Dissertation - Copy

University of Southampton

Appendix 1 . Assessment Feedback Sheet

Appendix 2: Example Final Project Cover

Re-Open Silk Road

How to return the world centre of Chinese silk enterprises

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The University of Southampton 2011 Faculty of Business and Law Winchester School of Art ARTD6057 Final Project

Re-Open Silk Road --- How to return the world centre of Chinese silk enterprises

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323612231 Presented for MA Design (Fashion Management)This project is entirely the original work of student registration number: 323612231, where material is obtained from published or unpublished works; this has been fully acknowledged by citation in the main text and is conclusion in the list of reference.Word Count: 8008

Table of Content

Table 1: Top 10 Cocoons Producers and their percentage of global total in 2005 P17

Table 2: 2011January-February silk garments export market statistics P20

Table 3: 2011 January-February silk garments export market statistics--- (Marked decrease in regional and national) P21

Table 4: SWOT Analysis JXSCL P24

Table 5: Revenue structure of JXSCL P25

Table 6: Costs structure of JXSCL P25

Table 7: Exchange rate losses of JXSCL P28

Table 8: Theory 6W and 6O --- Analysis silk consumers’ action, aim and style P30

Table 9: Consumer of Influences P31

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Table 10: Some of the classic of brand attributes P32

Table 11: Brand Identify P33

Table 12: Product development form P36

Table 13: Four steps of product development P36

Table 14: Analysis of the retail channel P45

Table 15: Push and Pull factors of Global Retail Marketing Strategy P46

Table 16: Possible partners in the United Kingdom retail market P46

Table 17: Possible partners in the United States retail market P47

Table 18: Possible partners in the Japan retail market P48

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List of Illustrations

Figure1: Continuation of the millennium the Silk Road P13

Figure 2: Map of Silk Road P16

Figure 3: Chinese silk production of systematization in the Qing dynasty P16

Figure 4: Chinese embroidery in silk garment P18

Figure 5: Silk exports of China in 2010 P19

Figure 6: Chinese biologists through Gene Recombinant Technology, succeeded in silkworm can be produced colour–silk P20

Figure 7: China’s inflation rate 2009-2010 P22

Figure 8: China purchasing price index of raw materials fuels and power P22

Figure 9: Increased labour costs in China P22

Figure 10: Trademark of JXSCL P23

Figure 11: Main products of JXSCL P24

Figure 12: Stock market performance of JXSCL 2010/06-2011/06 P26

Figure 13: Women blouse of JXSCL P27

Figure 14: Women blouse of ZARA P28

Figure 15: Product’s details of JXSCL P29

Figure 16: Product’s details of ZARA P29

Figure 17: Brand Identity -psychology of advertising: the subliminal persuasion P32

Figure 18: Image of Jinsanta trademark P33

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Figure 19: Three towers in Jiaxin city P34

Figure 20: Trademark of Mulberry Company P34

Figure 21: Mulberry leaf as trademark P34

Figure 22: Strong and rugged with Levi’s P35

Figure 23: Confidence and elegant with Giorgio Armani P35

Figure 24: Design Inspiration from London, Paris, Milan and New York fashion weeks P38

Figure 25: More vivid colour by using in silk products; from left hand are John Richmond, DSquared, Ermanno Scervino and Z Zegna P38

Figure 26: Diverse printing in silk material P39

Figure 27: Pure colour and natural colour silk garments; from left hand is Salvatore Ferragamo, Jil Sander and D&G P39

Figure 28: Accessories and embellishment on silk garments; from left hand is BottegaVeneta, John Richmond, Gucci and D&G P40

Figure 29: Stripes design in silk garments; from left hand is Paul Smith, DSquared P40

Figure 30: Embroidery design in silk garment and hat; from left hand are Jean Paul Gaultier, Chinese Tradition Embroidery, and Armani Collzeoni. P41

Figure 31: Silk scarves P43

Figure 32: Classic package of fashion industry P42

Figure 33: Core elements of a marketing strategy P43

Figure 34: Defining the business- the start of market strategy P45

Figure 35: Possible franchise stores positions in Oxford Street and Regent Street P49

Figure 36: Possible franchise stores positions in Fifth Avenue in New York P49

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Topic:

Open Silk Road --- How to return to the world centre of Chinese silk enterprises

1. Abstract

2. Context

[2.1] Background of Chinese Silk Industry

[2.1.1] History Background of China Silk Industry

[2.1. 2] Current Background of China Silk Industry

[2.2] Advantage of Silk Industry in China

[2.2.1] Chinese Monopoly on Raw Material

[2.2.2] Completely Industrial Chain and Mature Technology of China Silk Industry

[2.2.3] Relaxed Environment of Silk export in China

[2.2.4] Technical Superiority

[2.2.4.1] Gene Recombinant Technology

[2.2.4.2] Solution Shrink and Anti-Crease

[2.3] Disadvantage of Silk Industry in China

[2.3.1] Chinese silk Industry too Dependent on Exports

[2.3.2] Increase of Labour Cost and Raw Material

[2.3.3] Disorderly Competition of Market and Technology Bottlenecks

[2.3.4] Reduction of Export Tax Rebate

3. Management Issues

[3.1] Research Object--- Jiaxin Silk Crop,Ltd.

[3.1.1] Company Background

[3.1.2] SWOT Analysis-JXSCL

[3.2] Management Issues of Financial

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[3.2.1] Declining Revenues and Increasing Expenses

[3.2.2] Serious Impact of Exchange Rate

[3.2.3] Slump in the Stock Market and Single Platform of Financing

[3.2.4] Solutions

[3.3] Management Issues of Marketing

[3.3.1] Single Marketing Mode-----B2B

[3.3.2] Lacked Retail Distribution Channel

[3.3.3] Low Share of Domestic Market

[3.3.4] Solutions

[3.4] Management Issues of Products

[3.4.1] Brand Issues of Products

[3.4.2] Design Issues of Products

[3.4.3] Solutions

4. Visual analysis

[4.1] Consumer

[4.1.1] Consumers Analysis

[4.1.1.1] Theory 6W and 6O --- Analysis Silk Consumers Action, Aim, and Style

[4.1.1.2] Theory of 4RS-Analysis Consumer Relation

[4.1.1.3] Consumer of Influences

[4.2] Brand Strategy

[4.2.1] Brand Attributes

[4.2.2] Brand Identify

[4.2.3] Brand Trademark

[4.2.3.1] Current Brand Trademark

[4.2.3.2] Brand Heritage and Weakness

[4.2.3.3] Design Trademark

[4.2.4] Brand Sense

[4.2.4.1] Sense of Brand Innovation- Either Innovate or Die

[4.2.5] Brand Sensibility

[4.3] Product Strategy

[4.3.1] Product Development Model

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[4.3.2] Products Design

[4.3.2.1] Silk Fashion Design Elements -Vivid Colours

[4.3.2.2] Silk Fashion Design Elements -Diverse Printing

[4.3.2.3] Silk Fashion Design Elements -Pure Colour and Natural Colour

[4.3.2.4] Silk Fashion Design Elements -Accessories/ Embellishment

[4.3.2.5] Silk Fashion Design Elements - Stripes

[4.3.2.6] Silk Fashion Design Elements –Embroidery Design

[4.3.2.7] Silk Fashion Design Elements –Scarves

[4.3.3] Products Quality

[4.3.4] Products Package

[4.4] Retail Market Strategy

[4.4.1] Identify NewTarget Marketing

[4.4.2] Four Core Elements of Retail Marketing Strategy

[4.4.3] Domestic Retail Marketing Strategy

[4.4.3.1] Use the Marketing Theory of 4Ps in Domestic Retail Market

[4.4.4] Distribution channel strategy

[4.4.4.1] Vertical Chain Process Cycles

[4.4.4.2] Mode of Retail Channel

[4.4.4.2.1] E-commerce Retail Channel

[4.4.4.2.2] Brick and Mortar Retail Channel

[4.4.5] Global Retail Marketing Strategy

[4.4.5.1] Push and Pull Factors of Global Retail Marketing Strategy

[4.4.5.2] Target Market of Global Marketing

[4.4.5.2.1] Department Stores

[4.4.5.2.2] Franchise Stores

5. Conclusion

6. Appendices

a. Appendix 1 ----Research Design

b. (Present material that different types of reader may need to refer to in order to further)

7. References and Bibliography

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Abstract

Historically, silk was the most significant goods in Chinese foreign trade. Due to the fact it was a closely guarded of silk production, so Chinese monopoly all silk business in worldwide in nearly thousand years. Then other countries gradually were to obtain the production process of silk, as the same time lasting political and economic turmoil in China, therefore Chinese were lost its dominant position in this silk market.

In recent three decades, the Chinese were gradual recovery of share of silk market, and Chinese silk production and export accounted for 54% of world total. On the other hand, Chinese silk industry is still facing some bottlenecks, such as develop high value-added products and enter the global retail market.

Figure1: Continuation of the millennium the Silk Road

Purpose

The aim of dissertation is to use a case ----Jinxin Silk Crop Ltd (Abbreviated form of a name: JXSCL), It is only a Listed Companies of silk industry in China. JXSCL products are covers men and women shirts, underwear, and bedding; among 80% is export to overseas markets. In recent years, because single development strategy and deteriorating global economic environment; JXSCL is facing an unprecedented dilemma.

