume of over 6 billion in 2017, and it is expected to surpass 10 billion yuan in the next two years. This brandnew B2B channel based on new consumption and new retailing has driven nearly 200,000 surrounding entrepreneurial and employment persons,effectively levering the transformation and upgrading of home textile industry. The micro-supply market that Home Textile City strives to build has highlighted three outstanding bright spots: first of all, the design is personalized. Traditional home textile enterprises are characterized by low product differentiation and relatively single pattern styles; while for business households in the micro-supply market, every household will launch six new patterns every month on average, they have novel design and unique style, featuring European and American styles, original works,digital printing, hand-painted home textiles and other aspects. Secondly,market segmentation. After years of development, Nantong Home Textile City has not only limited itself to the production of bedding articles, but also expanded to the whole household field. Micro-supply market operators seize the opportunity to enter the segment market, and at present,they have been baby bedding articles, ground mats, towels, ornaments and other directions. Moreover, the grade tends to be high-quality. Microsupply market develops acquaintance economy through social marketing,and customer groups are mainly young people who pursue quality of life,and their requirements for product quality are higher than the conventional standards of enterprises. Therefore, according to the latest data released by Alibaba Company, the customer unit price of home textile products in the micro-supply market is about 210 yuan, far higher than that of Tmall Home Textile (130 yuan) and that of Taobao Home Textile (85 yuan). Behind the increase in the customer unit price is the new demand of consumers for product quality.

Attaching importance to new consumption, new retailing and new channels. Grasping the trend of consumption upgrading is to study new consumption changes, young people’s consumption habits and young people’s favorite sales methods and do a good job in the business of young consumers. In the discussion, every enterprise invariably regards microsupply, e-commerce and new retailing as the breakthroughs of high-quality development. Not only that, Violet is people-oriented, pays attention to healthy sleep, and develops home textile products with antibacterial and acaricidal functions; Sanfondo has made breakthroughs in realizing automatic production of bedding sets; Goldsun has introduced a new joint supply chain cooperation system, which forms flexible and rapid response of back-and-forth integration with brand customers, and upgrades its services. Word Ofdream develops a micro-supply platform for employees,and all employees promote micro business; Kairui actively tries new busi-ness of cross-border e-commerce; Byford focuses on strengthening supermarket brands; Lansiu and Baoman expand all of their online and offline channels, and they are trying to upgrade to high-end home textiles.

To upgrade to high-end home textiles, Cao Jianxin, Deputy Head of Tongzhou District, introduced that the government will strengthen its support in four aspects: First, to support the brand development and creation,increase its support strength and support the brands to go international;second, to support the scientific and technological innovation of home textile enterprises, and promote the integration of intelligence and informatization; third, to support the extension of industrial chain, especially upward extension; fourth, to support the establishment of various cooperation platforms and help enterprises achieve higher quality development.

At present, there are seven Chinese well-known trademarks in the brand matrix of Tongzhou home textile, namely Violet, Goldsun, Sanfondo, Lansiu, Word Ofdream, JOES HOME and Wolong. Sanfondo Textile was awarded among the fifth batch of industrial brand cultivation demonstration enterprises by National Ministry of Industry and Information;Newsega Textile and Tangsheng Textile and other enterprises have become pilot enterprises of brand cultivation. Violet Home Textile becomes a provincial industry demonstration enterprise of “increasing variety, improving quality and creating brands”. Besides, Tongzhou is also a demonstration area of high-quality products in Jiangsu province and a pilot area of regional brands in national industrial clusters.

After listening to various situations at the symposium, Yang Zhaohua made a speech on behalf of the research group. “After listening to everyone’s situation, I feel that the most pressing issue comes from brand, and how to build a dynamic brand. The essence of business is the brand, the essence of the brand is the symbol, and how to make our brand be remembered? It should be noted that the lack of corporate brand development is our weakness. Building regional brands should be supported by enterprise brands, and the government should attach great importance to how to lay out terminal brands, manufacturing brands and regional brands and how to promote the first echelon and the second echelon of brand cultivation. In recent years, we have encountered development bottlenecks,and enterprises are actively breaking through the transformation and upgrading of traditional channels. The breakthrough of business model should focus on two aspects: the first aspect is that the transformation and upgrading of traditional channels should actively seek for development and innovation suitable for themselves; the second is the breakthrough of new channels and model innovation, the traditional B2B model is inefficient, which is no longer suitable for the development of industries, so we should actively seek new breakthroughs. Both micro-supply and cross-border ecommerce can actively try if they have the conditions.In view of cost pressure, enterprises should pursue efficiency and benefits, achieve the development of intelligence and increase the integration of automation and intelligence on the basis of automation.”

