Busting at the seams

Company finds success by breaking away from the norms of the textile industry

For 45-year-old He Xihui, director of Zhejiang Phoenix Village Textile in Shaoxing county, Zhejiang province, the media reports detailing the downturn in China's textile industry this year are simply crying wolf.

Last year, the company's revenue reached 1.38 billion yuan ($220 million; 168 million euros). This year, its goal is 2.23 billion yuan.

"Many Chinese exporters regard the financial crisis in Western countries as bad news and have turned their focus to domestic markets. But I think the European and American markets offer huge opportunities to me," he says.

He says in the first nine months of 2012, revenue from exports out of Phoenix Village grew by nearly 30 percent on the same period last year.

"Compared with domestic markets, Western ones are more mature in terms of building brands and distribution channels. With more Chinese exporters taking a step back, I have more opportunities to build up my own brand," He says.

He says Phoenix Village is planning to open a wholly owned company in Spain by the end of this year to expand into European markets. The company in Spain will focus on selling products under Phoenix Village's own brand names.

"We are approaching two purchasing managers from Zara (a fashion line with headquarters in Spain), and if everything goes smoothly, they will be our chief managers in Spain," he says.

Although Spain's economy is mired in a deep recession, He is very confident in Phoenix Village.

"We are not competing on low prices, but on branding and services. Spain will be our first step in the European market. The company will later use its presence there to spread to other European markets," he says.

In the Chinese textile industry, which is mostly run in a traditional fashion, He runs his company using non-traditional means.

As early as 2001, Phoenix Village was the first company in Shaoxing to promise unconditional refunding on its fabrics. The textile industry has for many years stood by a "no refund" rule. The company also has an after-sales customer service department.

"The advantage of doing business in such a traditional industry is that we do not have the large amount of investment and experienced high-level talent that emerging industries have. That makes us fully aware of our risks and shortcomings, and we know where our competitors are," he says. "Until today, there are still people questioning our practice of unconditional refunding, but we can say that we are among the fastest growing companies here," says Shou Lumin, a deputy director at China Textile City, which is located in Keqiao, a township of Shaoxing county.

In 2006, He says sales revenue for Phoenix Village was only 120 million yuan, less than one-10th of 2011's figure.

He says his determination to launch an after-sales service comes from his belief that it creates more business opportunities.

"I'm sure risks are higher when clients are able to receive an unconditional refund, but it is also true that our sales channels have been broadened in the shortest time. Experienced businessmen will leave some part of today's profits for tomorrow," he says.

Sitting in his large and neatly decorated office, He sometimes quotes ancient Chinese strategists when he talks about his experience of doing business in the textile industry. But he admits he has not always been successful at Phoenix Village.

"The year 1997 was one of the most difficult for me. I ended my business in Beijing and was left with only the brand name of Phoenix Village. I was in debt for 10 million yuan at that time," he says.

The company director says it was a hiking experience that eventually taught him how to do business in the industry.

"I have acrophobia, and the height of the mountain scared me. My hiking partners told me not to look down but to focus on my steps. I suddenly had a vision that it was the same for doing business," he says.

In 1998, He left Beijing and located his new company in Shaoxing county because he believed that the nearer he was to the center of the industry, the greater the chances of success.

"You say cities like Beijing and Shanghai have larger connections with both suppliers and clients, but I say with the textile industry as its pillar industry, Shaoxing has more preferential policies for textile companies than any other city," he says. "And in today's information society, the location of the company no longer matters."

After the relocation, He spent two years developing new fabrics, a process that he calls "looking at his own steps".

"Product and service are the two most basic but important elements for a company and I want Phoenix Village to be good in both," he says.

Now, the company has 27 branches around China. He says six departments will be added to its exports division.

Another reason for the company's success is He's daring to hire new graduates, not experienced workers. He says he often hires college graduates for management level positions and vocational school graduates as technicians. He thinks companies have the obligation to cultivate qualified workers.

"Labor shortage has never been a problem to me because 60 percent of my workers are recruited directly from school," he says. Last year, He recruited 143 graduates. The total number of company employees is now more than 450.

"The flow of personnel is a natural thing in every company. People will leave the company if they think their value has been underestimated. A good employer will try to avoid this situation," He says.

The ultimate goal of He is to turn Phoenix Village into a Walmart-style company for the textile industry.

One of the first fabrics supermarket in China will open at Phoenix Village headquarters on Oct 24. "There are supermarkets for home appliances and groceries, so why can't there be one for fabrics? The whole idea is to provide a third-party platform for companies on every link of the industrial chain to communicate and do business," he says.

A total of 1,000 client companies and 120 supplier companies are expected to attend the opening ceremony of the supermarket.

yanyiqi@chinadaily.com.cn

(China Daily 10/26/2012 page18)