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This dissertation will to analyse the dilemma of development of JXSCL, which included issues of company financial, issues of company marketing and issues of company products. Furthermore, it will particularly research, development new market, new distribution, new brand and new product packing to reinforce competitiveness of JXSCL.

Research Design

Research design is based on secondary data, theories, and intelligence impact such as book, academic journals, magazines, and websites, for example Fashion Marketing, Economist and WGSN.com. Also, Equity Research Report is other important resource of JXSCL. Additional information was retrieved by visiting Victoria and Albert Museum, Design Museum, House of Fraser, Selfridges, John Lewis, Royal Exchange, and Harrods.

Finding

The key finding from this dissertation is Chinese silk company to survive in the Highly Competitive market and post-financial crisis era. And Chinese silk company to develop their new business strategies and Highly Added-Value products into new target market. By using an effective strategy to enhance the company image and brand value, lead to strong position in silk industry and retail market.

Value

This dissertation provides insight details of the silk industry. The content includes the overview development of the Chinese silk industry and current market. It also includes the analysis of the company development strategy and a business case study provided as an example. Since there were very few research focused on Chinese silk industry. Thus this paper would be exceedingly beneficial for Chinese silk enterprises, when they are considering from processing enterprises transfer to retail enterprises or to expand their customer base.

Keyword

Silk, Export Market, Domestic Retail Market, Global Retail Marketing, Fashion Elements, Design, Retail Distribution, High Value-Added, and Brand Strategy

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Thanks Southampton University

Enter to grow in wisdom;

Depart to serve better thy country and thy kind.

2. Context

[2.1] Background of Chinese Silk Industry

[2.1.1] History Background of China Silk Industry

The Silk Road crossed the mountains and deserts of Middle Asia to connect China and the Mediterranean. “This historical network was at its height from about the second century B.C. until about the fourteenth century ---in its heyday” (Elizabeth, 2002). Merchants carrying fine silks from China would mingle with traders bringing fragile Roman glass to the east. At the end of the 19th century, “the German geologist Ferdinand Von Richthofen first gave the name Silk Road to this route”. (Xiaoming, X, 2006)

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Figure 2: Map of Silk Road

Historically, the silk is the most important Chinese goods in foreign trade. “Due Chinese were remained a closely guarded skill of production of silk, so Chinese monopoly all silk business in worldwide in nearly thousand year” (Elizabeth, 2002).Then other countries gradually were to obtain the production process of silk, as the same time lasting political and economic turmoil in China, so Chinese were lost its dominant position in silk market.

Figure 3: Chinese silk production of systematization in the Qing Dynasty13


[2.1.2] Current Background of China Silk Industry

In 1976, China began to implement economic reform policies, and it has greatly promoted the development of production of silk. “During the same period Chinese manufacture of finished silk goods more than world; today these are exported in greater amounts that are their raw silk, silk yarns, and silk fabrics combined.”(Schoeser, M., 2007)

Chinese silk production was almost 54% of world total production. Therefore, the United States and European Union began to develop The New Silk Programme; its purpose was to reduce rely of Chinese silk and to suppress the price of Chinese silk. “The New Silk Programme has taken place in Bangladesh, Kazakhstan, Pakistan, Uzbekistan and Iran- five countries which have had cheapest labour cost and land costs due the political upheaval and poverty.”(Sorrell, C, 2010) The New Silk Programme has been shaking the global dominance position of Chinese raw silk industry; as a result Chinese would not completely control the price of raw silk as in the past, also declined profit of Chinese silk semi-finished goods. This means that Chinese silk industry must be to change the current mode of operation, uses of industrial upgrading to solve adverse situation of silk industry.

[2.2] Industry Advantage of Silk in China

[2.2.1] Chinese Monopoly on Raw Material

Recent three decades, Chinese were gradual recovery of share of silk market. The most advantages of Chinese silk industry are Chinese raw silk production and export amount are 54% of World Total Production, so China silk industry can to the lead the raw silk price on global marketing.

Table 1: Top 10 Cocoons Producers and their percentage of global total in 2005

Country Production (Int$1000)

Production (1000KG)

Percentage of Global Total

China 978,013 290,003 54%India 259,670 77,000 14%Uzbekistan 57,332 17,000 3%United States 37,097 11,000 2%Iran 20,235 6,088 1.1%Thailand 16,862 5,000 0.9%Vietnam 10,117 3,000 0.55%North Korea 5,059 1,500 0.28%Romania 3,372 1,000 0.18%Japan 2,023 600 0.11%

[2.2.2] Completely Industrial Chain and Mature Technology of China Silk Industry

“In china, sericulture is estimated to employ 20 million people, with production employing another half-million.” (Schoeser, M, 2007) China has a complete industrial chain of silk, which covers silk reeling, weaving, and dyeing, refining, printing and finishing more than a dozen process steps. Also, the reeling machines, non-woven machines, computer-printing machine and computerized flat knitting machine by equipped in all production processes.

The processing of silk garments are more complex than other materials clothing, need the special skills like embroidery, accordingly it cannot be transferred to countries of cheaper labour costs in Southeast Asian and Africa.

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Figure 4: Chinese embroidery in silk garments

The complete industrial chain and mature technologies are beneficial to support Chinese to consolidate the dominant position of world silk manufacturing.

[2.2.3] Relaxed Environment of Silk Export in China

European Union, United States, India, and Japan are largest silk of consumer market. However, due to labour costs, climate, and other reasons; “the silk weaving industry in the United States faded away and in Europe only the most innovative and quality conscious of weavers survived” (Schoeser,M. 2007). Japan has an amount of silk production, but its production in 2010 only 0.23% of global output. In India, the silk production is developing very rapid, but its silk production could not to fill its domestic market until now. Accordingly, these countries must be to rely on imports from China. Among them, India is Chinese largest export market of raw silk and other low value-added products, the United States, European Union, and Japan are Chinese major export market of silk garments. Meanwhile, the United States, European Union, Japan, and China are WTO members, in 2005, WTO member countries were to abolish textiles quotas, which also improved silk exports environment.

Figure 5: Silk exports of China in 2010

[2.2.4] Technical Superiority

“New technologies are a common driver of fashion change”

----------Hines,T. and Bruce, M

[2.2.4.1] Gene Recombinant Technology15


“There are good seasons and bad seasons for silk dyeing, just as these are good years and bad years for wine” (Hong, S. 2000). In past times, silk dyeing was quite difficult to guarantee qualify in different seasons. Nowadays, Chinese biologists through “Gene Recombinant Technology, succeeded in silkworm can be produced colour–silk” (Zhang, Z. 2010) Utilizing Gene Recombinant Technology, can induce silkworms to synthesize new proteins, different from fibroin. Silk structure could be modified at will be careful gene selection , so obtaining fibres endowed with improved properties or completely new fibres ---such as colour and fluorescent, this technology is in leading position in the world.

Figure 6: Chinese biologists through Gene Recombinant Technology, succeeded in silkworm can be produced colour–silk

[2.2.4.2] Solution Shrink and Anti-Crease

Shrink and Crease are two issues have been restricting the growth of consumption of silk products. In 2011, Suzhou University in the 15th Shanghai International Exhibition on Textile Industry launched Expanded Stretch Silk (ShanghaiTEX,2011), which has good elasticity, anti-crease, moisture absorption and resistance to deformation; because no other chemicals or other materials attached to, so keep the silk material of the original good health functions.

[2.3] Disadvantage of Silk Industry in China

[2.3.1] Too Dependent on Exports Market

The disadvantages of Chinese silk industry are nearly 80% of Chinese silk products are exports to East Asian, United States and European Union, so when economic downturn and debt crisis were happens in United States and European Union; Chinese silk industry would be to face a devastating blow. As a result, plenty silk products companies of China must choose shutdown or bankruptcy, When they lost global market orders.

Table 2: 2011January-February silk garments export market statistics

Country Exports Year-on-Year% Share%Worldwide $569M 16.22 100%United States $113M 0.46 19.94%India $72M 28.85 12.69%Italy $59M 17.27 10.53%Japan $50M 21.04 8.8%Hong Kong $37M 19.22 6.62%Germany $21M 3.66 3.73%Pakistan $20M -4.41 3.58%France $19M 3.09 3.37%Southern Korea $18M 19.66 3.31%United Kingdom $17M -0.54 3.06%

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Table 3: 2011 January-February silk garments export market statistics--- (Marked decrease in regional and national)

Country Exports Year-on-Year% Share%Spain $10M -10.88 1.9%Canada $6M -4.54 1.1%Australia $6M -2.23 1.1%Russia $3M -37.83 0.5%Greece $0.6M -50.24 0.1%

Through analysed Table1 and Table 2; the largest export market United States was completely saturated, and European Union market had tended to stagnate. Record 21.3% of unemployment rate (Wools, D. 2011) was mainly reason to reduce export amount of Spain. Russia, Australia, Canada, and Greece were still trapped in financial crisis and debt crisis were continued decline. If the economic crisis contagion, silk export market will shrink further.

