Interpretation Of PPG: Simultaneously Deified And Demonized

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

In the deified version of the story, PPG, a clothing Direct Selling Company that did not exist three years ago, is described as the perfect dream of all entrepreneurs.

From the discovery of the blue ocean by the talented founders to the annual revenue of over 1 billion yuan, the company can easily throw away all its competitors in only two years, and even YOUNGOR's (600177) traditional costume giant has to fall behind.

In the demonized version of the story, PPG's success story is a beach castle.

There has always been a subtle doubt about the quality of PPG's clothing. In recent days and even in some media, there are rumors that tens of millions of dollars of venture capital have been squandered under the aggressive market strategy of PPG.

The company is on the verge of bankruptcy. The so-called IPO listing is just a crazy idea of the management of the company.

After careful deliberation, PPG founder and CEO Lee (David Lee) decided to break the long silence and received an interview with the financial times in the afternoon of February 21st.

Rumors of capital chain

"The capital chain is broken?

It's ridiculous. "

Li Liang did not conceal his disdain when he heard the news.

In order to confirm his statement, Li Liang disclosed to the financial times a previously undisclosed news that PPG had invested in PE (private equity) three mountain investment company in the fourth quarter of last year, but shortly after that, the rumors of PPG's "capital chain break" were very noisy.

"We did invest in PPG last year.

As far as scale is concerned, I can only say tens of millions of dollars.

Wen Zhimin, vice president of San Shan investment company in Hongkong, confirmed on the phone.

San Shan investment is a private equity investment fund created by Zhu Rongji's proud disciple, former Hongkong Bank International President Li Shan, former Goldman Sachs Global President John Thornton (John Thornton) and another American financier Zheng Kaiwen (Kevin Czinger) who worked in Goldman Sachs.

Later, the reporter also confirmed to Wu Yunlong, another shareholder of PPG and the Chinese director of KPCB, the wind speculators.

In Li Liang's business logic, the external causes of PPG's success are divided into two factors: China's "world factory" status and huge demographic dividend, and the future of PPG will also be built on these two pillars.

Subversive

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

Unlike traditional clothing brands such as YOUNGOR, which own more than 1500 physical terminals in the country, PPG has never opened a physical store and has no physical counters in any shopping malls.

But this did not prevent the new brand from spreading rapidly in big cities.

Through advertising bombing in various local TV stations, print media, buildings LCD and the Internet, PPG quickly opened up beachfront positions in the shirt Market and took a firm step in just two years.

If PPG was still active as a challenger on the stage in 2006, its performance in 2007 would be enough to make any traditional costume tycoon feel ashamed.

"According to the figures we have obtained, the sales of shirts in PPG2007 have surpassed YOUNGOR."

Li Liang said.

In fact, from the first day in the field of vision, PPG, a typical "light company", has been constantly compared with YOUNGOR, the top ranked brand in China's clothing industry (000902).

Such extreme "weight" contrast is obviously very visual impact.

As a traditional clothing company with annual sales of about 1 billion yuan and profit margin of around 5%, YOUNGOR's touch touches every aspect of the industrial chain.

From cotton fields to cotton mills, printing and dyeing mills, manufacturing plants, logistics centers and even sales terminals, YOUNGOR is extremely squeezing its costs and gaining profits through its absolute control over the industrial chain.

The practice of "light company" on behalf of PPG is the opposite.

In the upper reaches of the industry chain, PPG outsourcing production to all garment factories with excess capacity (which is almost inevitable in China's garment industry), and logistics is outsourced to professional logistics companies such as home express, FedEx and so on.

For the lower reaches, PPG has built up a brand with a comprehensive advertising campaign and has been directly facing consumers through online and catalog sales, eliminating huge channel costs.

On the outskirts of Shanghai, a few white small buildings are all PPG's property.

Si Xinying, a brand marketing expert, believes that the success of the PPG model lies primarily in its right market segmentation.

Men's shirt is one of the most suitable products for online sales and catalogue sales.

Even in sales terminals, men's shirts are not allowed to try on, so there is almost no requirement for on-site experience, which makes men's shirts sell online like books.

In addition, PPG makes use of its own IT system and its inherent advantages in the "world factory" to create a fast response supply chain.

"We just want professional people to do professional things.

PPG will not and will not touch the manufacturing industry in the future. "

Faced with doubts about whether journalists will expand in the industrial chain, Li Liang said without hesitation.

Misread PPG

Because the business model of PPG is too popular, the other side of coin is rarely noticed: a necessary condition for the establishment of a business model similar to PPG is that it must adapt to the market with the fastest speed.

The biggest challenge comes from PPG's concept of "zero inventory".

Through the advanced IT system, PPG can regard the products of the OEM manufacturer's production line as mobile stock, thus the production cycle will be compressed for 10 days to 45-60 days.

However, during the clearance sale campaign at the end of last year, some of the PPG's little known problems were exposed.

It has been found that some discount shirts are 46, 47, 48 and 49, and the shirts worn by Asians are generally 40 or 41.

Such a size is obviously contrary to China's national conditions.

Another problem is the choice of colors.

Li Liang told reporters that in the United States, red, yellow and green trousers and other bright colored dates occupy about 10% of the market.

And when PPG launched similar products, he discovered that making script src=>