In May 2011, the domestic razor industry began to enter the off-season (May to August), but for Feike founder Li Gaiteng, this was a good time to defeat his competitors. "We are preparing for a new round of actions." He told China Business Weekly.
This standing program aimed at proactively targeting competitors has been around for five years. In July last year, Feike reduced the prices of two models priced at more than 100 yuan to 39 yuan and 45 yuan respectively, and concentrated them on third- and fourth-tier cities. One of the models has a production volume that has increased from more than 70,000 to more than 1 million units. The result was that "more than a dozen razor companies in Zhejiang Province withdrew from key areas."
According to data provided by Li Gaiteng, Feike's sales reached 2.3 billion yuan in 2010, with an annual growth rate of more than 60%. When Li Gaiteng founded Feike in 1999, domestic brands such as Superman, Ding Ling, and Real Man had already completed their initial accumulation, and there were more than 100 local brands, large and small, across the country. Today, Feike is already the domestic razor brand with the largest sales volume, as well as the mid-to-low-end brand with the highest sales volume.
The reason why Feike is able to catch up from behind is partly due to the huge price gap between domestic and international brands. In the late 1990s, small commodity distribution centers such as Yiwu Market and Wuhan Hanzheng Street were the main sales channels for domestic brands. Through these distribution centers, products were distributed to third- and fourth-tier markets across the country. Due to backward technology, wholesale prices are usually below 20 yuan, and few products sell for more than 100 yuan. There are also a large number of manufacturers engaged in foreign trade business of processing supplied materials.
The domestic razor market is a clearly defined industry. The shaving products that really occupy the high-end department store channel (with special counters in shopping malls) are almost all foreign brands. Until now, razor products priced above 300 yuan have been dominated by foreign brands. In this market segment, brands such as Philips, Panasonic, and Braun regard each other as competitors. Domestic brands occupy the mid-to-low-end market priced below 300 yuan. Even if they are placed in adjacent cabinets in stores, the target consumers of domestic and foreign brands will hardly "collide".
In large and medium-sized cities in China, electric shavers are regarded as suitable gifts because they represent the physical maturity of men. Therefore, they are expensive. Even the cheapest product costs several dollars. One hundred dollars. The most eye-catching among them is Philips, which pioneered rotary shaving technology and broke the traditional reciprocating model. This quieter, higher-purity technology has immediately become a trend in China, and products that use this technology are expensive. At its peak, Philips' shipments accounted for 70% of department store channels in Zhejiang.
In 1998, 27-year-old Li Gaiteng felt the rapid growth of this market segment and wanted to open his own factory. Previously, he worked as the director of a razor workshop and also sold razor accessories for a period of time. But with a capital of more than 100,000 yuan, he could barely sell razors on a consignment basis. Drawing on his experience as director of a razor shop, he began researching rotary head technology. Eight months later, he successfully copied the first domestic rotary double-head shaver.
Although the technology is still very rough, Li Gaiteng's products have caused quite a shock in the Yiwu market. In fact, the "double-head rotary type" has been packaged as high-end enough. Li Gaiteng set the unit price of this product at 37 yuan, forming an attractive price difference with Philips products that often cost over a thousand yuan. In fact, even with the best knife net and battery on the market, Li can still earn 20 yuan from a single knife. In 1999, as soon as Feike was registered, demand for its products began to exceed supply.
With rotary technology, Li Gaiteng gradually set the price of his main products at more than 100 yuan. Trying to fully imitate foreign brands in product appearance has become Feike's top priority. The company's first razors, with silver plastic casings and soft curves, were launched a year after the company was founded. In Li Gaiteng's summary, beautiful appearance can quickly amplify the few technical advantages. This is a shortcut to find differences among domestic brands.
“Chinese consumers like fashion, as long as they can afford it.” Li Gaiteng said.
In 2001, electric shaver manufacturers were still enjoying the dividends of market expansion. Like other peers working hard in the Yiwu market, Feike's products are also in short supply, enjoying a 35% profit margin, and sales have begun to exceed 100 million. Li Gaiteng chose to develop terminal channels for consumers at this time.
This is a risky choice.
At that time, the layered agency system from provinces, cities to towns and villages was still strong, and factories had no chance to contact consumers. Feike doesn't even know how much it costs to build a nationwide consumer network, let alone the marketing expenses required to build a brand. There were many objections in the company, but Li Gaiteng insisted on his choice. He believed that "only in this way can we understand the demand, which is of great significance to product design and production capacity deployment."
Feike More than ten sales representatives were sent to Ningbo, Changshu, Wuxi and other places to look for opportunities to directly enter retail terminals. To be on the safe side, these are areas where the company's products are relatively popular, and Feike has a certain market reputation.
After several inspections, Feike chose supermarket chains as its main focus. This format, which would later change the way China retails, began to grow in 2002. Supermarket formats such as Hualian and Lianhua are busy opening community stores, while only Carrefour has begun to take shape in the hypermarket model. Even if it has not grown yet, they still have no idea about the razor products that were not originally in their purchasing plan. In order to win over a supermarket in Wenzhou, Feike even raised the price point for a single machine to 30 points.
But even if you enter a store, it will be difficult to do business without a good location and store image, and there will be a lot of back-end expenses. Dealers from all over the country are recruiting, and favorable conditions have been offered - dealers only have to undertake logistics and advance financing functions. The development of local channels is solely undertaken by Feike.