[2.3.2] Increase of Labour Cost and Raw Material

In past three decades, China has been relied on cheap labour cost, so rapid development of processing industry and manufacturing industry became the first manufacturing powerhouse of world. “But as Chinese wages soar, buyers are looking elsewhere.” (The Economist, 2011)

Firstly, “the price of raw silk rose to a 15-year-high in April in 2010” (Nie Peng, 2010), also in 2011 years, price of raw silk is continued to rise. The mainly rise reason is high inflation in China, “the Chinese government announced the CPI index was 5.5% in May 2011” (Trading Economics, 2011), so all production necessities, including factory workshop, water, electricity, and heating prices all rose. High raw silk costs will make the ex-factory price of silk products has grown dramatically, thus lose its competitive advantage in global market. As a result, as a main product of export-oriented enterprises is very difficult to survive.

Figure 7: China’s inflation rate in 2009-2010

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Figure 8: China purchasing price index of raw materials, fuels and power

Secondly, due China enacted a new labour law in 2008, enacted additional provisions in 2009 and 2010. New labour law increased the minimum wage workers; also let employers must be to pay pension insurance, medical insurance and unemployment insurance to all workers. Therefore, as a labour-intensive industry, all silk enterprises must to afford more costs of labour.

Figure 9: Increased workers salary of annual in China

Nowadays, due to the increased of labour costs, the prices of products also increased. The rising of products prices, which is to affect the market competition of products. Consequently, Chinese silk enterprises must take the initiative to seek the transformation to adapt to the new production environment.

[2.3.3] Disorderly Market Competition and Technology Bottlenecks

In today, 3199 Silk garment enterprises existing in China, but almost 90%are more small enterprises. These smaller silk companies are using price war to scramble for market share, which is seriously disrupting the normal market price.

In technology aspect, the raw silk technology innovation and integrated innovation capability still is technology bottlenecks; at the same time silk printing and dyeing and finishing technology also is restricted products to enhance the international competitiveness and embark upscale market.

[2.3.4] Reduction of Export Tax Rebate

In September 2006, the Ministry of Finance, State Administration of Taxation issued a notice to reduce the Export Tax Rebate rate of textiles products of export, which rate from 13% to 11%; In June 2007, the Ministry of Finance, State Administration of Taxation have decided to reduce Export Tax Rebate rate of raw material, which rate from 13% to 11%.

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3. Management Issues of Company

[3.1] Research Object--- Jiaxin Silk Crop,Ltd.

[3.1.1] Company Background

JXSCL (Full name: Jiaxin Silk Crop Ltd) is exclusively a Listed Companies of silk industry in China (STOCK No: Shenzhen 002404).It is Top 10 companies of Chinese silk industry in 2009-2010. Its products covered men and women shirts, underwear, and bedding; its products mainly be exported to the Japan, Hong Kong, United States, and European Union. In last three years, because the global financial crisis; as an export enterprise its market share in lasting decline.

Figure 10: Trademark of JXSCL

Figure 11: Main Products of JXSCL

[3.1.2] SWOT Analysis-JXSCL

Table 4: SWOT analysis JXSCL

JXSCLStrengths 1. Firm size

2. Close to the origin of raw materials3. Rich experience in production4. Location advantages of Company5. Logistics6. Existing brand value “Made in China”

Weaknesses 1. A single business model2. Over-reliance on export markets3. Lack of retail channels4. Single product, the lack of innovative design5. New to this market segment

Opportunities

1. Vertical mode enter retail market2. Fast-Fashion mode3. Rejuvenate the Chinese fashion brand

Threats 1. In the export market(1) Rising costs and declining competitiveness

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(2) Losses of Exchange rate2. If enter retail market

(1) Unfamiliar market(2) Unfamiliar competitors

3. Danger of competitor pre-empting

[3.2] Management Issues of Financial

[3.2.1] Declining Revenues and Increasing Expenses

Through analysed Table 5 and Table 6, JXSCL’s total income and export income were decreased in 2009, but company average monthly wage, payroll, and proportion of total operating costs all were arrived peak in 2009. Especially, proportion of total operating costs from 5.48% in 2006 increased to 10.22% in 2009, rose almost double.

Table 5: Revenue structure of JXSCL

2009 2008 2007 2006Total Income RMB137M RMB152M RMB174M RMB150Total domestic market Income RMB35M RMB37M RMB45M RMB43MProportion of domestic market Income

24.56% 23.41% 25.47% 28.43%

Total Export Income RMB102M RMB115M RMB129M RMB107MProportion of Export Income 75.44% 76.59% 74.53% 71.57%

Table 6: Costs structure of JXSCL

Items 2009 2008 2007 2006Average Monthly Wage/Per Worker RMB 2,500 RMB 2,129 RMB 2,119 RMB2,073Payroll Approx.RMB120

.4MRMB104.4M

RMB92.1M RMB68.7M

Total Operating Costs Approx. RMB 1090M

RMB1248M RMB1443M RMB1255M

Proportion of Total Operating Costs 10.22% 8.36% 6.38% 5.48%Total Profit Approx.

RMB88MRMB86M RM106M RMB79M

For every1% increase in wage costs, the total profitreduction ratio.

1.25% 1.21% 0.86% 0.86%

Exchange Rate RMB 1=USD 0.146

RMB1=USD 0.137

RMB=USD 0.128

RMB=USD 0.126

[3.2.2] Impact of Exchange Rate

Thirdly, because JXSCL 80% business of export, dealing with the U.S. dollar as currency, so the dollar and the RMB exchange rate is a major issue. Because the U.S. government be continued to force the RMB appreciation in recent years, so JXSCL need to bear huge losses of exchange rate.

Table 7: Exchange rate losses of JXSCL

JXSCL 2009 2008 2007 2006Exchange losses Approx. RMB0.3M RMB7.6M RMB11.7M RMB6.8MProportion of Total Profit

0.23% 8.92% 11.03% 8.55%

Impact of Income Tax RMB-0.05M RMB-1.5M RMB-2.8M RMB-1.9MImpact of Net Profit RMB-0.1M RMB-6M RMB-9M RMB-5M

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Through analysed Table 7, the profit loss due to exchange rate has slowed in 2009, but exchange rate rose sharply again in 2010, RMB1 = USD 0.151(X-rate, 30.12.2010).Therefore, losses of exchange rate still is a mainly financial issue for JSCL.

JXSCL should be integrate to use of foreign currency borrowings and bank financing loans, forfeiting and other foreign exchange hedging tools to reduce the negative impact of RMB appreciation.

[3.2.3] Slump in the Stock Market and Single Platform of Financing

Through analysed Figure 12; JXSCL stock was appeared a serious fall in May 2011.Although the stock price changes did not have any impact on the company's actual operations. But JXSCL is a holding company Board of Directors, its 70 per cent of the stock is non-tradable shares held by the board. If the stock price continues to fall, Pledge of equity financing will be significantly reduce. Meantime, decline in stock prices will affect both, the cooperation with other companies, as well as in the secondary market financing and acquisition. As a result, because stock prices declined, which let JXSCL operational range was further reduced; lose some opportunities of the financing, mergers, acquisitions, and cooperation.

Figure 12: Stock market performance of JXSCL 2010/06-2011/06

Nowadays, consumers are increasing demands for silk products；JXSCL must be to upgrade technology and equipment to meet the market requirement; this needs mass financial to support. But JXSCL's financing channels is single, it just rely on its own retained profits and bank loan financing, at the same time by the company debt ratio to the constraints and bank loan growth is limited, which restricts the company business development. Not financing, JXSCL equipment and technology are cannot to upgrade; as a result, JXSCL is cannot obtain more orders.

[3.2.4]: Solutions

Develop the domestic market will to increase revenue and reduce exchange rate losses of export market. Meantime, Increase the visibility of JXSCL in the domestic country; improve the confidence of investors of the JXSCL.

[3.3] Management Issues of Marketing

[3.3.1] Single Marketing Mode----B2B

JXSCL’s operate mode is based on production by order, which belongsB2B (Business-to-Business) transactions. JXSCL's main customer group are foreign brand dealers, that JXSCL and these brand dealers to establish business partnership; then these brand dealers will accord their requirement to order JXSCL’s products. When received orders, JXSCL would be to consider the company's own procurement costs, processing fees, freight, insurance, gross margins, and other costs and budgets. Then JSXCL would to set a price report; if foreign brand dealers were agreed for this report of price; they would directly generate the

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sales contract. JXSCL coordination of other manufacturers or self-produced two models, and then shipped; the other party received the goods after settlement.

Because B2B mode, JXSCL was engaged in foreign trade, but could not to contact with real consumers. At the same time, according foreign brand dealer orders to produce, JXSCL could not to produce its own culture and characteristics of the goods, only the mercy of others, so could not generate a loyal consumer groups of JXSCL.

As a result, JXSCL is a large-scale company, however it is not much advantage than many small enterprises; because it has not loyal consumer group and brand awareness; so a plenty of small companies can to replace JXSCL’s orders.

[3.3.2] Lacked Retail Distribution Channel

Until today, JXSCL still remain in the OEM (Original equipment manufacturer) export stage. Products sold to foreign brand dealers, then be pasted foreign brands trademark entered retail market. Lacked retail distribution channel is a mainly barrier for JXSCL to break this stage.

[3.3.3] Low Share of Domestic Market

In 2009, JXSCL 75.44% revenue from export business; domestic market income was just 24.56%.More low domestic market share is directly to limit company growth rate and profits.

