From civil servant to business guru

A Chinese entrepreneur has made a struggling manufacturing sector fit for success

When Chen Jianhua left his job as a civil servant 15 years ago to start a glove-making business, he never thought he would become the largest sports glove manufacturer and exporter in Jiaxiang county, one of the world's major sports glove production areas.

His Shandong-based Jining Zhongxing Gloves Group, which owns five subsidiary companies and a technology service center, now produces 10 million pairs of sport gloves annually, accounting for more than 10 percent of the county's total output.

About 80 percent of Chen's gloves are exported to more than 30 countries and regions, including the United States, Italy, Canada and Switzerland. The company's exports were worth $10 million last year.

"I really enjoy running the glove business," Chen says. "Like the girl who put on the red shoes in the fairy tale and couldn't stop dancing, you can't stop. You want to pursue one goal after another." This was how Chen explained his expansion of the business over the past 10 years.

The road to success, however, has been far from smooth.

After graduating from Shandong Industrial University in 1989, Chen worked for a local government department for several years under the influence of the Chinese tradition that "officialdom is the natural outlet for good scholars".

Frustrated by the slim prospects for promotion, he quit the stable job in 1988 and took charge of the previously state-owned Jining Zhongxing Garments Co, which was on the verge of bankruptcy due to poor management.

"When I came to the workshop, I was shocked to see that all the machines had been stopped and the workers were playing cards all day," Chen says. "The company left me a debt of 200,000 yuan ($33,000; 24,000 euros) and a batch of unsold clothes and gloves."

Chen urged the workers and his family to try every means to sell the stock. They held sales promotions at local temple fairs and even set up street stalls.

While his competitors stayed in Jiaxiang county waiting for orders to come in, Chen went out and chased them. He attended the China import-export fair in Guangzhou in 1999 with a large bag of gloves. With no money for a booth, he had to show the products near an elevator in the exhibition hall. Eventually he caught the attention of a US dealer, whom Chen calls Kenkye.

"Won over by our relatively attractive prices, Kenkye placed an order for 40,000 pairs of ski gloves," Chen says. "When we delivered the goods to him several months later, he gave us a bonus of $8,000 for fulfilling the order on time with high-quality products."

The success of the first overseas order encouraged Chen to develop his sports glove manufacturing, and he transformed the factory to suit those products.

With these efforts, Chen cleared all the debts and earned a profit of 700,000 yuan by the end of the following year.

According to the trend for reforming state-owned enterprises in China, the garment company was turned into the privately owned Zhongxing Gloves Group, with Chen taking over as its president in 2003.

Today, the group has established long-term partnerships with many world-renowned sports brands, such as Richlu of Canada, and Gordini and Kombi of the United States.

Chen attributes the group's rapid expansion to establishing a strict quality control system and cultivating a large number of skilled workers.

"The glove-making industry is a typical labor-intensive sector and requires lots of experienced workers," Chen says.

"Each ski glove needs to go through more than 20 production processes, including sewing, embroidery and fabric mending, most of which have to be done by hand."

To meet the growing demand for orders and overcome a labor shortage, Chen started to develop family workshops in neighboring villages in 2008. He was the first glove maker in the area to do this.

In addition to the 1,000 employees working in his factories, Chen now has 40 family workshops where more than 1,200 villagers do stitching, sewing and mending.

Zhang Yanxia, who is responsible for one workshop, hired more than 50 middle-aged women from her village to work in her two-story house in Tuanli town, which is about half an hour's drive from one of Chen's factories.

"A worker who is highly proficient on sewing machines can earn 2,000 to 3,000 yuan a month, much higher than farmers," says the 28-year-old, who makes a net profit of more than 100,000 yuan annually.

According to Shandong Provincial Bureau of Statistics, a farmer's annual per capita net income in the province was only 9,446 yuan last year.

Chen has strict standards for the quality of his products.

"Every day he sends people to bring us materials which have been well tailored and to check every glove we make, both manually and by using needle detection facilities," Zhang says.

Other glove makers copied Chen's methods and the Jiaxiang county soon blossomed into a worldwide center for manufacturing sports gloves. It is now home to more than 200 companies and 700 family workshops covering 85 percent of the local villages. The industry employs more than 50,000 people.

However, as dwindling overseas orders and increasing costs for raw materials and labor continue to erode profit margins, Chen is trying to boost sales by speeding up the creation of independent brands, and improving their design and technological qualities.

Provincial authorities have set up a 20-million-yuan public technology service and research center equipped with advanced design and inspection facilities. The move has helped the glove companies gain 20 invention patents and develop 30 new products, such as emergency rescue gloves, self-defense gloves, as well as high-temperature and radiation-proof gloves designed for firefighters.

Chen also keeps an eye on the emerging domestic market. Last year, his three self-owned brands targeted at the domestic market had sales revenue of more than 4 million yuan. He expects this to reach 10 million yuan this year.

"As Chinese people pursue a better quality of life, more and more of them will be involved in regular outdoor sports in their spare time, such as skiing, mountaineering, and cycling," Chen says. "That will provide a huge opportunity to domestic sports glove makers."

Statistics from the China Ski Association show that there are more than 300 ski resorts in China, which attract about 3 million skiers a year. The number is expected to reach 10 million in five years.

To further promote the sector, Jiaxiang Glove Industrial Association was set up in 2006, with 101 local member companies. Chen was elected its first chairman.

Every year he organizes member companies to attend international trade activities, including the China Import-Export Fair and the Munich Fabric Start, a bi-annual trade show for global manufacturers and suppliers of fashion fabrics, accessories and garments.

Chen is aware that to meet the challenges of a volatile international business he and his peers must strive to improve their technological capacity and produce more personal and higher value-added products, rather than merely waging price wars.

With this principle in mind, he spent more than 500,000 yuan on a set of computer-aided design facilities, which offer technological supports to local companies. His research center also provides free training and inspection services to all the glove manufacturers and family workers in the county.

Chen and the association members are busy with the construction of a 33.3-hectare glove industrial park, integrating production, exhibition, trading and research.

"We hope Jiaxiang will not only be an original equipment manufacturer for foreign brands, but also a global trading, research and development center for the sector in the future," Chen says.

wangqian2@chinadaily.com.cn

(China Daily Africa Weekly 12/13/2013 page19)