Haimen: the hidden brand pain behind the biggest home textile market

Haimen owns the world’s largest home textile market - China Dieshiqiao International Home Textiles, which has ten major business areas, including core trading areas of Phase I, Phase II and Phase III,public service platform, home textile museum, European-style pedestrian street, famous product square,boutique building, trade city and logistics center. The building area is more than 1 million square meters, and there are more than 10,000 shop fronts. There are more than 30 villages and towns around, and more than 1 million people (including more than 300,000 external persons) make home textiles around the market. It plays a decisive role in China’s home textile industry.At present, it is also experiencing the pressure of transformation and upgrading.

“There is a problem with our brand promotion,and the market share of China Dieshiqiao International Home Textiles ranks the first in the country, and last year, it achieved 76 billion domestic sales, and its ecommerce transaction was the largest as well, making up to 70 %, and it reached 40 billion last year. What makes people heartache is that there are no wellknown domestic brands in stacked stone in the local place of Stacked Stone.” On the afternoon of March 20th, the research group arrived at Haimen city without a stop to conduct research and discussion. As soon as they took a seat, Wang Fan, Director of Administrative Committee of Haimen Industrial Park, began to reveal his “dirty linen”. Over the years, Stacked Stone has cultivated many growing home textile brands,while there are very few big brands with industry influence. He believes that the transformation and upgrading of China Dieshiqiao International Home Textiles has already brooked no delay.

In 2017, the home textile market of Stacked Stone was functioning normally as a whole, and the physical market was impacted and affected by e-commerce and micro-business to some extent, and some small enterprises and enterprises without brands and innovation abilities were under great pressure to survive. On the whole, the sales in the physical market declined to some extent last year, and the development momentum of e-commerce micro-business was relatively fast.There were about 11,500 enterprises of e-commerce micro-business in Stacked Stone.

A fairly good start was made in 2018, and after New Year’s Day, the pilots of market procurement and trade modes continued to advance steadily. By the end of February, 95 tickets had been cleared by the customs and the export sales exceeded USD 7.5 million dollars. By the end of February, the market turnover reached up to 13 billion yuan.

In fact, home textile persons in Dieshiqiao have obviously felt that there exist great worries behind market prosperity: small enterprises are struggling on the line of life and death; the export situation in 2018 is not optimistic; the cost of production factors grows rapidly, and the costs of both laborforce and raw materials are increased by more than 10%... the transformation and upgrading are imminent.

During the discussion, the directors of Haimen Development and Reform Commission, Market Supervision and Administration, Saicheng Group, Meiluo Home Textile, Bestwish Home Textile, Xinjiashu Textile,Shengyuan Home Textile, Genbs Home Textile and FZD Bedding focused on improving market quality sampling and supervision efforts so as to enhance product quality; strengthening the construction of group standards of bedding articles and purifying the brand cultivation environment; actively expanding micro-supply channels; going out to expand the overseas market; carrying out exchanges on upgrading market service functions and other aspects.

“Transformation is painful, and there is no way to live without it.As soon as bosses met in the past, they talked about profit indicators and how much money they earned; now they asked ‘have you made intelligent transformation, how much can micro-supply do, and has the transformation taken a turn for the better’...” Yang Hua, Chairman of Bestwish Home Textile Co., Ltd., expressed the wish of many bosses.“The main business owners in the market have become young people,our market supporting services are still old ones, and will the post-90s pay the bill?” Zhu Jialing, the young Chairman of China Dieshiqiao International Home Textiles, has begun to think about and lay out upgrading service functions of the market.

After hearing the situation, Yang Zhaohua suggested that Dieshiqiao International Home Textiles should use the resources of The Association of Merchants Abroad to recall overseas buyers, integrate the dealer resources of enterprises, set up its own market database, and use big data to achieve accurate matching of market functions. Dieshiqiao International Home Textiles has a one-hundred-billion industrial base and 200,000 employees, and it must have a good ecological development environment to retain talents and develop continuously. He stressed that Stacked Stone lacks domestic brands which are well-known in the industry, the cultivation of brands should be strengthened, and to create a brand, we should take a multi-pronged approach. He suggested that home textile enterprises should not be too conservative in market development, and they should dare to break through traditional channels on the basis of prudence, try new channels around new consumption demands, and develop microsupply and e-commerce through multiple channels.