[3.3.4] Solutions

JXSCL must be to upgrade marketing mode to Business to Consumer (B2C). In addition, JXSCL needs to build kinds of retail distribution channels.

[3.4] Management Issues of Products

[3.4.1] Brand Issues of Products

JXSCL mainly business mode was exported products to foreign brand dealers, and then be pasted foreign brands trademark entered retail market. Hence JXSCL could not to develop self-brand, so many consumers were bought JXSCL’s products, but they would not to know which manufactured the products. Also, JXSCL could not to cultivate the fixed customer group and to create a reputation of brand.

[3.4.2] Design Issues of Products

Figure 13: Women blouses of JXSCL

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Figure 14: Women blouses of ZARA

Through analysed Figure 13 and Figure 14; JXSCL products have outstanding quality and classic style. But JXSCL products lacked of innovative design and fashionable elements, so its products must exported to foreign fashion companies, re-processed by those companies, then to throw in the retail market.

JXSCL silk blouses were launching few styles, and then every style had over four colours. ZARA every style silk blouse just has one or two colours, but ZARA has many styles provides for consumers. This product composition is directly restricts JXSCL to develop the retail market.

Figure 15: Product’s details of JXSCL

Figure 16: Product’s details of ZARA

Through analysed Figure 15 and Figure 16; JXSCL used more backward sewing technology on garment edges and collars that was not suitable current trend and consumer’s requirement. Therefore, JXSCL products were lacked market competitiveness. ZARA silk

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blouses used a variety of edge sewing technology, in sleeves, collar, buttoned that can adapt to different body and different favour of consumers.

[3.4.3] Solutions

JXSCL should be to use more fashion elements to produce products, provides multi-style garments to replace multi –colours. Upgrade production technology is other an essential element to enter fashion retail market .At the same time; JSXCL is needs to establish its brand and trademark.

4. Visual Analysis

[4.1] Consumer

The consumer is not a moron, she is your wife.

-------------David Ogilvy

[4.1.1] Consumers Analysis

In today, customers have more knowledge of fashion and brands than at any time in the past. “Many fashion brands have to face the fact that their consumers are becoming more knowledgeable and often know more about fashion than brands know about their customers.” (Hines,T. 2007) When JXSCL prepare to develop Business-to-Customer mode, its first work is to analysis its potential consumers.

[4.1.1.1] Theory6W and 6O --- Analysis Silk Consumers Action, Aim, and Style

Table 8: Theory 6W and 6O --- Analysis silk consumers’ action, aim, and style

What-Objects What object consumers want to buy?

1. Good quality at affordable price

2. Fashionable design

Why-Objectives Why consumers to buy objective?

1. Psychological satisfaction2. Use value3. Impulse spending

Who-Organizations

Who will buy object? Has organization or not?

1. Consumers favor silk products2. Exploratory consumers3. Not organization

How-Operations Consumers how to buy? 1. Economic buyers of performance and cheap

2. Impulsive buyer , Because product’s taste and appearance

3. Busy buyers attention to convenience and home delivery purchase

When-Occasions Consumers when to buy object?

1. Full season

Where-Outlets Consumers where to buy object?

1. Online 2. Brick and Mortar shop

Through analysed Table 8; JXSCL needs to provide diversity products and prices to covers more consumers groups. Also, JXSCL needs to build diversity retail channels to meets lasting development consumers purchase action.

[4.1.1.2] Theory of 4RS-Analysis Consumer Relation

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The Theory of 4RS-Analysis consumer relation main idea is to increase loyalty, keep old customers back and attract new customers.

1. Relevancy-JSXCL must be to establish and develop long-term relationships with customers.

2. Respond- Company standing the customer's perspective, the production of products to meet customer needs.

3. Relation-Let consumers from short-term interests to the long-term interests, improve the service from a single service to more than service.

4. Return-JSXCL should to establish of consumer feedback channels to solve the existing issues of company.

Through analysed Theory of 4RS-analysis consumer relation; firstly, long-term is a key element in establish relationship with customers and bring up consumers interest for silk products. Also, build communication channel with consumers, which will help JXSCL obtain customer’s demand and feedback.

[4.1.1.3] Consumer of Influences

Table 9: Consumer of Influences

Aspects of influence

Elements of influence Consumer style of influence

Enterprises can control element

Buying/Selling Process

Supplier, Advisor, Gate Keeper

ConsumerCustomer

Supplier, Advisor

Motivators Friends, Family, Advisor Consumer Advisor

Macro Factors Country, InfluencerGate Keeper

Customer None

Culture Society, Family, Country None None

Through analysed Table 9; JXSCL needs through supplier and advisor to enhance influences for consumers, to let consumers gain a deeper understanding and awareness of brand, to stimulate consumption.

[4.2]Brand Strategy

‘A brand is a promise......products are made in factories, but brands are created in the mind’

--- Walter Landor, Founder of Landor Associates

[4.2.1] Brand Attributes

JXSCL is needs to define its brand attribute. “These are companies that focus upon a narrow and specific product range, such as Hom Underwear, LA Senza, Tie Rack, Nike and Sock Shop has a clearly defined target customer group”. (Hines,T. 2007) Brand attribute is a main element in the building and managing of a strong brand by specifying how the brand is related to customers’ targets. This will allow consumers to have a clearer with brand awareness. As a result, JXSCL needs let itself brand attributes to locate in silk specialist.

Table10: Some of the classic of brand attributes25


Louis Vuitton Leather goods and luggage SpecialistZARA Fast fashion SpecialistH&M Low-priced Fast fashion SpecialistTOD’S Shoes and other leather goods of

SpecialistRay Ban Sunglass of Specialist

[4.2.2]Brand Identify

When JSXCL completed a clear brand attributes, it need to continue to does a brand identify, draw a framework for a brand, to allow consumers to identify. A clearly identify of brand refers to the specific, intended meaning for a brand in customers’ minds, also it presents the aim that consumers will achieve by using the brand and explains why it is superior to other brand.

Figure17: Brand Identity -Psychology of Advertising: the Subliminal Persuasion

Table 11: Brand Identify

Brand Identify System

Specific Identity of brand Specific Identity of JXSCL

Brand as Product 1.Product Scope2.Product Attribute3.Quality/Value4.Uses5.Users6.Country of Origin

1.Women and Men clothes, Underwear, bedding2.Specialist of silk3.Good quality at affordable price4.Any5.Middle and Upper class6.China

Brand as Organization

1.Organization attributes2.Local&global

1.Innovation2.Global

Brand as Person 1.Personality2.Brand-customer Relationships

1.Elegance and Energetic2.Lont-term partnership

Brand as Symbol 1.Visual Imagery Metaphors2. Brand Heritage

1.Monica Bellucci and Jude Law2.Chinese silk

“Successful brands capture a unique place in the minds of consumers.” (Jesper, K., 2002) Consequently, a clear brand identify is establish on uniqueness. JSXCL market located is specialist silk, also it needs to add other uniquely elements to help consumers to identify brand.

[4.2.3] Brand Trademark

Brand image is defined as anything that connects the consumers to the brand

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-------Aker, 1991

[4.2.3.1]Current Brand Trademark

JSXCL has Jinsanta and the Golden Three Towers trademark ownership of text and graphics. At the same time, Jinsanta trademark has been successfully registered in Japan, Hong Kong, European Union ,and the United States

Figure18 : The Image of Jinsanta trademark

[4.2.3.2]Brand Heritage and Weakness

The Jinsanta trademark is originated a local landmark.At the same time, It is a well-known trademark in local. JSXCL was took over this trademark in 1999 , from a Chinese state-owned enterprise. JSXCL is hoping to use its reputation to open retail market. But this trademark was lacked brand awareness in oversea market and Chinese other cities, also almost all consumers were difficult to associate it with silk products. Consequently, JXSCL should be to create a new trademark ,which trademark needs has some features and characteristics of its products.

Figure19: Three towers in Jiaxin city

[4.2.3.3] Design Trademark

JXSCL’s market position is silk specialist, so its trademark should be link with silk industry. For example, Mulberry Fashion Company was used mulberry tree image as its trademark. This trademark is effective to help consumers through image to remember company name.

Figure 20: Trademark of Mulberry company27


Image is an international language, all national consumers could through image to understand the content of trademark. JXSCL needs to select an image ; it is directly related with JXSCL products , then through after processing become a new trademark.

Mulberry leaf has three advantages as an image of trademark; Firstly , mulberry leaf is most main material for silk industry , thus consumers would be comprehension meaning of trademark .Secondly,mulberry leaf image is most suitable for green marketing strategy. Thirdly, none company used mulberry leaf in current market.

Figure 21: Mulberry leaf as trademark

[4.2.4] Brand Sense

‘We have shift to high value-added products, and to do that we need to improve our sense of brand’

--Noboru Fujimoto, President Sharp Electronics Corporation’

In today, brand has been becoming first element of consumers purchase. Brand is not just a name of product, it represent the attributes, quality, price, reputation, image, and self-expression of product. Brand is an intangible asset, has become the company's most valuable asset. As a result, JXSCL to enhance the brand sense is to increase profitability of key.

[4.2.4.1]Sense of Brand Innovation- Either Innovate or Die

Sense development is an enterprise firmly establishes the brand, increase brand depth, innovative brand ideas, improve brand image, and enhance brand market competitiveness. If without innovations, JSXCL could not to expand and develop brand, in final brand would be abandoned by consumers.

