Last year, the "Chinese aunt" who claimed to have defeated the "Wall of Wall Street" snapped up the gold boom, bringing surprises to Chinese gold and jewellery companies. However, because the base is too high, growth in the industry has slowed this year.
Sales of Shanghai's domestic gold jewelry brand Shanghai Laofengxiang Co., Ltd. (600612.SH) have remained basically stable. Figures show that from January to September this year, Lao Fengxiang's profit increased by 15%.
In fact, when Shi Lihua, the general manager of Laofengxiang took over the company, in 2001, Lao Fengxiang’s sales were only 710 million yuan, and the book profit was more than 5 million yuan. In 2013, Lao Fengxiang opened its business in 2013. The income was 33 billion yuan, and the net profit attributable to shareholders of listed companies was 890 million yuan.
In the past ten years, Lao Fengxiang's average compound revenue growth rate was 35%, and the average compound growth rate of profits was 50%. It is one of the few companies in the traditional industry that can maintain such rapid growth.
Dare to think, dare to do, dare to break through
In 1998, in front of Shi Lihua, the general manager of the original China First Pencil Co., Ltd., there were two acquisition options, one was Lao Fengxiang, who made gold jewelry, and the other was a company that made pianos in Shanghai.
"Investigation stage has already had strategic thinking on these two industries." Shi Lihua, general manager of Laofengxiang told the "First Financial Daily" reporter that the gold and jewelry industry is not a sunrise industry or a sunset industry, but an eternal industry, than the piano industry. More promising, so in 1998, the first pencil decided to acquire 50.44% of Shanghai Laofengxiang Co., Ltd. for more than 80 million yuan and began to enter the gold and silver jewelry industry.
However, in the 1990s, due to the impact of the market economy, many old brands were on the verge of bankruptcy. At this time, it was one of the most difficult moments of Lao Fengxiang. How to bring this old name back to life is an urgent problem facing Shi Lihua.
“When taking over the old Fengxiang, it is indeed a crisis.†Shi Lihua recalled that at that time, the gold jewelry industry had a low gross profit margin and was operating under a purely state-owned mechanism. The operator’s concept did not match the market. At the same time, Lao Fengxiang’s gold distribution under the planning system was the main The business environment is very difficult to grow up; in addition to the negative factors in the market, the loss of the talent team is also an important issue facing Lao Fengxiang.
Shi Lihua found that in fact, many old-fashioned companies are not operators lacking entrepreneurial spirit, but lack proper ideas. "Dare to think, dare to do, dare to break through, these seven words are the essence of Lao Fengxiang's business management guiding ideology." Shi Lihua said that after more than half a year of research by Lao Fengxiang, he proposed a series of drastic reform measures.
First of all, the most important thing is that in terms of employing people, Shi Lihua, who has not taken any of his men from the first pencil to Lao Fengxiang as the general manager, has retained all the management teams of the original Lao Fengxiang and changed the distribution system of the original talents of the technical talents, which not only improved their salary. The level also allows more than 100 management and technical personnel to hold shares, which is nearly a decade earlier than the mixed ownership advocated today.
Secondly, to establish a clear strategic goal and positioning, unlike other silver houses selling multi-brand products, Shi Lihua insists that Laofengxiang Silver House only sells its own brand products, and requires strong brand awareness, market awareness, management and efficiency awareness, products and Quality awareness and service awareness."
Third, adjust the product and industrial structure, expand the categories and specifications of Laofengxiang products, such as expanding pearls, colored gemstones and other higher-margin categories, and improve the quality of operations, so that the proportion of gold sales decreased from over 95% at the time to 75% now. Left and right (although the absolute value of gold sales of Laofengxiang is increasing year by year).
Now, Lao Fengxiang has taken the lead in the industry from the traditional "gold, platinum, diamonds, silver" old four categories of jewelry, to the "white jade, jade, pearl, colored gemstones" new four categories of jewelry products structure, and is in the process New categories such as high-end K-gold frames and arts and crafts tourist souvenirs are included in the product chain.
