The principles of global business are changing and today standing alone among many similar placed companies in a market where customers are exposed to so much information and choices, is like committing suicide… Collaborations and synergies to offer customers more than just product, is the key to success. And a company which has seen growth on the back of this philosophy is ShangGong Europe (Holding) Corp., a wholly-owned subsidiary of ShangGong Group, China, the first state-owned company in the country with a foreign collaboration. The company’s success can be gauged from the fact that last year, ShangGong Europe registered a two-digit increase in sales income of sewing equipment when many other players in the segment struggled.
Driving the change is Zhang Min, who rose from the ranks to become the Chairman & CEO, Senior Engineer (Professor), SGSB Group Co., Ltd. in 2005. Zhang Min has also been on the Board of Directors at China Sewing Machinery Association and awarded the Title of National Outstanding Entrepreneur; indeed, the way the company has grown under his guidance is exemplary. Supporting him on this mission is Dietrich Eickhoff, Co-CEO, ShangGong Europe, and now also the member of the Supervisory Board, who is responsible for ensuring continuity of the strategic orientation of the company. Having held the position of Chairman and Board Member at Dürkopp Adler AG since 2011, Dietrich Eickhoff has a global vision with an approach i.e. German-quality all the way.
ShangGong Europe started its international journey of collaboration when it acquired Dürkopp Adler AG and became its majority shareholder in July of 2005. An aggressive company that understands the need of multi-brand presence in the market to be competitive, ShangGong subsequently went on to acquire Pfaff, KSL and Gemsy. Last year, the company also acquired a 26 per cent holding in H. Stoll AG, one of the most innovative and largest manufacturers of automatic flat knitting machines in the world.
In an exclusive interaction with the two, Deepak Mohindra, Editor-in-Chief, StitchWorld debates on the new strategy. Below are the excerpts of the debate…
How will the presence of such diverse brands under one identity – ShangGong Europe work as a strategy?
Zhang Min: The company has been working on business integration so as to create a special platform and facilitate the opening-up of international markets for ShangGong products and the penetration of Dürkopp Adler, Pfaff and KSL products into Chinese and Asian markets. That way we have market presence across the globe with distinct and diverse product/technology offerings.
But when I look at the brands under the SG umbrella and their market positioning, I feel confused as a customer…, there is too much difference in the technology levels. Dürkopp is about high-level automation and cannot be brought down to the level of Gemsy, so why not use the Dürkopp Adler name, which is a premium brand to uplift Gemsy and create a vertical platform rather than a platform which looks very horizontal in terms of technology…?
Dietrich Eickhoff: What you are saying is one strategy, but we are targeting another strategy wherein each brand retains its core competence and addresses market needs of different segments, instead of having a company that is only about high-end technology. The strategy is about segmenting our brands and customers and providing a common platform for easy movement along the options.
Zhang Min: We want to be a global supplier of technology in all segments. So, whatever the need is, we can offer the best solution in that segment at the best price for best value.
Why not have a common brand image maybe that of Dürkopp Adler, as it represents high-end reliable technology and carry it on all products instead of keeping multi-brand names, wherein the customer first has to understand the individual brands?
Dietrich Eickhoff: Some companies have tried to provide a very wide selection of technology options under one brand name, but it has not worked as each brand has a strong market association; for example, KSL is about robotics and if all of a sudden it starts selling basic stitching machines, its value at its original position will also get diluted. So, multi-brands work better. What is needed is shared synergy. Our branding strategy contains premium and commodity brands.
Zhang Min: That is why we are developing a common platform for marketing that will study customer’s requirements and suggest what best suits its needs. Like if it is a shoe or jeans line than Pfaff which will be at the forefront, similarly in heavy duty industrial sewing segment like automotive or technical textiles, it is going to be Dürkopp and for basic automated machines in lockstitch, chainstitch, overlock, etc., SG Gemsy is the key product.
What has been the experience of this strategy; is the customer reacting positively to this consolidation?
Dietrich Eickhoff: We have seen good growth and in Bangladesh alone we doubled our sales for Dürkopp. Asia is the place to be and now that we have the right strategy in place and the right thrust, we are really excited with the possibilities.
Zhang Min: The reaction of the customer has encouraged us to expand our portfolio and we have already added Stoll for knitting machines and now we are exploring technologies along the textile value chain. At the upcoming CISMA, you may see many more technologies under our umbrella.
Dietrich Eickhoff: We target to be the number one technology providing company worldwide, in terms of profitability, volume of business and market reach, and I am not talking only about those segments that we are already working in, our influence will be felt in technical textiles and in future technologies.
Zhang Min: Putting it very simply, the aim is to be the best in the sewing related industry and take the expertise of the DNA to the complete value chain in textiles. For that the focus is on accelerating R&D in shirts, suits, and trousers automatic sewing unit, new thick material machines, high-end electronic control, and continuing promotion of R&D, production and customer application of Industry 4.0 intelligent sewing equipment system.
It is already proven that sewing machines can be networked very similar to network of computers over internet. This will give unprecedented control of machine setting remotely, tracking machine downtime anywhere in the world, tracking sewing workers’ efficiency remotely, to name a few. What is your take on this? Does ShangGong Europe have any plan of development in this direction?
Zhang Min: It is certainly a direction, the company has continuously increased investment in independent innovation, and achieved a substantial increase in the number of patents applied for. We will always put ‘innovation-driven’ as the core power of development and continue to increase investment in innovation, cultivation of innovative talents in the future to accelerate the integration of Internet and networking technology and industry. The R&D will keep innovating in the direction of “automatic, modular, smart” and aiming at the new materials, new technology and new industrial areas in direction of Industry 4.0.
Dietrich Eickhoff: We have proven that robotics in sewing industry is not a dream anymore and we already have in place robot and programmed manipulator for large scale production of automotive interiors seats and bags. Now with industry being encouraged to move back to western countries and even China’s labour getting expensive, it is a real need even in standard products. The only challenge is the speed of the R&D and the cost performance ratio i.e. ROI for the end-user.