Unscrambling ppg: Being deified and demonized at the same time

Unscrambling ppg: Being deified and demonized at the same time

This is a company that is deified and demonized at the same time.

In the mythical version of the story, PPG, a clothing outlet company that did not exist three years ago, is portrayed as the perfect dream for all entrepreneurs. From the founder's discovery of Blue Ocean to an annual income of more than 1 billion yuan, the company has been easy to shake off all rivals in two years, even the traditional garment industry such as Youngor has to lagging.

In the demonized version of the story, PPG's success story is a beach castle. The quality of PPG's clothing has always been a looming doubt, and recently even in some media rumors that tens of millions of of dollars in venture capital has been squandered under the PPG Radical market strategy. The company is on the verge of collapse, and the so-called IPO listing is just a crazy fantasy of the company's management.

After much deliberation, Liang, the founder and CEO of PPG, decided to break the long silence by accepting an interview with the Financial Times on the afternoon of February 21.

Capital Chain Rumors

"The capital chain breaks?" That's ridiculous. When he heard the news, Liang made no secret of his disdain.

To substantiate his claim, Liang told the Financial Times of a previously undisclosed message that--PPG had a PE (private equity) three-way investment company in the fourth quarter of last year, while the rumours of a "broken capital chain" were rife shortly thereafter.

"We did invest in PPG last year," he said. As for size, I can only say tens of millions of dollars. Wen Zhimin, vice president of San Shan Investment Company in Hong Kong, confirmed on the phone. San Shan investment is by Zhu's proud disciple former Hong Kong Bank of China International President Shan, former Goldman Sachs global president John. Mr Thornton (John Thornton) and another US financier Zheng Kaiwen, who worked at Goldman Sachs, created a private equity investment fund.

Subsequently, the reporter to PPG's another shareholder, the venture investment agency Kleiner Chinese director Wu Yunlong to verify, he also immediately confirmed the matter.

In the Liang business logic, PPG's successful external cause is broken down into China's "world factory" status and huge demographic dividend two factors, and PPG's future will be built on these two cornerstones.

Subversive

In big cities such as Shanghai and Beijing, PPG has become a well-known clothing brand.

Unlike the traditional clothing brand, which has more than 1500 physical terminals in the country, PPG has never opened a physical store or owned a physical counter in any store.

But this has not prevented the new brand from spreading rapidly across major cities. In various local television stations, print media, building LCD and even the Internet advertising bombing, PPG quickly in the shirt market opened a beachhead, and in a short span of two years on the firm footing.

If, in 2006, PPG was active on the stage as a challenger, its 2007-year performance would be enough to make any traditional garment giant blush.

"According to the numbers we've got, PPG2007 has sold more shirts than Youngor in years," he said. "Liang said.

In fact, from the first day of sight, PPG's typical "light Company" has been compared with the brand of Youngor, the number one in China's apparel industry.

Such extreme "weight" contrast is obviously very visual impact. As an annual sales of about 1 billion yuan, profit margin of about 5% of the traditional clothing enterprises, Youngor Tentacles touched the industrial chain of every link. From cotton field to cotton mills, printing and dyeing plants, factories, logistics centers and even sales terminals, Youngor through its absolute control of the industrial chain to the extreme compression of costs and grab profits.

The "Light Company" represents PPG's approach is completely the opposite. In the upstream of the industrial chain, PPG will outsource production to the garment factories with excess capacity (which is almost inevitable in China's apparel industry), while the logistics outsourcing to the home urgent delivery, FedEx and other professional logistics companies. To the downstream, PPG to a comprehensive advertising campaign to build brands and through the online and catalog sales directly facing consumers, eliminating the huge cost of the channel. In the outskirts of Shanghai, Xu Jing Pan Middle Road, a few white small low building is PPG all the belongings.

Brand marketing experts in the new view, the PPG model is successful, first of all, it is oriented to a correct market segments. Men's shirts are one of the most suitable products for online sales and catalog sales in clothing. Even at the point-of-sale, men's shirts are not allowed to be tried on, so there is little demand for on-site experience, which allows men's shirts to be sold online like books. In addition, PPG uses its own IT systems and the innate advantages of being at the "World Factory" to create a fast-reacting supply chain.

"We are going to make professional people do professional things." PPG is not now, and will certainly not touch the manufacturing industry. "In the face of the question of whether journalists will expand in the industry chain, Liang not hesitate to say."

Mistakenly read ppg

Because PPG's business model is too popular, the flip side of the coin is rarely noticed: a necessary condition for the establishment of a business model like PPG is that it must be adapted to the market at the fastest pace.

The biggest challenge comes from PPG's "zero inventory" concept. Through the advanced IT system, PPG can make the OEM production line products as a flow of inventory, which will be the production cycle of 45-60 days of clothing inventory turnover period compressed to 10 days or so.

However, in a clearance sale at the end of last year, some of the lesser-known problems of PPG were exposed. Some people found that some discounted shirt products are 46, 47, 48, 49, while the Asian people wear shirt collar is generally 40, 41, even if it is very large. This size is clearly contrary to China's national conditions.

Another problem arises in the choice of color. Liang told reporters that in the United States, red, yellow and green and other bright-coloured trousers will occupy about 10% of the market. And when PPG launched similar products, he found that the same choice of Chinese consumers less than 1 per thousand.

In fact, for shirts, ties and other "evergreen" products, PPG's IT system is usually able to make relatively accurate judgments, but in the introduction of new products, the problem will follow.

"We have no corresponding data for the new product, so we can only try to push a batch of market reactions first." Push less, there will be out of stock situation, pushed more, then this batch of products became our inventory. Liang admits that as there is no first-hand in China's market for reference, this issue will be accompanied by PPG. However, PPG said that the end of 2007 inventory shipments accounted for only 3% of its day shipments. Accordingly, the total number of PPG clearance products is only thousands of, Does not seem to be enough to affect it too much.

The strategy of advance and retreat

In the eyes of many observers, the biggest uncertainty that PPG faces is that the "blue sea" in which it is traveling is slowly disappearing.

From the second half of 2007 onwards, VANCL, Bono and other brand-name brands such as direct sales have sprung up. What is more frightening is that its leaders are old, Tian Jian, and many of them are veteran Internet veterans rather than fledgling entrepreneurs.

"I welcome competitors to join us in this industry," he said. "When it comes to this issue, Liang has not shown any apparent hostility to rivals.

At least at present, in the same industry can not see a competitor compared to PPG. Even veteran companies such as Dangdang have not sold their shirts to one-tenth of PPG's.

In Liang's view, how to expand and change the advertising bombing in second-tier cities is the biggest challenge ppg faces.

"PPG's brand influence has already been, next is wants to promote the brand image, our marketing method this year will be very different from last year." "Liang seems to want to take PPG on a different path at a time when rivals are launching differentiated marketing against PPG." ("Financial Times")