At the same time, Laofengxiang, which has accumulated many years of history, has formed a complete industrial chain of production, processing and sales of multi-category jewellery. In addition to the silver buildings across the country, Laofengxiang also has professional silverware, jewelry processing plants, creative design centers, two research institutes, two museums, auction houses, pawn shops, etc., which are not available to other domestic jewelry companies.
"Old Brand" Fashion Internationalization Transformation
In 1847, Cartier was born in Paris, France; in 1848, Shanghai, China, Lao Fengxiang was founded. Shi Lihua has been paying attention to this internationally renowned jewelry brand that was born a year earlier than Lao Fengxiang, hoping to build Lao Fengxiang into "China's Cartier."
However, although there are many “luxury items†in the products of Lao Fengxiang, Shi Lihua does not want to make Laofengxiang a luxury brand, but a world brand rooted in mass consumers and become a “rational managementâ€. Instead of pursuing a superficial image, it is pursuing the business connotation of the brand."
Lao Fengxiang once conducted a survey. His brand's awareness and reputation in the 40-year-old population reached 95%, but the recognition rate was only 20% to 35% among people over 30 years old. For such an old brand, how to make it rejuvenate and get the favor of young consumers?
Shi Lihua told reporters that Lao Fengxiang's approach is to start with new products. Among his team of designers, there are many young professionals who graduated from internationally renowned design colleges. They are responsible for 3,000 new products every year, hoping to compete with international fashion. Combining innovative products to capture young consumers; secondly, in terms of marketing methods, Lao Fengxiang also keeps in touch with young people through various ways such as sponsoring college campus activities.
In addition to the fashion transformation for young consumers, Lao Fengxiang continues to expand its internationalization pace. As early as 2012, Australia already had the image of Laofengxiang Yinlou. Before the end of this year, the flagship store of Laofengxiangyin Building, which covers an area of ​​nearly 400 square meters, will be on display at the Fifth Avenue World Luxury Brands in New York, USA. Enter Vancouver, Canada.
It is reported that Lao Fengxiang currently has about 2,800 retail outlets in China, which are distributed in 31 provinces, municipalities and autonomous regions across the country, including specialty stores, shop-in-shops, franchise stores, etc. In addition, there are nearly 1,500 wholesalers, which are currently domestic. The most widely covered enterprise in gold jewellery companies.
"The focus of next year will be to enter the Hong Kong market." Shi Lihua said that although it is the home base of its competitors Chow Tai Fook, Chow Sang Sang and Tse Siu Lam, they have used the Chinese market for nearly a decade, and in Hong Kong, an international fashion landmark, Lao Fengxiang also hopes to occupy a place.
Of course, there are still many places to learn in the international market. Shi Lihua said that in the world business center such as the US market, the profitable diamonds account for 70%, while the Chinese market gold products account for more than 70%. This is also the main breed of Laofengxiang. A good opportunity for structural adjustment and learning.
"I hope that after three years of brand cultivation in the international market, we will achieve a certain scale effect." Shi Lihua's plan is to open 30 to 40 stores in the international market and open to 50 stores in 5 years. After five years of planning, Lao Fengxiang reached nearly 100 billion in revenue, while sales in overseas markets accounted for 20% to 30%.
When talking about leadership, Shi Lihua believes that it is to cultivate an excellent team and a group of outstanding employees. As the helm of the enterprise, we must use ideas to create value. Even when cultivating corporate successors, they need to be left with their spirit and ability, not just assets.
In terms of leadership style, Shi Lihua believes that he is not a strong leader, but while he is easygoing, he is quite persistent and focused on business philosophy. He hopes that after three to five years of hard work, Laofengxiang will become the first brand in the Chinese jewelry industry. After 5-10 years of hard work, Laofengxiang has world influence and, more importantly, must be in the eyes of consumers. It has become an important brand with cultural heritage and has a place.
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