D&Y Group accelerates overseas layout based on the Belt and Road
May 15, 2018 ｜ by Zhao Zihan
In recent years, with the sharp increase in raw materials and labor costs, the competitive advantages of Chinese textile companies have gradually disappeared. How to seize opportunities in the highly competitive textile market? D&Y Group actively integrated the “Belt and Road” Initiative into its strategic plan to fully transfer the mode and adjust the structure, so as to accelerate the layout of overseas markets.
D&Y Group is a large-scale enterprise integrating spinning, weaving, garment, import and export trade, and multinational production and management. It ranks among the top 20 in the comprehensive competitiveness of China’s cotton textile industry. Faced with the trend of economic globalization and regional integration, D&Y Group takes a global perspective to examine the development trend of the industry, persists in implementing the “go global” strategy, and accelerates the internationalization process, which has promoted the transformation and upgrading of the traditional textile and apparel industry and realized accelerated development of enterprises. In recent years, the Group has witnessed a garment company established in Sri Lanka, trading companies respectively established in the United States and Canada, and a textile company in Malaysia, so as to optimize such links as design, procurement, production, and marketing throughout the world, gradually establishing a development model of transnational business.
The Belt and Road drives the investment into overseas layout
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The establishment of Shandong Daiyin Import and Export Co., Ltd. (D&Y Imp & Exp Co., Ltd.) took the first step in international business.
D&Y Group started its international operations from international trade. In 1998, the International Trade Department was established with a tough start from second-hand export orders, and now it has grown step by step into over 30 business units with export products expanding to more than 3,000 varieties of patterns of more than 100 series of fabrics and garments. The exports to over 80 countries and regions reached 220 million U.S. dollars in 2017. In addition, the Department is equipped with more than 300 professionals who are proficient in both business and foreign languages.
At present, D&Y Group has established a diversified export structure. Among its total exports, the U.S. market, the EU market, and other emerging markets respectively account for one third, which not only effectively avoided the risks to international trade brought about by market fluctuations, but also ensured the continuous growth of export amount.
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The establishment of D&Y Lanka Apparel (pav) Ltd. in Sri Lanka developed direct customers for first-hand orders.
In 1999, China was about to join the WTO. At that time, D&Y Group was running a garment factory of 1,200 workers in China, enjoying an annual output of 1.5 million pieces of various garments. However, being far from the forefront of international market, it lacked direct major customers and the first-hand orders, but only small orders and low processing fee. Under such circumstances, D&Y Group started to implement the strategy of going global. In 1999, D&Y Lanka Apparel (pav) Ltd. was established in the Gower Province of southern Sri Lanka and officially put into operation in 2000, which then was a project with the largest amount of investment totally from China in Sri Lanka, as well as the first overseas garment processing project from Shandong Province.
After more than ten years of production and operation, D&Y Lanka Apparel (pav) Ltd. has been equipped with 1,500 sets of various types of garment production equipment, enjoying 20 garment production lines and annual processing of more than 1.5 million pieces (sets) of garments. The establishment of D&Y Lanka Apparel (pav) Ltd. enabled D&Y Group to truly go abroad, which contacted direct foreign customers for domestic garment factories and received direct orders, and trained a number of internationalized management talents for enterprises, accelerating the company’s internationalization process.
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The establishment of D&Y U.S. Trade Co., Ltd. in the United States made direct selling of its own apparel brands with registered trademark “Renoir”.
In order to change business pattern from OEM processing to brand operation, D&Y U.S. Trade Co., Ltd. came into being in the United States in 2007, with a registered trademark of “Renoir”, carrying out direct sales of independent apparel brands to the U.S. and Canadian markets. At present, the brand sales network has covered more than 20 cities, including Los Angeles, Toronto, New York, Washington, Chicago, Atlanta, etc. In 2017, 350,000 sets of “Renoir” apparel were sold in the U.S. market, an increase of 35% year on year. It has become a Chinese independent apparel brand in the United States enjoying the largest sales volume. The establishment and operation of D&Y U.S. Trade Co., Ltd. enabled the company to initially realize a complete industrial chain from design, production, and export to wholesale and retail, and took a new step in the development of independent brand exports and the promotion of brand added value.
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Actively building the US-based cross-border e-commerce platform with the help of the Internet+
In accordance with the basic ideas of the traditional industry + the Internet, the Group actively developed cross-border e-commerce in the U.S. market, setting up a business unit that focuses on suits, shirts, bedding, and household items, and establishing a modern large-scale overseas warehouse in Los Angeles. Through “domestic + overseas” teamwork, the product is delivered directly from Factory to Consumer, building a new path of cross-border e-commerce. Currently, the online sales have been expanded to a number of platforms in the United States such as AMAZON, WALMART, OVERSTOCK, GROUPON, JCPENNEY, etc., achieving sales volume of more than 7 million U.S. dollars with a significant year-on-year increase. The success of the cross-border e-commerce model in the United States has strengthened D&Y’s confidence in conducting cross-border e-commerce. The Group will take the development of cross-border e-commerce as a key focus of the next step, improving the replication of existing models and fostering more single product divisions to expand the business to other European countries.