[4.2.5] Brand Sensibility

In current, consumers are increasing demand for brand sensibility. Consumers are hope through products to express their social status, economic status, and personality. JXSCL should be to catch up this trend.

“A brand is a complex bundle of images and experiences in the customer’s mind. A brand represents a personality and social status by particular company about a particular product.” (Lindstrom, M., 2005) Levi’s is represents a strong and rugged image in mind of consumers, and Giorgio Armani is represents the confidence and elegant; both are classic brand sensibility. JXSCL is needs according itself situation to create a uniquely brand sensibility. Chinese traditional silk and modern avant-garde fashion element are two most central factors of JXSCL, so integration of traditional and avant-garde element is JSXCL to convey to the customers the brand sensibility.

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Figure 22: Strong and rugged with Levi’s

Figure 23: Confidence and elegant with Giorgio Armani

[4.3] Product Strategy

JXSCL must be to adhere to the high-level product strategy, through product innovation to create high value-added products, rather than to increase production volume. High value-added products will to reduce raw material usage, thereby to reduce negative impact of rose raw material costs.

[4.3.1]Product Development Model

Table 12: Product development form

Development steps of Model

Core elements Specific measures

1.Trend analysis 1.Market trend2.Popular trend

1.Style analysis2.Colour analysis3.Material analysis4.Accessories analysis5.Fashion week trend analysis

2.Product evolvement 1.Fabrication selection2.Palette selection3.Fabric design

1.Manual production, Machine processing2.Pure and Mix Match3.Traditional and new technologies

3.Prototype 1.Silhouette and style 1. Chinese tradition mix

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http://www.designscene.net/2010/01/giorgio-armani-ss-2010-campaign-by-josh


construction direction Avant-garde design

4.Defined target market merchandising process

1.Domestic markets2.Foreign markets

1.Vertical mode of retail2.Wholesale

5.Total market 1.Fit your target customer profile

1.Change from passive to active

Table 13: Four steps of product development

1.Consumers research 1. Consumer action2. Consumer psychology

2.Design/concept development The refinement and development of business objectives

3. Sampling 1. The development of samples (Prototype pattern-Sample-Range meeting)2. Specification development

4.Finally pre-production sampling Production patterns-Grading—Markers—Production templates—Specifications—(Feedback from manufacturing/Feedback from marketplace)

Through analysed Table 12 and Table 13; product development model in the first place is established at current market trend analysis and consumers research, through market analysis and consumers’ research to obtain most real and new market information; also integrated fabrication selection, palette selection, and fabric design. At the same time, find and develop suitable products prototype is most core element of product development model. JXSCL is according company internal factor and market external factor to produce products prototype; then according market and consumer feedback to improve quality, performance, and features of products. In finally, identify and develop target market is last step of product development model.

[4.3.2] Products Design

Fashion is a form of ugliness so intolerable that we have to alter it every six months ”

– Oscar Wilde

For JSXCL, products design should is based on current catwalk shows trend ,company needs to arrange designer long term working in London, Milan ,Paris ,Tokyo and NewYork, specially in spring/summer and Autume/Winter fashion weeks. Designers to capture up fresh elements, new design inspiration, and newfangled style, then uses these elements to produce products prototypes. Fashion design is needs diversity, personality ,and emotion. For JXSCL, most significant work is through products design to satisfy consumers requirement of personality pursuit, spirit of joy, comfort ,and sense of superiority.

“To create a critical path analysis so that the right thing happens at the right time.” (Scott,B., 2005) JXSCL needs to set up a design development research system that enables them to anticipate design changes in current market. In addtion,JXSCL needs more research for lifestyle expectations of target market .

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Figure 24: Design Inspiration from London, Paris, Milan and New York Fashion Week

[4.3.2.1] Silk Fashion Design Elements -Vivid Colours

Figure 25: More vivid colours by using in silk garments; from left hand are John Richmond, DSquared, Ermanno Scervino, and Z Zegna

In past time, silk products consumers’ age stage was between 30-50 years; so more mature and dark colours be used on silk products. Nowadays, more brightly colours began to appear in silk garments; vivid color silk clothing could to open young consumers market. Vivid colours are good at ready-to-wear and slim-fit on party garments, it also is most suitable as bright stripe and Turn-ups design. For JSXCL, reasonable to use vivid colours elements would be a shortcut to open the youth market.

[4.3.2.2] Silk Fashion Design Elements -Diverse Printing

Figure 26: Diverse Printing in Silk Materials31


“In fashion and design there is always a search for inspiration, reinterpretation” (Sott, P., 1993) In printing aspect, more all-over patterns and pattern graphics be printed in silk textile, which included geometric images, florally flowers, leopard points, and prestigious paintings. Diverse printing could be let silk garments have more personality, passion, and uniqueness. Thusly, diverse printing will to help JSXCL to open other a new consumer group that is pursuit personality and unique consumers group.

[4.3.2.3] Silk Fashion Design Elements -Pure Colour and Natural Colour

Figure 27: Pure Colour and Natural Colour Silk Garments; from left hand is Salvatore Ferragamo, Jil Sander and D&G

Pure colour and natural colour are maintaining the real characteristics of silk. It is suitable for consumers prefer natural. Pure colour is widely by using in tailored, neutrals, and ready-to-wear Jackets. For JXSCL, pure colour and natural colour garments are lower production and processing costs, but they must to cooperate advance sewing technology and design elements.

[4.3.2.4] Silk Fashion Design Elements - Accessories/ Embellishment

Details determine success or failure

------------ Liu Ying

Figure 28: Accessories and Embellishment on Silk Garments; from left hand is Bottega Veneta, JohnRichmond, Gucci, and D&G

Details design is playing an increasingly major role in silk fashion industry. For example, accessories and embellishments have been using in many collection of silk garments. Firstly, accessories and embellishment elements are moved forward to satisfy the

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personality requirement of consumers. Secondly, enterprise could be through more accessories and embellishment to increase added-value of products.

[4.3.2.5] Silk Fashion Design Elements - Stripes

Figure 29: Stripes Design in Silk Garments; from left hand are Paul Smith and DSquared

In past, very limited colours were used to match stripes. But now designers have been broken this colours limit; more and more colours by used to match stripes. Paul Smith is most successful example about matched stripes; JSXCL should be to reference the experience of Paul Smith.

[4.3.2.6] Silk Fashion Design Elements –Embroidery Design

Figure 30: Embroidery design in silk garment and hat; from left hand are Jean Paul Gaultier, Chinese Tradition Embroidery, and Armani Collzeoni.

“Embroidery has always been seen as a vital element in the silk industry since it could provide commercial advantage over competitors.”(Stevenson, M., 1995) Embroidery is traditional skill of Chinese; thus it is a trump card for Chinese silk companies in global market. Armani Collzeoni was launched some collection that mixed Chinese embroidery and popular seasonal trend; these products were obtained good comments from both Asia and Western markets. JSXCL should be to according the experience of Armani Collzeoni.

[4.3.2.7] Silk Fashion Design Elements -Scarves

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Figure 31: Silk Scarves

“Scarves have remained a site of innovation among silk printers, and for some fashion labels, such as Versace and Hermes, their signature.”(Schoeser, M., 2007) For any silk products enterprises, scarves are lowest requirement of style design; but scarves also are typical High value-added merchandise, also development scarves will help JSXCL to cover a full-aspects silk consumers market

[4.3.3] Products Quality

Products quality is determine the enterprise survival and development. JSXCL needs to build a system of quality controller to monitor products quality, which included suppliers monitor, products random checks, specifications check, and consumer tracking feedback. In addition, except containing the physical quality products, also JSXCL product quality needs contain the intangible quality.

[4.3.4] Products Package

Figure 32: Classic Package of Fashion Industry

Packaging is an integral element of product. Firstly, package is a significant way to help consumers to identify goods, and to expand the reputation of company. An outstanding package could be to remain currently customers, also to attract more potentially customers. For example, yellow package of Selfridges, dark green package of Harrods, vivid orange package of Hermas and lake blue package of Zara totally are classic package in fashion industry. Consumers could through their package colour to distinguish the brands. For JSXCL, company needs to select a unique colour, then to according this colour to design package.

[4.4] Retail Market Strategy

[4.4.1] Identify New Target Marketing

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As everyone knows, fashion retail market is more profit than the wholesale market. On the other hand, the challenging and competition of retail market also is far than wholesale market. Compared with wholesale marketing, retail marketing more emphasizes relationship between company and consumers, which include attract & engage, smaller audiences, high relevance, and high return. As a result, new retail strategy must be coverage all new elements.

[4.4.2] Four Core Elements of Retail Marketing Strategy

Figure 33: Four core elements of a marketing strategy

1. Target

JSXCL retail marketing strategy is covering both domestic market and foreign markets.

2. Sell

JSXCL is produce excellent silk fashion at an affordable price; also products are involved Chinese traditional concept with recently catwalk trend.

3. Channel

Franchise Stores, department stores, and warehouse stores are three mainly channels to enter retail markets.

4. Offer

JSXCL will to imitate ZARA Vertical Mode; JXSCL’s products are from manufactory into stores to face consumers, reduce intermediate links.

