Securities Times reporter Li Yingquan
Ten years ago, Sofia was just one of the many furniture factories. The annual revenue was only 200 million yuan and the profit was only 20 million. At that time, Jiang Yan did not expect that Sofia would become a household name nowadays, and the company would become a dazzling star in the capital market.
In 2011, Sophia went public, and many people learned the concept of “custom furniture†from the company's prospectus for the first time: the original home can also be “customized†like this! At this time, Jiang Yan has been quite emboldened. The rapid growth of three consecutive years has allowed him to appreciate the enormous energy of customized consumption.
In 2017, the market was called the first year of the explosion of custom furniture, including a number of custom furniture companies such as Ou Pai Home, Shang Pin Zhai, Piano, etc. The media reports were overwhelming and institutional research was coming.
At this time, Jiang Yan was determined to be idle. Sophia, the capital market, has already completed five major production bases and information layout. Compared with the 2008 data, Sofia's revenue increased by nearly 30 times in 2017, net profit increased by about 40 times, and the compound growth rate of 9 years was close to 50%.
Correct choice
Jiang Yan, who graduated in 1984, first participated in the work of state-owned enterprises, and then moved to several trading companies. In 2003, he officially started his own business. At that time, he chose the furniture business.
“Floor, cabinet... everything. I felt that in addition to these, I could sell other products in the store, so I also made a wardrobe to increase some income. After a few months, I found that the wardrobe business is very good, even more than before. The product, so we focused on the sales of the wardrobe, but at the time did not think that the wardrobe can become such a large industry." Jiang Yan told reporters that after the opportunity to get involved in the wardrobe, the company even gave up cabinets, flooring and other products , to create a wardrobe brand. In 2017, Sophia's wardrobe business revenue reached 5.157 billion yuan, accounting for 84% of the company's total revenue, which is the company's most profitable business.
“It was my most correct choice to choose to make wardrobes instead of cabinets.†Jiang Yan said that the first-line cabinet brands had more than 600 stores nationwide. At that time, the wardrobe market, which was not eye-catching, became a "golden track" for Sophia to avoid fierce competition and have experienced rapid growth for more than a decade.
Capital assistance
In 2011, Sofia successfully landed in the capital market as “the first share of customized furnitureâ€. However, the significance of listing for Jiang Yan is not to pursue a surge in the value of one's own value, but to solve a very real problem: lack of money. "We have done 100 million from 0. It took 5 years. Before the listing, the profits made by the company were far from enough to invest in the funds needed. The development speed at that time is very slow now."
After the IPO raised 1.16 billion yuan, Sophia did not idle for a moment, and quickly rushed to the layout of the national production base. Today, the company has formed five production bases in Jiashan, Chengdu, Guangzhou Zengcheng, Langfang and Huanggang in “West, West, South and Northâ€, covering the five most intensive regions of the Yangtze River Delta, Southwest China, Pearl River Delta, Beijing-Tianjin-Hebei and Central China.
The help of capital has allowed Sofia to once again make a substantial leap. Up to now, the company's five production bases have been put into production, the average monthly production capacity of custom closets and their ancillary products reached 184,400, ranking first in the custom wardrobe industry, with an average annual capacity utilization rate of 85.6%.
In terms of sales channels, at the end of 2017, Sofia's whole house customization has opened more than 2,200 stores and more than 1,200 dealers. Sophia’s Secretary-General Pan Wenxi said that in 2017, the company opened a total of 518 new stores. In 2018, the company will speed up its expansion in stores, and it is expected to open 800-900 new stores.
Pan Wenzhao told reporters that Sofia has experienced three stages of development since its inception: from 2001 to 2006, the company was only a follower in the traditional furniture industry; from 2007 to 2011, the company concentrated on developing customized wardrobe business and became the industry leader; The 2011 IPO was a turning point, and the company began to cut into the manufacture of other custom furniture and moved towards the “big home†strategy.