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The establishment of D&Y Textile (Malaysia) Sdn. Bhd. accelerates the layout abroad
The implementation of the Belt and Road Initiative in China has brought excellent opportunities for Chinese companies to go global and seek for better resource allocation. After conducting comprehensive inspections and analysis of countries in Southeast Asia, South Asia and other regions, D&Y Group eventually registered and established D&Y Textile (Malaysia) Sdn. Bhd. in Malaysia. Malaysia is one of the important countries on the “Maritime Silk Road” and the bilateral relationship between China and Malaysia has been promoted into a comprehensive strategic partnership. China-Malaysia economic and trade cooperation has broad prospects. Malaysia has many unique investment advantages: First, China-Malaysia relations are sound and the economic foundation is solid; Second, good policy support is provided, and financing costs are low; Third, global cotton procurement without Quota restrictions; Fourth, superior labor resources; Fifth, rich in oil and gas resources, and low power costs; Sixth, the social environment is stable, and the investment is safe and reliable; Seventh, investment in Malaysia can enjoy preferential tax policy.
D&Y Textile (Malaysia) Sdn. Bhd.: An optimum witness for the mutual development of China and Malaysia
“China is the largest importer of Malaysian textiles, and Malaysia is one of the important countries on the Maritime Silk Road. Investing in and building factories in Malaysia is the opening chapter of D&Y Group to accelerate overseas layout under the Belt and Road Initiative. From the outset, we have established the goal of building a world-class factory, requiring that the planning and design concepts as well as the levels of equipment, labor employment, and product quality should all reach the international advanced level.” Zhao Huanchen, President of D&Y Group, told the reporters.
D&Y Textile (Malaysia) Sdn. Bhd. is located in Kulai, Johor, Malaysia. The construction of 100,000 spindles for the first phase of the project was officially started in March 2014. It took only eight months to complete the civil works. After intense installation and commissioning, the 100,000-spindle first phase of the project was completed and put into operation on May 28th, 2015, enjoying an annual output of 30,000-ton high-grade combed yarn and an annual foreign exchange through exports of 100 million U.S. dollars.
Thanks to the accurate positioning and rapid construction, the first-phase project achieved good economic and social benefits, receiving favorable comments from both the local government and the industry. In order to further implement the national Belt and Road Initiative, further promote enterprises to “go global”, and make full use of Malaysia’s resource advantages and investment environment, D&Y Group launched the second-phase project in November 2016. The new 120,000-spindle production lines with investment of 100 million U.S. dollars are to fully put into production in May 2018.
When the second phase of the project achieves good operations, it will continue to invest 200 million U.S. dollars in the construction of the third phase, and newly add 280,000-spindle spinning production lines to fully build a textile prototype factory in Southeast Asia.
D&Y Group seized the opportunity of China’s Belt and Road Initiative to deepen its strategy of internationalization. The successful construction of D&Y Textile (Malaysia) Sdn. Bhd. is a step forward for both China and Malaysia to strengthen economic and trade cooperation and mutual development, also the best witnesses. It has become an important project to drive local industry, promote employment, and improve development. In addition, it has increased local fiscal revenue and foreign exchange earnings through exports, playing an active role in promoting the friendly exchanges and economic cooperation between China and Malaysia. The company has become a successful example of Chinese investing in factories in Malaysia. The Johor State Government stated that they will, as always, support the construction and operation of D&Y Textile (Malaysia) Sdn. Bhd., provide a broader space for development, create a more high-quality development environment, and help the company to become stronger and bigger for new successes.
It is believed that more and more Chinese companies will consider Malaysia as the preferred location for overseas investment under the guidance of China’s Belt and Road Initiative and the International Capacity Cooperation Initiative. The establishment of the company in Malaysia is a successful win-win case of Sino-Malaysian cooperation, promoting the transformation and upgrading of Malaysian traditional textile industry and contributing to the economic development of Johor, while fulfilling self-development of the Group.
Zhao Huanchen expressed that through the investment in transnational distribution, D&Y Group has taken a new strategic height to overlook the development of the company, as well as a global perspective to consider the future growth space, achieving development in the tide of economic globalization. As a result, D&Y Group will rely on Malaysian textile projects to build Malaysia’s largest textile and apparel industrial park and seize the opportunity of reshaping the international competition landscape of China’s textile industry, so as to bring more domestic textile enterprises to Malaysia.
To strengthen the internationalized management and realize the globalization of production factors
D&Y Group will base itself on the modern textile industry and take clothing as the guide to “create a century-old enterprise”. Focusing on technological innovation and brand cultivation, it will accelerate the development of core products, core technologies and core capabilities, in order to cultivate and build the brand “Daiyin” into a famous brand at home and abroad, and develop the brand “Renoir” into a world-class apparel brand.
It is also to increase internationalized management to realize globalized procurement, design, production layout, and sales. Efforts also should be made to innovate management mechanisms, build a talent team, cultivate corporate culture, and foster sustainable competitiveness, so as to develop into a large-scale textile and garment enterprise group that will remain dynamic and guide the trend, and strive to achieve sales revenue of RMB 10 billion by 2020.
Looking at the world, the global economic landscape is changing every moment. D&Y Group has never stopped the pace of advancement. For new leapfrogging and development, it has always been facing new opportunities and challenges to speed up the process of branding and internationalization, to achieve the globalization of production factors, and to vigorously build a strong textile and apparel enterprises that keep pace with the development of the times.