[4.4.3] Domestic Retail Marketing Strategy

JXSCL to open the domestic market is extremely important to get rid of dependence on the export market. Domestic marketing strategy must be to integrate really demographic-economic environment, technological-natural environment, and social-cultural environment. Moreover, company also needs to make the pre-product launch market research and post-product launch market research.

[4.4.3.1] Use the Marketing Theory of 4Ps in Domestic Retail Market

Marketing Theory of 4Ps is help JXACL around the target consumer and helps articulate the whole marketing strategy cycle from analysis and planning to implementation and control stages. (Kotler and Armstrong, 1994)

35


Figure 34: Defining the Business- the start of Market Strategy

1. Product-Customer

JXSCL is according to the domestic market trend to develop products. At the same time, through improve products variety, quality, design, features, brand name, packing, sizes, services, warranties, and uniqueness to increase added-value.

2. Price-Cost

JXSCL is abide by the consumption patterns of domestic market, then to develop the products of suitable domestic market consumption price, discounts, allowances, payment, period ,and credit terms.

3. Place- Convenience

Retail distribution channels must are diversify; wide range to contact customers in online market and brick and mortar market. Furthermore, JSXCL needs to build related warehouse, inventory, and transport places to aid retail distribution channels; and offer free deliver, exchange, and return services allowing customers to enjoy the convenience.

4. Promotion-Communication

JXSCL should be to use a variety of promotions to stimulate consumer, like advertising, sales force, relations, and direct marketing to attract consumers to boost sales. In addition, JXSCL is needs more active communication with customers, looking for win-win sense.

[4.4.4] Distribution channel strategy

[4.4.4.1] Vertical Chain Process Cycles

Either domestic markets or oversea markets, JXSCL would be to use vertical chain mode to finish all business process rely itself.

Vertical Chain Mode: JXSCL---Procurement Cycle ---Manufacturing cycle---Replenishment Cycle---Customer Cycle---Consumption Cycle ---End

[4.4.4.2] Mode of Retail Channel

[4.4.4.2.1] E-commerce Retail Channel

“By using B2C commerce they can instead showcase all of their products on the internet which reduces the cost of transaction. B2C also allows their customers to better access information about different product and sellers.”(Different Businesses, 2011) Compared with mass upfront investment to enter the brick and mortar retail marketing, e-commerce platform to enter the retail marketing is fast and cheap. Indeed, e-commerce should is first step for JSXCL to enter retail markets; through e-commerce to obtain consumers feedback and real markets information. EBay and self-website both are suitable to operate online

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markets. But just e-commerce cannot to fulfill silk giant JXSCL, so JXSCL must go into the brick and mortal marketing, and build more distribution of retail.

[4.4.4.2.2] Brick and Mortar Retail Channel

The company image is also built by the store image

----Driessen, E., 2005

In brick and mortar retail markets, JXSCL needs to according to different market characteristics and consumer habits create a different retail channels. For example, most orient consumers thought luxury brands must be opening independent franchise stores, and middle brand and fast fashion would be operating in department stores. On the other hand, western consumers were not agreeing this thought. JSXCL is needs according different retail markets to decide retail distribution channels.

Table14: Analysis of the retail channel

Suitable Area

Difficulty of the operation

Seasonal Upfront investment

Operational and management of risks

FranchiseStores

Domestic/ Overseas (European Union, North American and East Asian)

Hard None Mass investment rather domestic or overseas

Higher risk of operational and management

DepartmentStores

Domestic/ Overseas (European Union, North American and East Asian)

Medium None If Same size, investment less than Franchise Stores

Higher risk of operational and middle risk of management

WarehouseStores

Domestic Easy Yes Less Middle risk of operational and easy of management

[4.4.5] Global Retail Marketing Strategy

For a company without any experience about international retail marketing, to enter the international retail market is undoubtedly stringent. JSXCL lacked international market data and retail channel; also needs to face many limitations from the foreign market.

[4.4.5.1] Push and Pull Factors of Global Retail Marketing Strategy

Push and Pull factors have emerged as an important method for interpreting retailers’ motives for expanding into foreign markets. ----- Hines,T. 2007

Table15: Push and Pull factors of global retail marketing strategy

Push PullGlobal Retail Marketing

1. Domestic Marketing2. Consumers Recognize3. Reputation of Brand

1. Update management2. Update service3. Product Structure

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“Retailers are pulled towards a foreign market and/or are “pushed” out of their home market in order to further their growth objectives” (Hines,T. 2007) JSXLC into the global retail markets and obtain recognized by international consumers, which also is very conducive to the promotion of the domestic market.

[4.4.5.2] Target Market of Global Marketing

United Kingdom, United States, and Japan are best places of JXSCL to join global retail markets, because that three countries have plenty consumers of silk products, also are stable political and economic environment.

[4.4.5.2.1] Department Stores

JSXCL should be to cooperate with local department stores to become their supplier. As a supplier, JSXCL can to use sales network of partners, also is reducing difficult to manage. JSXCL is lack brand reputation and loyalty consumers group, so it cooperates with upscale department stores or traditional department stores is a development shortcut, also such cooperation is lower business risk than franchise stores.

Table 16: Possible partners in the United Kingdom retail market

Name of Department stores

Number of Stores

Type of Departments Stores

How to Cooperation

Require to Supplier

John Lewis 32 stores throughout England, Scotland & Wales

traditional department stores

Sent product information to the John Lewis Partnership, waiting response

Responsible Sourcing

Debenhams 160 stores traditional department stores

Contact buyer group or Debenhams Retail

Supplier Code of Conduct

Selfridges &Co 4 stores upscale department stores

Contact the relevant Buying and merchandising department

Currently Stocks/Offering Exclusivity to Selfridges/Price Range/Brand Sits Within the Market

In United Kingdom market; Selfridge &Co is most laborious to cooperate, also it just operating 4 stores. Debenhams has most widely sale net, but its market positioning more close youth consumers. Therefore, JSXCL should be selected John Lewis to cooperate.

Table 17: Possible partners in the United States retail market


Number of Stores


How to Cooperation

Require to Supplier

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Macy's over 800 stores in the United States

mid-to-high range department stores

Contact Macy's Fashion Office or Macy’s Open Call

Vendor and SupplierCode of conduct

J.C. Penney 1,107 department stores in all 50 U.S. states

mid-range department stores

Provide either Design-Related or Construction-Related Products and Contractor’s Qualification Statement to Supplier Department

Supplier Certification

Kohl’s 1,067 stores in 49 states

family-focused, value-oriented, specialty department stores

Contact Kohl's Connection

Kohl’s Terms and Conditions

Compared with British and Japanese department stores, the American department stores chain is larger. Thusly, in future, the U.S. market is still the JSXCL first target market.

Table 18: Possible partners in the Japan retail market


Number of Stores


How to Cooperation

Require to Supplier

Takashimaya 18 stores in Japan

up-scale department stores

Contact Takashimaya Headquarters

Oversea Supplier Certification

Isetan 6 stores in Japan


Contact Sales Department

Supplier Certification

Marui 24 stores in Japan

women's fashion and accessories, which are aimed at the 25-35 age range

Subsidiary SKU (stock keeping-unit)

Mitsukoshi 16 stores in Japan


Contact MitsukoshiHeadquarters

Oversea Supplier Certification

“Japan often has been criticized by foreign governments or companies on the ground that in Japan there exist various non-tariff barriers which are too high to clear.”(Hanamizu,Y., 1990) In fact, Japanese department stores are very troublesome to enter, because the Japanese department stores have strict management for the suppliers. Almost all department stores are requiring supplier must obtain supplier certification.

[4.4.5.2.2] Franchise Stores

“The franchise store is absolutely the key to the brand”

-------Tangate, M, 2005

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In global market establish franchise stores, JXSCL must to build joint ventures in target country. JXSCL to build franchise stores needs to invest a large amount of money, so company should be to find collaborative agreement.

JXSCL can to establish franchise stores in Oxford Street, Regent Street, and Piccadilly Street of United Kingdom; and Fifth Avenue and Michigan Avenue of United States.

Figure 35: Possible Franchise Stores positions in Oxford Street and Regent Street

Through Analysed Figure35; purple circle 5 is closing Oxford Circus is a best position. United Colours of Benetton, 3 Store, Pandora, The Orange Shop, Vision express, J-D,Surprise Surprise , Regent Hall, Ernest Jones, Esprit,Carpisa, T-mobile, Grafunkel’s , TTTForeign Exchange Crop, Skechers, McDonalds, Accessorize, and Tie-rack about 16 stores are occupying in this position. Considered stores size and business conditions; Skechers and Vision express stores are more suitable for takeover of JSXCL.

Figure 36: Possible Franchise Stores positions in Fifth Avenue

Heartland Brewery store and Duane Reade store both are Ideal location for Franchise Stores of JSXCL. Heartland Brewery is located in the Empire State Building, which is prestigious mark of United States. If JSXCL could be successfully purchased this location to build franchise stores that would be extremely helpful to spread reputation of JSXCL.

5. Conclusion

Chinese is having huge advantage in the silk industry. But in past three decade, Chinese silk industry still was concentrated on export low value-added products that need a large number of raw materials and labors, but received low profit margins. Nowadays, as lasting increase raw materials and labours costs let this mode also is very difficult to maintain.