Informatization layout
Into the Sophia smart factory, the reporter was amazed by the scene: in the highly automated workshop, the robotic arm swiftly swept, and the raw wood board completed a series of processes such as pressing, cutting, sealing and punching. Nuoda's factory is in sight, only a few workers are operating equipment, doing inspections, packaging and other work that must be done manually.
All of this efficient production methods have benefited from Sofia's long-standing commitment to information and automation. Since 2005, Sofia has set up an IT department to gradually electronically control production processes and quality control. In the second year of the listing, the company transformed the ERP system and put into production a flexible production line to further reduce costs and shorten production cycles.
Jiang Yan cited an example: In 2013, the company's operating income was 1.78 billion yuan. At that time, the company had more than 300 metering personnel, and they had to work overtime every night. Now, the company's revenue has exceeded 6.1 billion yuan. The number of personnel has been reduced to about 100 people, and there is no need to work overtime.
Not only that, Sophia has not let go of informational upgrades in sales. The company implements big data management for dealerships, perfects customer portraits, and provides personalized services. In 2008, there were 361 stores in Sophia, with an average sales of less than 500,000 yuan in a single store. After 10 years, Sophia had 2,275 custom-made wardrobe stores, with an average sales of 2.4 million yuan in a single store, an increase of nearly 5 times.
The construction of information technology is considered by the market to be the key to Sofia's leadership in the industry. Pan Wenzhao told reporters that thanks to the advancement of information technology, the company's delivery cycle has been shortened and the user experience has been greatly improved. In 2017, the average delivery time of the Sofia factory was around 10~12 days.
During the factory visit, the reporter noticed that the company has a line on each package of the product: "Leading every detail." Jiang Yan also emphasized the importance of product quality: "If you fight the output, fight the terminal, fight the price, do not make up your mind to make the product quality, and make the production supporting system solid, not the company, not the brand, but the brand. The entire Chinese wardrobe industry."
100 billion space
At the same time that Sofia has once again delivered a bright and colorful report to the stunning market, one question has been repeatedly asked, that is, the impact of the real estate industry on the company. Some people believe that the high-speed growth of the custom furniture industry is actually the dividend of real estate in the past ten years of savage growth. In the context of the continuous regulation of the real estate industry, Sofia's high growth may not be sustainable.
Jiang Yan said frankly that the company and the real estate development do have a close relationship, but it is not strictly positive correlation. “Real estate development is good, our business will naturally be good; but real estate will also encounter bad times, such as in 2009, 2013, 2014, all due to policy regulation, very depressed, but in our years The development is still very stable."
Jiang Yan believes that in addition to enjoying the dividends of new home construction, there are two major growth points for custom furniture:
On the one hand, the channel is sinking, and the fourth- and fifth-tier cities and the secondary decoration market are being cultivated. At present, the number of stores in the company's fourth- and fifth-tier cities has reached 52%. In 2017, the proportion of new home decoration customers decreased by 6 percentage points year-on-year, and the proportion of second-hand housing renovation continued to rise. Especially in key first- and second-tier cities, the proportion of second-hand housing renovation customers was close to 50%.
On the other hand, the space for the growth of the custom furniture industry comes from the replacement of traditional finished furniture. Nowadays, a large number of young people are pursuing individualization, hoping to tailor their own homes, and the trend of custom replacement of finished products is still spreading rapidly. According to reports, in the customer base of Sofia, the proportion of customers aged 25 to 35 accounted for 55%.
Pan Wenzhao told reporters that custom furniture has three incomparable advantages compared with traditional standardized furniture products: First, the space utilization efficiency has been greatly improved. At the beginning of custom furniture design, the size and shape of the furniture should be planned according to the size of the customer's room. Different from person to person, according to local conditions; Second, in the matching, the design can more closely match the overall perception and personalized preferences of the customer's room; third, customers can personally participate in the design process to achieve a unique experience of DIY.
Not only that, but the customization model is also a multi-win business model. For consumers, the advantages of personalized design and high space utilization have strong appeal; for enterprises, the customization model reduces inventory, improves profitability and anti-risk ability; for the society, the customization model has It is conducive to the realization of on-demand production, avoiding overcapacity, reducing wood waste, contributing to environmental protection and improving social benefits.