At the same time, Feike’s more than 30 original agents in Yiwu felt the danger of being bypassed and boycotted Feike. For a while, Feike’s sales volume in the agency channel dropped severely. Under huge financial pressure, Li Gaiteng still invested 5 million yuan in advertising on CCTV in the second half of 2002. "We didn't want to finish the 15-second commercial in one go, so we made three 5-second simple commercials to be broadcast in three time periods. We have been prepared not to make any money for three years." Li Gaiteng said.
The bad days did not last long. A few months later, Li Gaiteng found that the supply of products began to exceed demand, and Feike began to vigorously expand the production line. Facts have proven that the channels occupied by Feike are more in line with the spending habits of mid- to low-end consumers on personal care products than department stores. The high cost performance is also in line with the affordable selling point of "supermarket chains". Although Carrefour, which has already grown bigger, has repeatedly failed to conquer, Feike began regional cooperation with Wal-Mart in 2002 until it signed a nationwide contract with Wal-Mart in 2004. In 2002, Wal-Mart only opened 25 stores in China; by 2010, the number of Wal-Mart stores had reached 221 - Feike followed Wal-Mart and spread its products across the country.
To date, Feike has deployed more than 300 city management outlets and more than 20,000 sales terminals across the country. Among them, the promoters are trained by Feike itself in order to control the terminals in their own hands.
In 2003, the soaring sales volume began to make Feike's production lines unbearable, and the company reluctantly began to look for the possibility of outsourcing production. This prompted Li Gaiteng to have the idea of ??spinning off production - this would allow the company to focus more on R&D and channel construction. Flexible order-based production would also allow Feike to cope with changes in the market during the off-peak and peak seasons. Feike chose to send part of the molds and production processes to the processing manufacturers to express its sincerity in cooperation. Li Gaiteng promised that the factory's production profit could reach 10%.
Until around 2004, domestic manufacturers could still make good profits from agency channels and foreign orders, while Philips and Panasonic were still guarding their own counters in department stores and earning high profits. . But in the next two years, as the prices of raw materials rose again and again, those "big manufacturers" that were still hesitating about the need to build brands began to struggle to survive. By 2007, Feike's OEM manufacturers had expanded to 8. Just that year, the company also acquired five companies in the industry.
The subsequent financial crisis caused the closure of many domestic razor factories, and the domestic mid- to low-end market gradually became concentrated. The "price cleaning" led by Feike and other companies has also accelerated this process. So far, there are only a few domestic rivals competing with Feike at the national level, such as Superman and Mercedes-Benz. According to statistics from the China Chamber of Commerce, the annual sales of the second place are less than 1/4 of Feike.
Feike invests 5% of its sales in research and development every year. Among the company's more than 100 patents, "micro-innovations" based on market demand, such as "1-hour battery charging" are still among the company's more than 100 patents. The strengths of the department.
“What is more important than R&D capabilities is R&D direction.
Li Gaiteng believes that Feike devotes more energy to "application technology" that is more dependent on the understanding of consumer behavior. For example, a product that "can be used for three months on a single charge" went from idea to finished product in less than half a year. The time is much shorter than the two-year research and development cycle of the shaver's patented technology. The focus of its technology research and development is nothing more than expanding the battery capacity and streamlining the circuit system.
In September 2006, Feike finally took control of the "whole body." "Washing" technology, in addition to the sealing of the cutter head rotating group, the most important thing is the waterproof and breathable film of the circuit and battery parts. Previously, foreign brands still firmly controlled this technology, and combined it with other functions, only assembling Models costing more than 500 yuan. Feike found that this single technology does not require much cost, so it also installs this function on products as low as 100 yuan. At the same time, a "clean shaver must be washed." The promotion plan began to appear frequently in TV advertisements and promotional activities.
“Promoters repeatedly told customers that razors contain 125 times more bacteria than toilet seats. "Xu Xiaocong, general manager of Feike Shanghai District, said that this strategy of using water washing as a general standard was successful. At that time, the purchase volume of the Sichuan area under Xu's jurisdiction increased by 20%. In 1999, the first domestically produced double-head rotary type was independently developed. Shaver;
In 2002, Zhejiang Feike Electric Co., Ltd. was established. Feike took the lead in the industry and invested heavily in advertising on CCTV for brand operation;
2003 In 2004, it established offices in provincial capital cities and branch offices in prefecture-level cities to establish a complete marketing network system;
In 2004, it entered major supermarkets, stores, and electrical appliance chains across the country to serve as image terminal markets. , faded out of the wholesale market;
In 2005, it became the unit for formulating and revising national standards for China's electric shaver industry;
In 2006, it launched a full-body washable shaver and included this item for the first time The technology is applied to products above 100 yuan;
In 2007, a technology research and development center was established in Shanghai to establish a new technology research center for innovative research, a new product development engineering research center, and a shaver quality research center;
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In 2007, FLYCO merged with 5 companies in the same industry to form FLYCO, ending the history of low, small and fragmented China's razor industry. In the same year, "FLYCO" became the first "China Famous" brand in the Chinese razor industry. Trademark";
In 2008, it became the "Iconic Brand in China's Electric Shaver Industry", with sales exceeding one billion yuan in the same year;
In 2009, amid the international financial crisis, Against this background, Feike achieved 80% year-on-year annual growth; Feike brand electric shavers ranked first in the national market share of similar products and ranked first in the national market sales of similar products;