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JXSCL as a leader in Chinese silk exports industry, its success was relied on cheap raw material and labors costs. But now that the objective conditions of production had changed, so JXSC was needed to change its market strategy; from the export outsourcing market to enter fashion retail market; from low value-added products to high value-added products; JSXCL must be improve its every tiny aspects, which will guarantee JXSCL can obtain success in new market.

Consumers are most important part of new market strategy, so it must be first target to analysis. Consumers’ analysis would be to decide JSXCL brand and product strategy. In brand aspect, JXSCL needs an easy to identify trademark, also this trademark must has directly relate with enterprise culture. Mulberry leaf is represent the enterprise culture and suitable the popular philosophy of environmental protection. Meanwhile, JSXCL enter retail market, it must be immediately to enhance its brand awareness. In design aspect, current catwalk is best source of inspiration. JXSCL can gain popular elements and fashion trend from London, Milan, New York, Tokyo, and Paris; then popular elements to mix Chinese tradition embroidery is a trump card to conquer the global retail market.

Enter retail market is core part of dissertation; JSXCL should be joint development domestic retail market and global retail market. E-commerce, department stores, and franchise stores are three specific mode of operation. JXSCL needs according the actual market conditions to finish that last step of whole strategy.

6. Appendices

A. Appendix 1 ----Research Design

Dissertation is standing in actual situation of Chinese silk industry.

First step is understand and research a whole operates and survives environment of Chinese silk industry, to catch industry features, marketing statistic, and secondary data of Chinese silk industry .Then according feature and marketing statistic to obtain existing advantages and disadvantages of industry, completion of the macro-analysis of the Chinese silk industry.

Second step is deeply to research target company---JXSCL. Through SWOT analysis to obtain specific strengths, weaknesses, opportunities, and threats of research object. Follow,

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Interpretation of the company's current marketing strategy and detailed reading of the company's annual stock report to know currently company situation; then to summarize a series of existing management issues.

Third step is according to the existing management issues of JXSCL; to design a visual analysis that included consumer analysis, brand strategy, product strategy, and retail market strategy. Visual analysis need to integrate successful experience with other fashion companies; also according to the JXSCL own characteristics and realities to design new marketing strategy to solve management issue. Feasibility is first principle of new marketing strategy, therefore all research and analysis is standing in real example and secondary data.

Finally, make sure visual analysis is providing feasibility answers for all management issues; also make sure all new strategies are correspond current market conditions, the overall environment, and JXSCL operating areas.

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Peng, N., 2010. Raw silk price hits 15-year high. China Daily, [online] (Lasted updated 15:46 21th May 2010) Available at :< http://www.chinadaily.com.cn/bizchina/2010-05/21/content_9879387.htm> [Accessed on 16 June 2010].

Trading Economics.com. 2011. China Inflation Rate Rises to 5.5% in May. Trading Economics, [online] (Lasted updated 10:52 14th June 2011) Available at :< http://www.tradingeconomics.com/china/inflation-cpi>[Accessed on 16 June 2010].

Ogilvy, D., 2004.Confessions of an Advertising Man. London: Southbank.

Hines,T. and Bruce,M.,2007.Fashion Marketing. 2nded.Elsevier: Oxford.

Landor, W.,Landor History. [Online] Available at: <http://www.landor.com/> [Accessed 10 July 2011].

Baron, P.,2008. Business and the organisation. Chester: Pearson.

Chow, D., 2002. Primer on Foreign Investment Enterprises and Protection of Intellectual Property in China: Berlin: Springer publishing.

Collins,L. Stevenson,M.,1995. Macclesfield the Silk Industry.Chalford: Chalford Publishing Company

Sott, P., 1993.The book of silk. London: Thames and Hudson Ltd.

Erdem, O., 1999. Consumer values and the importance of store attributes. International Journal of Retail &Distribution Management., 27(4), pp.137-144.

Campbell,D. and Lafili,L.eds.,1990.Distributorships,agency and franchising in an international arena:Europe, the United States,Japan and Latin America. Boston: Kluwer Law and Taxation Publishers.

Tungate, M., 2005.Fashion Brands: Branding Style from Armani to Zara. Great Britain: Kogan Page Limited.

Driessen, E., 2005.Message communication in advertising: Selling the Abercrombie and Fitch image. Journal of Undergraduate Research, VIII, pp.4.

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Table of Content

Table 1: Top 10 Cocoons Producers and their percentage of global total in 2005

Economic and social department., 2011.Major food and agricultural commodities and producers; Selected cocoons, [online] Available at:<http://www.fao.org/es/ess/top/commodity.html?lang=en&item=1185&year=2005>[Accessed on 16 June 2010].

Table 2: 2011January-February silk garments export market statistics

Customs of China., 2011. 2011 January-February silk garments export market statistics, China National Silk Import-export Corporation, [online] Available at:<http://www.chinasilk.com/news.aspx?ID=635>[Accessed on 16 June 2010].

Table 3: 2011 January-February silk garments export market statistics--- (Marked increase in regional and national)

Customs of China., 2011. 2011 January-February silk garments export market statistics (Marked increase in regional and national), China National Silk Import-export Corporation, [online] Available at:<http://www.chinasilk.com/news.aspx?ID=635>[Accessed on 16 June 2010].

Table 4: SWOT Analysis JXSCL

Everbright Securities Co.,Ltd.2009.Initial Public Offering prospectus of Jiaxin Silk Crop Ltd (Draft Report),Shanghai: Everbright Securities Co.,Ltd.

Table 5: Revenue structure of JXSCL


Table 6: Costs structure of JXSCL


Table 7: Exchange rate losses of JXSCL


Table 8: Theory 6W and 6O --- Analysis Consumers action, aim and style

By Author Survey

Table 9: Consumer of Influences

44


By Author Survey

Table10: Some of the classic of brand attributes

Hines,T. and Bruce,M.,2007.Fashion Marketing. 2nd ed. Elsevier: Oxford.

Table 11: Brand Identify

By Author Summary

Table 12: Product development form

By Author Survey

Table 13: Four steps of product development

By Author Survey

Table14: Analysis of the retail channel

By Author Survey

Table15: Push and Pull factors of Global Retail Marketing Strategy

By Author Survey

Table 16: Possible partners in the United Kingdom retail market

By Author Summary

Table 17: Possible partners in the United States retail market

By Author Summary

Table 18: Possible partners in the Japan retail market

By Author Summary

List of Illustrations

Figure1: Continuation of the millennium the Silk Road

Keren, S. 1998.Camel Caravan Silhouette, Silk Road, China.[Photograph] Available at: <http://www.allposters.co.uk/-sp/Camel-Caravan-Silhouette-Silk-Road-China-Posters_i4154041_.htm> [Accessed 04 July 2011].

Figure 2: Map of Silk Road

Scott, P.,1993.The book of silk. London: Thames and Hudson Ltd.

Figure 3: Chinese Silk production of systematization in the Qing Dynasty

Vainker, S., 2004. Chinese Silk A Cultural History. London: The British Museum Press.

45


Figure 4: Chinese embroidery in silk garment

Sott, P., 1993.The book of silk. London: Thames and Hudson Ltd.

Figure 5: Silk exports of China in 2010

Curran, L. 2010.The financial crisis: impact on key clothing markets and suppliers. [Photograph] Available at: <http://www.emeraldinsight.com/journals.htm?articleid=1886279&show=html> [Accessed 04 July 2011]

Figure 6: Chinese biologists through Gene Recombinant Technology, succeeded in silkworm can be produced colour–silk

Ninghua,S., 2010 China Silk City. [Electronic print] Available at<http:// www.chinasilkcity.com/silk/list1.asp?id=884&type=2> [Accessed 18 June 2011]

Figure 7: China’s inflation rate 2009-2010

HKTDC.2010. Mounting price pressure on China exports. [Photograph] Available at: <http://www.hktdc.com/info/mi/a/ef/en/1X06XKRL/1/Economic-Forum/Mounting-Price-Pressure-On-China-Exports.htm > [Accessed 04 July 2011].

Figure 8: China Purchasing Price index of Raw Materials, Fuels and Power

HKTDC.2010. Mounting price pressure on China exports. [Photograph] Available at: <http://www.hktdc.com/info/mi/a/ef/en/1X06XKRL/1/Economic-Forum/Mounting-Price-Pressure-On-China-Exports.htm > [Accessed 04 July 2011].

Figure 9: Increased labour costs in China

Collins,M.,2010.China’s workers agitate for their rights.[Photograph] Available at: <http://www.fidelity.com.au/insights-centre/investment-articles/chinae28099s-workers-agitate-for-their-rights/ > [Accessed 04 July 2011].