Jiang Yan said that the current penetration rate of custom furniture in the entire furniture market is still not high, and it is still in a stage of continuous explosion. “The cost of buying a wardrobe for a family may be more than that of an air conditioner. The Gree and the beauty of air conditioners can achieve a scale of 100 billion. Why can't we? Custom-made furniture for the future leading enterprises, it is likely to be Gree and the United States. This scale is close."
Whole house customization
Seizing the golden period of custom wardrobes, Sofia has gained momentum for sustained high growth. But what's interesting is that the cabinet business that was once abandoned by Jiang Yan was “snapped back†by Sophia three years ago. Not only that, but the company also cut into new products such as wooden doors, curtains, wine cabinets and tatami.
In this regard, Jiang Yan’s view is that the competition in cabinets has been fierce and has been developed in China for more than 20 years. But when an industry develops to a certain extent, there will be a lot of production resources and consumer resources can be extended horizontally. "The same is a customizable product. We have the production resources and service resources of the wardrobe. Why can't we do more diversified products such as cabinets, wooden doors and curtains?"
“As long as consumers have demand, we can grasp the original customers. Even if only 50% of the wardrobe customers buy cabinets or other products, the consumption of individual customers will increase, and the cost of acquisition for individual customers will decrease. This is a kind of Comprehensive utilization of resources.†Jiang Yan said that the whole industry is actually taking a diversified route, and the industry has also formed a concept called “full house customizationâ€.
Into the cabinet, the company has also adopted a different approach, neither to follow the Sofia brand, nor to create a brand new brand, but to cooperate with France's 1934 cabinet brand "Smi".
In Pan Wenzhao's view, Smy cabinets can maintain a certain independence and positioning with the Sophia wardrobe brand on the one hand; on the other hand, Smy's long history can also make consumers more trustworthy than the new brand.
Through three years of construction, Simi cabinets have opened more than 600 stores in China, forming a sales scale of more than 600 million yuan. The same is to achieve 600 million yuan from 0, when the Sophia wardrobe used nearly a decade.
Jiang Yan has confidence in the cabinet business. He believes that from the beginning of this year, the utilization rate of cabinet factories will further increase significantly, the price of products will become more and more competitive, and the growth of front-end sales will become more obvious. “In the next five years, cabinets, wooden doors and curtains will bring new growth points to the company.â€
Trust and sharing
For more than a decade, Sofia’s brand has become more and more loud, but the founder Jiang Yan has always kept a low profile. When I first saw Jiang Yan, I felt that he was more like a scholarly scholar, calm and without affinity.
In terms of leadership style, Jiang Yan advocated full decentralization. There are not too many strict systems in the company, but Jiang’s unreserved trust can mobilize everyone’s subjective initiative. In the eyes of the subordinates, Jiang Yan is very tolerant and willing to give everyone the opportunity to try and give, which also brings a strong sense of belonging and cohesion to the team.
What really makes employees full of fighting spirit, as well as the company's sharing culture. In 2013 and 2015, Sofia has implemented two equity incentive plans, covering 124 key employees for the first time, giving a total of 3% of the total share capital; the second time covering 600 employees and 100 dealers, shareholding plan More than 5% of the total share capital. Today, the company is implementing a third equity incentive covering 2,500 employees and 100 dealers.
The first two employees and dealers involved in equity incentives have already gained a lot in the company's stock price rise, which is the result of Jiang Yan.
“The premise of equity incentives is to be optimistic about the rapid growth of this enterprise. Now the company is on a high-speed development track. At this time, equity incentives can enable employees and distributors to share the dividends of corporate growth. Everyone is more diligent in making their careers bigger. If the company has ended high growth and enters the stable period and then makes equity incentives, it will be difficult for employees and dealers to make more money, and they will not be able to share the dividends of enterprise development.†Jiang Yan said.
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