Figure 10: Trademark of JXSCL

JXSCL’s website., 2011 Official website.[electronic print ]Available at<http:// http://www.jxsilk.cn/>[Accessed 18 June 2011]

Figure 11: Main Products of JXSCL

JXSCL’s website., 2011 Official website.[electronic print ]Available at<http:// http://www.jxsilk.cn/>[Accessed 18 June 2011]

Figure 12: Stock market performance of JXSCL

Finance, Sina., 2011 Stock market performance of JXSCL. [electronic print ]Available at <http://finance.sina.com.cn/realstock/company/sz002404/nc.shtm> [Accessed 18 June 2011]

Figure 13: Women Blouse of JXSCL

Anonymous., 2011 Jin san ta.[electronic print ]Available at<http:// http://www.jstsilk.cn/>[Accessed 18 June 2011]

Figure 14: Women Blouse of ZARA

Anonymous., 2011 Zara web app.[electronic print ]Available at<http://www.zara.com/webapp/wcs/stores/>[Accessed 17 June 2011]

46


Figure 15: Product’s Details of JXSCL

Anonymous., 2011 Jin san ta.[electronic print ]Available at<http:// http://www.jstsilk.cn/>[Accessed 4 June 2011]

Figure 16: Product’s Details of ZARA

Anonymous., 2011 Zara web app.[electronic print ]Available at<http://www.zara.com/webapp/wcs/stores/>[Accessed 13 June 2011]

Figure17: Brand Identity -Psychology of Advertising: the Subliminal Persuasion

Lakhani, D., 2008.Brand Identity -Psychology of Advertising. [Photograph] (Subliminal Persuasion:British Library)

Figure18: The Image of Jinsanta Trademark

JXSCLOfficial Website.,Brand Trademark.[electronic print ]Available at<http:// http://www.jxsilk.cn/>[Accessed 18 August 2011]

Figure19: Three Towers in Jiaxin City

Dore, H.,1915. Three towers in Jiaxin. [Photograph] (Researches Into Chinese Superstitions 1915: British Library).

Figure 20: Trademark of Mulberry Company

Mulberry Official Website.,Brand Trademark.[electronic print ]Available at<http://www.mulberry.com/>[Accessed 11 August 2011]

Figure 21: Mulberry Leaf as Trademark

Konoval,I., Mulberry leaf isolated on a white. [Electronic print] Available at: <http://www.123rf.com/photo_5198057_mulberry-leaf-isolated-on-a-white.html > [Accessed 15 August 2011].

Figure 22: Strong and rugged with Levi’s

Anonymous., Levis Advertisement.[Electronic print] Available at: < http://us.levi.com/home/index.jsp> [Accessed 2 August 2011].

Figure 23: Confidence and elegant with Giorgio Armani

Anonymous.,Giorgio Armani Advertisement. [Electronic print] Available at: < http://www.giorgioarmani.com/ > [Accessed 9 August 2011].

Figure 24: Design Inspiration from London, Paris, Milan and New York Fashion Week

Anonymous.,London,Paris,Milan and New York Fashion week labels.[Electronic print] Available at: < http://www.WGSN.com/ > [Accessed 1 August 2011].

Figure 25: More vivid colours by using in silk products; from left hand are John Richmond, DSquared, ErmannoScervino and Z Zegna

Anonymous., silk products. [Electronic print] Available at: < http://www.wgsn.com/content/wgsn/unifiedsearch.html?q=SILK&tags=&t=all&_charset_=utf-8 > [Accessed 15 August 2011].

Figure 26: Diverse Printing in silk material

47



Figure 27: Pure Colour and Natural Colour Silk Garments; from left hand is Salvatore Ferragamo, Jil Sander and D&G


Figure 28: Accessories and Embellishment on Silk Garments; from left hand is BottegaVeneta, John Richmond, Gucci and D&G


Figure 29: Stripes Design in Silk Garments; from left hand is Paul Smith, DSquared


Figure 30: Embroidery design in silk garment and hat; from left hand are Jean Paul Gaultier, Chinese Tradition Embroidery, and Armani Collzeoni.


Figure 31: Silk Scarve

Anonymous., silk products. [Electronic print] Available at: < http://www.wgsn.com/content/wgsn/unifiedsearch.html?q=SILK&tags=&t=all&_charset_=utf-8 > [Accessed 18 August 2011].s

Figure 32: Classic Package of Fashion Industry

Anonymous., package . [Electronic print] Available at: < http://www.wgsn.com/content/> [Accessed 7 August 2011].

Figure 33: Four Core Elements of a Marketing Strategy

Lyon,E.,Using Segmentation to Develop Your Marketing Strategy.[Electronic print] Available at: < http://sparxoo.com/2009/05/27/using-segmentation-to-develop-your-marketing-strategy/> [Accessed 18 August 2011].

Figure 34: Defining the Business- the start of Market Strategy

Berthon, Jean-Paul., Defining the Business- the start of Market Strategy.[Electronic print] Available at: <https://blackboard.soton.ac.uk/> [Accessed 19 August 2011].

Figure 35: Possible Franchise Stores positions in Oxford Street and Regent Street

Anonymous. Oxford Street,. [Electronic print] Available at: < http://www.streetsensation.co.uk/oxford/os_intro.htm > [Accessed 19 August 2011].

Figure 36: Possible Franchise Stores positions in Fifth Avenue in New York

48


Anonymous. Fifth Avenue,. [Electronic print] Available at: <http://newyorkcity2005.web.infoseek.co.jp/information/maps/5thavenue-dtl.html > [Accessed 19 August 2011].

B. Other appendices

(1).Principal of new 7S

Stockholder satisfaction, Strategic soothsaying, Speed, Surprise, Shifting the rules against the competition, Signaling strategic intent, and Simultaneous and sequential strategic thrusts

(2).Brand Positioning Statement

A brief description of the targeted consumers in terms of some identifying characteristics, such is demographics and psychographics (activities, interests, opinions). These targets characteristics are typically selected on the basis of category and brand usage.

(3).Product Process

STEP 1 Prepare (Business Objective, Research, Information Gathering, Stakeholder Interviews)

STEP 2 Analyse (Business Analysis, Brand Analysis, Target Analysis, Competitive Analysis )

STEP 3Define (Objectives, Differentiation, Credibility, Personality)—Brand Positioning Statement

STEP 4 Implement (Communication—Internal/External communication Tactics-Measurement)

STEP 5 Create (Creative Development)

49


(4).Brand strategy needs to be viewed from three perspectives:

A customer analysis (A customer analysis can productively involve an analysis of customer trends, motivations, segmentation structure, and unmet needs)

A competitor analysis: Competitor analysis looks at the brand image/position and strengths and weakness of the major competitors

A self-analysis: An important input to the development of a brand identity is a careful self-analys is of one’s brand and organization.

(5).Brand identity consists of twelve dimensions organized around four perspectives:

Brand as product (product scope, product attribute, quality, uses, users, country of origin)

Brand as organization (organizational attributes, local customer relationships)

Brand as a person (brand personality, brand customer relationships)

Brand-as symbol (visual imagery, brand heritage)

(6).B2C, C2C, B2B New advertising methods

Business-to-Customer promotions: mailers such as text/emails are sent to customers on behalf of brands (Insight department).

Customer-to-Customer advertising tool for direct and online media - early adopters/taste-makers, (planning depart), one person in 10 influences the choices of the others.

Business-to-Business bigger budgets – less correspondence events organization to create channels to open up opportunities for dialogue - (heavy role of Insight and planning)

(7).Marketing Mix

Marketing (The management process responsible for identifying, anticipating and satisfying customer requirements profitably)

Marketing Mix (Combination of the four controllable variables of Product, Price, Place ,and Promotion that ate essential to define and fulfill a target market )

Marketing Communications Mix (Advertising, Personal Selling, Sales Promotion, Direct Marketing and Public Relations)

(8).Ways to add value to a fashion brand

1. Design

2. Quality of Product

3. Brand

4. Distribution and availability

5. Price

6. Retail experience, including packaging

7. E-experience

8. Press coverage

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9. Peer usage/recommendation

10. Celerity endorsement/product placement

11. Advertising

(9).Competitive Advantage

Important: the difference delivers a high value benefit to target buyers

Distinctive: competitors do not offer the difference, or your brand can offer it in a more distinctive way

Superior: the difference is superior to other ways that customers might obtain the same benefit

Communicable: it is possible to communicate the difference to customers

Preemptive: competitors cannot easily copy the difference

Affordable: the customer can afford to pay the difference

Profitable: the company can afford to introduce the difference profitably

(10).Strategic Marketing and Design Management-Opportunities for design in the context of marketing

1. To start a company –Logo

2. To launch a new product-concept development and new product development

3. To launch a brand –name development and graphic design

4. To increase market share-web and packaging design

5. To regain market share-redesign

6. To diversify into a new market- product

(11).4ps—Brand

(Loyalty, association, quality, awareness, assets) ---brand equity—brand value

(12). Pricing Decisions

(Internal Factors: Marketing Factors, Marketing Mix Strategy Costs, Organisation for Pricing/External factors: Nature of the market and demand Competition Environmental Factors)

Internal Factors/Marketing objectives, Marketing Mix Strategy

Internal Factors 2: Costs/Fixed Costs, Variable Costs, Total Costs

External Factors 1: Market and Demand

(13) Brand Research----A Brand Is More Than a Product

51


(14). Brand scorecard: Integrated brand planning and controlling process

(15).Marketing Communications Mix

(16) .Target Audience

52


(17).Brand Identify Prism

(18) The Process of Competitive Advantage

(19).Compare: The Product Life Cycle

53


(20).Client

(21). Brand Future

(22).How We Buy In Practice: Male vs. Female Traits

54

CLIENT

Account planning

Account team: director,

manager and executive.

Creative team Media buying and planning

Production department

Finance and Accounting


(23). Return the focus back to the consumer

(24).Individual Traits

(25). The Retailing Offer

55


(26).The New Marketing DNA

(27). Brand Identity Planning System

56

Documents

Dissertation - Copy